Scribd
Upload
657 views31 pages

Understanding SCM

This chapter is for the beginners who want to pursue career in Supply Chain. It covers the basic concept of supply chain and its evolution.

Uploaded by

Ahmed Abdullah
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
657 views31 pages

Understanding SCM

This chapter is for the beginners who want to pursue career in Supply Chain. It covers the basic concept of supply chain and its evolution.

Uploaded by

Ahmed Abdullah
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
You are on page 1/ 31

CHAPTER-1

UNDERSTANDING THE SUPPLY


CHAIN
HISTORY OF SUPPLY CHAIN MANAGEMENT STAGES OF SCM EVOLUTION
STAGE-1: MULTIPLE DYSFUNCTION
• No Clear internal definition of goals.
• No external links other than transactional ones
STAGE-2: SEMIFUNCTIONAL ENTERPRISE
• Initiative for improvement within functional boundaries.
• Little or no overlap in decision making from one dept. to another.
STAGE-3: INTEGRATED ENTERPRISE
• Functional Areas brought together in processes.
• Focus on company-wide processes
STAGE-4 :EXTENDED ENTERPRISE
• Establishment of partnership with internal/ External Supply Chain
Partners.
What is a Supply Chain?
• All stages involved, directly or indirectly, in fulfilling a customer
request
• Includes manufacturers, suppliers, transporters, warehouses,
retailers, and customers
• Within each company, the supply chain includes all functions involved
in fulfilling a customer request (product development, marketing,
operations, distribution, finance, customer service)
What is a Supply Chain?
• A supply chain is actually a complex and dynamic supply and demand
network.
• A supply chain is a system of organizations, people, activities,
information, and resources involved in moving a product or service
from supplier to customer.

Source: Wikipedia
What is a Supply Chain?
• Customer is an integral part of the supply chain
• Includes movement of products from suppliers to manufacturers to
distributors and information, funds, and products in both directions
• May be more accurate to use the term “supply network” or “supply
web”
• Typical supply chain stages: customers, retailers, distributors,
manufacturers, suppliers
• All stages may not be present in all supply chains (e.g., no retailer or
distributor for Dell)
Flows in a Supply Chain

Figure 1-2
The Objective of a Supply Chain
• Maximize overall value created

Supply Chain Surplus


= Customer Value – Supply Chain Cost
Value Chain
Value Chain is made up of “ the functions within a company that
add value to goods or services that the organization sells to
customer for which it receives payment”.
(APICS Dictionary 14th Edition)
The Objective of a Supply Chain
• Example: a customer purchases a wireless router from
Best Buy for $60 (revenue)
• Supply chain incurs costs (information, storage,
transportation, components, assembly, etc.)
• Difference between $60 and the sum of all of these
costs is the supply chain profit
• Supply chain profitability is total profit to be shared
across all stages of the supply chain
• Success should be measured by total supply chain
profitability, not profits at an individual stage
The Objective of a Supply Chain
• Customer the only source of revenue
• Sources of cost include flows of information, products, or funds
between stages of the supply chain
• Effective supply chain management is the management of flows
between and among supply chain stages to maximize total supply
chain surplus
Decision Phases of a Supply Chain

• Supply chain strategy or design


• How to structure the supply chain over the next several years
• Supply chain planning
• Decisions over the next quarter or year
• Supply chain operation
• Daily or weekly operational decisions
Supply Chain Strategy or Design
• Decisions about the structure of the supply chain and
what processes each stage will perform
• Strategic supply chain decisions
• Locations and capacities of facilities
• Products to be made or stored at various locations
• Modes of transportation
• Information systems
• Supply chain design must support strategic objectives
• Supply chain design decisions are long-term and
expensive to reverse – must take into account market
uncertainty
Supply Chain Planning
• Definition of a set of policies that govern short-term operations
• Fixed by the supply configuration from previous phase
• Starts with a forecast of demand in the coming year
Supply Chain Planning
• Planning decisions:
• Which markets will be supplied from which locations
• Planned buildup of inventories
• Subcontracting, backup locations
• Inventory policies
• Timing and size of market promotions
• Must consider in planning decisions demand
uncertainty, exchange rates, competition over the
time horizon
Supply Chain Operation
• Time horizon is weekly or daily
• Decisions regarding individual customer orders
• Supply chain configuration is fixed and operating
policies are determined
• Goal is to implement the operating policies as
effectively as possible
• Allocate orders to inventory or production, set order
due dates, generate pick lists at a warehouse, allocate
an order to a particular shipment, set delivery
schedules, place replenishment orders
• Much less uncertainty (short time horizon)
Process View of a Supply Chain
• Cycle View: processes in a supply chain are divided into a series of
cycles, each performed at the interfaces between two successive
supply chain stages
• Push/Pull View: processes in a supply chain are divided into two
categories depending on whether they are executed in response to a
customer order (pull) or in anticipation of a customer order (push)
Cycle View of
Supply Chain
Processes

Figure 1-3
Cycle View of
Supply Chain Processes

Figure 1-4
Push/Pull View of Supply Chains

Figure 1-5
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
Push/Pull View of
Supply Chain Processes
• Useful in considering strategic decisions relating to
supply chain design – more global view of how supply
chain processes relate to customer orders
• Can combine the push/pull and cycle views
• L.L. Bean
• Dell
• The relative proportion of push and pull processes
can have an impact on supply chain performance
Push/Pull View of – L.L. Bean

Figure 1-6
Push/Pull View – Dell

Figure 1-7
Supply Chain Macro Processes
• Supply chain processes discussed in the two views can
be classified into
• Customer Relationship Management (CRM)
• Internal Supply Chain Management (ISCM)
• Supplier Relationship Management (SRM)
• Integration among the above three macro processes
is critical for effective and successful supply chain
management
Supply Chain Macro Processes

Figure 1-8

You might also like