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Chapter 1 - Understanding The Supply Chain

The document provides an overview of supply chain management concepts. It defines key terms like supply, supply chain, and supply chain management. It describes the linkages in a supply chain between procurement, manufacturing, and distribution. It also outlines some of the difficulties in managing global supply chains, like balancing supply and demand with uncertainties. Finally, it discusses strategic, tactical, and operational decision levels in a supply chain and some major decision areas.

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Mohit Jain
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865 views17 pages

Chapter 1 - Understanding The Supply Chain

The document provides an overview of supply chain management concepts. It defines key terms like supply, supply chain, and supply chain management. It describes the linkages in a supply chain between procurement, manufacturing, and distribution. It also outlines some of the difficulties in managing global supply chains, like balancing supply and demand with uncertainties. Finally, it discusses strategic, tactical, and operational decision levels in a supply chain and some major decision areas.

Uploaded by

Mohit Jain
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
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Chapter 1 Understanding The Supply Chain

Content:

Introduction
Evolution of the Supply Chain Concept
SCM: Definition
Supply Chain Linkages
SCM: Difficulties / Issues
Extended Supply Chain
Supply Chain Decision Hierarchy

Chapter 1 Understanding The Supply Chain

References:
Designing and Managing the Supply Chain
David Simchi Levi, Philip Kaminsky,
Edith Simchi Levi, Ravi Shankar
Supply Chain Management for Retailing
Rajesh Ray
Supply Chain Management (Process, System
and Practice) N Chandrasekaran

Supply Chain Management Introduction


What is Supply Chain?
Important business process concept
Links various elements of business operations
Network of facilities and distribution
Functions like
Procurement
Planning
Production
Distribution / Logistics
Exists in both service and manufacturing organization
Complex based on product market configuration
What is Supply Chain Management?
Controls the physical flow.
Integrates the activities of different functional areas in a
firm.

A Typical Supply Chain

Typical supply chains are far more complex involving


multiple suppliers, manufacturing centers, distributors and
retailers
Hence, often referred to as supply networks

Supply Chain Management Introduction


Why focus on Supply Chain?
Globalization of markets
Fierce Competition gain competitive advantage
Products with short Product Life Cycle
Heightened expectations of customers
Continuing advances in communication and
transportation technologies

Evolution of Supply Chain Management

Supply Chain Management - Definition


SUPPLY:
Quantity of inventory / goods available (in required quantity)
for use or the actual replenishment of a product or component.
SUPPLY CHAIN:
It is the link connecting a set of facilities, companies, demand
and supply points and service providers. This chain links the
upstream suppliers and downstream customers with the flow
of products, services, finances and information from a source
to a customer.
SUPPLY CHAIN MANAGEMENT:
It is the systematic and strategic coordination of all business
functions within a company and across businesses within the
supply chain to improve the long-term performance of
individual companies and the supply chain as a whole.

Supply Chain Management - Definition


SUPPLY CHAIN MANAGEMENT:
Supply chain management encompasses the planning and
management of all activities involved in sourcing and
procurement, conversion and all logistics management
activities. Importantly, it also includes coordination and
collaboration with channel partners, which can be suppliers,
intermediaries, third party service provides and customers. In
essence, supply chain management integrates supply and
demand management within and across companies.
- Council of SCM Professionals
SCM is a set of approaches utilized to efficiently integrate
suppliers, manufacturers, warehouses and stores so that
merchandise is produced and distributed at the right
quantities, to the right locations and at the right time in order
to minimize system wide costs while satisfying service level
requirements.
- Simchi Levi

Supply Chain Linkages


Supply Chain Linkages:
Procurement
Manufacturing
Distribution

Supply Chain Linkages


In essence, SCM can be understood by what it can
achieve,
It manages 3 Flows:
Inventory :
FG, RM, WIP
Information : Order, Status, Contracts
Finance:
Payments, Credits
It manages 4 cycles:
Order Fulfillment: Customer arrival order entry order fulfillment - order receiving
Replenishment: Retail order trigger - Entry fulfillment
-Receiving
Manufacturing: Order arrival (from retailer/distributor)
production scheduling Manufacturing Shipping
Procurement: Order release Receive material
It aligns capabilities of Suppliers and service providers

Supply Chain Management Difficulties / Issues

The Development Chain


Set of activities and processes associated with New Product
Introduction
Capabilities and knowledge
Sourcing decisions
Production Plans
Make /Buy
Supplier involvement

Global Optimization
Complex Network
Different facilities different conflicting objectives
Dynamic System Customer demand / customization
System Variations seasonal fluctuations, trends,
competitors, advertising & promotions

Supply Chain Management Difficulties / Issues

Managing Uncertainty and Risk


Matching supply and demand
Fluctuating inventory and back orders
Forecasting
Lean manufacturing, outsourcing, off shoring

Conflicting Objectives in the Supply Chain

Purchasing
Stable volume requirements
Flexible delivery time
Little variation in mix
Large quantities

Manufacturing
Long run production
High quality
High productivity
Low production cost

Supply Chain Management Difficulties / Issues

Conflicting Objectives in the Supply Chain

Warehousing
Low inventory
Reduced transportation costs
Quick replenishment capability

Customers
Short order lead time
High in stock
Enormous variety of products
Low prices

Extended Supply Chain


Extended Supply Chain: Key function of SC of Manufacturing firm:
Buy Make - Distribute
Suppliers supplier
Customers customer
Complex to manage
Better control of costs, delivery and end product quality
Higher customer satisfaction and profitability

Decisions in Supply Chain

3 levels of decisions in supply chain: Strategic, Tactical and


Operational
Strategic Decisions:
Long term in line with corporate strategy, influence supply
chain network design
Decisions related to number, size and location of new
plant, distribution centers and warehouses
Acquisition of new production equipment
Design of transportation facilities, communication
equipment
Tactical Decisions: Enhancing efficiency and effectiveness of
the supply chain system
Purchasing / Production decisions (Make / Buy)
Workforce Size
Inventory Policy
Distribution Centers
Alternative Transportation

Decisions in Supply Chain

Operational Decisions: Short-term, day to day activities


Assignment of customer orders to individual machines
Dispatching, expediting, processing orders
Vehicle Scheduling and Routing

Major decision areas with strategic, tactical and operational


elements in SCM are:
Network Related
Vendor Related
Production Related
Inventory Related
Distribution Related
Information Flow Related

Supply Chain Decisions

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