Supply Chain Management (SCM) Basics What is SCM? Why is it important? SC Decisions SC Strategies SC and IT Compiled by: Alex J. Ruiz-Torres, Ph.D. From information developed by many.

What is SCM? Design, management and control of the systems and processes related to the movement of materials and products from suppliers to manufacturers, then from manufacturers to distributors, and then to the customer. It includes the flow of information and funds. The term logistics management is used as a synonym to SCM.

What is SCM? Manufacturing (internal) Distribution (internal) (external) Suppliers (external) Customers (external)

What is SCM? Selecting Suppliers. Managing the flow of goods from suppliers including transportation and customs (importing). Also called Inbound logistics. Suppliers (external)

What is SCM? Coordinating with the Production Planning and Manufacturing elements. Right supplies. Right production to meet customer needs. Manufacturing (internal) Suppliers (external)

What is SCM? Flow to the Distribution centers Flow to the customers as to meet their demand Also known as Outbound logistics Manufacturing (internal) Distribution (internal) Distribution (external) Customers (external)

What is SCM? SCM is also about information flow What is needed? Where is the product? Products also flow back into the network (returns). Information and funds Returns

What is SCM? Not all SCs are the same Stores

What is SCM? Not all SCs are the same Retailer Stores

What is SCM? Not all SCs are the same Retailer Hospital Stores

What is SCM? Not all SCs are the same Retailer Hospital Make to order Stores

Why is SCM Important? Everything you consume /use was enabled by SCM. THE BACKBONE OF MOST BUSINESSES! Efficient SCM makes it possible for organizations to provide the products and services in a competitive way. Allows international trade and the use of economies of scale, scope, and location. Green SCM focuses on the flow of goods in such a way the effect on the environment is minimized.

Supply Chain Decisions Three decision levels Strategic: Long term planning 1+ years into the future Tactical: Medium term planning Next 3 months to a year Operational: Short term planning: Today, tomorrow, next week, next 1-3 months short term planning

Supply Chain Decisions Strategic Facility location: where to locate new factories, and warehouses (or which ones to expand, which ones to close down). Strategic partnership with suppliers, distributors, and customers. Supplier development. Information Technology infrastructure to support supply chain operations. Where-to-make and what-to-make-or-buy decisions (outsourcing).

Supply Chain Decisions Tactical Sourcing contracts and other purchasing decisions. Production decisions, including contracting, locations, scheduling, and planning process definition. Inventory decisions, including quantity and location of inventory. Transportation strategy, including frequency, routes, and contracting.

Supply Chain Decisions Operational Short term production and distribution plans for each plant/ area (daily/weekly production schedules). Inbound operations, including transportation from suppliers and receiving inventory. Inventory tracking and reordering. Outbound operations, including all fulfillment activities and transportation to customers. Order promising, when can an order make it to the customer. Customs and other international trade issues.

Supply Chain Strategies Similar to others previously described for services and manufacturing Responsive: fast delivery. Flexible: makes a high variety of products in variable amounts as requested by the customer. Reliable: delivers when it promised. Efficient: provides the product at a low cost. As before, there are tradeoffs. A SC cannot be all of these at the same time.

Supply Chain Specialization Model Creates manufacturing and distribution networks composed of multiple, individual supply chains specific to products/customers. These SCs work together to design, manufacture, distribute, market, sell, and service a product. The set of partners may change according to a given market, region, or channel with its own unique characteristics and demands.

Supply Chain Specialization Model For example. XYZ Company makes two families of washers/dryers: Economy Luxury They are designed by different teams. They use different components and suppliers. Low cost for the Economy product family. High quality and technology for Luxury product family. Made in different locations. Stored in different areas of the distribution centers with different levels of customer service. Thus each family has its own Specialized SC.

SC and Info Technology Information technology plays a key role in Supply Chain Management. ERP = Enterprise Resource Planning Systems ERP are information technology systems that integrate most functional elements of the enterprise including: Customer orders and demand Suppliers and production Transportation, Warehouses, Inventories Accounts payable and other financials Human resources Customer Returns