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ffected by another chain that most anizations have, the development chain.? It is challenging to design and operate a supply chain so that total systemwide costs are minimized, and systemwide service levels are maintained.? Uncertainty and risk are inherent in every supply chain. 169。CopyrightDevelopment of the Concept? After 1990s, supply chain management can be viewed as a pipeline or conduit for the efficient and effective flow of products and materials, services, information, and financials (usually cash) from the supplier’s supplier through the various immediate anizations out to the customer’s customer. ? It is a system of connected works between the original vendor and the ultimate final customer. ? The extended enterprise or boundary spanning perspective of supply chain management represents a logical extension of the logistics concept, providing an opportunity to view to total system of interrelated panies and their impact for the final product in the marketplace in terms of its pricevalue relationship.169。CopyrightWhat Is the Goal of Supply Chain Management?? Supply chain management is concerned with the efficient integration of suppliers, factories, warehouses and stores so that merchandise is produced and distributed:– In the right quantities– To the right locations – At the right time? In order to– Minimize total system cost – Satisfy customer service requirementsThe rightProductHigherProfitsThe rightTimeThe rightCustomerThe rightQuantityThe rightStoreThe rightPrice=++ ++ +169。CopyrightWhat to do?? Recognize that demand is stable and predictable? Establish accountability for forecast? Eliminate planning delays and/or reduce time bucket? Alternatively, put assembly within pull system and eliminate bulk inventoryCase 1169。Order quantityMaterialPlanfocusing on information flows169。CopyrightOutline ? Intent – diagnosis of supply chain? Business overview? Supply chain? Production planning? What’s wrong?? How to fix it?Case 1169。CopyrightMeditech Surgical? Case describes a scenario with typical symptoms – inventories are too high and customer service is poor.? Initial explanation is that the problems are due to poor forecasting of customer demand. There’s a perception that demand is highly variable and unpredictable, possibly due to irrational customer behavior, e. g., panic ordering. … if only Meditech could forecast what the customers will order, then they could improve customer service and reduce inventories….Case 1169。 Meditech sells to material managers? Customer preferences change slowlyCase 1External Supply ChainPart suppliersMeditech Assembly plantsMeditechWarehouse:autonomous regional warehousesDomestic DealersInt’l MeditechAffiliatesHospitalsHospitalsCase 1Internal Supply ChainParts Inventory Assembly Bulk Inventory FG InventoryPackaging Sterilization2 16weeks2weeks1 weekCase 1Assembly anized into multiple flexible lines, manual . Packaging and sterilization have adequate capacityProduction PlanningAnnual ForecastMonthly RevisionTransferRequirements MonthlyPlanMRPPartsProcurement PlanWeeklyAssemblyScheduleCase 1Annual forecast determined by marketing and financeRevision done at beginning of month by marketing and central planningTransfer requirements = forecast – FG inventory +safety stock (3 weeks of demand), done by central planningMonthly plan sent to business units, who input it into MRP to get material plans and assembly schedules Production PlanningParts Inventory Assembly Bulk Inventory Packaging Sterilization FG inventory