Week 1 – August 22, 2024

Supply chain is a complex logistics system that

consists of facilities that convert raw materials
into finished products and distribute them to
end consumers or end customers, distribution,
finance, and customer service
- Wikipedia
Supply chain is the network of the involved
companies, through upstream and downstream
linkages, in the different processes and
activities that produce value in the form of
products and services in the hands of the
ultimate consumer.
- Basic Supply Chain Management by Y.Serroukh – Anglais Commercial
 A supply chain consists of all parties involved, directly or
indirectly, in fulfilling a customer request.
 The supply chain includes, not only the manufacturer and
suppliers, but also transporters, warehouses, retailers, and
even customers themselves .
 Within each organization, such as a manufacturer, the
supply chain includes all functions involved in receiving and
filling a customer request.
 These functions include, but are not limited to, new
product development , marketing, operations, distribution,
finance, and customer service
A typical supply chain may involve a variety of stages, including
the following:

 Customers
 Retailers
 Wholesalers/distributors
 Manufacturers
 Component/raw material suppliers

Supply chain may imply that only one player is involved at each
stage, but in reality, a manufacturer may receive material from
several suppliers and then supply several distributors.
The supply chain stages may include: suppliers,
producers, wholesale/distributors, retailers, and
customers
A supply chain is dynamic and involves the constant
flow of:

 Information,
 Product, and
 Funds, between different stages.

Each stage in a supply chain is connected through the flow of

products, information, and funds. These flows often occur in
both directions and may be managed by one of the stages or an
intermediary.
Flow of Product, Information and Money
THANK YOU
Week 2 – August 25-27, 2024
 Supply chain management means the management
of upstream and downstream relationships with
suppliers and customers to deliver superior
customer value at less cost to the supply chain as a
whole.
- Wikipedia
The design and management of seamless, value-added
process across organizational boundaries to meet the real
needs of the end customer
-- Institute for Supply Management

Managing supply and demand, sourcing raw materials and

parts, manufacturing and assembly, warehousing and
inventory tracking, order entry and order management,
distribution across all channels, and delivery to the
customer
-- The Supply Chain Council
 With SCM, companies can cut excess costs and
deliver products to the consumer faster and
more efficiently.
 Good SCM can help prevent expensive product
recalls and lawsuits as well as bad publicity.
 The five most critical phases of SCM are
planning, sourcing, production, distribution,
and returns.
 A supply chain manager is tasked with
controlling and reducing costs and avoiding
supply shortages.
Supply chain management is 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
– At the right time

In order to:
– Minimize total system cost
– Satisfy customer service requirements
– Face global competition
– Improve standardization
 It can help achieve several business objectives. For
instance, controlling manufacturing processes can
improve product quality, reducing the risk of recalls
and lawsuits while helping to build a strong
consumer brand.
 Control over shipping procedures can improve
customer service by avoiding costly shortages or
periods of inventory oversupply.
 Overall, supply chain management provides
multiple opportunities for companies to improve
their profit margins and is especially important for
businesses with large and international operations.
Firms have discovered value-enhancing and long term
benefits
* Who benefits most? Firms with:
 Large inventories
 Large number of suppliers
 Complex products
 Customers with large purchasing budgets
* Benefits - Lower purchasing/inventory costs, higher
quality/customer service
*Cost savings and better coordination of resources are
reasons to employ Supply Chain Management
Bullwhip Effect- the magnification of safety stocks and costs
based on separate forecasts and uncoordinated planning
and sharing of information along the supply chain
*Reducing the bullwhip effect occurs through:
Process integration - Interdependent activities can lead to
improved quality, reduced cycle time, better production
methods, better forecasts, less safety stock, etc.
 1960’s - Inventory Management Focus, Cost Control
 1970’s - MRP & BOM - Operations Planning
 1980’s - MRPII, JIT – Materials Management, Logistics
 1990’s - SCM - ERP - “Integrated” Purchasing,
Financials, Manufacturing, Order Entry
 2000’s - Optimized “Value Network” with Real-Time
Decision Support; Synchronized & Collaborative
Extended Network
 Lower inventories/increase inventory turnover
 Higher productivity
 Greater agility
 Shorter lead times
 Higher profits
 Greater customer loyalty
 Integrates separate organizations into a
cohesive operating system
1. Globalization: Consumers have benefited due to
greater product choice, higher quality, and lower
cost. The distance factor presents special
challenges to supply chain managers.
2. Outsourcing: is hiring a third party to perform a
set of tasks for a fee. An organization creates
superior value for its customers by managing
their core competencies better than their
competitors. This has helped companies be
more efficient by focusing on what they do best
3. Technology: Technological advances have enabled
companies to produce faster with better quality, at a
lower cost, and this trend will continue.
4. Postponement: The challenge for a global company is
to achieve the cost advantage of standardization while
still catering to local taste. This is sometimes called
postponement where completion of the final product
is postponed to the last possible moment till local
demands are known with greater certainty.
Postponement is a n important strategy for companies
to reach diverse geographic areas while still providing
customization.
5. The Lean Supply Chain: Waste in the supply chain is passed
on to the consumer and everyone in the supply chain pays
for it. In the lean supply chain all organizations work
collaboratively to reduce cost and waste by analyzing
processes and identifying areas of improvement..
6. Managing Supply Chain Disruptions: Some strategies
include having access to backup suppliers, building excess
capacity into the system, screening and monitoring
suppliers for supply chain risks, requiring suppliers of
critical items to develop detailed disruption plans, and
including the expected costs of disruption in the total cost
of sourcing.
7. Supply Chain Security: Tighter security and
inspection at ports can significantly increase transit
time and increase costs. Other concerns are theft
and product tampering. Electronic seals can be used
to prevent tampering and RFID and GPS
technologies can be used to track product location.
8. Sustainability and the Green Supply Chain: This
means designing processes to use environmentally
friendly inputs and create outputs that can be
recycled and that do not contaminate the
environment. Companies are realizing that they are
good business practices.
9. Innovation: This can include designing new
products to satisfy customer demands,
designing new cost cutting production
processes, or coming up with more efficient
product delivery mechanisms.
10. The Financial Supply Chain: The push is to
redesign the supply chain and search for less
costly sources of supply. Identifying the risks
and challenges of the financial supply chain
will continue to be a significant trend in the
future.
THANK YOU
Week 3 – September 5, 2024
A. Logistical Drivers B. Cross Functional Drivers
•Facilities • Information
•Inventory • Sourcing
•Transportation • Pricing

