Supply Chain Management - Introduction
• Say we get an order from a European retailer to produce
10,000 garments. For this customer we might decide to
buy yarn from a Korean producer but have it woven and
dyed in Taiwan. So we pick the yarn and ship it to
Taiwan. The Japanese have the best zippers … so we
go to YKK, a big Japanese zipper manufacturer, and we
order the right zippers from their Chinese plants. …the
best place to make the garments is Thailand. So we
ship everything there. …the customer needs quick
delivery, we may divide the order across five factories in
Thailand. Effectively, we are customizing the value
chain to best meet the customer’s needs. (Interview of
Victor Fung of Li & Fung in HBR, Sept-Oct 1998.)
Supply Chain Management - Introduction
• A value chain is another name for a supply chain.
• A supply chain is a sequence of organizations - their
facilities, functions and activities - that are involved in
producing and delivering a product or service.
• Li & Fung is Hong Kong’s largest export trading
company. It has also been innovative in supply chain
management.
• In the interview example, it can be seen that Li & Fung
has created a supply chain for the purpose of meeting a
customer’s needs. In general, this case is more the
exception than the rule, but serves to illustrate some of
the pieces of a supply chain.
Supply Chain Management - Introduction
In a supply chain, virtually all of the members serve as
both customers as well as suppliers. In the Li & Fung
example, the Korean yarn producer and the Japanese
zipper producer are probably only suppliers and the
customer’s customers (folks like you and me) are
probably only customers. Every other organization in the
supply chain is both a customer and a supplier. See the
figure on slide five (green - supplier, yellow - customer,
orange - both).
Supply Chain Management - Introduction
Supplier
Supplier
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