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Supply Chain Management

Dr. Md. Mamunur Rashid, 2014

Supply Chain Management


Contents :

Fundaments
The four interrelated flows in SCM
Strategic SCM
Time-based Competition
Other important factors in SCM
Supply Chain Profit Leverage
Greening the Supply Chain
The reprocessing flow
Greening the Supply Chain:
The 5 Rs of reprocessing
The sustainable Supply Chain
Dr. Md. Mamunur Rashid, 2014

Supply Chains

Supply
SupplyChain
Chain

Dr. Md. Mamunur Rashid, 2014

The connected chain of


all of the business
entities, both internal
and external to the
company, that perform or
support the logistics
function.

Supply Chain

Supply Chain is a set of activities:

purchasing,

manufacturing,

logistics,

distribution,

marketing,

that perform the function of

delivering value to end customer.


Dr. Md. Mamunur Rashid, 2014

Supply Chains

Supply
SupplyChain
Chain
Management
Management

Dr. Md. Mamunur Rashid, 2014

A management system that


coordinates and integrates
all of the activities
performed by supply chain
members into a seamless
process, from the source to
the point of consumption,
resulting in enhanced
customer and economic
value.

Supply Chain Paradigms

Functional: departments (procurement, operations,


design) are weakly connected.
Procurement: (supply side of SC) e.g. a company might
want to consolidate their demand for supplies. This
paradigm involves partnering with a supplier
Logistics: (downstream side of SC) e.g. consolidation of
outbound activities: warehousing, distribution centers
support
Information: ensuring information flow between
member of SC.
Dr. Md. Mamunur Rashid, 2014

Components of Supply Chain


Management
There are five basic components for supply
chain management, these are:

1. Plan: This is the strategic portion of supply chain


management. This strategy need for managing all
the resources that go toward meeting customer
demand for product or service
2. Source: Choose the suppliers that will deliver the
goods and services to create new product or service.

Dr. Md. Mamunur Rashid, 2014

Components of SCM (cont)

3.Make: This is the manufacturing step. Schedule the


activities necessary for production, testing, packaging and
preparation for delivery
4. Deliver: This is the part that many insiders refer to as
"logistics." Coordinate the receipt of orders from
customers, develop a network of warehouses.
5. Return: The problem part of the supply chain.
Create a network for receiving defective and excess
products back from customers and supporting
customers who have problems with delivered products.
Dr. Md. Mamunur Rashid, 2014

Supply Chain Planning Processes


Material Requirement Planning
Component
Requirement

Supplier

Demand Forecasting
Demand Planning

Production
Plan

Plant

Warehouse

Order Management
Dr. Md. Mamunur Rashid, 2014

Logistics

Retailer

Supply Chain Decisions


There are four major decision areas in supply chain
management:
1. Location Decisions: The geographic placement of
production facilities, stocking points, and sourcing points
is the natural first step in creating a supply chain.

2.Production Decisions: The strategic decisions


include what products to produce, and which plants to
produce them in, allocation of suppliers to plants,
plants to DC's, and DC's to customer markets.
Dr. Md. Mamunur Rashid, 2014

Supply Chain Decisions(cont)


3. Inventory Decisions: These refer to means by which
inventories are managed. Inventories exist at every stage
of the supply chain as either raw materials, semifinished or finished goods.

4.Transportation Decisions: The mode choice aspect of


these decisions are the more strategic ones. These are
closely linked to the inventory decisions.

Dr. Md. Mamunur Rashid, 2014

The Time Paradigm for Time


Based Competition

Competitive advantage: Provide the most


value to the customer at the lowest cost in the
least amount of time.
Aimed at minimizing the time it takes to
deliver a product or service to the customer.
Rapid response enables companies to quickly
redirect their value-delivery systems to the
most attractive customers
Dr. Md. Mamunur Rashid, 2014

Supply Chain Managers

The philosophy behind supply chain


management is that by visualizing the entire
supply chain, supply chain managers can
maximize strengths and efficiencies at each
level of the process to create a highly
competitive, customer-driven supply system
that is able to respond immediately to changes
in supply and demand.
Dr. Md. Mamunur Rashid, 2014

