GLOBAL SUPPLY CHAIN

MANAGEMENT
Course ID: 704015
Lecturer: Lê Phước Luông

1/7/2021
 About me

Lê Phước Luông
- BA in Industrial Management (HCMC University of
Technology)
- MSc. in Business Administration (Umea University, Sweden)
- Ph.D. in Supply chain engineering (Quebec University,
Canada)

2
 Learning objectives

❖ Identify the key issues and challenges in Supply chain management;

❖ Explain the basis concepts and methods in inventory management;
❖ Analyze the value of information;
❖ Apply information technology in supply chain management;
❖ Implement the procurement and outsourcing strategies;
❖ Evaluate the advantages and disadvantages of outsourcing;
❖ Evaluate the risks in global transportation management;
❖ Apply modeling skills and problem- solving tools to real world cases,
with emphasis on how to find a balance between total cost and
service level;

1/7/2021 Chapter 1-Introduction to SCM 3

 Course materials
[1] David Simchi-Levi, Philip Kaminsky, and Edith
Simchi-Levi(2008), Designing and Managing the
Supply Chain. McGraw-Hill/Irwin;
[2]Bowersox, D. J., Closs, D. J. and Cooper, M. B. (2012).
Supply Chain Logistics Management (4th ed.). New
York:McGraw Hill;
[3] Nguyễn Đức Trí và cộng sự.(2014), Quản trị vận hành
chuỗi cung ứng, NXB Kinh tế TP. Hồ Chí Minh, TP Hồ
Chí Minh.
1/7/2021 Chapter 1-Introduction to SCM 4
 Course requirements

❖ Students are required to:

Attend all scheduled classes;
Come to classroom on time;
Be prepared for class by reading the book
chapters ahead of time;
Turn off cell phones and computer during a
class.
1/7/2021 Chapter 1-Introduction to SCM 5
 Evaluation

• 10 %: Multiple-choice tests;
• 20 %: Group presentation;
• 20 %: Mid-term exam;
• 50 %: Final exam.

1/7/2021 Chapter 1-Introduction to SCM 6

 Group Activity Organization
Discussion Leader and Time keeper/checker
▪ Keep the discussion going, involve everyone in the
discussion;
▪ Note total time allowed for the discussion and keep track of
time;
Recorder and Reporter
▪ Follow each contribution and take notes/record discussion;
▪ Represent the group when oral responses are requested in
class

1/7/2021 Chapter 1-Introduction to SCM 7

 1.1 What is SCM?

High quality products, satisfactory

services, attractive prices
1/7/2021 Chapter 1-Introduction to SCM 8
 What is supply chain management?
The system of suppliers, manufactures, transportation,
distributors, and vendors that exists to transform raw materials
to final products and supply those products to customers:

That portion of supply chain which comes after the

manufacturing process is sometimes known as the distribution
network.

1/7/2021 Chapter 1-Introduction to SCM 9

1/7/2021 Chapter 1-Introduction to SCM 10
 What is supply chain management?
❖ SCM is a set of approaches utilized to efficiently integrate
suppliers, manufactures, warehouses and stores, so that
merchandise is produced and distributed:
▪ In the right quantities and to the right locations and At the
right time;
In order to:
▪ Minimize total system cost
▪ Satisfy customer service requirements

1/7/2021 Chapter 1-Introduction to SCM 11

 Why supply chain management?
• Information and communication systems have been
widely implemented, and provide access to
comprehensive data from all components of the supply
chain.
• It is possible for all components of the supply chain
to share customer demand.
• The Internet and electronic commerce have produced a
deep impact on supply chain performance.

1/7/2021 Chapter 1-Introduction to SCM 12

 Why supply chain management?

• Reduce cost, increase profit;

• Improve service level, shorten lead-time;
• Expand market share;
• Create higher customer value.

1/7/2021 Chapter 1-Introduction to SCM 13

 1.2 The Development Chain

• Set of activities and processes associated

with new product introduction. Includes:
– product design phase
– associated capabilities and knowledge
– sourcing decisions
– production plans

1/7/2021 Chapter 1-Introduction to SCM 14

 1.2 The Development Chain

FIGURE 1-2: The enterprise development and

1/7/2021
supply chain Chapter 1-Introduction to SCM 15
 1.3 Global Optimization
• Geographically distributed complex network
• Conflicting objectives of different SC actors
• Dynamic system
– Variations over time
– Matching demand-supply difficult
– Different levels of inventory and backorders
• Recent developments have increased risks
– Lean production/Off-shoring/Outsourcing

1/7/2021 Chapter 1-Introduction to SCM 16

 1.4 Uncertainty and Risk Factors
Matching Supply and Demand a Major Challenge

REASONS
•Raw material shortages
•Internal and supplier parts shortages
•Productivity inefficiencies
•Sales and earnings shortfall
•Larger than anticipated inventories
•Stiff competition
•General slowdown in the PC market
•Higher than expected orders for new products
over existing products
EXAMPLES
Boeing Aircraft’s inventory write-down of $2.6
billion
Sales at U.S. Surgical Corporation declined 25
percent, resulting in a loss of $22 million
Intel reported a 38 percent decline in quarterly
profit
EMC Corp. missed its revenue guidance of
$2.66 billion for the second quarter of 2006 by
around $100 million
 1.4 Uncertainty and Risk Factors

1/7/2021 Chapter 1-Introduction to SCM 18

FIGURE 1-3: Order variations in the
 1.4 Uncertainty and Risk Factors
• Fluctuations of Inventory and Backorders throughout the
Supply Chain
• Forecasting is not a solution
• Demand is not the only source of uncertainty
• Recent trends make things more uncertain
– Lean manufacturing
– Outsourcing
– Off-shoring

1/7/2021 Chapter 1-Introduction to SCM 19

 1.4 Uncertainty and Risk Factors
• August 2005 – Hurricane Katrina
– P&G coffee supplies from sites around New Orleans
– Six month impacted by hurricane
• 2002 West Coast port strike
– Losses of $1B/day
– Store stock-outs, factory shutdowns
• 1999 Taiwan earthquake
– Supply interruptions of HP, Dell
• 2001 India (Gujarat state) earthquake
– Supply interruptions for clothing manufacturers
• Covid-19 pandemic
– All industries are impacted
1/7/2021 Chapter 1-Introduction to SCM 20
 1.5 Evolution of SCM

Further
Refinement of
SCM Capabilities
SCM
Formation/
Extensions
JIT, TQM,
BPR,
Inventory Alliances
Management/Cost
Optimization
Traditional Mass
Manufacturing
1950 1960 1970 1980 1990 2000 Beyon
s s s s s s d
1/7/2021 Chapter 1-Introduction to SCM 21
 1.7 Key Issues in SCM
Chai Global Managing Risk and
Distribution Network n
Suppl Optimization
Y Uncertainty
Configuration
Inventory y
Suppl Y
Control
Production ySuppl Y
Sourcing
Supply y
Bot Y Y
Contracts
Distribution h
Suppl Y Y
Strategies
Strategic yDevelopmen Y
Outsourcing
Partnering and t
Developmen Y
Offshoring
Product t
Developmen Y
Design
Information tSuppl Y Y
Technology
Customer y
Bot Y Y
Value
Smart h
Suppl Y
Pricing y
TABLE 1-1: Key supply chain
management issues
1/7/2021 Chapter 1-Introduction to SCM 22
CHUONG 1: