Supply Chain Processes (DP IB Business Management)

Local & Global Supply Chains

• Supply chain management (SCM) coordinates and schedules manufacturing to ensure that products are produced efficiently, on time and in the quantities needed

  • It refers to all stages from obtaining materials and components to delivery of the product to the end consumer

    • Stock control: planning, implementing and monitoring the movement of raw materials, components, work-in-progress and finished goods

    • Quality control: ensuring output meets standards so that the end product is safe and meets customer expectations

    • Transport networks: ensuring efficient deliveries of good to customers taking account of speed, reliability and costs

    • Supplier networks: developing strong relationships with suppliers willing to work collaboratively to improve quality

• Global supply chains require these activities to be coordinated across international borders

  • Some stages can be completed at lower cost in other countries

    • China has a reputation for producing high quality, low-cost electronics components

    • Labour-intensive processing such as clothes manufacturing is outsourced to countries with low labour costs such as Vietnam

  • Scarce raw materials may only be available in certain countries/regions

    • For example, more than half of the world's cobalt - an important raw material required in the manufacture of mobile phones - comes from the Democratic Republic of Congo

Just-in-time (JIT) Versus Just-in-case

• Just in Time involves stocks (raw materials and components) being delivered to a business as and when they are needed to be used in the production process

• Just in Case involves holding spare (buffer) stock to ensure that there is always more than enough stock to meet production requirements

A Comparison of Just in Time and Just in Case Approaches