Supply Chain ManagementCommon Learning Block I

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Supply Chain Basics

• People / Processes / Technology• Chain / Network• Levels of Supply Chain• First Tier – Factories to main operators• Second Tier – Suppliers to First Tier

LO1

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Supply Chain

• Customers’ customers• Suppliers’ suppliers• Focal Firms – The Initiator• End Customer• Voice of Customers• Values and Expectations

LO1

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Supply Chain Focus

• Products• Information• Funds Moving From:• Suppliers Distribution

• Retailers Customers• Reverse Logistics

LO2

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Supply Chain Management

• Plan / Direct / Control Supply Chains• CSCMP – Council of Supply Chain

Management Professionals• It Encompasses The Following:• Procurement / Conversion / Management• Links Major Business Functions • High Performing Business Model

LO3

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Supply Chain Activities

• Sourcing of Raw Materials and Parts• Manufacturing and Assembling• Warehousing and Controlling Inventory• Entering and Managing Orders• Finishing, Customizing and Packaging• Distributing Across All Channels• Delivering to Final Customers• Managing Relationships with Suppliers• Managing Relationships with Customers• Maintaining Infor. Systems for Monitoring

LO4

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Supply Chain Strategy

• Corporate Strategy Determines Target Mkt• Compete on Price, Service, Quality,

Innovation, Flexibility or a Combination• The Business Plan • Demand & Supply Plan • Supply Chain (to fill customers orders)

LO5

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Interdepartmental Work

• Functions contribute to goal of securing lowest transportation Costs • R&D• Procurement• Manufacturing

LO5

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Supply Chain Financials

• Optimizing Supply Chain• Eliminate Company Vs. Company• Supply Chain Vs. Supply Chain• Services – Lower Supply Chain Costs• Manufacturing – Higher Supply Chain Costs

LO6

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Profit Leverage

• Supply Chain Mgmt Corporate Success Profit Leverage• Profit Leverage = Decrease expenses through

Supply Chain Management• Flows from decreasing expenses and

increasing efficiencies• Profit Leverage Effect – Providing Industries

with greater options for increasing profits through expense reduction.

LO7

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Today’s Supply Chain

• Global Era• U.S. Economic Recession of the 1980’s• Global Competition (China)

• Characteristics of The Era• Intense Competition in industries• New strategies to increase market share• Rapid increase in technology / shorter product life

cycle e.g. computers, mobile phones, fashion

LO7

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Today’s Supply Chain

• Increased Importance of Supply Chain• Use of the internet• Use of International Data Networks

• 2000’s to the present• Relationships with suppliers• Cooperation replaced adversarial relationships

• New Strategies• Supplier Development / Design Involvement / Full

Service Suppliers / Strategic Cost Management

LO7

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Supply Chain Management Principles

• Procurement – All activities required to purchase materials, products, and services.

• Operations – The planning and manufacturing (conversion) of goods.

• Logistics – The movement and storage of materials, products, and services

• Integration – The communication and visibility within companies and suppliers; customers and service providers.

LO8

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Supply Chain

• Estimated to control up to 90% of the cost associated with delivering a final product or service

• ERP (Enterprise Resource Planning) – An integrated, real-time information sharing module to monitor and control the business

• Can help firms obtain economies of scale

LO8

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Transportation

• Transportation Operations focuses on timely movement of materials and products within and between organizations

• Transportation Modes Depend on:• Costs / Values / Dimensions / Weights / Time-

Definite Delivery / Requirements / Hazardous / Refrigerated

• Third-party Logistics – • Forwarders & Brokers

LO8

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Customer Service

• Delivery of Satisfaction – Typically assigned to logistics or sales

• Focus of Customer Service• Identifying Customers Needs, Wants, and

Expectations before, during, and after purchase• Customer Service Operations Interfaces with

Logistics, Transportation, Operations, Warehousing & Inventory to control costs

LO9

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Customer Services

• Customer Service Operations is important to:• The Public Sector (Airports, Ports, & Terminals)• The Private Sector (Manufacturers, Wholesalers,

Retailers, Carriers, & Third-party logistics providers

• Due to Increased demand & competition, all industries are involved in Supply Chain e.g. distribution channels, e-commerce, brick and mortar stores, & reverse logistics.• Skills to handle customer complaints and

communicate consistently

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ERP

• In ERP, Customer Service Operation is supported as follows:• Inventory Stock Status• Customer Contact Management• Sales Force Management• Customer Relationship Management (CRM)

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Warehousing

• Warehousing is a function of logistics controls and involves:• Receiving / Storing / Retrieving / & Distribution

• Warehousing also provides the following services:• Picking / Packing / Final Assembly & Packaging /

Putting Multiple Products Together as kits / & Refurbishing

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Warehousing

• Warehousing is Supported By:• WMS (Warehousing Management Systems) within

the ERP system.

• WMS is supported by Integrated Material Handling Systems such as:• Equipment to move, put away or retrieve

goods• Sophisticated flow of information and

communication to optimize efficiency

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Demand Planning

• Demand planning – the process of planning materials from inbound to manufacturing• Forecasting – What is needed to have ready

for the customer• Demand planning focuses on what is

needed in order to meet customer inventory levels from forecasting

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Inventory Management

• Inventory Management involves seeing/controlling & managing inventory levels to maximize efficiency and profitability• Interacts with:•Warehousing• Transportation• Demand Planning

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Supply Chain Today

• Since the 1980’s -• Companies have decreased inventory levels

& carrying costs• Technology is used to a greater extent today

to meet customers needs with a high level of service and lower cost• ERP manages inventory at all levels and is

used to correct errors quickly

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Operations Department

• Operations Department supports lean and efficient flow of supply management and procurement

• Global sourcing • Risk – Climate / Political / Social • Monitors – Availability / Pricing /Currency

Fluctuations• Protects Reputation – Socially responsible

practices

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Operations Department

• Procurement – Ensures accurate product description, collaborates to determine specifications and quality

• Procurement balances lowest purchase costs with other impacts on the company including the time it takes to receive products

• Some suppliers are close to production facilities others are across continents making procurement a global function

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Procurement – A Global Function

• Procurement must understand • International time zones• Approaches to mitigating interuptions such

as natural disasters, embargoes, strikes and military action

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EDI

• EDI (Electronic Data Interchange) used in an effort to decrease costs. EDI is used to:• Evaluate search engines• Vendor performance managementp• Purchase order management• Bid Management • Contract Management