Supply Chain Management


Communicator
Communicator of
of customer
customer demand
demand
from
from point
point of
of sale
sale to
to supplier
supplier

Physical
Physical flow
flow process
process that
that engineers
engineers the
the
movement
movement of
of goods
goods

Dr. Md. Mamunur Rashid, 2014

Benefits of Supply
Chain Management

Supply chain oriented companies commonly report:


Lower inventory, transportation, warehousing,
and packaging costs
Greater supply chain flexibility
Improved customer service
Higher revenues
Increased performance and profitability

Dr. Md. Mamunur Rashid, 2014

Four Interrelated Flows of SCM


Management
Systems
Strategic
Decisions

Product
Design
Decisions

Measurement
Decisions

Reward
Decisions

Product
Decisions
Price
Decisions

Logistics
Systems

Process
Design
Decisions

Dr. Md. Mamunur Rashid, 2014

Engineering
Systems

Promotion
Decisions
Place (How,
where, how
much)

Inventory
Decisions

Production
Capacity
Decisions

Transportation
Decisions

Production
Scheduling
Decisions

Sourcing
Decisions

Shop Floor
Decisions

Marketing
Systems

Manufacturing
Systems

Supply Chain Integration


Relationship
Relationship Integration
Integration

Firm-to-Firm
Firm-to-Firm Social
Social
Interactions
Interactions

Measurement
Measurement
Integration
Integration
Technology
Technologyand
and
Planning
PlanningIntegration
Integration

Operational
Operational
Planning
Planning and
and
Control
Control

Material
Material and
and Service
Service
Supplier
Supplier Integration
Integration
Internal
InternalOperations
Operations
Integration
Integration

Customer
CustomerIntegration
Integration
Dr. Md. Mamunur Rashid, 2014

Customer
CustomerIntegration
Integration

Supply Chain Integration


Relationship
Relationship
Integration
Integration

Measurement
Integration

Dr. Md. Mamunur Rashid, 2014

The
The ability
ability of
of two
two or
or more
more
companies
companies to
to develop
develop social
social
connections
connections that
that serve
serve to
to guide
guide
their
their interactions
interactions when
when working
working
together.
together.
The performance assessment of the
supply chain as a whole that also
holds each individual firm or
business unit accountable for
meeting its own goals

Supply Chain Integration


Technology and
planning
integration

Material and
service supplier
integration

Dr. Md. Mamunur Rashid, 2014

The creation and maintenance of


information technology systems that
connect managers across and
through the firms in the supply chain

Requires firms to link seamlessly to


those outsiders that provide goods and
services to them so that they can
streamline processes and provide
quality customer experiences.

Supply Chain Integration


Internal
Operations
Integration

Links internally performed work into a


seamless process that stretches across
departmental
and/or
functional
boundaries, with the goal of satisfying
customer requirements

Customer
Integration

A competency that enables firms to offer


long-lasting, distinctive, value-added
offerings to those customers who
represent the greatest value to the firm
or supply chain

Dr. Md. Mamunur Rashid, 2014

Key Business Processes

1.
2.
3.
4.
5.
6.
7.
8.

Customer relationship management


Customer service management
Demand management
Order fulfillment
Manufacturing flow management
Supplier relationship management
Product development and commercialization
Returns management

Dr. Md. Mamunur Rashid, 2014

Customer Relationship
Management

Customer
Customer
Relationship
Relationship
Management
Management
(CRM)
(CRM)Process
Process

Dr. Md. Mamunur Rashid, 2014

Allows companies to
prioritize their marketing
focus on different customer
groups according to each
groups long-term value to
the company or supply chain

Customer
Service Management

Customer
Customer
Service
Service
Management
Management
Process
Process

Dr. Md. Mamunur Rashid, 2014

Presents
a
multicompany,
unified
response system to the
customer
whenever
complaints, concerns,
questions,
or
comments are voiced

