WEEK 1

Chapter 1:
Introduction to Supply Chain

Lecturer: Vuong Nhat Nam UTH

University of Transport HCMC
Email: namvn.tg@ut.edu.vn
Chapter 1: Learning Objectives

• Appreciate what a supply chain is and what it does

• Understand where your company fits in the supply chains it

participates in and the role it plays in those supply chains

• Be able to discuss ways to align your supply chain with

your business strategy

• Start an intelligent conversation about the supply chain

management issues in your company

• Use interactive supply chain simulations to explore how

supply chains operate
 Table of contents
01 04
Course Development
Overview Process
02 05
General Operating Method
Introduction of SC
03 06
Concepts & Roles Summary
 01. Course Overview

INTRODUCTION TO LOGISTICS & SUPPLY CHAIN

Course name MS: 681106
MANAGEMENT

Credit number 3 (3,0,3)

T HW P Total SS
Period number
45 0 0 45 90
Assessment Process: 50% Finals: 50%

Grade scale 10

A1.1: In-class assessment: 40%

A2.1: Final test: 50%
A1.2: Mid-term test: 10%
 02
General
Introduction
CHAPTER 1
 Basics Definition
 All organizations move materials.

Manufacturers: raw materials -> finished goods.

 Definition of Logistics: Logistics is the function that is responsible for the

movement of materials (and information). It is responsible for the transport

and storage of materials between suppliers and customers.

 According to the Council of Supply Chain Management Professionals

(CSCMP), a professional organization for Logistics and SCM professionals,

logistics is defined as: “the process of planning, implementing and

controlling the efficient, effective flow and storage of goods, services and

related information from point of origin to point of consumption for the

purpose of conforming to customer requirements”

 Basics Definition

Sony, Apple, Samsung -> Tangible Good

Viettel, Facebook, Spotify -> Intangible Good

McDonalds -> Balance of goods and services

 Basics Definition

Operations: Operations include manufacturing, serving, transporting,

selling, training, and so on. The main outputs are products.
 Basics Definition
 LOGISTICS is the function responsible for the flow of
materials from suppliers into an organization, through
operations within the organization, and then out to
customers.
 Basics Definition
 Inbound logistics: activities between external suppliers and
the organization
 Outbound logistics: activities between external customers
and the organization
 Operations within the organization: activities between
internal suppliers and internal customers
 Basics Definition
-Different names for these chains of activities and
organizations. emphasize the operations, refer to the
process; emphasize marketing, call it a logistics
channel; look at the value added, call it a value chain,
see how customer demands are satisfied, call it a
demand chain.

Here we are emphasizing the movement of

materials and will use the most general term of supply
chain.

A SUPPLY CHAIN consists of the series of activities

and organizations that materials move through on their
journey from initial suppliers to final customers.
Basics Definition
2. role and structure of supply
chains
Structure of the supply chain
 Structure of the supply chain

• SUPPLY CHAIN = a series of activities and organizations that move materials

from initial suppliers to final customers
• Upstream supply chain activities: involve initial supplier, third tier supplier,
second tier supplier, first tier supplier
• Downstream supply chain activities: involve first tier customer, second tier
customer, third tier customer, final customer
CHAPTER 1

Supply Chain
vs.
Logistics
Differentiate “Supply Chain” and “Logistics”
 03
Concepts
and Roles
CHAPTER 1
 Concept of Supply Chain Management
Supply Chain Management encompasses a series of key activities and
processes including:

1. Planning and Strategy: Determining how to best fulfill the

requirements of customers.
2. Sourcing: Selecting suppliers to provide the goods and services
needed.
3. Making: Producing products and creating value-added services.
4. Delivery: Logistics, warehousing, and transporting products to the
right location at the right time.
5. Returning: Handling defective products, excess, returns, and other
post-consumer processes.
 Supply Chain Drivers

