1. what is supply chain

7/31/2019 1. What is Supply Chain

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Designing a customer pleasing

product is an art

Building the product is, to a largeextent, science

Moving the product from design tothe customer is management

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What is supply chain Historical perspective

Objective of supply chain

Decision phases in supply chain Process view of supply chain

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Supply Chain refers to completechain in flow of information,material, funds & services from

suppliers, inside the firm, towarehouses and till delivery tocustomers along both directions

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In other words Supply Chain

is the picture that describeshow organizations(suppliers, manufacturers,

distributors, and customers)are linked together asviewed from a company

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Suppliers

Inputs

Suppliers

ServiceSupportOperations

Transformation

Manufacturing

LocalServiceProviders

Localization

Distribution

EndCustomers

Output

Customers

Services

Supply Networks

Manufacturing

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RELATIONSHIPOF TASKS

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THE TYPICAL SUPPLY CHAIN

SuppliersT1,T2,T3

Manufacturers Warehouses &Distribution Centers

Customers

Material Costs

TransportationCosts

TransportationCosts Transportation

CostsInventory CostsManufacturing Costs

Plan Source Make Deliver Buy

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HISTORYOF SUPPLY CHAIN

MANAGEMENT

1960s Sourcing, Inventory Management,Cost Control

1970s - MRP & BOM - Operations Planning

1980s - MRPII, JIT - MaterialsManagement, Logistics

1990s - SCM - ERP -Integrated

Purchasing, Financials, Manufacturing,Order Entry

2000s - Optimized Value Network withReal-Time Decision Support; Synchronized

& Collaborative Extended Network

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Supply Chain Management istotal systems

approach to managing the entire flow ofinformation, materials, funds and servicesfrom raw-material and component

suppliers through factories andwarehouses to retail store and back tomeet real needs of the end customer

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SUPPLY CHAIN

MANAGEMENT APPROACH

Three items flow through supply chain: Information

Money

Materials

Three areas of decision-making:

Materials

Processes

Logistics

Two types of tools:

Information Technology

Operational Analysis

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SUPPLY CHAIN MANAGEMENT

KEY ISSUES

ISSUE CONSIDERATIONS

Network Planning Warehouse locations and capacities Plant locations and production levels

Transportation flows between facilities to minimize cost and time

Inventory Control How should inventory be managed?

Why does inventory fluctuate and what strategies minimize this?

Supply Contracts Impact of volume discount and revenue sharing Pricing strategies to reduce order-shipment variability

Distribution Strategies Selection of distribution strategies (e.g., direct ship vs. cross-docking)

How many cross-dock points are needed?

Cost/Benefits of different strategies

Integration and Strategic

Partnering

How can integration with partners be achieved?

What level of integration is best? What information and processes can be shared?

What partnerships should be implemented and in which situations?

Outsourcing & ProcurementStrategies

What are our core supply chain capabilities and which are not?

Does our product design mandate different outsourcing approaches?

Risk management

Product Design How are inventory holding and transportation costs affected by

product design? How does product design enable mass customization?

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OBJECTIVEOF SCM

Objective of SCM is to maximiseoverall value generated

Effective SCM involves managementof supply chain assets, products,information, funds & services to

maximise total supply chain surplus

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DECISION PHASESINA

SUPPLY CHAIN

Supply chain strategy: how tostructure supply chainchainsconfiguration, resource allocation and

processes each stage will perform toincrease supply chain surplus

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DECISION PHASESINA

SUPPLY CHAIN(CONTD. 1)

Supply chain planning: includes

demand forecasting, finalisingsupply network, inventory levels,and timing & size of marketpromotions, defining operationalpolicies and fine tuning actions tomitigate uncertainties of demand,exchange rate & competition

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DECISION PHASESINA

SUPPLY CHAIN(CONTD. 2)

Supply chain operation: individualcustomer order is focus ofproduction planning, shippingschedule & mode, inventory andplace replenishment orders withpractically nil uncertainty

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PROCESS VIEWSOF SUPPLY

CHAIN

Cycle View supply chainprocesses are divided into a seriesof cycles each performed at the

interface of two successive stagesof a supply chain

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WHY IS SCM DIFFICULT?

Uncertainty is inherent to every supplychain Travel times

Breakdowns of machines and vehicles Weather, natural catastrophe, war

Local politics, labor conditions, border issues

The complexity of problem to globallyoptimize a supply chain is significant Minimize internal costs

Minimize uncertainty

Deal with remaining uncertainty

Plan Source Make Deliver Buy

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1. what is supply chain

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