ABSTRACT
Learning Outcomes Describe the components of the input-transformation-output model ◾ Describe the three types of fl ows in a supply chain ◾ Provide examples of supply chains in diff erent industries ◾ Identify the diff erence between internal and external customers ◾ Explain the diff erence between open and closed systems ◾ Describe the eff ects of external infl uences on supply chains ◾ Discuss the obstacles and enablers of supply chain integration ◾ Explain how supply chain performance can be measured ◾ Explain why costs, resources and benefi ts must be fairly allocated along the ◾ supply chain Describe the ways companies create value along the supply chain ◾
Introduction In Chapter 1, we described the evolution of supply chains and their importance in today’s business environment. In this chapter, we will describe the basic components of supply chains and how they fi t together to form the supply chain system. Supply chain management (SCM) is the design, planning, execution, control, and monitoring of supply chain activities with the objective of creating net value, building a competitive infrastructure, leveraging worldwide logistics, synchronizing
supply with demand, and measuring performance globally.1 Viewed another way, it is the result of a series of coordinated steps necessary to transform raw materials into fi nished products and services that the consumer needs or wants. A company manages a series of business processes in order to transform inputs into outputs that have value to a customer. Customers value a pan of corn bread higher than a bag of unprocessed cornmeal. A well-furnished apartment costs more than a non-furnished one to a tenant. In the context of SCM, the inputs consist of things and people. Th e outputs are goods or services consumed by customers in manufacturing or service businesses. Th e input-transformation-output (ITO) model is the DNA of the supply chain. Both manufacturing and service businesses employ the ITO model to create a systematic, functioning supply chain to sustain and become competitive. Figure 2.1 shows a basic ITO model. Employees, equipment and facilities, information systems, and supply partners are the resources needed to eff ect the transformation process.