Demand Management

Demand
Demand
Management
Management
Process
Process

Dr. Md. Mamunur Rashid, 2014

Seeks to align supply and


demand throughout the supply
chain by anticipating customer
requirements at each level and
create demand-related plans
of action prior to actual
customer purchasing behavior

Order Fulfillment

Order
Order
Fulfillment
Fulfillment
Process
Process

Dr. Md. Mamunur Rashid, 2014

A highly integrated process,


often requiring persons from
multiple
companies
and
multiple functions to come
together and coordinate to
create customer satisfaction
at a given place and time

Manufacturing Flow
Management

Manufacturing
Manufacturing
Flow
Flow
Management
Management
Process
Process

Dr. Md. Mamunur Rashid, 2014

Concerned
with
ensuring that firms in
the supply chain have
the needed resources to
manufacture
with
flexibility and to move
products through a
multi-stage production
process

Supplier Relationship Management

Supplier
Supplier
Relationship
Relationship
Management
Management
Process
Process

Dr. Md. Mamunur Rashid, 2014

Closely related to the


manufacturing
flow
management process and
contains
several
characteristics that parallel
the customer relationship
management process

Product Development and


Commercialization

Includes the group


activities that
facilitates the joint
Product
Product
Development
Development and
and development and
Commercialization
Commercialization marketing of new
Process
Process
offerings among a
group of supply
chain partner firms
Dr. Md. Mamunur Rashid, 2014

Returns Management

Returns
Returns
Management
Management
Process
Process

Dr. Md. Mamunur Rashid, 2014

Enables firms to manage


volumes
of
returned
product efficiently, while
minimizing returns-related
costs and maximizing the
value of the returned
assets to the firms in the
supply chain

Logistics
Logistics is

the process of strategically managing the


efficient flow and storage of raw materials,
in-process inventory, and finished goods
from point of origin to point of
consumption.

Dr. Md. Mamunur Rashid, 2014

DEFINITION OF LOGISTICS

.is that part of the supply chain process that plans,


implements, and controls the efficient, effective flow
and storage of goods, services, and related information
from the point-of-origin to the point-of-consumption in
order to meet customers' requirements.

Council of Logistics Management, 1998;


www.CLM1.org

Dr. Md. Mamunur Rashid, 2014

Management actions
Planning

Implementation

Outputs of
logistics

Control

Inputs into logistics


Natural resources
(land, facilities,
and equipments)

Logistics management
Suppliers

Raw
In-process
materials inventory

Finished
goods

Customers

Human resources

Financial
resources

Information
resources

Components of
logistics
management :
Dr. Md. Mamunur Rashid, 2014

Logistics Activities
Customer Service
Plant and warehouse
site selection
Demand forecasting
Procurement
Distribution
communications
Packaging
Inventory control
Return goods handling
Material handling
Salvage and scrap
disposal
Order Processing
Traffic and
Parts and service
transportation
support
Warehousing and
storage

Marketing
orientation
(competitive
advantage)
Time and place
utility
Efficient
movement to
customer

Proprietary asset

Supply
Chain
Team

Dr. Md. Mamunur Rashid, 2014

Logistics Information
Information System
System
Logistics

Logistical Components
of the Supply Chain
Sourcing
Sourcing &
& Procurement
Procurement
Production
Production Scheduling
Scheduling
Order
OrderProcessing
Processing
Inventory
Inventory Control
Control
Warehouse
Warehouse &
& Materials
Materials Handling
Handling
Transportation
Transportation

Sourcing and Procurement

The
The Role
Role of
of Purchasing:
Purchasing:
Plan purchasing strategies
Develop specifications

Negotiate price and service levels

Reduce costs
Dr. Md. Mamunur Rashid, 2014

iStockphoto.com/Maria Toutoudaki

Select suppliers

Production Scheduling

Traditional Focus

Customer Focus

Push / Pull
Strategy

Push

Pull

Start of
Production

InventoryBased

Customer-Order
Based

Manufacturing

Mass Production

Mass Customization

Dr. Md. Mamunur Rashid, 2014

Just-in-Time Manufacturing

JIT
JIT

Dr. Md. Mamunur Rashid, 2014

A process that redefines and


simplifies manufacturing by
reducing inventory levels
and delivering raw materials
at the precise time they are
needed on the production
line.

