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Integrated Supply Chain Management
Optimizing Logistics Support

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ntegrated supply chain management is a proven business strategy that has gained wide acceptance in recent years due to increasing customer

demands for quality, delivery, and speed. New and radical ways of communicating, coupled with cost reduction and more interdependent supplier, provider, and customer relationships,have contributed to the emergence of an integrated supply chain approach.

http://www.dod.mil/comptroller/icenter/learn/iscm.htm

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Integrated Supply Chain Management: Optimizing Logistics Support

Supply chains can exist in both manufacturing and service organizations, and they are principally concerned with the flow of products and information between supply chain memberorganizations—procurement of materials, transformation of materials into finished products, and distribution of those products to end customers. Today’s information-driven, integrated supply chains are enabling organizations to reduce inventory and costs, add product value, extend resources, accelerate time to market, and retain customers.

Today’s information-driven, integrated supply chains are strategic assetsthat support innovative warfighting capabilities— enabling organizations to reduce inventory, add product value, extend resources, accelerate time to market, and retain customers.

A Well-Run Household
An integrated supply chain is similar to maintaining an efficient household. Households are equipped with items, such as stoves, refrigerators, washing machines, etc., that require maintenanceand repair, and may eventually obsolesce. Other consumable items, such as clothing and food, require frequent replenishing. Heads-of-households must continually decide which items should be purchased when. These decisions are affected by past use, known and anticipated needs, changes in cost and availability, budgetary constraints, and other factors. Because household money is spread out over agiven period, expenditures must be thoughtful and prudent to get the most value for every dollar spent.

DoD logistics programs and operations totaled approximately $84 billion in FY2000, accounting for close to one-third of the Department’s budget. This rivals the cumulative operations of the 10 largest corporations worldwide.

The business supply chain, although more complex, works in much thesame way. Every step in the process, from identifying a customer need to final consumption, is an opportunity to save money, extend longevity, and enhance the effectiveness of goods and services.

The Heart of Supply Chain Management
“Delivering the right product to the right place at the right time and at the right price.”

The Impact of Supply Chain Management
When applied in the privatesector, supply chains have demonstrated superior customer responsiveness at about half the cost. Industry

http://www.dod.mil/comptroller/icenter/learn/iscm.htm

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experts estimate that supply chain costs approach 75% of an organization’s total operating budget. Effective management of the supply chain not only improves the flow of materials from the end-user perspective, but it also reduceslogistics costs. In the public sector, integrated supply chains play a critical role in optimizing logistics support and in improving management of secondary inventory. Secondary items include reparable parts—expensive items such as hydraulic pumps and navigational computers that can be fixed and used again, spare parts that support weapons systems, and commodities such as subsistence, medicalmateriel, and clothing.

Integrated Supply Chain Management: Optimizing Logistics Support

“Logistics is that part of the supply chain process that plans, implements, and controls the efficient, effective flow and storage of goods, services, and related information from the point of origin to the point of consumption in

order to meet customers’ DoD logistics systems, often referred to as...
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