1. Supply Chain Management

2. Supply Chain
The sequence of organizations - their facilities, functions, and activities - that are involved in producing and delivering a product or service.
Supply chain connects suppliers, producers and final customers together in a tework that is essential to the creation and delivery of goods and services.
(Value chains are the chain of activities and functions WITHIN a single organization.)

3. Supply Chain Management (SCM)
The strategic coordination of the supply chain for the purpose of intergating supply and demand management.

4. Logistics
The part of a supply chain involved with the forward and reverse flow of goods, services, cash and information.
Movement within the facility
Incoming and outgoing shipments
Distribution

5. Facilities Warehouses Factories Processing centers
Distribution centers
Retail outlets
Offices …

6. Functions and Activities
Forecasting
Purchasing
Inventory management
Information management
Quality assurance
Scheduling
Production and delivery
Customer service

7. Key issues of SCM Determinate the appropriate level of outsourcing
Managing procurement
Managing suppliers
Managing customer relationships
Being able to quickly identify and respond to problems
Managing risks and uncertainty

8. Typical Supply Chains Purchasing Receiving Storage Operations
Production
Distribution

9. Typical Supply Chain for a Manufacturer
Supplier
Storage }
Mfg.
Dist.
Retailer
Customer

10. A farm-to-market supply chain
Farm (wheat)
Suppliers: equipment, repair, feed, seed, fertilizer, pesticides, energy/fuel
Mill (flour)
equipment, repair, energy
Bakery (bread)
equipment, repair, energy, other ingredients
Supermarket (bread sold to the final customer)
T r a n s p o r t

11. Typical Supply Chain for a Service
Supplier }
Storage
Service
Customer

12. Supply chain and Cash flow
Goods and services
Cash flow
Reverse logistics
Suppliers
Consumers
Marketing
Customers
Production
Design
Logistics

15. Elements of Supply Chain Management
Deciding how to best move and store materials
Logistics
Determining location of facilities
Location
Monitoring supplier quality, delivery, and relations
Suppliers
Evaluating suppliers and supporting operations
Purchasing
Meeting demand while managing inventory costs
Inventory
Controlling quality, scheduling work
Processing
Incorporating customer wants, mfg., and time
Design
Predicting quantity and timing of demand
Forecasting
Determining what customers want
Customers
Typical Issues
Element

16. Benefits of Supply Chain Management
Lower inventories
Higher productivity
Greater agility
Shorter lead times
Higher profits
Greater customer loyalty

17. Global supply chains Product design Products sold globally
Outsourcing to low labor cost countries
Difficulties: language, culture, currency fluctuations, increased tratnsportation costs and lead time, increased need for trust

18. PROCUREMENT
Purchasing is responsible for obtaining the materials, parts, and supplies and services needed to produce a product or provide a service. Goal: to develop and implement purchasing plans for products and services that support operations strategies. Duties:
Identifying sources of supply
Negotiating contracts
Maintaining a database of suppliers
Obtaining goods and services
Managing supplies
Purchasing cycle: series of steps that begin with a request for purchase and end with notification of shipment recieved in satisfactory condition.

19. Purchasing Cycle Requisition received Supplier selected
Legal
Accounting
Operations
Data
process-
ing
Design
Receiving
Suppliers
Requisition received
Supplier selected
Order is placed
Monitor orders
Receive orders

20. Centralized vs. Decentralized purchasing
Purchasing is handled by one special department
Lower prices, better service and closer attention from suppliers, employing specialists
Decentralized purchasing
Individual departments or separate locations handle their own purchasing requirements
Aware to different local needs, quicker response

21. Trade-offs Lot-size vs. inventory
Bullwhip effect
Inventory vs. transportation costs (reducing average costs)
Cross-docking
Lead time vs. transportation costs
Product variety vs. inventory
Delayed differentiation
Cost vs. customer service
Disintermediation

22. Trade-offs Bullwhip effect Cross-docking
Demand variations begin at the customer end of the chain and become increasingly large as they radiate backwards through the chain.
Inventories are progressively larger moving backward through the supply chain.
Cross-docking
Goods arriving at a warehouse from a supplier are unloaded from the supplier’s truck and loaded immediately onto outbound trucks. Avoids warehouse storage. Reduces holding costs and lead times.

23. Bullwhip Effect 1 (uncertainty)
Demand
Initial supplier
Final customer
Backward effect

24. Bullwhip Effect 2 = Amount of inventory Tier 2 Suppliers Tier 1
Producer
Distributor
Retailer
Final Customer

25. Trade-offs Delayed differentiation Disintermediation
Production of standard components and subassemblies, which are held until late in the process to add differentiating features (expl. automobiles produced without extras)
Disintermediation
Reducing one or more steps in a supply chain by cutting out one or more intermediaries.

26. Supply Chain Benefits and Drawbacks
Problem
Potential
Improvement
Benefits
Possible
Drawbacks
Large inventories
Smaller, more frequent deliveries
Reduced holding costs
Traffic congestion
Increased costs
Long lead times
Delayed differentiation
Disintermediation
Quick response
May not be feasible
May need absorb functions
Large number of parts
Modular
Fewer parts
Simpler ordering
Less variety in final products
Cost
Quality
Outsourcing
Reduced cost, higher quality
Loss of control (even on quality)
Variability
Shorter lead times, better forecasts
Able to match supply and demand
Less variety

27. Successful Supply Chain
Trust among trading partners
Effective communications
Supply chain visibility
Event-management capability
The ability to detect and respond to unplanned events (uncertainty)
Performance metrics

28. Thank you for your attention!