Benefits of JIT

For manufacturers: reduces raw material


inventories; immediate shipping of
products
For suppliers: daily or hourly deliveries
rather than weekly
For customers: lower costs; shorter lead
times; products tailored to customer needs
Dr. Md. Mamunur Rashid, 2014

Order Processing
An Order Processing System is
a system whereby orders are entered
into the supply chain and filled.

Order processing is becoming more automated


through the use of computer technology known as
ELECTRONIC DATA INTERCHANGE (EDI).

Dr. Md. Mamunur Rashid, 2014

Inventory Control

Inventory
Inventory
Control
Control
System
System

Dr. Md. Mamunur Rashid, 2014

A method of
developing and
maintaining an
adequate assortment
of materials or
products to meet a
manufacturers or a
customers demand

Inventory Control

Tools for managing inventory include:


materials requirement planning (MRP)
materials management supplier
manufacturer
distribution resource planning (DRP)
manufacturer to end user
automatic replenishment programs
minimal forecasting
Dr. Md. Mamunur Rashid, 2014

or
to

Warehousing and
Materials Handling
A Materials-Handling System
is
a method of moving inventory into, within,
and out of the warehouse.

Most manufacturers today have moved to


AUTOMATED materials-handling systems to
minimize the amount of handling.
Dr. Md. Mamunur Rashid, 2014

Transportation
Airways
Water
Pipelines
Motor Carriers

Railroads
Dr. Md. Mamunur Rashid, 2014

Transportation Mode Choice

Cost
Transit time
Reliability
Capability
Accessibility
Traceability

Dr. Md. Mamunur Rashid, 2014

Trends in Supply Chain


Management
Advanced
Advanced computer
computertechnology
technology
Outsourcing
Outsourcing of
of logistics
logistics functions
functions

Electronic
Electronic distribution
distribution

Dr. Md. Mamunur Rashid, 2014

Advanced Computer
Technology
Automatic identification systems
- Bar coding
- Radio frequency technology
Communications technology

Supply chain software systems


Dr. Md. Mamunur Rashid, 2014

Outsourcing Logistics
Functions
Outsourcing
OutsourcingBenefits
Benefits
Reduce inventories
Locate stock at fewer plants and distribution
centers

Provide same or better levels of service

Dr. Md. Mamunur Rashid, 2014

Electronic Distribution
Electronic Distribution is

a distribution technique that includes any kind


of product or service that can be distributed
electronically, whether over traditional forms
such as fiber-optic cable or through satellite
transmission of electronic signals.

Dr. Md. Mamunur Rashid, 2014

Green Supply Chain


Management

Requires integrating green thinking into all


phases of the supply chain
Green materials sourcing
Environmental impact of packaging,
shipment, use
Incorporate end-of-life management
Recycling
Clean disposal
Dr. Md. Mamunur Rashid, 2014

Green Manufacturing
Sustainable
Manufacturing
(Innovative, 6R based)
Green Manufacturing
(Environmentally-benign, 3R
based)
Lean Manufacturing
(Waste Reduction based)

Remanufacture
Redesign
Recover
Recycle
Reuse

Traditional
Manufacturing
(Substitution based)

Reduce

Year

1950

1975

2000

2025

2050
49

Eco-Attributes
Product
s

Manufacturing

EcoAttributes

Environmental
Burden

CO2 Footprint
(kg/kg)
Water Usage ( l/kg)
NOX emission (g/kg)
SOX emission (g/kg)

50

E-commerce and SCM

E-commerce describes Information


Technology based techniques utilized to
conduct business in a paperless environment.
E-commerce technologies:
Internet applications
Web services
Data bases and data warehousing
Decision support and data mining
Dr. Md. Mamunur Rashid, 2014

Conclusions:

Supply chain Management is a critical


factor in the success and profitability
of a company. Improper planning can
take the company out of business.
Planning is an hard problem to
formulate as well as solve.
Dr. Md. Mamunur Rashid, 2014

Thanks for your attentions !

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