STRATEGIC SUPPLY CHAIN

MANAGEMENT
Chamil Kodithuwakku
25.02.2022
Understanding the
Supply Chain
01
Areas of Focus
❖ Introduction to SCM

❖ Key Elements of SCM

❖ Key Drivers

❖ SCM Process Flows

❖ Top Players

❖ Supply Chain Risks

❖ Technologies and Trends

❖ Supply Chain Performance

❖ Learning Outcomes
Introduction to SCM | Definitions
Council of Supply Chain Management Professionals (CSCMP)

“Lead the evolving supply chain management profession by developing, advancing, and disseminating supply
chain knowledge and research”. CMCSP defines SCM as “encompasses the planning and management of all
activities involved in sourcing and procurement, conversion, and all Logistics Management activities. Importantly,
it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries,
third party service providers, and customers. In essence, Supply Chain Management integrates supply and
demand management within and across companies” (www.cscmp.org)

Global Supply Chain Forum (GSCF)

“Supply Chain Management is the integration of key business processes from end user through original suppliers
that provides products, services, and information that add value for customers and other stakeholders.” (Lambert
et al, 1998, p.1). On the forum website, they also write: “Supply Chain Management is not a business function,
rather it is a new business model necessary for an organization's success and everyone in the organization needs
to be involved” (www.scm-institute.org)
Introduction to SCM |Importance

Supply chains get the right goods and services to

the right customers at the right time via a network
of linked activities. As such, they are a powerful
engine of economic activity.
Introduction to SCM | High level flow

Distribution Center/ Retail store

Supplier Manufacturing Plant Customer
Warehouse

Supply Chain Operations Reference Model (SCOR 12.0)

Product /Information/Finances

Plan Source Make Deliver Return Enable

Introduction to SCM | High level flow
Introduction to SCM | High level flow
Typically, a supply chain is composed of two main business
processes:

• Material management (inbound logistics)

• Physical distribution (outbound logistics)

Material management:
Supports the complete cycle of material flow—from the purchase
and internal control of production materials, to the planning and
control of work-in-process, to the warehousing, shipping, and
distribution of finished products (Johnson and Malucci, 1999).

Physical distribution:
Encompasses all outbound logistics activities related to providing
customer service. These activities include order receipt and
processing, inventory deployment, storage and handling,
outbound transportation, consolidation, pricing, promotional
support, returned product handling, and life-cycle support
(Bowersox and Closs, 1996).
Introduction to SCM | Frameworks
Why do we need Frameworks ?

✓ Serves as a point of reference to SCM researches and professionals

✓ Highlight the best practices

✓ Enable the user to understand the risks and mitigation strategies

SCM Frameworks

• Supply Chain Operations Reference (SCOR)

• Global Supply Chain Forum Framework

• Collaborative Planning, Forecasting, and Replenishment

• The Mentzer Framework

 What is SCOR Model ?
Plan Return

- Plan Supply Chain - Source Return Defective

- Plan Source Product
- Plan Make - Deliver Return Defective
Product
- Plan Deliver
- Source Return MRO Product
- Plan Return
- Deliver Return MRO Product
- Source Return Excess Product
- Deliver Return Excess Product

Source Deliver

- Source Stocked Product - Deliver Stocked Product

Make
- Source Make-to-Order Product - Deliver Make-to-Order
- Source Engineer-to-Order Product
- Make to Stock
Product - Deliver Engineer-to-Order
- Make to Order Product
- Engineer to Order - Deliver Retail Product
Key Elements of Supply Chain Management

DELIVER
SOURCE

PLAN MAKE/EXECUTE
RETURN .
Key Elements of Supply Chain Management
•Supply chain planning
This includes production planning, demand forecasting, network modeling, and supply and demand optimization

•Sourcing and procurement

This involves in identifying suppliers and making effective purchases

•Transportation (inbound and outbound)

Transportation spans importing, cross-border and exporting

•Warehousing and distribution

This is inclusive of receiving, stocking, picking, packing and distribution of inventory

•Manufacturing
Some enterprises include production in their supply chain scope

•Services
Services includes areas such as aftermarket, returns, repair and upgrades of physical and digital products
Key Drivers of Supply Chain Management
The decisions you make related to the
supply chain drivers guide the capabilities
of Supply Chain

These drivers need to be managed to

improve responsiveness and efficiency
while maintaining the control of supply
chain.

