Intro to Supply Chain Management - Chp 1

who has a supply chain?

any organization, anywhere in the world, offering a product or a service

how are products & services created?

materials, equipment, labor, time, money, and other

3 components that comprise a supply chain

suppliers, manufacturers, customers

how is supply chain facilitated?

through logistics

A supply chain consists of the flow of materials and products. . .

from suppliers to manufacturers to customers

which way does product & service flow (SC flow)?

product and service flows right towards customer

which way does information flow (SC flow)?

information flows throughout the SC, three components

which way does payment flow (SC flow)?

payment flows back towards suppliers

which way does returns flow (SC flow)?

returns flow back towards suppliers

every link in the supply chain is both a

customer to their suppliers and a supplier to their customers

a disruption in the supply chain impacts…

all suppliers and customers

A supply chain is only as strong…

as its weakest link

What is Supply Chain Management?

the coordination of the network of independent trading partners who create a desired product or service and then move it through the supply chain to customers when and where the customer wants it

supply chain is the ____ process of any business

execution

two ideas of supply chain

1. every product represents the cumulative effort of multiple organizations

2. most organizations only focus on what is happening within their own walls

Supply Chain Management represents the active management of supply chain activities to…

maximize customer value and achieve a sustainable competitive advantage.

Supply Chain Management creates value by…

collaborating in an efficient, effective, and cost-conscious way

goals of SCM

1. increase customer service

2. reducing Inventory and operating expenses

reasons for implementing SCM

1. achieve cost savings

2. better coordinate resources

services also have a…

supply chain

service SC is about what, rather than managing the SC?

about managing the relationships between trading partners

SC where customers are more directly involved in the delivery than physical product

service industry supply chain

true or false: service products can be generally produced in advance or inventoried?

false

true or false: services cannot start until customer arrives and actively participates?

true

SCOR model parts

plan, source, make, deliver, return, enable

end-to-end scm

the holistic coordination of every phase of a product's lifecycle from supplier’s supplier to customer’s customer

scor model: plan

this part establishes the parameters within which the supply chain will operate, and makes strategies, determines marketing and distribution channels

scor model: source

this part involves procuring the materials, building a strong relationship with suppliers - not just transactionally related, and also develop pricing, shipping, delivery, and payment processes

scor model: make

manufacturing or converting materials into finished goods, testing, packaging, quality control, scheduling for delivery

scor model: deliver/return (or logistics)

this part involves moving stuff, storing stuff, execution of the glow of goods, filing order, selecting carriers, setting up an invoicing systems

scor model: enable

this part facilitates a company’s ability to manage the supply chain and are spread throughout every stage (includes lot of IT stuff)

SC in the 1950s & 1960s?

US was limited to materials management and logistics (extensive inventories and manufacturers internally focused)

what happened in SC in the 1970s and 1980s?

better planning techniques and new computer tech

what is Material Requirements Planning?

a time-phased method of determining what materials are needed and when to support the production plan

what is Manufacturing Resource Planning?

a method for the effective planning of all resources of a manufacturing company

what happened in SC in the 1990s and 2000s?

new concepts, methodologies, and processes to enhance planning and control of the supply chain —→ CPFR, S&OP, JIT, TQM

Collaborative Planning, Forecasting, and Replenishment (CPFR)

a process that helps trading partners jointly plan key supply chain activities

Sales and Operations Planning (S&OP

a process that integrates customer-focused marketing plans with the management of the

supply chain

Just-in-Time (JIT)

a philosophy of manufacturing based on the elimination of waste and continuous improvement

Total Quality Management (TQM)

a management approach where all members of an organization take ownership of quality

what happened in SC in the 2010s and beyond?

companies focus on what they’re good at and outsource what they’re not good at thru trading partners

Old paradigm of SCM

company gained synergy through vertical integration (from ownership to SC activities) —> short term, company-focused perforamce

New paradigm of SCM

companies focus on their area of specialization and enter into relationships with their suppliers and customers by outsourcing non-core skills —> everyone benefits

SCM in 2010s and beyond…companies will continue to focus on….

 Building strategic partnerships

 Corporate Social Responsibility (CSR)

 Supply chain sustainability

 Risk and opportunity management

 Accelerated pace of change driven by the explosion of e-commerce

logistics definition (don’t get confused with SCM, they’re different)

focuses on moving products or materials most efficiently to arrive at the right place and time

• just one aspect of SCM

what are the foundations of SCM?

• operations management

• supply management

• logistics management

• integration

what is Operations Management?

Managing internal resources related to planning and production

• ex: forecasting and demand planning & production planning

what is Supply Management?

Managing all of the supplies and suppliers that are needed to run the business

• ex: purchasing management & strategic sourcing

what is Logistics Management?

Managing all of the storage and movement of materials and products within the supply chain, whether the flow is forward or reverse

• ex: warehousing, transportation, distribution

what is Integration?

