Every product has a story. Every product is part of multiple supply chains.

It’s rare to find an item

that gets manufactured or grown and consumed in the same place at the same time.

Where can I source from?

How much inventory do I hold?

How do I forecast my demand?

How do I move my product from source to final consumption?

What is supply chain?

Two or more parties linked by a flow of resources typically material, information, and money that
ultimately fulfils a customer request.

The store places an order to its supplier. The supplier sends material in the form of delivery back to
the store. The retailer pays the supplier for the material.

Supply chain management is about minimizing cost, maximizing profit, improving level of service,
and other metrics.

Its not that simple!.

Suppliers  Plants Distribution centre Retailers Customer

A bicycle manufacturer has hardware supplier and frames supplier. Hardware and frames suppliers
have third party vendor specializing in tires, gear, pedals, cast of aluminium frames and paint. Bicycle
manufacturers can sell to wholesaler, retailers or both. Customers can buy bicycle directly online.

Downstream and upstream supply chain- the direction of product flow (closer to customer or to the
supplier).

The primary purpose of supply chain is to satisfy customer need because there customers are the
only source of revenue. All the payments between the different parties are fund exchanges. The
division of intra Payments are a function of power, market, conditions,etc.

Supply chain try to maximize the revenue generated.

What the customer pays- Total effort expended to fulfil

Difference between logistics and supply chain

Sinuous- moving in a twisting way. Gritty- sandy. Cumbersome- awkward because of being large.

Implements- to start using a plan.

Procurement- Trying to find where to buy it from (sourcing). If you’re sourcing for a unit you’ll look
for numerous vendors then once you find a vendor with good lead time and appropriate cost.

Conversion (operation) - Conversion of raw materials into sellable products.

Supply chain perspectives

How can I visualize supply chains?’

Mapping the geographic location of plants, distribution centers, and other facilities allow user to
understand how any local condition (flood, tornado, political unrest) impacts the overall supply
chain.

Product flow diagram

It’s a good framework to understand how the product flows.

Who are your suppliers? Where are they located? How many do they have?
Another way to think about SP is through cycles.

Customer order cycle- Customer arrives, places an order, pays for the order and subsequently is
served.

Replenishment cycle- How the retailer gets replenished from the distributor.

Distributor- Place an order to the manufacturer, it might have to be scheduled into production or be
delivered directly from inventory.

As you go upstream, order size and lead time increases.

You can’t keep them separate (siloed) they all depend on each other. For example, demand planning
depends on the customer.

Demand and supply planning come into play in a process called SOP (sales and operation planning)
to balance what the customers want and what we are able to deliver from our suppliers.

Metrics for individual companies would interfere with the supply chain wide end to end
performance.

SCOR Model- Planning seeds source make and deliver of products.

Types of supply chain

Making to stock and delivering something to go into inventory. Demand is not predictable.

Making to order

Engineering to order- Not only do I make something until someone places an order but the form is
different.
Think of it as a system that interacts internally and with external factors.

Inventory control

Inventory is the goods or materials a business intends to sell to a customer for profit.

Inventory management tracks inventory from manufactures to warehouses and from these facilities
to the point of sale. Inventory visibility- knowing when to order, how much to order, and where to
store stock.

A supply chain can be thought of as a complex system with multiple objectives, conflicting
constraints overlapping decision variables. Actions taken by one firm or link in the supply chain can
have dramatic impacts on other players as well as the supply chain as a whole.

If you are managing transportation

Objective- Minimize the transportation cost. Select a transportation carrier that supplies goods every
day within a specific time.

Now that you manage customer service you can select the time frame to deliver to the customer.

Since I own the inventory I have freedom in selecting where to replenish from.

What designs can I implement in my product to easily manage my supply chain?

If I make my product smaller I can fit more products. I can keep the separate parts independent until
I get an order to assemble and deliver them.
I am dealing with suppliers and customers that are not on my team. They might not share the same
goals. Suppliers and retailers might be servicing or serviced by other supply chains.

How do you measure a system?

It’s difficult to quantify a metric that looks at the end to end performance.

Look at the very end- Outcome based logistics- perfect order, perfect shelf (damage free, on time,
complete and with correct invoicing and documentation)

Supply chain major challenges

Why should we care?

Companies cannot manage their warehouse separate from their inventory, transportation and from
procurement.