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APICS Operations Management Body of Knowledge Framework, Third Edition

Supply Chain

Current ideology behind the supply chain is to apply a total systems approach to designing and managing the entire flow of information, materials, and services from raw materials suppliers, through factories and warehouses, and finally to the customer. The term "supply chain" comes from the visual representation of how organizations are linked together as viewed from a particular company. The chain has many links, such as those between suppliers that provide inputs, links to manufacturing and service support operations that transform the inputs into products and services, and the distribution and service providers that localize the product.

3.1 Responsiveness, agility, and efficiency

Responsiveness is the ability of the supply chain to meet the changing and diverse needs of customers. Agility refers to the ability of a firm to manufacture and deliver a broad range of high-quality products and services with short lead times and varying volumes to provide enhanced value to customers. Efficiency refers to the ability to do this at low cost.

Typically, there is a trade-off between such factors as cost and speed of delivery. For example, a firm's ability to efficiently deliver a broad range of products at low cost depends on the relative certainty of supply and demand. The stable supply base and relatively predictable demand associated with commodities enables an efficient supply chain. At the other extreme, firms that produce innovative products with short life cycles using the latest technologies need a more agile supply chain.