Introduction to Supply

Chain Management
Lecture 1
Instructor: Dr. Ubaid Ullah Mumtaz
email: [email protected]
About Me
• Bachelors in Mechanical Engineering (UET Peshawar)
• Masters in Engineering Management (GIKI)
• Ph.D. in Management (University of Western Australia)
• Technology Consultant (Ernst & Young Australia)
About you
• Name
• Where are you from
• Why GIKI
• What do you think you will get from this course
• Future goals or careers aspirations
• An interesting fact about you
Office hours
• By appointments, drop me an email for any enquiry and I’ll schedule a
meeting if needed.
• Email ID: [email protected]
Instructions
• According to the institutes policy, 80% attendance is mandatory
• There will be no retake of quizzes
• It is expected that you come to class well prepared having read the
assigned material
• Makes sure you form your groups for the group assignment in the first
week.
Unit objective
• Be a supply chain consultant or researcher
• Develop an understanding of SCM issues
• Analyze key management trade-offs related to overall revenues, costs,
partnerships, customer service and push – pull strategies
• Explain how emerging technologies can reshape SCM
Text Books
• Designing and managing the
supply chain: concepts, strategies,
and case studies (3rd Edition)
• Principles of Supply Chain
Management, A balanced
Approach, 3rd edition.
Grading Policy
Assignments 15%
Quizzes 10%
Presentation 5%
Mid Term 30%
Final Term 40%
Total 100%
Assignments
• Individual Assignment
• The impact of “TOPIC” on supply chain management
• “TOPIC” is one of the following:
• Cloud computing
• Cybersecurity
• 3D Printing
• Digital Reality (Virtual reality/Augmented Reality)
• Word Limit: 1500 words
Assignments
• Group Assignment and Presentation
• How ”TOPIC” is reshaping supply chain industry
• “TOPIC” is one of the following:
• Blockchain
• Artificial Intelligence
• Internet of Things (IoT)
• Big Data / Analytics
• Autonomous Vehicles
• Word limit: 3000 words
Assignments
Assignment Deadlines
• Individual Assignment:
• 13th October
• Group Assignment:
• 13th , 14th ,15th December Presentations
• 22nd December for the written report
Assignments
• Plagiarism is serious (A major cause of unit failure)
• Plagiarism might be unintentional, but that is not an excuse
• If two or more people have similar assignments, this is also plagiarism
(Irrespective of who wrote and who copied, both will be penalized)
Agenda
• Supply Chain Management (SCM) Overview
• SCM key aspects
• SCM key issues
What is supply chain
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.
A The
set ofSupply Chainutilized
approaches Councilto 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.
What makes SCM difficult?
• Supply chains can not be determined in isolation. They are directly
affected by another chain most organizations have called the
development chain.
• It is challenging to design a supply chain such that the overall cost is
reduced. Here we study the system-wide costs.
• Uncertainty and risk are inherent in every supply chain.
SCM Network - Costs
SCM Network - Flows

Converter
Supplier Distributor Retailer

Source
Converter Consumers
Distributor End-User
Supplier

Funds/Demand Flow

Material Flow

Value-Added Services

Information Flow

Reuse/Maintenance/After Sales Service Flow

Key Consideration
• Every facility that impacts costs need to be considered
• Suppliers’ suppliers
• Customers’ customers
• Efficiency and cost-effectiveness throughout the system is required
• Multiple levels of activities
• Strategic – Tactical – Operational
• Challenging to minimize system costs and maximize system service
levels at the same time.
• Inherent presence of uncertainty and risk
 You are as weak as

the weakest link in your supply chain

Suez Canal
• Suez Canal blockage adds strain
to global supply chain
• A headline from Forbes said:
“The Suez Canal and our fragile
global supply chain”
• The blockage held up
approximately $9.7 billion of
products per day
Development Chain
Global Supply Chains

• The supply chain is a complex network with facilities

dispersed over multiple geographies across the globe.
• Different facilities in the SC have different or
conflicting objectives.
• The SC is a dynamic system, not only customer
demand changes, but supplier relations or
capabilities might change over time as well.
Global SCs
Uncertainty and
Risk Factors

Balancing Supply
& Demand is
Challenging
Inventor
y levels
• Inventory and back-order
levels fluctuate
• Even if customer demand
does not vary significancy
• Distributor order to the
factory fluctuate more
than the underlying
demand.
• Forecasting does not solve
the problem
Examples of uncertainty and risk
• On August 29, 2005, Hurricane Katrina devastated New Orleans and the Gulf coast.
Procter & Gamble coffee manufacturing, with brands such as Folgers that get over half of
their supply from sites in New Orleans, was severely impacted by the hurricane.
• In September 1999, a massive earthquake devastated Taiwan. Initially, 80 percent of the
island's power was lost. Companies such as Hewlett-Packard and Dell, who source a
variety of components from Taiwanese manufacturers, were impacted by supply
interruptions
• The impact of COVID 19 on our global supply chains
Uncertainty and Risk Factors
EXAMPLE REASONS
Boeing Aircraft’s inventory write-down of $2.6 Billion • Raw material shortage
• Internal and supplier parts shortages
• Productivity inefficiencies
Sales at U.S. Surgical Corporation declined by 25%, • Sales and earnings shortfall
resulting in a loss of $22 Million • Larger than anticipated inventories
Intel reported a 38% decline in quarterly profit • Staff competition
• General slowdown in the PC market
EMC Corp. missed its revenue guidance of $2.66 • Higher than expected orders for new products over
billion for the second quarter of 2006 by around $100 existing products
million
Key Considerations

• Forecasting is not a solution

• Demand is not the only source of uncertainty

• Recent trends that focus on cost reduction make things more uncertain
• Lean manufacturing (minimizing waste while maximizing productivity)

• Outsourcing (vs insourcing, assigning third party to perform in-house jobs)

• Off-shoring (moving in-house jobs off-shore)

Levels of decision making
• The issues in a supply chain span over:
• Strategic level: Deals with decisions that have long-lasting effect on the firm.
It includes decisions e.g. product design, supplier selection, outsourcing,
location of new facilities etc.
• Tactical level: Decisions that are updated anywhere between every quarter or
once a year. These include purchasing decisions, inventory policies,
transportation strategies etc.
• Operational level: Refers to the day-to-day decisions. Includes scheduling,
lead time quotations, routing, loading/unloading
Key decisions
• Distribution network configuration
• Inventory control
• Production sourcing
• Supply contracts (relationships with partners)
• Distribution strategies
• Product design
• Pricing
• Customer values
• Information technology
Example

• Production:
• Produces chips in 6 different locations:
• Chips are shipped to 7 assembly locations
in Southeast Asia.
• Distribution:
• The final product is shipped to hundreds
of facilities all over the world
• 20,000 different routes
• 12 different airlines
• 95% of the products are delivered within
45 days
Example
• Example from the apparel industry:
Cost per
Percent
Shirt
Saving
Manufactur Distributor Retailer Customer
er
$52.72 0%

Manufactur Distributor Retailer Customer

er
$41.34 28%

Manufactur Distributor Retailer Customer

er $20.45 62%
 Summary
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.

Suppl Conve Retai

rter Distrib
Sour ier utor ler
ce Conver Consu
ter Distrib End-
Suppl utor mers
ier User
Funds/Demand Flow
Material Flow
Value-Added Services
Information Flow
Reuse/Maintenance/After Sales Service Flow
For any questions or clarifications reach out at [email protected]