SUPPLY CHAIN NOTES
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LESSON 1- OVERVIEW OF SCM
Objectives of Supply Chain Management
A. SATISFY THE CUSTOMER NEEDS
-Retail success hinges on customer satisfaction, so it makes
sense supply chain success is also closely ties to happy
customers.
1.Improve on time delivery
-Customers want what they want it fast on time. Example:
Nothing proves this more that Amazons announcement of
one day delivery earlier this year.
2. Use technology to enhance visibility and track inventory
-Technology is important to automate warehouse activities
and ultimately fulfill today’s customer needs.
3.Increase speed to delivery with on demand fulfillment
-Winning ECommerce customer starts with a great produce
and user experience, but it strengthened by your delivery
service.
4.Satisfy customer demand with an agile inventory strategy
-Inventory management is a constant struggle, but today’s
consumers are powering a critical change in how inventory
is handled.
B. INVENTORY MANAGEMENT
-Purely focusing on limiting stock is far too short sighted
and, in terms of the bottom line, the result will often be
that it costs more than what it yields.
C. SUPPLIER CASH CONTROL
-A great deal of insight can be found in the supply and
payment agreements with suppliers.
D. OPERATING EXPENSES CONTROL
-For many organizations, a great deal can also be improved
on the operations side of things.
E. CUSTOMER CASH CONTROL
-When improving the profitability of customer relationships
and orders, the measurability of order processing and
optimizing settlement of payments is crucial.
SOURCES OF REVENUE AND COST
-Appropriate management of the flow of information,
product or funds is a key to supply chain success.
* Replenishment of the Material or Product whenever
required
* Cost Quality Improvement
* Shortening time to Order
* Faster Speed to Market
* To meet consumer demand for guaranteed delivery of
high quality and low cost with minimal lead time.
* Efficient supply chain, etc...
Types of Flow in Supply Chain Management
A. Material Flow
-Material flow includes a smooth flow of an item from the
producer to the consumer.
B. Information Flow
-Information/data flow comprises the request for
quotation, purchase order, monthly schedules, engineering
C. Money Flow
-On the basis of the invoice raised by the producer, the
clients examine the order for correctness.
Benefits of Supply Chain Management
A. IMPROVED PRODUCT AND MATERIAL FLOW
-Time-to- consumer is a crucial indicator of product flow
efficiency.
B. SEAMLESS INFORMATION FLOW
-The effective SCM requires not only the integration of
material flows but also the integration of information flows
in the supply chain.
C. ENHANCED FINANCIAL FLOW
-Another pain point for supply chain players is how to
improve cash flow in the value chain, which involves
“thousands of invoices and payments in a given year.”
D.REDUCES UNCERTAINTY AND RISK IN THE SUPPLY CHAIN
-Supply chain uncertainty refers to the decision- making
process in the supply chain in which the decision maker
does not know exactly what to decide due to lack of
transparency of the supply chain and the impact of possible
actions.
Five-step structured approach to set up an effective global
inventory planning and control process
1. TAKE A BUSINESS ASSESSMENT
-Assess business functions and processes in their current
environment.
2. DEVELOP THE INVENTORY PLAN
-Complete and ac curate data is fundamental to developing
an inventory plan.
3. EXECUTE ACCORDING TO THE PLAN
-Executing to the plan involves the following steps:
>Ensure tight adherence to inventory planning and
ordering policies at part level.
>Establish process controls to ensure data quality and
consistency.
>Synchronize production schedules to the materials
plan.
4. MEASURE PERFORMANCE AGAINST THE PLAN
-Organizations can’t improve what they don’t measure.
5. ENSURE CONTINUOUS IMPROVEMENT
-This step should involve devising a mechanism or practice
in order to:
>Capture root causes for variations in the plan.
>Conduct periodic reviews to discuss impact areas,
assign ownership and establish timelines to facilitate
resolution.
>Run continuous improvement programs such as
Vendor Managed Inventory (VMI) and consignment stock
