Supply Chain Management is the management of the entire value-added chain, from the supplier to manufacturer right through to the retailer and the final customer. SCM has three primary goals: Reduce inventory, increase the transaction speed by exchanging data in real-time, and increase sales by implementing customer requirements more efficiently.
“that part of supply chain management that plans, implements, and controls the efficient, effective forward and reverse flow and storage of goods, services and related information between the point of origin and the point of consumption in order to meet customers' requirements.”
The transit of goods. This occurs through many modes of transportation including: maritime, air, rail, and truck. Freight transportation includes the handling of goods in distribution centers and terminals (such as marine ports or airports). Cargo can be held in a variety of different containers. Intermodal transportation includes more than one mode.
Supply chain management, typically the business school perspective, serves individual companies
Industrial engineering focusses on methodologies for improving logistics in all contexts
Transportation logistics from the CEE perspective looks at transportation from a societal perspective, the net flow and impact on the infrastructure. To understand this we must know something about SCM and IE.
Logistics Costs Initial gains from deregulation (restructuring of networks) dropping off $1000 reduction to each household annually
How does REI get goods to market? Asian Factories West Coast Port Distribution Center Destination Store Container on marine vessel Drayage truck Short or Long-haul truck Due to infrastructure government infrastructure investments and decreases in Transportation cost, transportation cost is typically much less significant than the Reductions in manufacturing. Inventory management has been the area of attention.
In-transit inventory or pipeline inventory : inventory that is in the process of movement from point of receipt or production and between points of storage and distribution.
Inventory-at-rest : inventory that is NOT in the process of movement from point of receipt or production and between points of storage and distribution, rather it is stationary, typically at a production facility, warehouse, distribution center, or consumption facility.
How does REI get goods to market? Asian Factories West Coast Port Distribution Center Destination Store Container on marine vessel Drayage truck Short or Long-haul truck In transit inventory
Cycle Inventory : the average amount of inventory used to satisfy demand between receipt of supplier shipments. The size of the cycle inventory is a result of the production or purchase of material in large lots. Companies produce or purchase in large lots to exploit economies of scale in the production, transportation, or purchasing process. With the increase in lot size, however, also comes an increase in carrying costs. The basic trade-off supply managers face is the cost of holding larger lots of inventory (when cycle inventory is high) versus the cost of ordering product frequently (when cycle inventory is low). Some of this inventory may be in-transit, while some may be inventory-at-rest.
Safety inventory : inventory held in case demand exceeds expectation; it is held to counter uncertainty. If they have too much safety inventory, goods go unsold and may have to be discounted. If the company has ordered too little safety inventory, however, the company will lose sales and the margin those sales would have brought. Therefore, choosing safety inventory involves making a trade-off between the costs of having too much inventory and the costs of losing sales due to not having enough inventory. Generally this inventory is inventory-at-rest, so that it is immediately available.