You are on page 1of 35

Supply Chain Management

Course Facilitator: Anas Iftikhar


Iqra University Alumni
MSc (Supply Chain & Logistics Management (Warwick)

Supply Chain Management


Attendance Policy
- Only 5 min late after that Absent.
- No leniency or proxy
- Max 6 after that SOA

Supply Chain Management


Marks Distribution:
-

Class Quizzes: 5 % (Avg. will be taken)


Assignments: 5%
Mid Term: 30 %
Final Exam: 40 %
Final Report & Presentation: 20%

You may expect un announced quizzes and marked


assessment during the semester.

Course Outline
1. Introduction to SCM
2. Procurement & Purchasing
3. Building Deep Supplier Relationship HBR Article
4. Logistics Management
5. Inventory Management
6. Warehousing Management
7. Manufacturing
8. Production Planning Systems
9. Master Production Schedule
10. Material Requirement Planning
11. Vendor Managed Inventory
Recommended Books:
Principles of Supply chain management: A balanced approach by Joel D. Wisner
Essentials of Supply Chain Management by Michael Hugos
Designing and Managing the Supply Chain by Simchi-Levi, D and E and
Kaminsky, P.

Restaurant Supply Chain


When you buy a burger from McDonald or a Zinger
from KFC, have you thought where all of the
ingredients came from that produced your sandwich?
Depending on the restaurants location, McDonalds
and KFC source their ingredients from both local and
global suppliers.
The challenge is to ensure that all restaurants in their
network have enough ingredients to meet customer
demand.

Supply Chain Video


http://www.youtube.com/watch?v=XEWsgIUi
Hyo (Working at Beiersdorf)
http://www.youtube.com/watch?v=GHNuOLr
Awlo (Unilever Supply Chain)

Brief Historical Background


Academic study of logistics management could be dated back to the 1850s, when Henry
Adams, an economist who was president of Yale University, Offered a course in the
Economics of Transportation
In 1962, Peter Drucker argues that logistics was unexplored and left behind as a dark
continent.
In the 1970s and 1980s the importance of logistics was brought to the surface.
Over the early 1980s, logistics has penetrated into a broader management philosophy
known as Supply Chain Management
The term supply chain management first appeared in a Financial Times article written by
Oliver and Webber in 1982 (Laseter, T, & Oliver, K., (2003). When will Supply Chain
Management Grow Up. Strategy and Business, 32, pp.1 5.) describing the range of
activities performed by the organization in procuring and managing supplies.

Brief Historical Background


The distinction between supply chain management and logistics is blurry in
the literature and the terms often used interchangeably.

Today it focuses more on dynamic buyer-supplier relationships towards the


entire supply chain integration, of which the implementation of e-business is
the new dimension.

Modern SC View
An effective SC ensures high level of Customer Service at
optimum level!
So simple yet extremly demanding......
Operational view
an efficient supply chain that ensures products are on the
shelf, available for sale, when Shoppers come to buy
them ... all the time!

Supply Chain Flows

Material Flow
Information Flow
Finance Flow
Return Product Flow

Supply Chain Definitions

Managing supply and demand, sourcing raw materials and


parts, manufacturing and assembly, warehousing and inventory
tracking, order entry and order management, distribution
across all channels, and delivery to the customer

The Supply Chain Council

Supply Chain Definitions

The planning and management of all activities involved in


sourcing and procurement, conversion, and all logistics
management activities also includes coordination with
channel partners, which can be suppliers, intermediaries,
third party service providers, and customers.

Council of Supply Chain Management


Professionals

Supply Chain Model

Source: Bowersox 1996

Supply Chain Network

Source: Nigel Slack, 2002

Supply Chain Management

A definition: Maximising added value and reducing


total cost across the entire trading process through
focusing on speed and certainty of response to the
market.

Tom McGuffog

Key Activities of Supply Chain Operations


PLAN
Demand
Forecasting
Product Pricing
Inventory Management

DELIVER
Order Management
Delivery Scheduling

SOURCE
Procurement
Credit & Collection

MAKE
Product Design
Production Scheduling
Facility Management

Supply Chain Drivers


1.
PRODUCTION
What, how, and when
to produce

2.
INVENTORY
How much to make
and how much to
store

5.
INFORMATION
The basis for
making these
decisions

4.
TRANSPORTATION

How and when to


move product

3.
LOCATION
Where best to do
what activity

Key Players in Supply Chain


A supply chain consists of all stages involved,
directly or indirectly in fulfilling a customer
request. The supply chain not only includes the
manufacturer and supplier, but also transporters,
warehouses , retailers and customer themselves
--- Chopra & Meindl

Why is SCM difficult?