Managing all of the enabling systems necessary to facilitate the complete

integration of the operations, supply, and logistics functions outlined above

• ex: enabling systems, project management, performance management

what is Forecasting & Demand Planning? (operations management element)

forecasting the demand for a product or service so it can be produced and delivered more efficiently and satisfy customer needs

what is Planning Systems? (operations management element)

the process and tools used to manage a company’s resources to achieve the company’s goals

what is Inventory Management? (operations management element)

the activities and techniques used to plan and control the desired levels of items needed to support production

what is Process Management? (operations management element)

using LEAN Manufacturing to improve the flow of materials and eliminate waste in the process, and using Six Sigma to improve quality compliance across all suppliers

what is Purchasing Management? (supply management element)

responsibility for acquiring the materials, supplies, and services the company needs to provide their products and services to the market

what is Strategic Sourcing? (supply management element)

a comprehensive approach for locating and sourcing key material and service suppliers. This includes a focus on developing long-term relationships

what is Supplier Relationship Management? (supply management element)

a comprehensive approach to managing a company’s long-term interactions with the key organizations that supply the materials and services that the company needs

what is Warehousing? (logistics management element)

the activities related to receiving, storing, and shipping materials to and from production or distribution locations

what is Transportation? (logistics management element)

planning, scheduling, and controlling activities related to mode, carrier, and movement of inventories into and out of a company

what is Distribution? (logistics management element)

the activities associated with moving finished goods from the manufacturer to the customer

what is International Trade Management? (logistics management element)

exchanging goods and services across international borders or territories

what is Customer Relationship Management? (logistics management element)

strategies to ensure deliveries, resolve complaints, improve communications, and determine service requirements

what is Service Response Logistics? (logistics management element)

the management and coordination of the company’s activities while the service is being performed

what is Enabling Systems? (integration element)

all the systems, processes, and tools that support and facilitate a company’s ability to manage the supply chain

what is Supply Chain Risk and Security Management? (integration element)

the series of strategies and activities for continuously monitoring risks and enhancing the security of the supply chain to reduce vulnerabilities and ensure business continuity

what is Performance Measurement? (integration element)

the system for collecting, measuring, and comparing a measure to a standard for a specific criterion for an operation, item, service, business, etc

what is Project Management? (integration element)

the use of skills and knowledge in coordinating, organizing, planning, scheduling, directing, controlling, monitoring, and evaluating prescribed activities to ensure that the stated objectives of a project are achieved

2 basic SC capability models

1. efficient model

2. responsive model

what is the Efficient Model?

supply chain configured to maximize output with a minimum

input level at the lowest possible cost

• can be done by reducing hours, effort, resources, and cutting costs

what is the Responsive Model?

supply chain configured to be fast and flexible to respond quickly to dynamic market demand and new product launches

push business model relies on what?

make-to-stock

make-to-stock meaning?

producing finished products based on anticipated demand before receipt of an actual customer order

advantages of push business model:

 Product is immediately available to ship to customers on demand from the inventory created based on the forecast.

 Manufacturers can better plan the utilization of resources.

 Opportunities to take advantage of economies of scale and reduce costs.

disadvantages of push business model:

 High inventories (and money tied up in inventory).

 Heavily dependent on accurate forecasting.

 Forecasting errors create inefficiencies and additional costs, leading to

inventory shortages, excesses, and obsolescence.

pull business model relies on what?

make-to-order

make-to-order meaning?

producing finished products in response to actual demand, i.e., only after an actual customer order is received

advantages of pull business model

 High levels of customer service and opportunities for customization.

 Reduce dependency on forecasting.

 Very low inventories.

disadvantages of pull business model

 Every customer order is a rush order.

 Manufacturing problems and resource issues will immediately impact

throughput and customer satisfaction.

 Reduced ability to take advantage of economies of scale.

 only works if customers willing to wait

matching SC to product type: efficient model with…

functional products

matching SC to product type: responsive model with…

innovative products

challenge of SCM?

maintaining a balance between demand and supply

what are some benefits of SCM?

• Improved customer service

• Increased revenue

• Lower costs

• Better asset utilization

• Adds customer value / retain customers

• etc

what’s next for SCM?

• customers price-sensitive and so companies must be more flexible and responsive

• SC transforming into tech-centric

what areas are facing logistics labor shortages?

transportation and warehouse operations

contemporary topics affecting SCs

• supply chain risk management

• supply chain resilience

Supply Chain Risk Management - meaning?

A systematic process for managing supply chain risk by identifying susceptibilities and threats throughout the supply chain and developing mitigation strategies to combat those threats.

Supply Chain Resilience - meaning?

The ability to quickly respond to and recover from supply chain disruptions through flexible contingency planning and forecasting without significantly impacting production or shipments.

How the pandemic affects SCs?

• change in policies, forcing domestic production to look for alternative strategies

• lockdown —> affected trade

so….

• adoption of reshoring, near shoring, and additional suppliers

  • more SC diversification

Cyber Supply Chain Risk Management (C-SCRM)

the process of identifying, assessing, and mitigating the risks associated with the interconnected nature of product and service supply chains

Supply Chain Visibility

company’s ability to get a detailed view of its products as they move through the supply chain; achieved using data, tech, and processes

Circular Supply Chains

a closed-loop system that aims to reduce waste and extend the life of resources by using materials and goods for as long as possible.

how a circular supply chain works?

recover, recycle, redesign, reduce, refurbish, repair, resuse