Definition and Objective of a supply

chain
 Key points
01 What is a supply chain

02 Objectives of a supply chain

Definition of a supply chain

• A supply chain is comprised of all parties which are involved,

directly or indirectly, in fulfilling a customer request.

• A supply chain is considered dynamic and involves the

constant flow of information, product, and funds among
various stages.
Demonstration of a typical Detergent supply chain

Kashif Shafiq
• Information

• Product

• Funds
The fundamental objective of a supply chain

• The objective behind any supply chain is to maximize the overall value generated. This
value of a supply chain is actually the difference between what the final product is worth
to the customer and the cost of supply chain incurred in responding to the customers
request.
Why is Supply Chain Management So Important?
 Key points
01 Importance of Supply Chain Management

02 Improve customer services

03 Reduce operating costs

Importance of Supply Chain Management

• Improve customer services

• Reduce operating costs
• Improve financial position
Improve Customer Services
• Customers expect to receive the correct product mix and quantity to be
delivered on time. For example, if you buy five books from Amazon and only two
of the actual titles arrive, one is an entirely different book and two are missing,
the customer will lose faith in Amazon, prompting them to leave a bad review
and hinder them from returning to the platform.
• Products need to be on hand in the right location. Customer satisfaction is
tarnished if your car’s brake pads fail and the auto repair shop is delayed in
making the repairs because parts are not available in-house.
• Follow up support after a sale must be done quickly. When an appliance store
sells a furnace with a warranty and it breaks down when temperatures are below
freezing, it is a great possibility the customer will be irate if the heating unit
cannot be fixed immediately.
Reduce Operating Costs

• Decreases Purchasing Cost - Retailors depend on supply chains to quickly

distribute costly products to avoid sitting on expensive inventories.
• Decrease Production Cost - Any delay in production can cost a company
tens of thousands of dollars. This factor makes supply chain management
ever more important. Reliable delivery of materials to assembly plants
avoids any costly delays in manufacturing.
• Decrease Total Supply Chain Cost - Wholesale manufacturers and
retailer suppliers depend on proficient supply chain management to
design a network that meets customer service goals. This gives
businesses a competitive edge in the marketplace.
Improve Financial Position
• Insert Profit Leverage - Businesses value supply chain managers
because they help control and decrease supply chain expenditures.
• Decrease Fixed Assets - Supply chain managers decrease the use of
large fixed assets such as plants, warehouses and transportation
vehicles, essentially diminishing cost.
• Increases Cash Flow - Firms appreciate the added value supply chain
management contributes to the speed of product flows to customers.
Reference:

• https://www.global-business-school.org/
Introduction to Supply
Chain Management
Basic supply chain concepts and
terminologies
Supply
Chain
Management

By: Waqar Ahmed

A Basic Chain Structure - Channel

Supplier Manufacturer Distributor Retailers Customer

Chain’s Strength
By: Waqar Ahmed
Strength of Supply Chain
 Chain’s Length

Supplier Supplier Supplier Manufacturer Distributor Retailers Customer Customer

By: Waqar Ahmed

 Supply Chain Complexity

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Supplier
Supplier Supplier
Supplier Supplier Manufacturer Distributor Retailers Customer Customer

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p p l ie
Su pp
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By: Waqar Ahmed

 str ibu
tor
Supply Chain Complexity
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Supplier
Supplier Supplier
Supplier Supplier
M Manufacturer Distributor Retailers Customer Customer
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By: Waqar Ahmed

Supply Chain Network

By: Waqar Ahmed

Supply Chain
Every product that reaches an end user represents the
cumulative effort of multiple organizations.

These organizations are referred to collectively as the

supply chain.

By: Waqar Ahmed

Basic Supply Chain Flows

Supplier Manufacturer Distributor Retailers Customer

Material / Goods

Information

Funds / Money

By: Waqar Ahmed

Supply Chain Management Definition
Management of the Flow of

Material, Information and Funds

from beginning to the end

in any organization is called

Supply Chain Management

By: Waqar Ahmed
 Supplier
IB
Upstream
Inbound (IB) Outbound (OB)
Factory Manufacturer
OB

Material / Goods
Plan
Distributor

Source Make Deliver

Retailers
Return Return Down stream

Customer
SRM ISCM CRM

Information System (ERP)

Supply Chain decisions and cycle view of supply chains
 Key points
01 Decisions phases of a supply chain

02 Cycle view of a supply chain

Decision Phases in a Supply Chain
• Successful supply chain management requires many decisions
relating to the flow of information, product and funds. Each
decisions should be made to raise the supply chain Surplus.
Types of Decision Phases
• Supply chain Strategy or Design
• Supply Chain Planning
• Supply Chain Operations
Supply Chain Strategy or Design
• During this phase, given the marketing and pricing plans for a
product, a company decides how to structure the supply chain over
the next several years.
• It decides what the chain’s configurations will be, how resource will
be allocated and what processes each stage will perform.
Supply Chain Planning
• Strategic decisions made by companies includes;
• whether to outsource or perform a supply chain function in
house.
• location and capacities of production and warehousing facilities.
• Product to be manufactured or stored at various locations.
• Modes of transportation
• Types of information system to be utilized.
Supply Chain Planning
• During this phase, time frame considered is a quarter to year.
Therefore, supply Cain’s determined in the strategic phase is fixed.
• This configuration establishes constraint within which planning must
be done.
• The goal of planning is to maximize the supply chain surplus that can
be generated over the planning horizon given the constraints
established during the strategic or design phase.
• Companies start the planning phase with a forecast for the coming
year of demand in different markets.
Supply Chain Planning contd.
• It includes;
• Making decisions
• Subcontracting of manufacturing
• Inventory policies to be followed
• Timing and size of marketing
• Price of promotions
Supply Chain Operations
• The time horizon here is weekly or daily.
• During this phase, companies makes decisions regarding individual
customer order.
Cycle View of Supply Chain Processes

• The processes in a supply chain are divided into a series of cycles, each performed at the interface
between two successive stages of a supply chain.
• a cycle view of the supply chain clearly defines the processes involved and the owners of each
process.
Supply chain Process Cycles
Customer Order Cycle
Retailer

Replenishment Cycle Distributor

Manufacturer

Kashif Shafiq
Manufacturing Cycle

Supplier
Procurement Cycle
Introduction to Supply
Chain Management
Push & Pull view/ Push and pull
boundary
Start-up

38
Push/Pull View of Supply Chain Processes
Supply chain processes fall into one of two categories depending on the
timing of their execution relative to customer demand

• Pull: execution is initiated in response to a customer order (reactive)

• Push: execution is initiated in anticipation of customer orders

(speculative)

• Push/pull boundary separates push processes from pull processes

Manufacturing Strategy Few Examples

Buildings
Industrial Machineries
Designers

PUSH
A la carte Restaurant
Tailors
Few Furniture businesses

PUSH
Few Furniture Businesses
Subway Fast Food Chain
DELL PC

FMCG
Buffett Restaurants
Boutique
PUSH
Examples of Supply Chains
 Key points
01 Importance of supply chain

02 Industry wise- IT, Textile, Automobile, Fast Moving Consumer Goods, E-Business.
Importance of supply chain
• Timely product availability
• Right condition
• Improved customer service
• Higher revenues
• Efficiency in operations leads to more profits
• Greater agility(response)
• Greater customer loyalty
• Integration with the end to end chain.
• Better demand management
• Better supply management
Industry wise examples
• IT
• Textile
• Automobile
• Fast Moving Consumer Goods
• E-Business.