Different facilities may have different, conflicting objectives
Suppliers want manufacturers to commit themselves to purchasing large
quantities in stable volumes with flexible delivery dates
Manufacturers want continuous production runs, high quality, low
production cost.
Warehouses and Distribution Centers want to low inventory, reduced
transportation cost.
Reduction in inventory levels increase transportation costs
Customer need shorter lead times, low prices.

Cycle Time
A key aspect of supply chain management is cycle time. Cycle
time refers to the total time required to complete a process.
Much of this can be wasted time or time that is not used
efficiently.
A number of factors can slow down cycle time: unnecessary steps;

Activities that may have been in place for a long time but no longer add
value;
Ineffective or poorly utilized technology;
Excessive bureaucracy (procedures, controls, and forms that stagnate the
process);
Poor communication, coordination, and cooperation.

Cycle Time
1. Supply Chain Cycle time - time spent by the supply chain to convert the
raw materials into final products plus the time needed to reach the products to
the customer

2. Order to delivery cycle time - the time elapsed between the placement of
an order by a customer and the delivery of products to the customer

"Work smarter, not harder


Elimination of unnecessary work
Any activity or process that is not adding any value must be eliminated

Customer Wait Time


Customer wait time refers to the time that is incurred in
fulfillment of a customer order.
Also called as Logistics Response Time

Function:
It looks at what is stocked locally, what is stocked
elsewhere, how long it takes to repair or procure items not
in stock, how long it takes to ship material, how long it
takes to receive shipments, and other factors.

Velocity Management
Velocity management improves the speed and
accuracy with which materials and information
flow from providers to users. This in turn
reduces the need for massive stockpiles of
resources. The result has been impressive.
Accelerated deliveries of spare parts have
accelerated the repairs of cars.

Three Ts
Velocity

Timeliness

Acceleration
Collaboration
Empow erment

The 3 Ts

Key Ingredients
For Improving
Supply Chain
Efficiencies

Trust

Sharing

Information(eg. open schedules)


Accountability

Understanding the process


Transparency

Ability to see the real situation

Old Supply Chains vs. New


Vertically Integrated

Raw Materials
Company

Raw Materials
Transportation
Company
Transportation

Manufacturing

Distribution

Manufacturing
Company

Independent
Distributor

Retail Show
Room
Independent
Retailer

Slow Moving,
Industrial Mass
Markets

Fragmented, Fast
Moving Markets

What is the Bottom Line?

Efficient Supply Chain

Efficiently / effectiveness means with


minimal commitment of financial resources
Responsiveness means providing customer
satisfaction and value, which (combined with
efficiency) leads to profitability
Ultimately its Competitive Advantage

Typical Benefits From Integrating the


Supply Chain
Enhanced Delivery Performance
Excess Inventory Reduction

Reduce Customer Wait Time


Improvement in Overall Productivity
Lower Supply Chain Costs

The Heart of Supply Chain Management

Delivering
the right product
to the right place
at the right time and
at the right price
To all customers
For all the orders
At all the time

HOW?

Current Trends in Supply Chain Management

Expanding the Supply Chain


Firms are expanding partnerships and building
facilities in foreign markets

Current Trends in Supply Chain Management


(Cont.)

Increasing Supply Chain Responsiveness


Firms will increasingly need to be more flexible and
responsive to customer needs
Supply chains will need to benchmark industry
performance and meet and improve on a continuous
basis
Supply chain responsiveness requires firms to
reevaluate their supply chain relationships, utilize
business process reengineering, design new products
and services.

Current Trends in Supply Chain Management


(Cont.)
The Greening of Supply Chains
- Producing, packaging, moving, storing, delivering and
other supply chain activities can be harmful to the
environment
Supply chains will work harder to reduce
environmental degradation
Large majority (75%) of U.S. consumers influenced by
a firms environmental friendliness reputation
Recycling and conservation are a growing alternative
in response to high cost of natural resources

Current Trends in Supply Chain Management


(Cont.)

Reducing Supply Chain Costs


Cost reduction achieved through:

Reduced purchasing costs


Reducing waste
Reducing excess inventory, and
Reducing non-value added activities

Continuous Improvement through


Benchmarking- improve over competitors performance
Increased knowledge of supply chain processes