scm

Supply Chain Management

A Supply Chain for BreadA Supply Chain for Bread

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What is Supply chain?

• Consists of all parties involved, directly or indirectly, in fulfilling a customer request

Supplier Manufacturer Distributor Retailer Customer

Is supply chain so simple?




Upstream Downstream

Objective of a Supply Chain

• Maximise overall profit

• Profit– Revenue generated from customer - costs

incurred along the entire chain

(e.g. manufacturing / storing / distributing the product)

• When is Supply chain effective?– Manage Product, Information and Fund flow

Simple Product Supply ChainSimple Product Supply Chain

Supply Chain: A sequence of activities And organizations involved in producingAnd delivering a good or service

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Stage of Production Value Added

Value of Product

Farmer produces and harvests wheat $0.15 $0.15

Wheat transported to mill $0.08 $0.23

Mill produces flour $0.15 $0.38

Flour transported to baker $0.08 $0.46

Baker produces bread $0.54 $1.00

Bread transported to grocery store $0.08 $1.08

Grocery store displays and sells bread $0.21 $1.29

Total Value-Added $1.29

A Supply Chain for BreadA Supply Chain for Bread

So, what is SCM?

• Objective is to be able to have the right products in the right quantities (at the right place) at the right moment at minimal cost.

Causes

• Little or no communication between supply chain partners.

• Delay times between order processing, demand, and receipt of products.

• Over reacting to the backlog orders.

• Inaccurate demand forecasts.

Distribution

• Steps taken to move and store a product from supplier

• Design Options– Manufacturer storage with direct shipping– Manufacturer storage with direct shipping and

in-transit merge

Logistics

• Logistics is the management of the flow of goods, information and other resources, including energy and people, between the point of origin and the point of consumption

• Logistics involves the integration of information, transportation, inventory, warehousing, material-handling, and packaging, and occasionally security

• Logistics is a channel of the supply chain which adds the value of time and place utility.