Session 1

Introduction to Supply Chain

• Introduction
o Supply Chain
o Historical Perspective
 Session 1

Introduction to Supply Chain

Supply Chain
• Supply chain – all parties involved, directly or indirectly, in
fulfilling a customer request
• Includes manufacturer, suppliers, transporters,
warehouses, retailers, & even customers themselves
• It is dynamic, and involves constant flow of information,
products & funds among the different parties
• Within each organization, the supply chain includes all
functions involved in receiivng & fulfilling a cusomter
order or request
 Session 1

Introduction to Supply Chain

Supply Chain

Timber Paper Packaging

Company Manufacturer Manufacturer

Chemical Detergent Distribution

Retail Store Customer
Manufacturer Manufacturer Center

Plastic
Manufacturer

Stages of Detergent Supply Chain

 Session 1

Introduction to Supply Chain

Supply Chain

Supplier Manufacturer Distributor Retailer Customer

Supplier Manufacturer Distributor Retailer Customer

Supplier Manufacturer Distributor Retailer Customer

 Session 1

Introduction to Supply Chain

Supply Chain
• Supply Chain Stages
o Customers
o Retailers
o Wholesalers / Distributors
o Manufacturers
o Component / Raw Material Suppliers
• Bidirectional flow of products, information & funds
• Multiple players at each stage
• Not each stage may be present in every supply chain
 Session 1

Introduction to Supply Chain

Historical Perspective
 Session 1

Introduction to Supply Chain

Historical Perspective
• Evolved from the business processes & managerial
practices in

Physical
Distribution

Industrial
Engineering

Operations
Management
 Session 1

Introduction to Supply Chain

Historical Perspective
• Confluence of three main streams of knowledege &
practical experience of the business world

Sourcing,
Procurement &
Supply
Management

Logistics & Materials

Distribution Management
 Session 1

Introduction to Supply Chain

Historical Perspective
• Sourcing, Procurement & Supply Management
o Purchasing helps improve bottom line quicker & easier
than increased sales
o Economic buying as a strategic function handled by
top management
o Evolved from procurement to sourcing, supply side
management, inbound logistics, supplier relationship
management along with the materials, information &
cash flows interconnected with each other
 Session 1

Introduction to Supply Chain

Historical Perspective
• Materials Management
o Classic Materials Management - Forecasting, inventory
management, stores management, warehousing, stock
keeping & scheduling
o Extended Materials Management – Classic Materials
Management + production planning & production
control
o Integrated Materials Management – Extended
Materials Management + order processing
 Session 1

Introduction to Supply Chain

Historical Perspective
• Materials Management
o Materials contribute approx. 60% cost of most
manufactured products
o Management of flow of material into, through, & out of
an organization, adding in the process, value for the
customers both internal & external to the organization
 Session 1

Introduction to Supply Chain

Historical Perspective
• Logistics & Distribution
o Time and space related placement of goods to
provide improved customer service
o The part of supply chain management process that
plans, implements & controls the efficient & effective
forward & reverse flow and storage of goods, services,
& related information between the point of origin &
the point of consumption in order to meet customers’
requirements
 Session 1

Introduction to Supply Chain

Historical Perspective
• Logistics & Distribution
o Transportation – up to 50% of the total logistics costs
o Trade-off between transportation choices & inventory
policies saw logistics emerge as a cross-functional
approach integrating materials, functions of
purchasing, inventory management, production
control, inbound traffic, warehousing, store keeping, &
incoming quality control to ensure efficient operations
o Logistics – early avatar of supply chain management
 Session 1

Introduction to Supply Chain

Historical Perspective
• Logistics & Distribution
o Logistics – end-to-end movement of materials at all
stages of industrial & business endeavor in delivering
value to customer

Inbound Manufacturing Outbound

Logistics Logistics Logistics

intra-company
flow of materials
 Session 1

Introduction to Supply Chain

Historical Perspective
• Supply Chain Management – integrative philosophy & a
strategic business practice which encompasses flow of
materials, funds & information throughout the network
that ultimately delivers value to the customer