Appunti di Construction Supply Chain Management

Scor model: Supply chain operations reference

Supply chain

We have it into the product industry and in the service industry. There is an upstream or supply side and a downstream or demand side. We see circulations of:

• Raw materials
• Intermediate components
• End product

It ends with the final customers.

Scor model: Supply chain operations reference

Supply chain

We have it into the product industry and in the service industry. There is an upstream or supply side and a downstream or demand side. We see circulating raw materials, intermediate components, and end product. It ends with the final customer.

The assembler is named the focal firm - the strategical dominant actor in a supply chain. It orchestrates the all flow of materials connecting upstream and downstream sides. The execution flow goes from raw materials to finished products to the distribution network to the retailers to the end customer. Each one of these steps of the supply chain is called echelon, layer, or step. Each layer represents a customer-supplier relationship.

Supply chain - a multiple customer-supplier relationship

This involves several actors from raw materials to the final customer. To properly represent a supply chain, there are two main dimensions:

• The length of a supply chain
• The width of each tier

It gives us an idea of the flexibility of our network. (Sometimes the wider the network in terms of suppliers, the wider is the corresponding geographical width of the supply chain). The global footprint of a supply chain means how it is developed geographically by placing in different points of the world (or country) all the firms and the corresponding warehouse. The footprint is made up from:

• Plants
• Warehouses

The two major components and it is an important ingredient of the execution flow.

Definition of supply chain

The definition given by Prof Christopher is intended to emphasize the need to produce value. Different definitions exist, but in general, the idea is: The execution flow starts from a supplier, and the product is sold to a final customer. The definition given by Mr. Forrester is important because he underlines the presence of three different flows that can be found in a supply chain:

• The flow of information
• The flow of materials
• The flow of money

Simplified model of supply chain:

Raw Materials —> S —> M —> D —> Market

Supplier —> Manufacturer —> Distributor —> Market

1° Physical flow (flow of products) from upstream to downstream (direct flow) (execution flow) usually measured in SKUs (stock keeping units) involves the main SKUs from raw materials to the market.

2° Planning flow (flow of information) goes in opposite directions from the market to the distributor, from the distributor to the manufacturer, from the manufacturer to the supplier. From downstream to upstream.

What happens? The customer buys a product from the distributor (large retailer, for example), the inventory level of the distributor stage falls, and the distributor is expected to issue an order to the manufacturer that, according to the bill of materials, issues an order to the supplier (of a component).

B° Cash flow (flow of money, financial flow) goes exactly as the information flow! From downstream to upstream. When you receive goods, you pay the corresponding amount of money.

But in reality, what happens is that you don’t directly pay your supplier, you pay the bank that then pays the supplier (or more complicated, you pay your bank that pays the bank of the supplier that pays the supplier).

❮ Domain of supply chain finance

In reality, this flow has no specific rules, so we don't know exactly the flow of money across the supply chain. Product flow from upstream to downstream, information flow from downstream to upstream, and cash flow has no specific direction.

Supply chain management

⬅️ To properly manage a supply chain, we need:

• To be experts in logistics and transportation
• To be experts in purchasing and supply (in negotiating how to receive a good/service)
• To be experts in operations management (how to run a business)
• To be experts in marketing (as we need to distribute our product)
• Industrial economics and organization

As global supply chains face global dynamics that fall outside our company, the economic environment is part of the supply chain management. System dynamics involves mathematical modeling for supply chains.