SUPPLY CHAIN

Supply Chain
A system of organizations, people, activities, information,
and resources involved in moving a product or service
from supplier to customer

Supplier Warehouse Logistics Store Customer

Major Challenges in Supply Chain

Supplier Warehouse Logistics Store Customer

How can the supply chain be optimized such that demand

is met on time, while keeping the costs low, yet quality is
maintained high?
But there are a lot of moving parts…
Major Challenges in Supply Chain

Supplier Warehouse Logistics Store Customer

•Quality may be inconsistent when suppliers change

•Cost of raw materials from manufacturers may be volatile and
affect pricing
•Supply may not always be enough for demand
•Suppliers may be unreliable
Major Challenges in Supply Chain

Supplier Warehouse Logistics Store Customer

•Overstocking or understocking brought about by

improper planning
•Cost of storage can be high
•Impractical location of warehouse affects logistics
Major Challenges in Supply Chain

Supplier Warehouse Logistics Store Customer

•Poor route planning leads to delays in delivery

•Capacity of transport vehicles may not be maximized
•Inability to forecast peak seasons of demand translates to
unavailability of item and unhappy customers
Major Challenges in Supply Chain

Supplier Warehouse Logistics Store Customer

•Store location is not strategically placed to be reached by

customers and/or logistics providers
•”Padding” or overstocking misleads demand planners
Major Challenges in Supply Chain

SupplierWarehouse Logistics Store Customer

•No direct visibility on customer demand

Analytics
is the discovery, interpretation, and communication
of meaningful patterns in data. Especially valuable in
areas rich with recorded information, analytics relies
on the simultaneous application of statistics,
computer programming and operations research to
quantify performance.

From Wikipedia, the free

encyclopedia
How can Analytics help improve Supply Chain?

Analyze
Consider Apply the
historical
possible risks right
data on all
in each step measures to
processes to
especially improve
identify
those efficiencies in
possible
involving processes,
inefficiencies,
significant costs and
as well as
investments time
trends
 How Analytics can Help Improve Supply Chain

Supplier Warehouse Logistics Store Customer

•Study the seasonality of orders per item, store/location and be able

to anticipate the peak seasons to be planned with the suppliers
•Establish a quality management process that is based on a quantitative
rating that tracks quality levels of suppliers over time
•Model the risk factors that affect pricing of raw materials to
anticipate price changes
How Analytics can Help Improve Supply Chain

Supplier Warehouse Logistics Store Customer

•Demand planning as an output of a forecasting model that is

based on historical trends as well as anticipated risks and events
should be an input to warehouse management for proper
stocking
•Selection of location of warehouses is based on data about
target store locations and distributors, as well as its
surroundings
How Analytics can Help Improve Supply Chain

Supplier Warehouse Logistics Store Customer

•Route optimization determines the best possible route

for transport vehicles based on distance, cost and
target time
•Optimization of use of trucks is based on proper demand
planning
How Analytics can Help Improve Supply Chain

Supplier Warehouse Logistics Store Customer

•Store location may be selected given data on its

target market matched with the geographic profile
based on current and future situations
•Orders from stores per day will help demand planners
anticipate demand, preventing padding and
overstocking
How Analytics can Help Improve Supply Chain

Supplier Warehouse Logistics Store Customer

•Data on when end customers receive the items, at what

quality, and their satisfaction level may be analyzed for
better accuracy of the demand forecasting models, as
well as the risk models that anticipate delivery to end
customers
Conclusion
Only by leveraging on the data that we capture about
each step of the Supply Chain process by applying
analytics techniques can we gain insightful knowledge
about it enough to control the results.
What Is Supply Chain Management (SCM)?
Supply chain management is the management of the flow of goods and
services and includes all processes that transform raw materials into final
products. It involves the active streamlining of a business's supply-side
activities to maximize customer value and gain a competitive advantage in
the marketplace.
Supply chain management is the handling of the entire process of turning raw
materials into a final product. Without the supply chain, we would not have
access to food and health products, or the items that allow us to work, travel and
entertain ourselves. Supply chain management involves a network of suppliers
connected via a centralized management process. Each supplier acts as a link
that moves a product along a chain of production, from raw material suppliers to
manufacturers to retailers.
What supply chain management is today is largely a result of market evolutions, digital
transformations, and changing consumer preferences. Here are a few examples:

