Supply chain costs are operating costs associated with business functions related to the procurement, manufacturing and distribution of a product. On the contrary, costs associated with overhead functions, sales, promotion and marketing are not considered supply chain costs.
The term is not strictly defined and definitions may vary by industry and situation. For example, delivery costs are sometimes classified as sales costs, rather than supply chain costs.
link and chain
Other names for a supply chain manager include logistics manager, supply chain director, procurement manager, and operations manager. In some organizations, they may also be referred to as inventory manager or fulfillment manager, depending on the specific focus of their role. Additionally, titles like supply chain coordinator or supply chain analyst may be used for positions with varying levels of responsibility within the supply chain function.
A business supply chain refers to the entire process of producing and delivering a product or service, encompassing all stages from raw material acquisition to final delivery to the consumer. It includes various activities such as sourcing, production, logistics, and distribution, as well as the flow of information and finances. Effective supply chain management aims to optimize these processes to enhance efficiency, reduce costs, and improve customer satisfaction. Ultimately, a well-managed supply chain is crucial for a business's competitiveness and sustainability in the market.
A linked chain of companies or individuals is commonly referred to as a "supply chain" or a "value chain." In business and economics, a supply chain encompasses all the steps involved in getting a product or service from the supplier to the customer. This includes sourcing raw materials, manufacturing, distribution, retailing, and ultimately, the end consumer. The term "value chain" is often used to emphasize the value-adding activities within a supply chain that contribute to the final product or service.
The costs of multinational companies (MNCs) include operational expenses such as labor, raw materials, and logistics, which can vary significantly across different countries. Additionally, MNCs face regulatory compliance costs, tariffs, and taxes that differ by jurisdiction. Currency fluctuations and the complexities of managing a global supply chain also contribute to their overall costs. Finally, investment in local marketing and adaptation to cultural differences can further increase expenses.
The traditional local supply chain compared to a global supply chain is a matter of scale. Though with scale comes complexity. In the local supply chain the systems, processes, cultures, products, descriptions and languages are the same. When scaled globally, we operate across multiple boundaries affecting governance, language, culture, currency, and systems (computer and physical). Compare this to the costs of production and distribution - global procurement enables enormous diversity of choice though adds to distribution costs. Further manufacturers can tap into lower priced labour and raw materials to offset additional transport costs. Though global supply chains have been around for millenia: Marco Polo operated a global supply chain!
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A broken chain in a supply network can lead to disruptions in production, delays in delivery, increased costs, and potential loss of customers. It can also impact the reputation and credibility of the companies involved.
Dell should consider total supply chain profitability by evaluating the costs and revenues associated with each link in the supply chain, from raw material sourcing to final product delivery. This involves assessing supplier relationships, production efficiency, inventory management, and logistics costs. Additionally, understanding customer demand and market trends is crucial to optimize pricing and reduce waste. By aligning decisions with total supply chain profitability, Dell can enhance overall efficiency, reduce costs, and improve customer satisfaction.
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logistics is a part of supply Chain Management
Green Supply Chain Supply chain management with an emphasis on energy efficiency and environmental friendliness.
A broken chain link in a supply chain can lead to disruptions in production, delays in delivery, increased costs, and loss of customer trust. This can result in decreased revenue, damaged reputation, and potential loss of market share. It is important for businesses to identify and address broken chain links promptly to minimize these consequences.
1-Distribution Network Configuration2-Distribution Strategy3-Trade-Offs in Logistical Activities4-Information5-Inventory Management6-Cash-Flow
Objective of a Supply Chain • Maximize overall value created • Supply chain value: difference between what the final product is worth to the customer and the effort the supply chain expends in filling the customer's request • Value is correlated to supply chain profitability (difference between revenue generated from the customer and the overall cost across the supply chain) • Sources of supply chain revenue: the customer • Sources of supply chain cost: flows of information, products, or funds between stages of the supply chain • Supply chain management is the management of flows between and among supply chain stages to maximize total supply chain profitability
One can optimize supply chain visibility by using a Sterling Supply Chain Visibility from IBM. This type of supply chain will help to optimize it quite nicely.
HRC mostly outsources its logistics operations, hence reducing its supply chain costs.