INTRODUCTION TO SUPPLY CHAIN MANAGEMENT Chapter 1 INTRODUCTION TO SUPPLY CHAIN MANAGEMENT

Disclaimer These slides do not replace the prescribed material. All prescribed material need to be studied for assignment and examination purposes Some of the slide content is based on the 2015 Cengage Learning Instructor resources.

Chapter Outline Introduction Supply Chain Management Defined The Importance of Supply Chain Management The Origins of Supply Chain Management in the U.S. The Foundations of Supply Chain Management Current Trends in Supply Chain Management

What is a Supply Chain? Also see the list of definitions in your tutorial letter 101 A supply chain consists of the flow of products and services from: Raw materials manufacturers Component and intermediate manufacturers Final product manufacturers Wholesalers and distributors and Retailers Connected by transportation and storage activities, and Integrated through information, planning, and integration activities Many large firms are moving away from in-house Vertically Integrated structures to Supply Chain Management

What is a Supply Chain? (continued)

What is Supply Chain Management?

What is Supply Chain Management? (continued) Old paradigm - Firm gained synergy as a vertically integrated firm encompassing the ownership and coordination of several supply chain activities. Organisational cultures emphasised short-term, company focused performance. New paradigm - Firm in a supply chain focuses activities in its area of specialisation and enters into voluntary and trust-based relationships with supplier and customer firms.

Importance of Supply Chain Management For supply chain management to be successful firms must work together by sharing information on things like Demand forecasts Production plans Production changes New marketing strategies New technologies employed Purchasing plans Delivery dates

Importance of Supply Chain Management (continued) Firms using Supply Chain Management: Start with key suppliers Move on to other suppliers, customers, and logistics services Integrate second tier suppliers and customers (second tier refers to the customer’s customers and the supplier’s suppliers) From the case study When considering the case study, one notices the significance of supply chain management in a global organisation like Starbucks. When Starbucks’ management wanted to investigate where their costs were coming from, they did not consult the financial department, but instead appointed a new supply chain manager to investigate the situation. This manager was able to increase operational efficiency and cut costs by realigning the supply chain with Starbucks’ organisational goals.

The Four Foundations of Supply Chain Management Supply base reduction, supplier alliances, SRM, global sourcing, ethical and sustainable sourcing (Ch. 2-4) Operations Demand management, CPFR, inventory management, MRP, ERP, lean systems, Six Sigma quality systems (Ch. 5-8) Not covered in MNP2602 Logistics Logistics management, customer relationship management, network design, RFID, global supply chains, sustainability, service response logistics (Ch. 9-12) Integration Barriers to integration, risk and security management, performance measurement, green supply chains (Ch. 13,14) ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

The Four Foundations of Supply Chain Management (continued) Supply Elements:

The Four Foundations of Supply Chain Management (continued) Operations Elements: Operational elements can have a critical impact on the success of any supply chain because they determine the efficiency and effectiveness with which the assembly or processing of items into finished products occurs, ensuring that the right number of finished products are produced which meet specific quality, cost and customer service requirements. Demand management - match demand to available capacity Linking buyers & suppliers via MRP and ERP systems Use lean systems to improve the flow of materials to reduce inventory levels Employ Six Sigma to improve quality compliance among suppliers ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Logistics Elements:

The Four Foundations of Supply Chain Management (continued) Integration Elements: Supply Chain Process Integration - when supply chain participants work to achieve common goals. This requires intra-firm functional integration, with efforts to change attitudes & Supply Chain Performance Measurement - Crucial for firms to know if procedures are working as expected. Also to ensure all functions are working to achieve a common goal. High level supply chain performance will occur when strategies at each firm fit well with overall supply chain strategies

Current Trends in Supply Chain Management -Shrinking the supply chain -Managing supply chain risk -Increasing Supply Chain Visibility

Activity