Introduction to Supply Chain Management, Transportation

Basic introduction to supply chain networks, with an example, and then a focused discussion of transportation and the supply chain.

A "supply chain" is a network of suppliers, materials, manufacturers, distributors, and customers. It becomes a "network" when there are multiple links or connections between various players or agents and levels in the "value chain" of the product.

This video defines the supply chain as a network. A simple network diagram is shown to demonstrate how quickly the supply chain can grow in complexity even though each individual position in the chain has only a few choices. An example of bottled pineapple juice is then used to demonstrate how the supply chain can quickly grow to cover long distances and many countries.

In the second half of the video, the importance of transportation to the network is argued by discussing how different transportation modes are significantly different from each other.

Transportation is presented as falling into one of four primary categories: air, road, sea, and rail. Each of these modes are characterized by cost, speed, fuel consumption, and their ability to serve specific locations.

Finally, the video comments on the relationship between transportation reliability, or variance, and inventory. Higher variance, less reliable, transportation leads to higher quantity, more expensive, inventory, and vice versa.