 Interactions determine overall supply chain

performance
 Each driver affects the balance between responsiveness and
efficiency and the resulting strategic fit.
1. Facilities
- The physical locations in the supply chain network
where product is stored, assembled, or fabricated
2. Inventory
- All raw materials, work in process, and finished
goods within a supply chain
3. Transportation
- Moving inventory from point to point in the supply
chain
4. Information
- Data and analysis concerning facilities, inventory,
transportation, costs, prices, and customers
throughout the supply chain
5. Sourcing
- Who will perform a particular supply chain activity
6. Pricing
- How much a firm will charge for the goods and
services that it makes available in the supply chain
Facilities are the actual physical locations
in the supply chain network where
product are stored, assembled or
fabricated.

The two major types of facilities are :

1. Production sites or Factories
2. Storage sites or Warehouses
Factories can be built to accommodate one of two
approaches to manufacturing:

 Product Focus: A factory that performs the range of

different operations required to make a given
product line from fabrication of different product
parts to assembly of these parts.

 Functional focus: A functional focus approach

concentrates on performing just a few operations
such as only making a select group of parts or doing
only assembly
Warehouse – a building where delivered materials or
manufactured goods are kept with appropriate
product parameters.
There are three main approaches to use in warehousing:
1. Stock Keeping Unit (SKU) storage - In this approach all of
a given type of product is stored together.
2. Job lot storage - In this approach all the different
products related to the needs of a certain type of
customer or related to the needs of a particular job are
stored together.
There are three main approaches to use in warehousing:
3. Crossdocking - In this approach, product is not actually
stored in the facility, instead the facility is used to house
a process where trucks from suppliers arrive and unload
large quantities of different products. These large lots are
then broken down into smaller lots. Smaller lots of
different products are recombined according to the needs
of the day and quickly loaded onto outbound trucks that
deliver the product to their final destination.
 The major facility related decisions include
identifying the number of facilities, the
extent of flexibility, the level of capacity,
and the markets served by each facility.
 Increasing the number of facilities, their
flexibility, or their excess capacity increases
responsiveness but hurts efficiency.
Inventory - encompasses all the
raw materials, work in process, and
finished goods within a supply chain
Overall Trade Off
 Increasing inventory generally makes the supply
chain more responsive
 A higher level of inventory facilitates a reduction in
production and transportation costs
 Inventory holding costs increase
Basic decisions to make regarding the creation
and holding of inventory:
1. Cycle Inventory - amount of inventory needed
to satisfy demand for the product in the period
between purchases of the product.
2. Safety Inventory - inventory that is held as a
buffer against uncertainty. If demand
forecasting could be done with perfect accuracy,
then the only inventory that would be needed
would be cycle inventory.
3. Seasonal Inventory - inventory that is built up
in anticipation of predictable increases in
demand that occur at certain times of the year.
4. Level of Product Availability - the fraction of
demand that is served on time from product
held in inventory
5. Inventory Related Metrics – i.e c2c time,
obsolete inventory, average inventory, returns,
etc
 The major inventory related decisions include
identifying the batch size, the safety inventory, the
seasonal inventory, and the level of product
availability.
 Increasing the safety inventory and level of product
availability increases responsiveness but hurts
efficiency.
 Increasing the batch size and seasonal inventory
increases holding costs but may decrease
production, transportation, and purchasing costs.
Transportation entails moving inventory
from point to point in the supply chain .
Transportation can take the form of many
combinations of modes & routes, each
with its own performance characteristics.
 Moves inventory between stages in the supply
chain
 Affects responsiveness and efficiency
 Faster transportation allows greater
responsiveness but lower efficiency
 Allows a firm to adjust the location of its facilities
and inventory to find the right balance between
responsiveness and efficiency
There are six basic modes of transport that a company
can choose from:
1. Ship which is very cost efficient but also the
slowest mode of transport. It is limited to use
between locations that are situated nest to
navigable waterways & facilities such as harbor &
canals.
2. Rails which is also very cost efficient but can be
slow. This mode is also restricted to use between
locations that are served by rail lines.
3. Pipelines can be very efficient but are restricted to
commodities that are liquid or gases such as water,
oil & natural gas. Trucks are a relatively quick &
very flexible mode of transport.
4. Trucks can go almost anywhere. The cost of this
mode is prone to fluctuations though, as the cost of
fuel fluctuates and the condition of road varies.
5. Airplanes are a very fast mode of transport and are
very responsive. This mode is also very expensive
mode & is somewhat limited by the availability of
appropriate airport facilities.
6. Electronic transport is the fastest mode of
transport and it is very flexible & cost efficient.
However , it can be only be used for movement of
certain types of products such as electric energy,
data, & products composed of data such as music,
pictures & text.
Overall Trade off - Responsiveness Versus Efficiency
 The cost of transporting a given product (efficiency) and
the speed with which that product is transported
(responsiveness)
 Faster modes of transport are more expensive but can
improve responsiveness while helping decrease inventory
and facility costs
 Using fast modes of transport raises responsiveness and
transportation cost but lowers the inventory holding cost
Information serves as the connection between
various stages of a supply chain, allowing them to
coordinate & maximize total supply chain
profitability.

