Essentials of Supply Chain Management, 4th Edition

CHAPTER 2 Supply Chain Operations: Planning and Sourcing

After reading this chapter you will be able to

• Gain a conceptual appreciation of the business operations in any supply chain.
• Exercise an executive‐level understanding of operations involved in supply chain planning and sourcing.
• Start to assess how well these operations are working within your own company.

As the saying goes, “It's not what you know, but what you can remember when you need it.” Since there is an infinite amount of detail in any situation, the trick is to find useful models that capture the salient facts and provide a framework to organize the rest of the relevant details. The purpose of this chapter is to provide some useful models of the business operations that make up the supply chain.

A Useful Model of Supply Chain Operations

In the first chapter we saw that there are five drivers of supply chain performance. These drivers can be thought of as the design parameters or policy decisions that define the shape and capabilities of any supply chain. Within the context created by these policy decisions, a supply chain goes about doing its job by performing regular, ongoing operations. These are the nuts‐and‐bolts operations at the core of every supply chain.

As a way to get a high‐level understanding of these operations and how they relate to each other, we use a simplified version of the ...