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The supply chain refers to the network of plants and vendors that supply raw material, components, and services to another.
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Because of the dependency on outside suppliers, one approach to SCM is to establish safety lead times based on purchasing time and balanced to account for inventory costs.
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The amount of safety lead time needed increases when we have more components externally supplied.
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Reliable suppliers are extremely important to efficient operation of an assembly system that involves multiple purchased parts.
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Having fewer vendors providing multiple parts might produce better on-time performance than having many vendors providing single parts
- Purchases become a larger percentage, and therefore a higher-priority piece of the supplier’s business.
- Easier to keep track of suppliers if there are fewer of them.
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Since delivery times for different parts may vary even with the same supplier, it makes sense to schedule them differently.