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    Introduction To Supply Chain Management

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    Sneha Karpe
    The document provides an introduction to supply chain management. It defines a supply chain as including suppliers, manufacturers, warehouses, distribution centers, and retail outlets, along with the flow of raw materials, work-in-process inventory, and finished products between them. It describes supply chain management as coordinating these entities to minimize costs and satisfy service requirements. Key challenges include complexity, global optimization, demand uncertainty, and integrating partners.

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    Introduction To Supply Chain Management

    Uploaded by

    Sneha Karpe
    291 views19 pages
    The document provides an introduction to supply chain management. It defines a supply chain as including suppliers, manufacturers, warehouses, distribution centers, and retail outlets, along with the flow of raw materials, work-in-process inventory, and finished products between them. It describes supply chain management as coordinating these entities to minimize costs and satisfy service requirements. Key challenges include complexity, global optimization, demand uncertainty, and integrating partners.

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    Introduction to Supply Chain Management

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    Introduction to Supply Chain Management

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    The document provides an introduction to supply chain management. It defines a supply chain as including suppliers, manufacturers, warehouses, distribution centers, and retail outlets, along with the flow of raw materials, work-in-process inventory, and finished products between them. It describes supply chain management as coordinating these entities to minimize costs and satisfy service requirements. Key challenges include complexity, global optimization, demand uncertainty, and integrating partners.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    291 views19 pages

    Introduction To Supply Chain Management

    Uploaded by

    Sneha Karpe
    The document provides an introduction to supply chain management. It defines a supply chain as including suppliers, manufacturers, warehouses, distribution centers, and retail outlets, along with the flow of raw materials, work-in-process inventory, and finished products between them. It describes supply chain management as coordinating these entities to minimize costs and satisfy service requirements. Key challenges include complexity, global optimization, demand uncertainty, and integrating partners.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    of 19
    At a glance
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    The key takeaways are that a supply chain involves the flow of raw materials, work-in-process inventory, and finished goods from suppliers to customers through various facilities like manufacturers, warehouses, and distribution centers. It aims to efficiently integrate these entities to minimize costs and meet service requirements.

    The key components of a supply chain are suppliers, manufacturers, warehouses, distribution centers, customers, and the materials, inventory, and products that flow between them including raw materials, work-in-process inventory, and finished products.

    Supply chain management is a set of approaches to efficiently integrate suppliers, manufacturers, warehouses and distribution centers so that products are produced and distributed in the right quantities, to the right locations and at the right time, while minimizing system-wide costs and meeting service level requirements.

    Introduction to Supply Chain Management UNIT-I

    What Is the Supply Chain?


    Also referred to as the logistics network Suppliers, manufacturers, warehouses, distribution centers and retail outlets facilities
    Suppliers Manufacturers Warehouses & Customers Distribution Centers

    and the

    Raw materials Work-in-process (WIP) inventory Finished products


    that flow between the facilities

    Material Costs

    Transportation Costs

    Transportation Costs Transportation Manufacturing Costs Inventory Costs Costs

    The Supply Chain


    Suppliers Manufacturers Warehouses & Distribution Centers Customers

    Transportation Costs Material Costs

    Transportation Costs

    Manufacturing Costs

    Transportation Costs Inventory Costs

    The Supply Chain Another View

    Plan

    Source

    Make

    Deliver

    Suppliers

    Manufacturers

    Warehouses & Distribution Centers

    Customers

    Material Costs

    Transportation Transportation Costs Transportation Costs Manufacturing Costs Inventory Costs Costs

    What Is Supply Chain Management (SCM)?

    A set of approaches used to efficiently integrate


    Suppliers Manufacturers Warehouses Distribution centers In the right quantities To the right locations And at the right time

    So that the product is produced and distributed

    System-wide costs are minimized and Service level requirements are satisfied

    This definition leads to several observations. First supply chain management takes into consideration every facility that has an impact on cost and plays a role in making the product conform to customer requirement.

    Second, the objective of supply chain management is to be efficient and costeffective across the entire system; total system-wide costs, from transportation and distribution. Finally, because supply chain management revolves around efficient integration of suppliers, manufacturers, warehouses, and stores, it encompasses the firms activities at many levels, starting from strategic level through the tactical to the operational level.
    7

    Another view of SCM

    The process of planning, implementing and controlling the efficient, cost effective flow and storage of raw materials, inprocess inventory, finished goods and related information from point-of-origin to point-of-consumption for the purpose of conforming to customer requirements.

    History of Supply Chain Management


    1960s - Inventory Management Focus, Cost Control 1970s - MRP & BOM - Operations Planning 1980s - MRPII, JIT - Materials Management, Logistics 1990s - SCM - ERP - Integrated Purchasing, Financials, Manufacturing, Order Entry 2000s - Optimized Value Network with Real-Time Decision Support; Synchronized & Collaborative Extended Network

    What makes supply chain management difficult?


    Its a challenge to design and operate a supply chain so that total system wide costs are minimized and system wide service levels are maintained. The process of finding the best system wide strategy is known as global optimization. Uncertainty in every supply chain
    10

    A variety of factors make this a challenging problem Global Optimization


    The supply chain is a complex network Different facilities frequently have objectives. in the supply chain different, conflicting,

    The supply chain is a dynamic system System variations over time

    11

    A variety of factors make this a challenging problem Managing Uncertainty Matching supply and demand is a major challenge: Inventory and back-order levels fluctuate considerably across the supply chain, even when customer demand for specific products does not vary greatly. Forecasting doesnt solve the problem Demand is not the only source of uncertainty
    12

    Why Is SCM Difficult?

    Uncertainty is inherent to every supply chain


    Travel times Breakdowns of machines and vehicles Weather, natural catastrophe, war Local politics, labor conditions, border issues

    The complexity of the problem to globally optimize a supply chain is significant


    Minimize internal costs Minimize uncertainty Deal with remaining uncertainty

    13

    WHY SUPPLY CHAIN MANAGEMENT?

    ??????
    In the 1980s organizations discovered new manufacturing technologies and strategies that allowed them to reduce costs and to be more competitive in the market. Strategies such as JIT, Kanban, leanmanufacturing , Total Quality Management were applied. Manufacturing companies were able to reduce the production cost with the above mentioned technologies Later these companies discovered that effective supply chain management is the next step they need to take in order to increase profit and market share.

    14

    The Importance of Supply Chain Management


    Dealing with uncertain environments matching supply and demand
    Boeing announced a $2.6 billion loss in 1997 due to raw materials shortages, internal and supplier parts shortages and productivity inefficiencies U.S Surgical Corporation announced a $22 million loss in 1993 due to larger than anticipated inventories on the shelves of hospitals Hewlett-Packard and Dell found it difficult to obtain important components for its PCs from Taiwanese suppliers in 1999 due to a massive earthquake

    U.S. firms spent $898 billion (10% of GDP) on supply-chain related activities in 1998
    15

    The Importance of Supply Chain Management


    Shorter product life cycles of high-technology products
    Less opportunity to accumulate historical data on customer demand Wide choice of competing products makes it difficult to predict demand

    The growth of technologies such as the Internet enable greater collaboration between supply chain trading partners
    If you dont do it, your competitor will Major buyers such as Wal-Mart demand a level of supply chain maturity of its suppliers
    Firms have access to multiple products (e.g., SAP, Baan, Oracle, JD Edwards) with which to integrate internal processes

    Availability of SCM technologies on the market

    16

    Supply Chain Management Key Issues


    Firms activities- Strategic, tactical, operational level decisions Forecasts are never right
    Very unlikely that actual demand will exactly equal forecast demand

    The longer the forecast horizon, the worse the forecast


    A forecast for a year from now will never be as accurate as a forecast for 3 months from now

    Nevertheless, forecasts (or plans, if you prefer) are important management tools when some methods are applied to reduce uncertainty

    17

    Supply Chain Management Key Issues


    ISSUE Network Planning CONSIDERATIONS Warehouse locations and capacities Plant locations and production levels Transportation flows between facilities to minimize cost and time How should inventory be managed? Why does inventory fluctuate and what strategies minimize this? Impact of volume discount and revenue sharing Pricing strategies to reduce order-shipment variability

    Inventory Control

    Supply Contracts

    Distribution Strategies

    Selection of distribution strategies (e.g., direct ship vs. cross-docking) How many cross-dock points are needed? Cost/Benefits of different strategies
    How can integration with partners be achieved? What level of integration is best? What information and processes can be shared? What partnerships should be implemented and in which situations? What are our core supply chain capabilities and which are not? Does our product design mandate different outsourcing approaches? Risk management How are inventory holding and transportation costs affected by product design? How does product design enable mass customization?

    Integration and Strategic Partnering

    Outsourcing & Procurement Strategies

    Product Design Source: Simchi-Levi

    18

    Information Technology and DecisionSupport Systems


    Information technology is a critical enabler of effective supply chain management. Indeed, much of the current interest in supply chain management is motivated by the opportunities that appeared due to the abundance of data and the savings that can be achieved by sophisticated analysis to these data. In the end we can say two Ts will enable us to manage the supply chains effectively and efficientlyTECHNOLOGY & TRUST

    19

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