Supply Chain Management

By: 19-EE-518
19-EE-529
19-EE-539
To: Engr. M. Shahzad
 Supply Chain Management

 Definition:
Supply Chain Management is primarily concerned with the efficient
integration of suppliers, factories, warehouses and stores so that
merchandise is produced and distributed in the right quantities, to the
right locations and at the right time, and so as to minimize total
system cost subject to satisfying customer service requirements.
 Notice:
 Who is involved
 Cost and Service Level
 It is all about integration
 What Is Supply Chain
Management?

 Supply chain management is a set of approaches utilized to efficiently

integrate suppliers, manufacturers, warehouses, and stores, so that
merchandise is produced and distributed at the right quantities, to the
right locations, and at the right time, in order to minimize system wide
costs while satisfying service level requirements.
 What Is a Supply Chain?

Flow of products and services from:

 Raw materials manufacturers
 Intermediate products manufacturers
 End product manufacturers
 Wholesalers and distributors and
 Retailers
• Connected by transportation and storage activities
• Integrated through information, planning, and
integration activities
• Cost and service levels
 What is a supply chain?

Customer wants
P&G or other Jewel or third Jewel
detergent and goes
manufacturer party DC Supermarket
to Jewel

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

Chemical
Paper Timber
manufacturer
Manufacturer Industry
(e.g. Oil Company)
Drivers of Supply Chain
Performance
Efficiency Responsiveness

Supply chain structure

Inventory Transportation Facilities Information

Drivers
Decision Phases in Supply Chain

 Supply Chain
Strategy & Design
Strategy & Design
 Supply Chain
Planning Planning

 Supply Chain
Operations Operations
Cycle View of Supply
Chains
Customer
Customer Order Cycle

Retailer
Replenishment Cycle

Distributor

Manufacturing Cycle

Manufacturer
Procurement Cycle
Supplier
Flows in a Supply Chain

Information

Product
Customer
Funds
Supply Chain Strategy &
Design
 Location & capacity of production and
warehouses
 Products to manufactured and in which locations
 Mode of transportation
 Types of information systems to be used
 Strategic sourcing decisions
 The Value Chain: Linking
Supply Chain and Business
Business Strategy
Strategy
New Product Marketing
Strategy Strategy
Supply Chain Strategy

New Marketing
Product and Operations Distribution Service
Development Sales

Finance, Accounting, Information Technology, Human Resources

Supply Chain Planning

 Markets to be supplied & from which location

 Planned build-up of inventory
 Subcontracting of manufacturing
 Timing and size of market promotion
 Handling uncertainty in demand, foreign exchange
fluctuations
 Establishing production plan under fixed strategic
parameters
 Sequential Optimization
vs.
Global Optimization
Sequential Optimization

Procurement Manufacturing Distribution

Demand
Planning Planning Planning
Planning
Global Optimization

Supply Contracts/Collaboration/Information Systems and DSS

Procurement Manufacturing Distribution

Demand
Planning Planning Planning
Planning

Source: Duncan McFarlane

Strategic Scope

Suppliers Manufacturer Distributor Retailer Customer

Competitive
Strategy

Product Dev.
Strategy

Supply Chain
Strategy

Marketing
Strategy
Strategic Scope

 Intracompany Intraoperation Scope

 Minimize local cost view
 Intracompany Intrafunctional Scope
 Minimize functional cost view
 Intracompany Interfunctional Scope
 Minimize company profit view
 Intercompany Interfunctional Scope
 Maximize supply chain surplus view
Supply Chain Challenges

 Achieving Global Optimization

 Conflicting Objectives
 Complex network of facilities
 System Variations over time
Key Issues in Supply Chain
Management
 Distribution Network Configuration
 Inventory Control
 Supply contract
 Distribution Strategies
 Supply Chain Integration & Strategic Partnering
 Outsourcing & Procurement Strategies
Key Issues of SCM (cont)

 Product Design
 Information Technology & Decision Support
System
 Customer Value
Relationships between key SCM Issues
and the business environment

Global Managing
Optimization Uncertainty
Dist. Conf. X
Inv. Control X
Sup. Contract X
Dist. Strategies X X
St. partnership X X
Outsourcing X
P r. Design X
IT & DSS X X
Cust. Value X X
Prerequisites for Supply
Chain Management
 Top management understanding & commitment
 Quest for excellence
 Effective and efficient communication
 Relationship instead of exchange
 Cross-functional teams
 Reality of team, partnerships & alliances (based
on harmony & trust)
Considerations for Supply Chain
Drivers

Driver Efficiency Responsiveness

Inventory Cost of holding Availability

Transportation Consolidation Speed

Facilities Consolidation / Proximity /

Dedicated Flexibility
Information What information is best suited for
each objective
References
 A. Fernando, “Supply Chain Management (SCM): How It Works
and Why It Is Important,” investopedia.com.
https:/ /www.investopedia.co m/terms/s/scm.asp

 “What is supply chain management?,” ibm.com. https://

www.ibm.com/topics/supply-chain-management

 “Supply chain management,” wikipedia.org.

https://en. wikipedia.org/wiki/Supply_chain_management

 “What is SCM (Supply Chain Management)?,” oracle.com.

https://www.oracle.com/in/scm/what-is-supply-chain-management/