agreements with key suppliers.
Stages of Supply Chain
Stage 1: Unmanaged, or Managed by Others
-In this stage, functions and firms operate independently.
They often lack planning and control activities.
Stage 2: A Low-Cost Production
-Firms in this stage are likely to produce commodity-like
consumer products or specialized industrial products.
Stage 3: Project/Initiative Driven
-A series of projects drive incremental internal
improvements. Management is primarily results, not
process, driven.
Stage 4: Partner Driven
-This stage involves an investment in and responsiveness to
meeting key customer, supplier, or third-party logistics
requirements.
Stage 5: Balanced Internally
-Management sees the potential strategic benefits from
SCM, and is now focused on market-driven, not production-
driven, synchronization.
Stage 6: Extended Integration
-Management now has a strategic and systemic orientation
that drives integration from the customer's customer to the
supplier's supplier.
Stage 7: Real-Time Connectivity
-This stage is mainly aspirational, although the enabling
technologies exist today.
Supply Chain Management Processes
1. Planning – the plan process seeks to create effective
long- and short-range supply chain strategies.
2. Procurement – the buy process focuses on the purchase
of required raw materials, components, and goods.
3. Production – the make process involves the
manufacture, conversion, or assembly of materials into
finished goods or parts for other products.
4. Distribution – the move process manages the logistical
flow of goods across the supply chain.
5. Customer Interface – the demand process revolves
around all the issues that are related to planning customer
interactions.
PRINCIPLES OF SUPPLY CHAIN MANAGEMENT
Principle 1: Segment customers based on the service needs
of distinct groups.
Principle 2: Customize the logistics network to the service
requirements.
Principle 3: Listen to market signals and align demand
planning
Principle 4: Differentiate product closer to the customer
Principle 5: Manage sources of supply strategically.
Principle 6: Develop a supply chain wide technology
strategy.
Principle 7: Adopt channel spanning performance measures
Process Views of Supply Chain Management
A. Customer orders cycle
1. Customer Order Promised Cycle Time: This cycle time
performance measure tells you the expected time from a
customer order being placed to the time of its delivery.
2. Customer Order Actual Cycle Time: If you want to
measure this cycle time metric, you need to capture the
average time taken from when a customer places an order,
until it is delivered.
3. Cash to Cash Cycle Time: This is the length of time
elapsed between paying for raw materials and getting paid
for the end product.
4. Supply Chain Cyc le Time: An all- encompassing cycle
time performance measure, supply chain cycle time is the
sum of the longest lead time for each stage in the cycle.
Process Views of Supply Chain Management
B. Replenishment cycle
-The replenishment supply chain model is a relatively new
concept that hinges on trust between competitive suppliers
and real- time solutions to customer demands.
C. Manufacturing cycle
1. INCREASED CONTROL OVER PRODUCTION
-Use of information technology in supply chain
management provides improved visibility and
accountability.
2. BETTER INVENTORY MANAGEMENT
-Maintaining optimal levels of inventory is a challenge faced
by all manufacturers.
3. INCREASED COLLABORATION BETWWEN SUPPLY CHAIN
PARTNERS
-With the IT enabled, real time information sharing,
manufacturers can increase the collaboration with their key
partners.
4. MORE EFFECTIVE ORDER TRACKING AND DELIVERY
-Timely delivery of product is an important factor in
ensuring customer satisfaction.
D. Procurement cycle
1. ROLE OF PROCUREMENT IN SUPPLY CHAIN
-In this case, there is a need to manage suppliers to ensure
reliable delivery from their end and risk mitigation.
2. SUPPLIER MANAGEMENT STRATEGY & PROCUREMENT
-It should be noted that supplier risk is known as the
second-highest priority after managing cost and profit.
POOR SUPPLIER MANAGEMENT PRACTICES
-process disruption
-missed deliveries
-compliance issues &
-reputational losses
Drivers of Supply Chain Performance The Importance of Supply Chain Management:

