Scribd
Upload
83 views

Module 2. Basic Terms of SCMM

All the basics term related to supply chain

Uploaded by

Areeba Amir
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
83 views

Module 2. Basic Terms of SCMM

All the basics term related to supply chain

Uploaded by

Areeba Amir
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 18

Copyright © 2016 Pearson Education, Inc.

1
Muhammad Faisal
Downstream vs Upstream Supply Chain
• Some organizations simplify their management by dividing
the supply chain in two parts: upstream and downstream
supply chain.
• Upstream supply chain includes all activities related to the
organization’s suppliers: those parties that source raw
material inputs to send to the manufacturer.
• Downstream supply chain refers to activities post-
manufacturing, namely distributing the product to the final
customer.
• Downstream supply chain can also be thought of as the
“demand”
• Upstream supply chain is the “supply.”
• Supply chain managers seek to balance demand and supply
to make sure that there are no lost sales, inventory
shortages, or over-ordering
•
2
Basic Concept - 1 Supplier
Up-stream

Material / Goods
Manufacturer

Up-stream Distributor
&
Down-stream Retailers
Down-stream
Supply Chain Customer
Members
Basic Concept – 2
Inbound & Outbound
• Inbound logistics brings supplies or materials into a business

• Outbound logistics deals with moving goods and products out to


customers

• Both focus heavily on the transporting of goods.

• But inbound is all about receiving, while outbound focuses on delivery.

Copyright © 2016 Pearson Education, Inc. 5


Basic Concept - 2
Inbound & Outbound

Inbound (IB) Factory Outbound (OB)

OB IB
Basic Concept - 3
Supply Chain Macro Views
1.Customer Relationship Management
(CRM): all processes at the interface between SRM ISCM CRM
the firm and its customers (Source • Negotiate •
Buy • Design Collaboration • Supply Collaboration)
Suppliers Internal Supply Customers
2.Internal Supply Chain Management Relationship Chain Relationship
(ISCM): all processes that are internal to the Management Management Management
firm (Strategic Planning • Demand Planning •
Supply Planning • Fulfillment • Field Service)

3. Supplier Relationship Management


(SRM): all processes at the interface between Information System (ERP)
the firm and its supplier(Market • Price • Sell •
Call Center • Order Management)
Basic Concept - 4

Bullwhip Effect

• The bullwhip effect is a distribution


channel phenomenon in which
demand forecasts yield supply chain
inefficiencies.
• It refers to increasing swings in
inventory in response to shifts in
consumer demand as one moves
further up the supply chain.
• It is also known as the Forrester
effect
Grebson Manufacturing’s Supply Chain
• The Pearson Bearings Co. makes roller bearings for Grebson
Manufacturing on an as-needed basis. For the upcoming quarter,
they have forecasted Grebson’s roller bearing demand to be 25,000
units
• Since Grebson’s demand for bearings from Pearson has been
somewhat erratic in the past due to the number of bearing
companies competing with Pearson and also the fluctuation of
demand from Grebson’s customers, Pearson’s roller bearing forecast
includes 5,000 units of safety stock
• The steel used in Pearson Bearings’ manufacturing process is usually
purchased from Rogers Steels, Inc. Rogers Steels has, in turn,
forecasted Pearson’s quarterly demand for the high-carbon steel it
typically purchases for roller bearings
• The forecast also includes safety stock of about 20 percent over what
Rogers Steels expects to sell to Pearson over the next three months

10
Grebson Manufacturing’s Supply Chain

• This short description has exposed several problems occurring in most


supply chains. Because Pearson does not know with full confidence what
Grebson’s roller bearing demand will be for the upcoming quarter (it
could be zero, or it could exceed 25,000 units), Pearson will incur the
extra costs of producing and holding 5,000 units of safety stock.
• Additionally, Pearson risks having to either scrap, sell or hold onto any
units not sold to Grebson, as well as losing current and future sales to
Grebson if their demand exceeds 25,000 units over the next quarter.
• Rogers Steels faces the same dilemma—extra materials, labor costs and
warehouse space for safety stock along with the potential stockout costs
of lost present and future sales.
• Additionally, Grebson’s historic demand pattern for roller bearings from
its suppliers already includes some safety stock, since it uses roller
bearings in one of the products it makes for a primary customer.

11
PROCESS Views of SUPPLY CHAINS

A supply chain is a sequence of processes and flows that take place within and between different
stages and combine to fill a customer need for a product.
There are two ways to view the processes performed in a supply chain.

1. Cycle View: The processes in a supply chain are divided into a series of cycles, each performed at the
interface between two successive stages of the supply chain.

2. Push/Pull View: The processes in a supply chain are divided into two categories, depending on
whether they are executed in response to a customer order or in anticipation of customer orders. Pull
processes are initiated by a customer order, whereas push processes are initiated and performed in
anticipation of customer orders
PROCESS Views of SUPPLY CHAINS
All supply chain processes can be broken
down into the following four process cycles
• Customer order cycle
• Replenishment cycle
• Manufacturing cycle
• Procurement cycle
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

• Push: execution is initiated in anticipation of


customer orders (speculative)

• Pull: execution is initiated in response to a customer


order (reactive)

• Push/pull boundary separates push processes from


pull processes
Products and Observations

In an article by Lufthansa, they claimed that it took 6 million parts to build Boeing 747-8
More Illustrations

16
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
REFERENCES
• Chapter 1, Introduction to Supply Chain Management
Supply Chain Management (3ed.) by Chopra, Meindl and Kalra

• Chapter 1, Introduction to Supply Chain Management


Principles of Supply Chain Management by Wisner, Leong & Tan

You might also like