● Different ways to buy. Consumers have many choices when purchasing products.
They can buy products in physical stores or online, for example.
● Climate-conscious consumers. Consumers have become more aware of how
products are manufactured. They want to know about products that are
climate-friendly. This affects the initial stages of the supply chain, where
manufacturers need to incorporate sustainable practices and sourcing in their
operations.
● Evolving trade policies. When a manufacturer is unable to get raw materials from
one supplier because of a trade policy, it must be able to adapt quickly and pivot to a
new source for its raw materials.
Five basic components in a supply chain
management system:
1. Planning

2. Sourcing
3. Making
4. Delivering
5. Returning
Planning
To meet customer demands, supply chain managers have to plan ahead. This
means forecasting demand, designing the supply chain intentionally, and
determining how the organization will measure the supply chain to ensure it
is performing as expected in terms of efficiency, delivering value for
customers and helping to achieve organizational goals.
Sourcing

To meet customer demands, supply chain managers have to plan ahead. This
means forecasting demand, designing the supply chain intentionally, and
determining how the organization will measure the supply chain to ensure it
is performing as expected in terms of efficiency, delivering value for
customers and helping to achieve organizational goals.
Making
Supply chain managers also need to help coordinate all the steps
involved in creating the product itself. This includes reviewing and
accepting raw materials, manufacturing the product, quality testing and
packaging. Generally, businesses evaluate the quality, production output
and employee productivity to ensure overall standards are upheld.
Delivering
Ensuring the products reach the customers is achieved through logistics and it’s
fundamental to supply chain success. This includes coordinating the orders,
scheduling delivery, dispatching, invoicing, and receiving payments. Generally, a fleet of
vehicles must be managed to ship the products—from tankers bringing product
manufactured overseas to fleet trucks and parcel services handling last mile delivery.
In some cases, organizations outsource the delivery process to other organizations
who can oversee special handling requirements or home delivery.
Returning

Supply chain managers also need to develop a network that supports returning
products. In some cases, this may include scrapping or re-producing a defective
product; in others, it may simply mean returning a product to the warehouse. This
network needs to be responsible and flexible to support customer needs.

The foundation for each of these components is a solid network of supporting

processes that can effectively monitor the information across the supply chain and
assure adherence to laws and regulations. This involves a wide number of
departments, including HR, IT, quality assurance, finance, product design and sales,
according to CIO.
Benefits of Supply Chain Management
1. Lowered Costs
By integrating suppliers and applying technology, organizations can lower
operating costs by responding more dynamically to customer needs. For
example, managing based on demand keeps organizations from
over-producing, which not only reduces labor and raw materials costs, but
also cuts down on inventory management costs and transportation costs.
Benefits of Supply Chain Management
2. Increased Revenue
When organizations use technology to stay closer to customer demand and
respond more quickly (as in the Walmart example keeping shelves
stocked), it’s more likely products remain available for customers to
purchase. When manufacturing is streamlined to produce just enough,
labor and materials can be devoted to developing new items to offer the
customer and expand the product mix. Outside the product realm, this may
mean offering additional services customers.
Benefits of Supply Chain Management
3. Asset Utilization
With effective supply chain management, organizations can use capital
assets, like production or transportation equipment, most effectively.
Rather than adding wear and tear to manufacturing equipment needlessly,
businesses can produce to the need.

Supply chain management allows organizations to deliver more quickly,

ensure products are available, reduce quality issues, and navigate returns
with ease, ultimately improving value, both within the organization and for
the customers.
Role of Information Systems in Supply Chain
Management
The role of information systems in supply chain management is to help businesses manage
supply chains through scheduling, sourcing, supplier management, and data analytics.

These systems help organizations oversee the key elements of the supply chain, from resource
development to logistics. They can help organizations keep track of different participants in the
supply chain, including suppliers, warehouses, transport companies, retailers, manufacturers,
and customer

The primary role of information systems in supply chain management is to ensure businesses
have access to the information they need to make the right business decisions. For example,
operational visibility allows companies to assess fluctuations and anomalies in their business.
By leveraging data in their internal systems (and public data), businesses can act intelligently
on identifying and solving supply chain issues before they become big problems.
Role of Information Systems in Supply Chain
Management

Information systems can also improve decision-making throughout the supply chain
process by helping decision-makers to:

● Be aware of what’s happening at key touchpoints in the supply chain

management process (operational visibility)
● Analyze information through visual dashboards and easy-to-understand data
using analytics and emerging technologies (for example, machine learning)
● Find opportunities to improve the performance of the supply chain, which can
lead to improved profitability and better customer experiences
References
https://networks.upou.edu.ph/11985/application-of-analytics-to-supply-chain-michelle-alarcon/

What Is Supply Chain Management, and Why Is It Important? | Online Business UMD

What is Supply Chain Management (SCM)? | MSU Online (michiganstateuniversityonline.com)