Supply Chain Management:

An Introduction
 Typical Supply Chains

Purchasing Production Distribution

Receiving Storage Operations Storage

 Stages of Detergent Supply Chain

Customer wants
P&G or others Martin’s or Martin’s
detergent and
manufacturer third party Supermarket goes to Martin’s

Chemical
Plastic Tenneco
manufacturer
Producer Packaging
(e.g., Oil Co.)

Chemical
Paper Timber
manufacturer
Manufacturer Industry
(e.g., Oil Co.)
 Flow of material
+
Flow of ownership

Supplier 1 Dealer 1

Source Company Customer

Supplier 2 Dealer 2

Flow of information
+
Flow of money

Supply Chain System

 Supply Chain Flows

Information Capacity, promotion plans, delivery schedules

Material Raw materials, in-process products, finished goods
Finance Credits, consignment, payment terms, invoices

Suppliers Manufacturer Distributor Resellers Customers

Sales, orders, inventory, quality, promotion plans Information

Returns, repairs, servicing, recycling, disposal Material
Payments, consignment Finance
 Customer purchases online from Dell Computer
Pricing

Variety Availability
Customer orders through Dell website

Payment
Availability
Return to website & check the status of order

Information Customer orders taken by Dell assembly plant

Dell suppliers

Dell suppliers’ suppliers

 Supply Chain Dynamics
• Bullwhip effect
– Upstream members must react to the demand
– Slightest change in customer demand can ripple
through the entire chain

Copyright © 2010 Pearson

Education, Inc. Publishing as
Prentice Hall.
 Supply Chain Dynamics
Manufacturer’s Package supplier’s
weekly orders to weekly orders to
package supplier cardboard supplier
9,000 Retailers’ daily
orders to
manufacturer
Order quantity

7,000 Consumers’
daily demands

5,000

3,000

0
Day 1 Day 30 Day 1 Day 30 Day 1 Day 30 Day 1 Day 30
Month of April

Figure 10.2 – Supply Chain Dynamics for Facial Tissue

Copyright © 2010 Pearson

Education, Inc. Publishing as
Prentice Hall.
 Ways to Reduce Bullwhip Effect

• Good Demand forecasting

• Information sharing
• Coordination