Supply Chain Management is the complex process of overseeing the entire lifecycle of a product or service, from sourcing raw materials to delivery and customer service, aiming for efficiency and profitability.
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welcome to Supply Chain management now I
know most of you have spent your
childhood evenings dreaming of taking
your first Supply Chain management
course but for those handful of you who
might not know what Supply Chain
management is let me provide you a brief
explanation let's take a simple product
like a bottle of water clean water a
plastic bottle a plastic cap and a label
buying them at the store or vending
machine might cost you about
a150 how much of that do you think is profit
profit
nope wrong wrong again not
likely water a plastic bottle and a
label That Couldn't cost more than 50
cents and if you buy them in bulk how
could each bottle not give you at least
a dollar in profit seriously if you
think you can make $1 per bottle you
should drop out of college right now and
get into the bottled water business you
see this right here illustrates one of
the most common consumer misconceptions
product cost is not equal to material
cost and in business you don't have the
luxury of thinking only as a consumer
you need to think like a business
executive or better yet an
entrepreneur so in order to figure out
where all that profit went we need to
imagine what it took for that bottle of
water to get into your hands first you
need to negotiate the purchase of the
empty bottles and caps those bottles
will be much easier to transport if
they're in boxes we'll need to shrink
wrap those bottles so they don't fall
out of the box we can move a whole lot
of boxes quickly if they're all put on
pallets in order to move the pallets
you'll need a forklift which means
you'll need a forklift driver that
forklift will then take the pallet and
put it into a truck which will require a
truck driver Fuel and insurance also
you'll need a label for that bottle of
water therefore you need to design the
label print the label and get the label
shipped to the plant another truck
driver more fuel and insurance our water
bottling plant won't be free and neither
will the energy it uses in our bottling
plant will have employees and bottling
machines and let's not forget the
day-to-day items like light bulbs
garbage bags machine parts janitorial
supplies toilet paper and anything else
that will be used at the plant by the
employees oh yeah and we'll also need
access to the drinking water machines
will then purify the water other
machines will bottle the water and affix
the labels to the bottles and still
another set of machines will box shrink
wrap and then palletize the bottles in
order to move those pallets again you'll
need a forklift which means we'll need
another forklift driver that forklift
will then take the pallets and put them
into trucks head it to the distribution
centers and
as we've
seen those trucks will require drivers
Fuel and insurance those distribution
centers will also require employees
forklifts and energy from the
Distribution Center they'll head out to
retail stores and still another truck
which will require a driver Fuel and
insurance that store will need employees
to unload the truck stock the bottles of
water on the shelf or refrigerator if
you have a refrigerator you'll of course
need energy if we want to secure our
stock we may get a security guard or a
security system and of course the store
will likely get insurance also Imagine
the cost associated with returning and
replacing bottles that are damaged oh
and for some reason even bottles of
water sometimes have 1800 numbers which
means you'll need a staffed call center
to answer the customer questions about
your bottle of water wow all those
materials boxes people machines
buildings energy fuel and vehicles they
cost money those things weren't free and
they probably weren't used efficiently
and it's likely that several bottles
didn't survive the journey to the
consumer oh and by the way the employees
at the water company you know the ones
that work in finance accounting
marketing human resources and it they
want a paycheck too so through that
simple example of a super simple product
we're beginning to see that companies
face challenges when they buy things
make make things move things sell things
and service things which includes repair
and maintenance oh and let's not forget
companies need to do all these things
using sustainable materials energy and
methods guess whose job it is to make
sure that all these things happen
flawlessly with minimal effort and of
course at minimal cost you guessed it
supply chain managers the supply chain
manager needs to be able to do all of
these things they need to give the
customer the product they want when they
want it as often as they want it for a
reasonable price while still managing to
make a profit this requires world-class
skills and knowledge in the study of
Supply Chain
management there's that scary term again
Supply Chain management let me try to
make it friendlier by shuffling around the
the
words there you go the management of the
chain of supplies for some reason that
just seems a whole lot easier to
understand doesn't it but but it also
helps us understand the complex nature
of Supply Chain
management I mean the management of the
chain of supplies now let's think of
other products and what their supply
chains might Encompass hamburgers
hamburgers
sweaters coffee tables
tables
cars and
airplanes now I know many of you are
saying but I live in a service economy I
won't be Manufacturing
anything wrong again as of 2008 the US
was still the number one exporter of
manufactured goods okay maybe not for
long so let's talk about service Economy
Supply chains let's think of something
you're probably familiar with the hotel
industry what do hotels manufacture
lodging experiences dining experiences
Spa experiences which altogether make up
vacation and Conference experiences in
order to do all these things effectively
and efficiently what's required hotels
need to buy things like beds furniture
televisions cable food soaps towels they
also make things or in this case
manufacture services like housekeeping
meals massages and special events hotels
also move things like transporting clean
towels and food to and from the rooms as
well as transporting guests and their
luggage to and from the airport they
even sell things like in room movies
internet services and tickets to events
and finally they also provide services
such as making reservations organizing
events making wakeup calls and even
cleaning and pressing clothes once again
we see that the fundamental skills
learned in Supply Chain management can
be used to manufacture service
experiences as much as they aid in manufacturing
manufacturing
products well I hope that this has given
you an idea of what Supply Chain
management is all about you see this is
the reason why little kids all around
the world want to be supply chain
managers they want to take part in
manufacturing the best products and
services on Earth so again welcome to
Supply Chain management where all of
your childhood supply chain dreams are
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