1.Facilities A. Boost Customer Service

-Places where inventory is stored, assembled, or fabricated
2.Inventory
-Raw materials, finished goods within a supply chain
3.Transportation
-Moving inventory from point to point in a supply chain
4.Information
-Data and analysis, sharing regarding inventory,
transportation, facilities, cost, prices, supplier performance
5.Sourcing
Sourcing functions that are outsourced like production,
storage, management of information
6.Pricing
-Price associated with goods and services provided by a
firm to the supply chain
LESSON 2- INTRODUCTION OF SCM
COURSE DESCRIPTION
This course describes the skills, knowledge and
performance outcomes required to understanding the basic
concepts on managing the complete movement of products
or services in a supply chain from a suppliers to the
customers it also emphasizes on identifying the effects of
current and future trends in supply chain management and
on assessing the processes and performances in a supply
chain to optimize processes into a seamless, innovative and
most cost – effective way to help companies build a
competitive edge.
1. Customers expect products to be available at the right
location
2. Right Delivery Time – Customers expect products to be
delivered on time
3. Right After Sale Support – Customers expect products to
be serviced quickly.
B. Reduce Operating Costs
1. Decreases Purchasing Cost – Retailers depend on supply
chains to quickly deliver expensive products.
2. Decreases Production Cost – Manufacturers depend on
supply chains to reliably deliver materials to assembly
plants.
3. Decreases Total Supply Chain Cost – Manufacturers and
retailers depend on supply chain managers to design
networks that meet customer service goals at the least
total cost.
C. Improve Financial Position
1.Increases Profit Leverage – Firms value supply chain
managers because they help control and reduce supply
chain costs.
2. Decreases Fixed Assets – Firms value supply chain
managers because they decrease the use of large fixed
assets such as plants, warehouses and transportation
vehicles in the supply chain.
3. Increases Cash Flow – Firms value supply chain managers
because they speed up product flows to customers.

Advantages of Distribution Center

1. CONVENIENCE OF THE CUSTOMER

-Having a distribution Centre has a lot of customer
convenience in case of shopping.

2.TIME AND COST-SAVING

-The distribution centers are specialized centers in their
performance and their operations.

3. RETAILERS CAN BUY THE PRODUCTS IN SMALL

QUANTITIES
-Buying the entire bulk from the manufacturing facility will
be too costly as well as very cumbersome for the retailers.

4.FINANCIAL SUPPORT
-The retailers or resellers because of their bulk breaking
make payment options easier for their customers.

5.VALUABLE INFORMATION FROM RESELLERS History of SCM

-Resellers provide important information which is used to
improve the product and in turn increase the sale of the
product because resellers are the one who is in direct
contact with the customers and the feedback is passed via
them to the organization.
History of Supply Chain Management: Roots Both industrial
engineering and operations research have their roots in
logistics. Fredrick Taylor, who wrote The Principles of
Scientific Management in 1911 and is considered the father
of industrial engineering, focused his early research on how
to improve manual loading processes.
History of Supply Chain Management: The Early Years
-In the 1940s and 1950s, the focus of logistics research was
on how to use mechanization (e.g., pallets and pallet lifts)
to improve the very labor-intensive processes of material
handling and how to take better advantage of space using
racking and better warehouse design and layout.

History of Supply Chain Management: Logistics Comes of

Age
- The 1980s marked the beginning of asea-change in
logistics in the history of supply chain management. T h e
emergence of personal computers in the early 1980s
provided tremendously better computer access to planners
and a new graphical environment for planning.

History of Supply Chain Management: The Technology

Revolution
-The logistics boom was fueled further in the 1990s by the
emergence of Enterprise Resource Planning (ERP) systems.
These systems w e r e motivated in part by the successes
achieved by Material Requirements Planning systems
developed in the 1970s and 1980s, in part by the desire to
integrate the multiple databases that existed in almost all
companies and seldom talked to each other.

History of Supply Chain Management: Globalization and

Supply Chains
-The widespread recognition of the term “supply chain” has
come primarily as a result of the globalization of
manufacturing since the mid-1990s, particularly the growth
of manufacturing in China. U.S. imports from China grew
from about $45 billion per year in 1995 to more than $280
billion per year in 2006.

History of Supply Chain Management: The Future of

Supply Chain and Logistics
-Since the 1980s, computer technology has advanced at
such a phenomenal rate that it is currently far ahead of the
ability of the supply and logistics field to adequately utilize
the new technologies.