Unit 1: Fluctuations in the Supply Chain
To begin our exploration of supply chain management, we will take a look at the various players in the process, their roles, as well as their individual objectives. Since each link in the chain comes from a different perspective, there will be conflicts between their goals, which can affect the efficiency of the process. These complexities can lead to uncertainty in the ability to meet customer demand. In addition to internal challenges, many critical factors can affect the supply chain process, including environmental uncertainty, governmental regulations, communication and information technologies, relationships with suppliers and customers, and many others. Each of these elements must be identified and prioritized to ensure an efficient supply chain management process.
Finally, we will take a look at the bullwhip effect, which is what happens when members of the distribution channel revise their forecasts (either up or down) based on their departments' expectations of customer demand. As these numbers get passed along the supply chain, they distort actual demand and increase supply chain inefficiencies. Understanding the problems and challenges that can occur in the supply chain management process will help us better prepare for conflicts, inefficiencies, and inaccurate demand forecasts.
Completing this unit should take you approximately 1 hour.
Review this introduction to supply chain management to explore the elements of the process, including suppliers, manufacturers, distributors, and retailers. Each of these is involved in getting goods to consumers when they want them and at a cost that is agreeable to all parties.
Read these sections for an in-depth look at the supply chain management factors that affect a business' operations. These sections explore environmental factors, internal company issues, governmental factors, the role of IT, logistics, suppliers, and more.
The bullwhip effect relates to supply chain inefficiencies and changes in inventory levels as they relate to changes in consumer demand. Factors include demand forecasting, order batching, price fluctuations, rationing and gaming.