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ASSIGNMENT 4

Lecturers Name : Faculty Course Code Management Groups Members :

: :

Dr. Low Hock Heng Faculty of Management and Human Resource Development, University Teknologi Malaysia SHD 2723 Introduction to Operation

Mohd. Shafik Bin Masri Matrix No. : SX101031HDJ04 Muhammad Hanis Bin Roslan Matrix No. : SX095502HDD04 Aslija Nur Binti Tarmizi @ Anuar Matrix No. : SX101017HDJ04 Mohd Amirul Syazili Bin Mohd Suhimee Matrix No. : SX101028HDJ04 Mohd Firdaus Bin Aazami Matrix No. : SX090986HDJ04

ASSIGNMENT 4. Read the topic related to Supply Chain Management, after which you are required to write a brief of summary of the said topic.

SUPPLY-CHAIN MANAGEMENT. Definition A supply chain is defined as a network of facilities and distribution options that performs the functions of procurement of materials, transformation of these materials into intermediate and finished products, and the distribution of these finished products to customers. SCM also can be define as a stream processes of moving goods from the customer order through the raw materials stage, supply, production, and distribution of products to the customer. All organizations have supply chains of varying degrees, depending upon the size of the organization and the type of product manufactured. These networks obtain supplies and components, change these materials into finished products and then

distribute them to the customer.

An example of supply chain process flow

OVERVIEW OF SUPPLY-CHAIN MANAGEMENT Inventory Inventory is stock of materials used to satisfy customer demand or support the production of goods and services. In another words, inventory can define as a process which start with a raw materials to work-in-process of a goods and finally to a complete finished goods that are considered to be a portion of a business's assets that are ready or will be ready for sale. Inventory represents one of the most important assets that most businesses possess, because the turnover of inventory represents one of the primary sources of revenue generation and subsequent earnings for the company's shareholders or owners. Manufacturing entities have inventories for raw products products in the production process (WIP), and finished products (FGI). In addition there are often warehouses or distribution centers between the different levels of the supply chain. Inventories are costly. Binding capital in inventories prevents the company from investing this capital in projects of higher return.

However, inventory management forecasts and strategies, such as a justin-time inventory system, can help minimize inventory costs because goods are created or received as inventory only when needed. Raw Materials The inventories that are needed for the production of goods and services. A material or substance used in the primary production or manufacturing of a good. Raw materials are often natural resources such as oil, iron and wood. Before being used in the manufacturing process raw materials often are altered to be used in different processes. Raw materials are often referred to as commodities, which are bought and sold on commodities exchanges around the world. Work-in-process Items such as components or assemblies needed for a final product in manufacturing. Work in progress (WIP) therefore refers to all materials and partly finished products that are at various stages of the production process. As such, WIP excludes inventory of raw materials at the start of the production cycle and finished products inventory at the end of the production cycle. Also referred to as work in process.

Finished Goods The items in manufacturing plants, warehouses and retail outlets that are sold to the firms customers. In other definitions also Materials or products which have received the final increments of value through manufacturing or processing operations, and which are being held in inventory for delivery, sale, or use.

MANAGING THE CUSTOMER INTERFACE Order-placement Process The activities required to register the need for a product or services and to confirm the acceptance of the order. Cost Reduction. Using the internet can reduce the costs of processing orders because it allows for greater participation by the customer. Revenue Flow Increase.

A firms Web page can allow customers to enter credit card information or purchase-order numbers as part of the orderplacement process. This approach reduces the time lags often associated with billing the customer or waiting for checks sent in the mail. Global Access. Another advantage the internet has provided firms is the opportunity to accept orders 24 hours a day. Firms with internet access can reduce the times it takes to satisfy a customer. Thereby gaining a competitive advantage over bricks-and-mortar firms. Pricing flexibility. Firms with their products and services posted on the Web can easily changes prices as the need arises, thereby avoiding the cost and delay of publishing new catalogs. Customer placing orders have current prices to consider when making their choices.

Order Fulfilment Process The activities required to deliver a product or service to a customer. This process might be called upon to address any of the competitive priorities falling under the categories of cost, quality, time or flexibility. Information Sharing. The internet provides a quick and efficient means to share information along the supply chain. The supply chain can better match supply with demand, thereby reducing inventory costs and decreasing the time to fulfil orders. Inventory Placement. A fundamental supply-chain decision is where to locate an inventory of finished goods. Placing inventories can have strategic implication, as in the case of international companies locating distribution centers in foreign countries to pre-empt local competition by reducing delivery times to its customers.

Inventory Pooling. A reduction in inventory and safety stock because of the merging of variable demands from customers.

Forward Placement. Locating stock closer to customers at a warehouse, distribution centers, wholesaler or retailer.

Vendor-managed inventories. An extreme application of the forward placement tactic, which involves locating the inventories at the customer.

Continues Replenishment. A vendor-managed inventories method in which the supplier monitors inventory levels at the customer and replenishes the stock as needed to avoid shortages.

Postponement. A tactic used by assemble-to-order and mass-customization firms that refers to delaying the customizing of a product or service until the last possible moment.

Channel Assembly. The process of using members of the distribution channel as if they were assembly stations in factory.

MEASURES OF SUPPLY-CHAIN PERFORMANCE Inventory Measures All method of measuring inventory begin with a physical count of units, volume, or weight. Average Aggregate Inventory Value = items held in The total value of all

inventory for a firm. (Number of units of item A typically

on hand) (Value of each units of items A) Average Aggregate Inventory Value = + (Number of units of item A typically on hand) (Value of each units of items B) Weeks of Supply. An inventory measure obtained by dividing the average aggregate inventory value by sales per week at cost. Weeks of supply = Average Aggregate Inventory Value Weekly Sales (at cost) Inventory Turnover. An inventory measure obtained by dividing annual sales at cost by the average aggregate inventory value maintained during the year. Inventory Turnover = Annual Sales (at cost) Average aggregate inventory value

Supply Chain Process Measure. Supply Chain process measurement is a process which consist an element to measure a cost, time that used to produced a goods with a good quality. This process should include an order placement from customer, order fulfilment process and purchasing materials from suppliers. The table below shows on how supply chain process is measured: