Vocabulary Focus. Discovering connections

DISCOVERING CONNECTIONS

Logistics is the task of managing two key flows:

• material flow of the physical goods from suppliers through the distribution centres to stores;

• information flow of demand data from the end-customer back to purchasing and to suppliers, and supply data from suppliers to the retailer, so that material flow can be accurately planned and controlled.

The logistics task of managing material flow and information flow is a key part of the overall task of supply chain management.(supplier relationship management SRM управление поставщиками; управление отношениями с поставщиками; управление поставками, управление цепочкой поставок (совокупность мероприятий по планированию и контролю за деятельностью всех компаний, вовлеченных в систему производства и доставки продукции: поставщиков сырья, производителей, дистрибьюторов и т. д.) Supply chain management is concerned with managing the entire chain of processes, including raw material supply, manufacture, packaging and distribution to the end-customer.

READING

Text 1

While reading the text choose the heading for each part:

- The component activities of supply chain management (SCM)

- The definition of supply chain management (SCM)

- Why manage the supply chain?

- Partnership relationships

SUPPLY CHAIN MANAGEMENT

Part 1

The Blackwell Encylopedic Dictionary of Operations Management offers three competing definitions.

(1) The management of the internal supply chain.

This rather limited definition refers to the flow of materials and information through the firm from the time they are received from suppliers until delivery to the distributor. It describes the movement of goods from one 'internal customer' to another as they pass through successive departments of the firm.

(2) The development of long-term partnerships or relationships with suppliers.

This idea should be familiar as a key component of just-in-time and other aspects of lean production. The partners in the supply chain work together to improve design, reduce costs, improve quality and develop products.

(3) The management of the entire network of supply from original source through to meeting the needs of the end-consumer.

This definition is concerned not just with immediate suppliers (e.g. of components) and the immediate customer (e.g. a wholesaler) but with all firms involved in all processes from extraction to the end-customer.

This third definition is illustrated below in Figure 1. Successive tiers of suppliers provide inputs of materials, components and information 'upstream' from the firm. The manufacturer (or service firm) transforms the inputs into products and services, and distributors are engaged in moving these goods to the end-customers. The 'downstream' activities of physical distribution and channels of communication also feature in the marketing aspects of business.

The SCM approach requires that the organization should be concerned with all upstream and all downstream firms, however distant and indirect the relationship. This broad approach to SCM was typified by Marks and Spencer, in the days when it was the high street's most successful and profitable retailer. The company involved itself in every aspect of its suppliers' business, from product development to product and packaging quality. Its image collapse has coincided with a move away from this business strategy.

Part 2

SCM is concerned with the flow of goods/services and information. It focuses on the following activities:

Purchase and supply of materials, components and information. This means that there are important SCM decisions to be made in terms of the nature of relationships, the number of supply firms (i.e. multiple or single sourcing) and whether to source in-house or from an external supplier.

Stock control. Efficient and effective SCM is essential if just-in-time methods are to be employed.

Distribution strategy. Strategic decisions have to be made about the nature of distribution channels (direct or indirect, short or long, intensive or selective). These downstream activities are a key element in marketing, especially for perishable products — both physically perishable, such as strawberries, and fashion affected, such as swimwear.

Physical distribution. This includes both storage and transportation.

Part 3

Management of the complete chain can provide substantial benefits in satisfying the end-customer.

Firstly, all firms in the chain need to add value to output, as shown in Figure 2. Each organisation in the chain is, or should be, concerned about the competitiveness of the whole supply process. Satisfying the end-customer benefits not only the retailers but all firms upstream in the supply chain. They all have an interest in competitiveness, quality, waste minimization and overall profitability. Understanding these linkages also helps in understanding that suppliers and distributors are among every organisation's stakeholders.

Secondly, appropriate management of the supply chain produces benefits in terms of a reduction in stocks. The failure of supply patterns to match demand patterns leads to the accumulation of stocks at various stages in the chain, with shortages and delay at other stages. SCM seeks to overcome these problems by the identification of bottlenecks and improvements in both forecasting and in the flow of information.

SCM also produces benefits in terms of time-saving. This can result in increased customer satisfaction, increased flexibility and increased speed at which new products get to the market. In other words, SCM is an essential element in another aspect of lean production, namely time-based competition.

Part 4

Traditionally, the supplier-buyer relationship is seen as competitive and even confrontational. The supplier seeks the highest price whilst the buyer seeks the lowest price. The emphasis is on the profitability of the transaction at hand.

By contrast, SCM encourages joint problem-solving to improve quality and thus reduce waste. Partnership supply relationships are long-term co-operative agreements for the joint accomplishment of goals. Features of a partnership agreement are:

- the sharing of success

- multiple points of contact

- long-term commitments

- joint learning

- information sharing

- joint problem-solving

- and, most important of all, trust

This type of relationship is essential in successful supply chain management. As Marks and Spencer has demonstrated in recent years, firms are taking huge risks with their future if they jeopardize the bonds that link them to their suppliers.

Vocabulary Focus

Ex. 1. Match the following words and collocations with their Russian equivalents:

A	B
1. tier	a) уровень, класс; связующее звено
2. downstream activity	b) деятельность по созданию продукции
3. upstream activity	c) узкое место
4. supply chain management (SCM)	d) заинтересованные стороны
5. waste minimization	e) долгосрочные обязательства
6. stakeholders	f) "точно в срок", "точно по графику"
7. long-term commitments	g) управление цепочкой поставок
8. bottleneck	h) сокращение потерь
9. just- in- time (JIT)	i) бережливое, всесторонне рационализированное производство
10. lean production	j) деятельность по сбыту продукции

Ex. 2. Using a dictionary add as many words as possible into the table.

Noun	Verb	Adjective/Adverb
Customer
		successive
Extraction
	typify
		perishable
	compete
		multiple составной; со сложной структурой

Ex. 3. Match words from A with their opposites from B.

A	B
1. upstream	a) selective
2. in-house	b) separate
3. multiple	c) permanent
4. joint	d) downstream
5. perishable	e) external
6. intensive	f) doubt
7. trust	g) single

Ex.4. Match the words with a close meaning:

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