Supply Chain management Dr M. TUKUTA

Lesson 2: understanding the supply chain Supply chain management Concerned with the coordinated flow of materials and services from origins through suppliers into and through the organisation and unto the ultimate consumer Also included are funds and information (Bailey et al (2008).)

understanding the supply chain The supply chain has various actors and these might be: suppliers suppliers manufacturers Customers Retailers distributors

understanding the supply chain In the past, the 3 fundamental stages of the supply chain were managed independently Characterized by large inventories

understanding the supply chain Current scenario: firms are integrating the 3 stages of the supply chain Reasons for integration include Increasing competitive pressures leading firms to reduce costs Market globalisation

Understanding the supply chain Objective of a supply chain To maximize overall value generated To minimize costs Value is the difference between what the final product is worth to the customer and the cost the supply chain incurs in filling the request

Understanding the supply chain Importance of supply chain decisions A connection between design and management of supply chains and its success has been noticed Examples of successful supply chains that have a better design and are well managed are such as Walmart and Dell Computers Examples of failed ones are Webvan and Quaker oats and Snapple (1994)

Decision Phases in a supply chain Successful supply chain management requires many decisions The decisions fall into 3 phases as below, and dependent on the frequency of each decision and the time frame involved: The supply chain strategy or design; Supply chain planning; and Supply chain operations.

Decision Phases in a supply chain Supply chain strategy or design (long term) Configuration should support strategic objectives and should ensure supply chain surplus (profitability) Considers resource allocation Processes to be performed at each stage Make or buy decisions Location of products and warehousing Products to be manufactured and storage Mode of transportation Information system type

Decision Phases in a supply chain Supply chain planning (medium term, quarter to a year) Establishes constraints within which planning should be done Forecasts of the year Decisions on which markets will be supplied from which location Subcontracting decisions Inventory policies to be followed Timing & size, & price of market promotion

Decision Phases in a supply chain Supply chain operations (short term; weekly or daily) Decisions are over individual orders; Supply chain considered fixed, planning policies are already defined; Allocation of inventory or production to individual orders Dates assigned to fulfillment of orders; Orders are allocated particular shipment Delivery schedules for trucks Replenishment orders etc

Processes involved in a supply chain Cycle view

Processes involved in a supply chain Processes of a supply chain are divided into a series of cycles, each performed at the interface between two stages of a supply chain Each cycle consists of six sub processes Not every supply chain will have all the cycles clearly separated

Processes involved in a supply chain Push/Pull view The Push/pull view suggests that all processes in a supply chain can either be a push or a pull Push Speculative (demand not known Pull Reactive (demand known)