Outline

• What is supply chain management?

Project Supply Chain • Decisions Phases in SC

• Elements of SCM
Management
CASE STUDY
Ali Zaki HALF A CENTURY OF SCM AT WALMART

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Supply Chain Management SCM Historical Background

– A set of approaches used to efficiently integrate – Historical Background:
 Suppliers  Creation era
 Manufacturers
 Keith Oliver in 1982
 Warehouses
 Distribution centers  Integration Era

– So that the product is produced and distributed  electronic data interchange (EDI) systems
 In the right quantities  Globalization Era
 To the right locations  expansion of supply chains beyond national boundaries
 And at the right time
 Specialization era: outsourced manufacturing and distribution
– System-wide costs are minimized and  focus on "core competencies" and specialization
– Service level requirements are satisfied

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Alternate Definition Supply Chain Overview

Supply chain is dynamic and involves the constant flow of three things; Suppliers Manufacturers Warehouses & Customers
Distribution
Centers

1. Information
2. Product
3. Funds.

Transportation

Material Costs Costs

Transportation
Manufacturing Costs Inventory Costs

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What is Value Decision Phases in SC

 Supply Chain Strategy or Design:-
 Marketing, Pricing plans for several years…
– The value (profitability) a supply chain generates is the difference
 Sourcing, Procurement, vendor/supplier selection
between what the final product is worth to the customer and the
costs the supply chain incurs in filling the customer’s request.  Production capacity
 Supply Chain Planning:-
– Or in other words…  Time frame: Quarter to year.
– The difference between revenue generated from customer and the  After fixing strategic phase.
overall cost across the supply chain.  Forecasting, maximizing SC surplus/value/profitability.
 Supply Chain Operation:-
 Time Frame: Daily weekly.
 Goal is to handle the customer request in best possible
manner as per fixed strategy and planning.

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SC is a sequence of process & flows SC is a sequence of process & flows

Customer Order Customer Customer Order Customer

Cycle Cycle
Cycle
View.
Retailer Retailer
Replenishment Cycle Replenishment Cycle
Cycle
Buyer returns
View. Distributor reverse flows or Distributor
third party
Manufacturing Cycle Manufacturing Cycle
Manufacturer Buyer stage Buyer stage receives Manufacturer
places order order
Seller Stage Seller stage supplies
Procurement Cycle Receives order Procurement Cycle
Supplier Order Supplier

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Why Is SCM Difficult? Important Elements of SCM

• Uncertainty is inherent to every supply chain Procurement- Supplier alliances, supplier
– Travel times management, strategic sourcing
– Breakdowns of machines and vehicles
– Weather, natural catastrophe, war Operations- Demand management, MRP, ERP, JIT,
– Local politics, labor conditions, border issues TQM
• The complexity of the problem to globally optimize a supply chain is Logistics- Transportation management, customer
significant
relationship management, network
– Minimize internal costs design, service response logistics
– Minimize uncertainty
– Deal with remaining uncertainty Integration- Coordination/Integration
activities,
global integration problems,
performance measurement

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Next Lecture
• Introduction to Procurement
• Procurement Vs. Purchasing
• INCOTERMS
• Procurement Management Process
– Procurement Simulation
– Landed Cost Analysis

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