Chapter 1 Assignment: Understanding the Supply Chain

Understanding the Supply Chain
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Understanding the Supply Chain
Supply chain surplus is a term commonly used to represent the value addition to the product by supply chain processes of a firm (Kim, Jeong, & Jung, 2014). The term is also referred to as supply chain profitability, meaning that it can be used to compare the revenue obtained from the sale of the product with the overall cost of the entire of a particular supply chain. Therefore, the higher the variance between income generated and expenses across the supply chain, the higher the supply chain surplus (Kim, Jeong. & Jung, 2014). In essence, the operational principle of supply chain surplus is allotment of profit obtained after deducting expenses incurred during manufacture and distribution of products and services. Usually, earnings are shared among the supply chain stakeholders through transfer prices (Kim, Jeong, & Jung, 2014).
Phases of supply chain judgement making are various stages in supply chain management through which concerned parties take actions or decisions related to the production, distribution, and sale of some products and services (Attadjei, Madhwal, & Panfilov, 2018). There are three phases in any supply chain, which include strategy, planning, and operation. Supply chain strategy is a phase by which management makes important decisions concerning the prevailing and future market condition. A perfect example is the senior management of a particular company deciding to build a factory in a location where it will be easy to transport raw materials and the products. This is related to supply chain surplus regarding easy access to the products by the customers, which translates to higher sales and profits (Attadjei, Madhwal, & Panfilov, 2018). The other phase is supply chain planning, which involves making decisions depending on the trends of demand and supply. A good example is an organization conducting a research to understand customers’ demand. The phase is related to supply chain surplus because conducting such a research is important as it helps in determining the quantity of product to manufacture to minimize loss and maximize profit. Lastly, the supply chain operation is a phase where decisions are taken instantly within minutes, hours, or days. The main objective is to minimize uncertainty and optimize the performance. Amazon.com is one of the examples where this phase is apparent. In this company, customers make orders for products online. Marketing department takes orders and forward them to the production department, who respond to customer demand by sending them the ordered items through the appropriate medium (Attadjei, Madhwal, & Panfilov, 2018). This final phase is related to chain surplus in that companies that make instant decisions concerning customer orders are bound to have many customers, which translates to high revenue.
In a supply chain, all processes can be categorized into distinct macro procedures, and they i...