Essentials of Supply Chain Management, 4th Edition

CHAPTER 3 Supply Chain Operations: Making and Delivering

After reading this chapter you will be able to

• Exercise an executive‐level understanding of operations involved in the categories of making products and delivering products.
• Assess supply operations in your company that may be candidates for outsourcing.

Many companies and the supply chains they participate in serve customers who are growing more sophisticated every year and demanding higher levels of service. Continuous improvements to the operations described in this chapter are needed to deliver the efficiency and responsiveness that evolving supply chains require.

Product Design (Make)

Product designs and selections of the components needed to build these products are based on the technology available and product performance requirements. Until recently, little thought was given to how the design of a product and the selection of its components affect the supply chain required to make the product. Yet these costs can become 50 percent or more of the product's cost.

When considering product design from a supply chain perspective the aim is to design products with fewer parts, simple designs, and modular construction from generic subassemblies. This way the parts can be obtained from a small group of preferred suppliers. Inventory can be kept in the form of generic subassemblies at appropriate locations ...