“Increase throughput 1. 2.
PRODUCTION INVENTORY
while simultaneously What, how, and How much to
reducing inventory when to produce make, how much
and operating to stock

expense.”
5.
Goldratt, The Goal, INFORMATION
Basis for making
these decisions

Responsiveness 4.
TRANSPORTATION
3.
LOCATION
vs. How and when to Where best to do
move product what activity
Efficiency
 Supply Chain Drivers
1. Production
– Factories for making products
• Product Focus
• Functional Focus
– Warehouses for storing and distributing products
• Stock Keeping Unit Storage
• Job Lot Storage
• Crossdocking

2. Inventory
– Cycle inventory to meet on-going customer demand
– Safety inventory to protect against stockouts
– Seasonal inventory to meet seasonal demands
 Supply Chain Drivers
3. Location – place facilities so as to maximize performance
4. Transportation
– Ship or barge is the slowest and least expensive way to move products
– Rail can be both fast and efficient
– Pipeline is an efficient way to move liquid and gas products
– Truck is fast but also more expensive
– Airplane is the fastest and most expensive
– Electronic transport is a fast and inexpensive way to move data products

5. Information
– To coordinate daily supply chain activities
– For forecasting and planning of supply chain activities
Responsiveness vs. Efficiency
Supply Chain Drivers
Responsiveness Efficiency
1. Production - Excess capacity - No excess capacity
- Flexible manufacturing - Narrow product focus
- Many smaller plants - Few large plants
2. Inventory - High inventory levels - Low inventory levels
- Wide range of items - Narrow range of items

3. Location - Many locations - Few central locations serve

close to customers wide areas

4. Transportation - Frequent small shipments - Few large shipments

- Fast & Flexible modes - Slower and cheaper modes

5. Information - Collect & share timely - Cost of information drops

and accurate data while other costs rise
Benefits of supply chains
Cross Docking
Benefits of supply chains
Benefits of supply chains
 04
Development
Process
CHAPTER 1
 Old Supply Chains vs New

VERTICAL INTEGRATION
---> VIRTUAL INTEGRATION

Companies now focus on their

core competencies, and partner
with other companies to create
supply chains for fast moving
markets.
 Shift from Vertical Integration to Flexible Supply Chains

1. Market Dynamics: 4. Focus:

• Past: Stable demands, limited
product variety.
• Now: Rapidly changing preferences,
frequent new products.
2. Technology:
• Past: High coordination cost with
suppliers.
• Now: Advanced ERPs, IoT, and AI
enable efficient global collaboration.
3. Risk Management:
• Past: Own entire chain, high
exposure.
• Now: Diversified risk with multiple
suppliers.
• Past: Own everything.
• Now: Concentrate on core
competencies, and outsource the rest.
5. Globalization:
• Past: Localized operations.
• Now: Global sourcing, manufacturing,
and sales.
6. Consumer Expectations:
• Past: Mass-market products.
• Now: Wide variety, customization, fast
innovation.
 05
Operating
Method of SC
CHAPTER 1
 06
Summary

CHAPTER 1
 Summary
1. Definition of Logistics and Supply Chain:
- Logistics involves the management of transportation and storage of materials and information between
suppliers and customers.
- The supply chain encompasses the entire process from origin to the final consumer.

2. Structure of the Supply Chain:

- The supply chain consists of segmented steps, from suppliers to the ultimate end consumer.

3. Supply Chain Drivers:

- Key factors include Production, Inventory, Location, Transportation, and Information.

4. Responsiveness vs. Efficiency:

- Both responsiveness and efficiency are crucial in supply chain management but can sometimes be in
conflict.
 Summary
5. Benefits of Supply Chains:
- Benefits include optimal production locations, cost reduction, increased synchronization between supply
and demand, and various other advantages.

6. Vertical Integration, Virtual Integration:

- Vertical Integration involves integration from production to distribution.
- Virtual Integration links partners through technology and information, without the need for ownership of
production elements.

7. Agile Supply Chain, Lean Supply Chain:

- Agile Supply Chain focuses on flexibility and rapid adaptation.
- Lean Supply Chain aims to reduce waste and streamline processes.
Chapter 1 Quiz Questions

No Quiz today