SUPPLY CHAIN

• A supply chain consists of the flow of products and services from:

  – Raw materials manufacturers

  – Intermediate products manufacturers

  – End product manufacturers

  – Wholesalers and distributors and

  – Retailers
• Supply chain management contributes to business success by optimizing the flow of goods, reducing costs, improving customer satisfaction, and enhancing overall efficiency and profitability.
• SUPPLY CHAIN

  
• The supplyy Chain is connected by transportation and storage activities, and Integrated through information, planning, and integration activities.
• DEFINITION OF SUPPLY CHAIN MANAGEMENT

  Institute for Supply Management

  "The design and management of seamless, value-added process across organizational boundaries to meet the real needs of the end customer"
• DEFINITION OF SUPPLY CHAIN MANAGEMENT

  The Supply Chain Council

  "Managing supply and demand, sourcing raw materials and parts, manufacturing and assembly, warehousing and inventory tracking, order entry and order management, distribution across all channels, and delivery to the customer"
• OLD PARADIGM- - Firm gained synergy as a vertically integrated firm encompassing the ownership and coordination of several supply chain activities.
• NEW PARADIGM- Firm in a supply chain focuses activities in its area of specialization and enters into voluntary and trust-based relationships with supplier and customer firms.
• IMPORTANCE OF SUPPLY CHAIN MANAGEMENT

  WHO BENEFITS THE MOST? Firms with:

  • Large inventories
  • A large number of suppliers
  • Complex products
  • Customers with large purchasing budget
• IMPORTANCE OF SUPPLY CM.

  FIRMS WITH SUPPLY CM.

  1. Start with key suppliers
  2. Move on to other suppliers, customers, and shippers 3. Integrate second tisecond-tierr suppliers and customers (second tier refers to the customer’s customers and the supplier’s supplier
• IMPORTANCE OF SUPPLY CM.

  • Reduced Bullwhip Effect- the magnified reduction of safety stock costs based on coordinated planning and sharing of information
  • Process Integration- Interdependent activities can lead to improved quality, reduced cycle time, better production methods, etc
• ORIGINS OF SUPPLY CM.

  • 1950s & 1960s U.S. manufacturers focused on cost reduction and productivity improvement strategies
  • 1960s-1970s Introduction of new computer technology leads to development of Materials Requirements Planning (MRP) to coordinate inventory management.
  • 1980s & 1990s Intense global competition led U.S. manufacturers to adopt Supply Chain Management along with Just-In-Time (JIT), Total Quality Management (TQM), and Business Process Reengineering (BPR) practices
• HISTORIC SCM EVENTS

  
• IMPORTANT ELEMENTS OF SCM.

  • PURCHASING
  • OPERATIONS
  • DISTRIBUTIONS
  • INTEGRATION
• • PURCHASING - Supplier alliances, supplier management, strategic sourcing
• • OPERATIONS - Demand management, MRP, ERP, JIT, TQM
• • DISTRIBUTION - Transportation management, customer relationship management, network design, service response logistics.
• • INTEGRATION - Coordination/Integration activities, global integration problems, performance measurement.
• Purchasing- Trends:

  • Long term relationships

  • Supplier management

  -Supplier evaluation

  -Supplier certification

  • Strategic partnerships
• • Supplier management- improve performance through

  -Supplier evaluation (determining supplier capabilities)

  -Supplier certification (third-party or internal certification to assure product quality and service requirements
• • Strategic partnerships- successful and trusting relationships with top-performing suppliers.
• Distribution- Trends:

  • Transportation management
  • Customer relationship management
  • Network design
• • Transportation management- tradeoff decisions between cost & timing of delivery/customer service via trucks, rail, water & air
• • Customer relationship managementstrategies to ensure deliveries, resolve complaints, improve communications, & determine service requirements.
• • Network design- creating distribution networks based on tradeoff decisions between cost & sophistication of distribution system.
• Integration Trends:

  -Supply Chain Integration

  -Global Supply Chains

  -Supply Chain Performance Measurement
• • Supply Chain Integration- when supply chain participants work for common goals. Requires intrafirm functional integration. Based on efforts to change attitudes & adversarial relationship
• • Global Supply Chains- advantages that accrue from sourcing from the larger global markets e.g., lower cost & higher quality suppliers. May involve operating exposure, which is risa found in foreign settings.
• • Supply Chain Performance Measurement- Crucial for firms to know if procedures are working.
• FUTURE TRENDS IN SCM.

  Expanding the Supply Chain

  • U.S. firms are expanding partnerships and building facilities in foreign markets.

  The expansion involves:

  • breadth- foreign manufacturing, office & retail sites, foreign suppliers & customers

  • depth- second and third tier suppliers & customers
• Increasing Supply Chain Responsiveness

  • Firms will increasingly need to be more flexible and responsive to customer needs
  • Supply chains will need to benchmark industry performance and meet and improve on a continuous basis
  • Responsiveness improvement will come from a more effective and faster product & service delivery system
• Supply chain management is the integration of key business processes from initial raw material extraction to the final or end customer.
• Supply chain management is an outgrowth and expansion of logistics and purchasing activities and has grown in popularity and use since the 1980s.
• Reducing Supply Chain Costs

  
  

  Cost reduction achieved through:

  • Reduced purchasing costs
  • Reducing waste
  • Reducing excess inventory
  • And reducing non-value added activities
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  • Continuous Improvement through
  • Benchmarking- improve over competitors’ performance
  • Trial & error
  • Increased knowledge of supply chain process