Supply Chain Management Def: Supply Chain What is Supply Chain Management? Strategic Importance of SCM Purchasing Operations/Materials Management Marketing and Customer Service Uncertainty In Supply Chain & Some Solutions Supply Chain Design Accounting and Finance

Supply Chain Facilities, functions, activities for producing & delivering product or service from supplier to customer Planning, managing, acquiring, producing, warehousing, distribution, delivery

What is Supply Chain Management? Manufacturer or Service Provider Supplier Customer Scheduling Information Cash Flow Order Flow Credit Flow Material Flow Inv. Customer Marketing/ Sales/ Cust. Serv. Purchasing- Vendors Operations/ Materials Man. Accounting and Finance

Strategic Importance of SCM Deals w/the complete cycle of materials flows SCM plays key role in Product customization Quality control Cost reductions Speed-to-market Effective SCM is to balance the production stream with uncertainty (customer, supplier, economic, etc.)

Purchasing Why Important? Substantial % of sales, both goods and services e.g., Industry % of Sales All 54% Lumber 60% Food 63% Petroleum 83% Quality of goods and services produced are directly related to those purchased/received

Purchasing Selecting suppliers Ordering materials Shipping & delivery of raw materials Information management Quality management - w/regard to suppliers Customer service - w/regard to suppliers and fellow workers

Operations/Materials Management Ordering materials - in conjunction w/purchasing Inventory control Scheduling production & capacity Shipping & delivery - in conjunction w/warehouse Information management - linked to 3 major business areas Quality management - garbage in/garbage out principal Customer service - vendors and final customer

Marketing and Customer Service Forecasting demand Selecting suppliers - in conjunction w/purchasing Shipping & delivery - contract requirements Information management Quality management - first place customer complaints and/or compliments Customer service - make the sale next time?

Uncertainty In Supply Chain Wrong forecasts Late deliveries Poor quality Machine breakdowns Canceled orders Erroneous information

Some Solutions Vertical integration Single sourcing JIT - moving suppliers closer Keiretsu - Japanese concept of partnering a small # of suppliers and vertical integration Information technology improvements- MRP, ERP Improved inventory control - goods as well as services

Supply Chain Design Strategic issue Apply quality management principles Control inventory Work with suppliers & customers to achieve goals Major goal of distribution is speed Locate close to major markets Use IT to speed information flow - e.g., EDI, Internet, etc. Outsource international distribution

Summary Def: Supply Chain What is Supply Chain Management? Strategic Importance of SCM Purchasing Operations/Materials Management Marketing and Customer Service Uncertainty In Supply Chain & Some Solutions Supply Chain Design Accounting and Finance