Supply Chain Management

Module 1: Introduction
Understand Supply Chain Management
Agenda

The course objectives

Supply Chain Management:

1. What is it?
2. What are the objectives?
3. Decisions
4. Process view

The course overview & evaluation

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 The course objectives

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1. The course objectives

• To make you aware of the importance of Supply Chain Management, the

key performance challenges of Supply Chain
• To give a global view of the Supply Chain within a company
• To provide a global understanding of the structure of Supply Chain across
the industries
• To teach the concepts and techniques to be able to analyze and
optimize a Supply Chain
• Commercial Engineer (ICHEC 2011)
• Spadel – Business analyst (1 year)
• PwC – Strategy & Operations (5 years)
• PwC – Delivering Deal Value (1 year)

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 1. What is
Supply Chain Management?

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1. What is Supply Chain?

Supply Chain = all stages involved directly (or indirectly) in fulfilling

a customer request

• Customer is an integral part of the supply chain

• Each stage is connected though flows of: products, information & funds
• All stages may not be present in a supply chains

• Within each company, the supply chain includes all functions involved in fulfilling a
customer request

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1. What is Supply Chain?

 Most Supply Chains = Network = Several players / stage

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1. What is Supply Chain Management?

How should we manage those “chain of supplies”?

https://www.youtube.com/watch?v=Mi1QBxVjZAw

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 2. What are the objectives of
Supply Chain Management?

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1. What is Supply Chain Management?

1. Primary purpose of any Supply Chain = Satisfy the customer needs

2. Secondary purpose = Generate profit for itself

Max (Supply Chain surplus) = Customer value – Supply Chain cost

• Customer value = Value of the final product to the customer

May vary from each customer = Max amount a customer is willing to pay
• SC cost = Cost the entire SC incurs in filling the customer’s request

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 3. Importance of
Supply Chain decisions?

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4. Importance of Supply Chain decisions?

There’s a close connection between:

• The management & design of Supply Chain flows:
Products, information, and funds
• The success of a company.

It is crucial to adapt the management its

Supply Chain to a changing environment!!!

https://www.youtube.com/watch?v=6kPDd9SMJ0A

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4. Decision phases

The success of the management of a Supply Chain requires many

decisions related to the flows (products, information, and funds)

Each decision should be made to improve the Supply Chain

surplus, and depend on:
 The frequency of each decision
 The time frame during which the decisions made apply

Supply Chain decisions

fall under 3 categories:

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4. Decision phases

Time frame during which the decisions

made apply: Next years

Take uncertainty into account Anticipate market

conditions over the following few years.

Objectives Examples

 What the chains  In-house vs. outsource

configuration will be  Location of production & warehousing
 What process each facilities
stage will perform  Modes of transportation
 Type of information systems to be used

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4. Decision phases
Objectives
Max (SC surplus that
can be generated over
the planning horizon),
given the constrains
established during the
design phase
Supply Chain Management – François Grisay
Time frame during which the decisions
made apply: Quarter -> Year
Incorporate the flexibility build into the strategy
phase, and exploit it to optimize performance
Include uncertainties in: demand, exchange rate,
competition over the time horizon
Examples
 Which markets will be supplied by which
locations
 Subcontracting of manufacturing
 Inventory policies to be followed
 Target production quantity, timing & size of
marketing/ price promotions
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4. Decision phases

Time frame during which the decisions

made apply: Weekly -> Daily

Exploit the reduction of uncertainty & optimize

performance

Objective Example
 Allocation of inventory or production to individual
Handle the customer orders
orders
in the best possible manner.
o Allocate a shipping mode to the order
 Supply Chain
o Set a date by which an order is to be filled
configuration = fixed
 Generate pick list at warehouses
 Planning policies = fixed
 Set delivery schedules of trucks
 Place replenishment orders

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 5. Process view

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5. Process view

Supply Chain =
 Sequence of processes & flows
 Take place within & in between stages

Processes performed in a Supply Chain can be viewed in different ways:

A. Push/Pull view = the processes in SC = divided in 2 categories, depending on
whether they’re executed in:
 Response to a customer order = Pull
 Anticipation of customer order = Push
B. Cycle view = the processes in SC = divided into series of cycles
 Performed at the interface between 2 successive stages in SC
C. Supply Chain Macro process in a firm

