1. Supply Chain management
Dr M. TUKUTA

2. 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).)

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

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

5. 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

6. 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

7. 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)

8. 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.

9. 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

10. 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

11. 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

12. Processes involved in a supply chain
Cycle view

13. 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

14. 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)