The key drivers are :

▪ Production
▪ Inventory
▪ Transportation
▪ Location
▪ Information
Key Drivers of Supply Chain Management
What can be done to guide the five supply chain drivers toward responsiveness or efficiency ?
SCM Process Flows I Demand Planning
SCM Process Flows | Procurement (PO Creation)
SCM Process Flows | Manufacturing

MTS - PUSH

Factory Material Warehouse

MTO - PULL

Factory Material
Customer
SCM Process Flows | Manufacturing
SCM Process Flows | Deliver
Top Players

Source : The Gartner Supply Chain Top 25

for 2022
Top Players
Lessons Learnt from top 3 players :

❖1 Cisco Systems

The high-tech innovator was driven to the top due to the continuous effort to adapt various characteristics to
address the internal and external environmental changes.

❖ Schneider Electric
2
The energy management automation specialist is focused on process/ technology innovation through “self –
healing supply chain” approach.

❖ Colgate-Palmolive
3
The consumer product specialist realigned the supply chain strategy by instilling digital and sustainable
approaches while delivering agility, efficiency and resilience.
Supply Chain Risks

The two key categories of Supply Chain risks:

❑ Market disruptions

This includes pandemics, natural disasters, political uncertainty,

economic downfalls , cyber attacks, terrorism, third party or
supplier threats, consumer preference volatility.

❑ Supply chain transformation

This includes instilling globally dispersed operations (Lean),

digitization, new system migrations.
Supply Chain Risks

External Supply Chain risks Internal Supply Chain risks

Demand risks Risks of manufacturing failure
Supply risks Risks of planning and control
Environmental risks Mitigation and contingency
Business risks Information security
Competition Quality failure

Zara’s remarkable success is attributed to the “fast Zara’s approach :

fashion” philosophy in which the latest, trendy but
inexpensive fashions are quickly distributed into its
retail stores based on constant dialogues with the
customers. Zara focuses on “putting the customer in
control” in that it monitors customer reactions
carefully by noting what they buy and do not buy.
- Reach customers
- Obtain customer feedback and details at the point
of sale
- Introducing designs based on customer feedbacks
- Online and offline sales (store-based sales)
Supply Chain Risks

Enablers of supply chain risk management :

• Technology solutions

• Supply chain analytics

• Introduce supply chain policies and standards

Basic approaches to manage supply chain risks

- Product management

- Demand management

- Information management

- Supply management
Technologies and Trends
❖ Digital manufacturing solutions

The solutions track product manufacturing across workstations, enable real-time input of data by workers,
provide end-to-end traceability, and ensure that only high-quality parts move downstream.

❖ Logistics technology

Significant level of investments are made — especially in implementing tools for warehouse management,
matching freight loads to transportation capacity, and cost-effective routing.

❖ Robotic Process Automation (RPA)

Automation is applied for manual business processes and operations.

❖ Centralized Data For Better Decision-Making

Data centralization is focused to perform in-depth analysis and reporting that uncovers inefficiencies and
opportunities for improvement at every level.
Role of RPA in Supply Chain

3-way matching 6
Identify and match PO, GRN and
Invoice against Quantity, Volume
and Item

Quotation Evaluation 3
5 GRN Creation Strategic Role of the process
Check inventory quality and Negotiation
quantity physically

4 PO Creation
Strategic part PR Creation 1
Negotiation Already automated
Lead Time
EOQ
MOQ
2 Request for Quotations Reorder Level
Safety Stock

26
Supply Chain Performance | Overview

Performance attributes are considered to measure the outcomes of the supply chain.
These attributes are used to group or categorize metrics used in expressing a strategy.

*A metric : A standard for measurement of the performance of a supply chain or process.

*KPI : Key Performance Indicators

5 performance attributes :

❖ Reliability
❖ Responsiveness
❖ Agility
❖ Cost
❖ Asset Management Efficiency
Supply Chain Performance | Outcomes

Outcomes of Supply chain Performance Evaluation

• Clear identification of performance gaps

• Ensure visibility over the operations

• Efficient supply chain network redesign and optimization

• Enhanced operational control

• Streamlined management reporting and organizational structure

• Effective planning to improve business in terms of introducing new products

• Improve the competency and skills of supply chain teams

Learning Outcomes

❖ Understand Supply Chain by evaluating the definitions

❖ Familiarity on SCM terminology

❖ Supply chain and logistics

❖ Understand the high-level process flow of supply chain

❖ Define key drivers of supply chain in application to a practical set up

❖ Understand the supply chain objectives

❖ Identify supply chain risks

❖ Identify new technologies and trends

❖ Understand the concept of supply chain performance evaluation

Thank You