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5. Process view: A. Push / Pull view

A. Push / Pull view of Supply chain processes

All SC processes depend on the timing of their execution relative to a customer
order.
 Push process: initiated in anticipation of customer order based on forecast
= speculative process
 Boundaries: Uncertain environment (customer demand is not yet known)
 Pull process: initiated in response to the customer order
 Boundaries: Constrained by inventories & capacity decisions

This view is useful when considering strategic decisions

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5. Process view: A. Push / Pull view

Make-to-stock Assemble-to-stock Make-to-order Engineer-to-stock

Make-to-stock: Forecasts demand to determine how much stock should be

produced.

Assemble-to-order: Customer orders are produced quickly and are customizable

to a certain extent

Make-to-order: Only manufactures the end product once the customer places the
order.

Engineer-to-order: Designs and manufacturers a product based on very specific

customer requirements.

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5. Process view: A. Push / Pull view

How are those produced?

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5. Process view: A. Push / Pull view

Make-to-stock: If demand for the product can be accurately forecasted, the MTS strategy can
be an efficient choice.

Assemble-to-stock:

• Requires that the basic parts for the product are already manufactured, but not yet assembled.
• Once an order is received, the parts are assembled quickly and sent to the customer.

Make-to-order:

• This creates additional wait time for the consumer to receive the product
• But, allows for more flexible customization

Engineer-to-order: Because the end product tends to be complex

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5. Process view: A. Push / Pull view

Customer order decoupling point (CODP)

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5. Process view: B. Cycle view

B. Cycle view of Supply chain processes

 5 stages / 4 process cycles

 Scale of orders: # of orders increase & order size decrease

 Demand uncertainty: Sharing information & operating policies becomes more &
more important as we move further from the end customer

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5. Process view: B. Cycle view

B. Cycle view of Supply chain processes

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5. Process view: B. Cycle view

B. Cycle view of Supply chain processes

A cycle view of the Supply Chain clearly defines:
 The processes involved
 The owners of each process

This view is useful when considering operational decisions

Equivalent to the SCOR model (Supply Chain Operations Reference)

o Source
o Make
Processes
o Deliver
o Return

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5. Process view: C. Macro processes

C. Supply chain macro processes in a firm

All Supply Chain processes within a firm can also be classified under
Suppliers Firm Customer

Supplier relationship Internal Supply Chain Customer Relationship

Management (SRM) Management (ISCM) Management (CRM)

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 6. Course overview & evaluation

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6. Course overview

# Date Course

1 1 7 -Sep Introduction
2 24-Sep Source
3 01 -Oct Make
4 08-Oct Make
5 1 5-Oct Deliv er
6 22-Oct The beer game
29-Oct Holiday s
7 05-Nov IT
8 1 2-Nov Forecasting & machine learning
9 1 9-Nov Inv entory
10 26-Nov Inv entory
11 03-Dec Complex ity
12 1 0-Dec Strategy & Financial metrics
13 1 7 -Dec Rev ision / Sustainability

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6. Course continuous evaluation (30%)

A. Online tests (20%): # Date Course

Guest
speaker
Quotation

1 1 7 -Sep Introduction
2 to 4 guest speakers + 2 24-Sep Source
3 01 -Oct Make
online test on ICHEC campus 4 08-Oct Make
5 1 5-Oct Deliv er
6 22-Oct The beer game
29-Oct Holiday s
7 05-Nov IT Deloitte Online test TBC
8 1 2-Nov Forecasting & machine learning ULB Online test
9 1 9-Nov Inv entory
10 26-Nov Inv entory

B. Activity (10%): 11
12
03-Dec
1 0-Dec
Complex ity
Strategy & Financial metrics
GSK
V lerick
Online test TBC
Online test
13 1 7 -Dec Rev ision / Sustainability
At least 1 out of the 2 activities 20%

# Course activ ity Location Quotation

1 Site v isit Factory or Warehouse Photo + Maturity assesment*

or 2 Brussels Management Challenge ICHEC Montgomery Proof of pay ment + STEM student
1 0%

Supply Chain Management – François Grisay * Maturity assessment = Can be found on ICHEC Campus
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