Uses of Information in a supply chain:

 Coordinating daily activities related to the functioning of
other supply chain drivers:
 Forecasting & planning to anticipate& meet future
demands.
 Enabling technologies
 Improve the utilization of supply chain assets and the
coordination of supply chain flows to increase
responsiveness and reduce cost
 Information is a key driver that can be used to
provide higher responsiveness while simultaneously
improving efficiency
 Improves visibility of transactions and coordination of
decisions across the supply chain
 More information increases complexity and cost of
both infrastructure and analysis exponentially while
marginal value diminishes
Sourcing is the set of business processes
required to purchase goods & services.
Managers must first decide which tasks will
be outsourced & those that will be
performed within the firm.
Pricing determines how much a firm will charge
for goods & services that it makes available in
the supply chain.
Pricing affects the behavior of the buyer of the
good or services. This directly affects the supply
chain in terms of the level of responsiveness
required as well as the demand profile that the
supply chain attempts to serve.
Pricing is also a lever that can be used to match
supply & demand.
THANK YOU
Week 3 – September 3 & 5, 2024
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 a 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.
Given the 5 stages of a Supply Chain, all processes can be
broken down into the following four (4) process cycles namely:
Customer
Customer Order Cycle
Retailer
Replenishment Cycle
Distributor
Manufacturing Cycle
Manufacturer
Procurement Cycle
Supplier
 Each cycle occurs at the interface between two successive stages of the
supply chain.
 Not every supply chain will have all four cycles clearly separated.
 A cycle view of supply chain clearly define
the process involved and the owners of each
process.
 This view is very useful when considering
operational decisions because it specifies
the roles and responsibilities of each
member
 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 view is useful in considering strategic
decisions relating to supply chain design more
global view of how supply chain processes relate to
customer orders.
 The relative proportion of push and pull processes
can have an impact on supply chain performance
 Can combine the push/pull and cycle views.
 Classical manufacturing supply chain strategy
 Manufacturing forecasts are long-range
 Orders from retailers’ warehouses
 Longer response time to react to marketplace
changes
 Unable to meet changing demand
patterns
 Supply chain inventory becomes obsolete
as demand for certain products disappears
 Increased variability (Bullwhip effect) leading to:
 Large inventory safety stocks
 Larger and more variably sized production
batches
 Unacceptable service levels
 Inventory obsolescence
 Inefficient use of production facilities (factories)
 How is demand determined? Peak? Average?
 How is transportation capacity determined?
 Production and distribution are demand-driven
 Coordinated with true customer demand

 None or little inventory held

 Only in response to specific orders

 Fast information flow mechanisms

 POS data

 Decreased lead times

 Decreased retailer inventory
 Decreased variability in the supply chain and
especially at manufacturers
 Decreased manufacturer inventory
 More efficient use of resources
 More difficult to take advantage of scale
opportunities
 Combination of “push” and “pull” strategies to
overcome disadvantages of each
 Early stages of product assembly are done in a
“push” manner
 Final product assembly is done based on
customer demand for specific product
configurations
 Supply chain timeline determines “push-pull
boundary
THANK YOU