Intro: Welcome to the E6S-Methods podcast with Jacob and Aaron, brought to you by E6S Industries, your source for expert training, consulting, and leadership in business performance and continuous improvement methods, like Lean and Six Sigma. In this episode number 94 we speak Jacob leads the discuss on supply chain fundamentals. Here we go. http://bit.ly/E6S-094; http://bit.ly/E6S-iTunes

What is a Supply Chain?

A supply chain is a set of organizations directly linked by one or more upstream and downstream flows of products, services, finances, or information from a source to a customer. Supply chain management is the management of such a chain.

Supply chain management is a cross-functional approach that includes managing the movement of raw materials into an organization, certain aspects of the internal processing of materials into finished goods, and the movement of finished goods out of the organization and toward the end consumer.

In essence, Supply Chain Management integrates supply and demand within and across companies.

Organizations increasingly find that they must rely on effective supply chains, or networks, to compete in the global market and networked economy.

Key decision areas needed in Supply Chain Planning

Companies in any supply chain must make decisions individually and collectively on 5 main areas:

1. Production –

a. What products does the market want?

b. How much of which product needs to be produced when?

c. This involves creation of master production schedules that take into account plant capacities, workload balancing, quality control and equipment maintenance

2. Inventory –

a. What inventory should be stocked at each stage in a supply chain?

b. How much inventory should be held as raw material, semi-finished or finished good?

c. Primary purpose of inventory is to act as buffer against uncertainty in the supply chain. However, inventory is expensive, so what are optimal inventory levels and reorder points

3. Location –

a. Where should facilities for production and inventory storage be located?

b. Where are more cost efficient locations for production and storage of inventory?

c. Should existing facilities be used or new ones built?

d. Once these decisions are made they determine the potential paths available for product to flow through for delivery to the final customer

4. Transportation –

a. How should inventory be moved from one location to another?

b. Air freight and truck delivery are generally fast and reliable but expensive. Shipping by rail or sea is less expensive but usually involves long transit times and more uncertainty. This uncertainty is normally compensated by higher level of inventory.

c. When is it better to use which type of transportation?

5. Information –

a. How much data should be collected and how much information should be shared?

b. Timely and accurate information holds the promise of better coordination and better decision making. With good information, people can make effective decisions about what to produce and how much, about where to locate inventory and how best to transport it

Outro: Thanks for listening to episode 94 of the E6S-Methods Podcast. Stay tuned for episode 95 where we finish our discussion on supply chain fundamentals. If you would like to be a guest on the podcast, contact us through our website. Join our mailing list! Subscribe to past and future episodes on iTunes or stream us live on-demand with Stitcher Radio. Don't forget to leave a review and share us with a friend. Find outlines and graphics for all shows and more at www.E6S-Methods.com. “Journey Through Success”