Supply Chain Management

-Introduction

TIP FTP UB 2015

What is a supply chain?

A supply chain consists of all parties involved, directly

or indirectly, in fulfilling a customer request

A supply chain is dynamic and involves the constant
flow of information, product, and funds between
different stages
A supply chain stages include:

Customers
Retailers
Wholesalers/distributors
Manufacturers
Component/raw material suppliers

Supply Chain Stages

VISA

Material Flow Credit Flow

Supplier Manufacturing
Supplier

Retailer

Consumer

Wholesaler

Retailer

Schedules Order
Flow

Cash
Flow

Flows in a Supply Chain

Ex. : Stages of SCM at P&Gs

Detergent Product

Customer

Timber
Company

Paper
Manufacturer

Packaging
Corporation

Department
Store

Third Party
DC

P&G
Manufacturer

Chemical
Manufacturer

Plastic
Producer

What is a supply chain? (cont.)

Planning, organizing, directing, &

controlling flows of materials

Begins with raw materials

Continues through internal operations
Ends with distribution of finished goods

Involves everyone in supply-chain

Example: Your suppliers supplier

Objective: Maximize value & lower

waste

Why supply chain?

Local market, local supply vs. global market, global

sourcing.
Global competition.
Shorter product life.
Higher customer expectation

Rate of change in technology

Information & communication systems
Variety of transportation modes

All these factors lead to an increase in challeges to

reduce costs & Supply Chain Management provides the
opportunity.

Past paradigm of SCM

New paradigm of SCM

Decision phases in a
supply chain
Supply chain strategy or design long term

decision

Decide what the chains configuration

How resources will be allocated
What processes each stage will perform
Strategic decisions
The location & capacities of production &
warehouse
Modes of transportation
Type of information system

Supply Chain :
Planning and Operation
Supply chain planning quarter to a year

Forecast for coming year

Which market will be supplied from which location
Subcontracting or manufacturing
Inventory policies
Timing and size of marketing
Promotion

Supply chain operation short term decision

Allocate inventory or production to individual orders

Date of order to be filled
Shipping mode
Delivery schedule
Replenishment order

Process view of a supply chain

Cycle view
The processes in SC are divided into a series of cycle, each
performed at the interface between two successive stages of a
SC

Push/pull view
The processes in SC are divided into two categories:
Pull process:
Initiated by customer orders reactive process
Customer demand is known

Push process:
Initiated and performed in anticipation of customer orders
speculative process
Operate in an uncertain environment customer demand is not
yet known

Cycle view of SC processes

Customer
Customer Order Cycle

Retailer
Replenishment Cycle
Distributor
Manufacturing Cycle
Manufacturer
Procurement Cycle
Supplier

Sub-processes in each SC process cycle

Supplier stage
markets product

Buyer return
reserve flows to
supplier/third party

Buyer stage
places order

Supplier stage
receives supply

Supplier stage
receives order

Supplier stage
supplies order

Push/pull view of SC processes

Example for make to stock environment

Customer
PULL
PROCESSES

Customer Order Cycle

Customer order
arrives

Clothes Company
Replenishment Cycle &
Manufacturing Cycle

PUSH
PROCESSES

Manufacturer

Procurement Cycle
Supplier

Push/pull view of SC processes

Example for make to order environment

Customer
PULL
PROCESSES

Customer Order &

Manufacturing Cycle

Customer order
arrives
PUSH
PROCESSES

DELL Company

Procurement Cycle

Supplier

Supply chain macro processes

in a firm
Supplier
Supplier Relationship
Management (SRM)

Source
Negotiate
Buy
Design Collaboration
Supply Collaboration

Firm
Internal Supply
Chain Management
(ISCM)

Strategic planning
Demand planning
Supply planning
Fulfillment
Field service

Customer
Customer
Relationship
Management (CRM)

Market
Price
Sell
Call centre
Order management

Supply chain decision making framework

Competitive
Strategy
Strategic
Fit
Supply Chain
Strategy
Efficiency

Responsiveness
Supply Chain Structure

Facilities

Inv & trans.

Sourcing&Pricing

Drivers

Info system