Introduction to

Supply Chain Management

Supply chain management refers to the coordination
of activities involved in making and moving a
product.

It is the network of businesses and business

processes involved in the creation and selling of a
product, from suppliers that procure raw materials
through retail outlets and customers.

Supply Chain process is divided into 2 parts:

Upstream and Downstream

The upstream portion of the supply chain includes :
the organization's suppliers and the processes for
managing relationships with them.

The downstream portion consists of the organizations and

processes for distributing and delivering products to the final
customers.

The manufacturer also has internal supply chain

processes for transforming the materials and services furnished
by suppliers into finished goods and for managing materials and
inventory.
 Goal of SCM
• Supply chain management is concerned with the efficient
integration of suppliers, factories, warehouses and stores
so that merchandise is produced and distributed:

– In the right quantities

– To the right locations
– At the right time

• In order to
– Minimize total system cost
– Satisfy customer service requirements
Inefficiencies in the supply chain :

could include parts shortages, underutilized plant

capacity, excessive inventory, or runaway transportation
costs, Which are caused by inaccurate or untimely
information and can waste as much as 25% of operating
costs.

Uncertainties also arise because many events cannot be

foreseen—product demand, late shipments from
suppliers, defective parts or raw material, or production
process breakdowns.
 Drivers of Supply Chain Performance
• Facilities
– places where inventory is stored, assembled, or
fabricated
– production sites and storage sites
• Inventory
– raw materials, WIP, finished goods within a supply chain
– inventory policies
• Transportation
– moving inventory from point to point in a supply chain
– combinations of transportation modes and routes
• Information
– data and analysis regarding inventory, transportation,
facilities throughout the supply chain
– potentially the biggest driver of supply chain performance
 Classification of supply chain s/w

a)Supply chain planning system:

1) Generate demand forecasts for a product.

2) Develop sourcing and manufacturing plans for that
product
3) Make adjustments to production and distribution plans,
and
4) Share information with relevant supply chain members.
One of the most important supply chain planning
functions is demand planning, which determines how
much product a business needs to make to satisfy all of its
customers' demands.
b) Supply chain execution system:

Physical flow of products through distribution

centers and warehouses to ensure that
products are delivered to the right locations
in the most efficient manner.