Introduction to Supply Chain Management

Supply Chain Management

The process of planning, executing, and controlling the flow of goods, information, and finances from the source to the consumer

Supply Chain

The system that moves a product from the place where it's made to the person who buys it

Supply Chain

It includes everything and everyone involved — like factories, trucks, warehouses, stores, and even the people who work in them — to make sure the product gets to you on time.

Management

The process of planning, organizing, leading, and controlling people and resources to reach a goal.

5 Phases of SCM

• Planning

• Sourcing

• Production

• Delivery

• Returns

Planning

involves developing strategies to satisfy customer demands profitably, including demand management and inventory control

Sourcing

this focuses on procuring raw materials, components, and services from suppliers and establishing pricing, delivery, and payment processes

Production

involves transforming raw materials into finished goods, often at a manufacturing facility

Delivery

the process of transporting finished goods to customers, encompassing warehousing, distribution and order fulfillment

Returns

this deals with the management of returned products, whether for defective items, customer dissatisfaction or other reasons

Continuous flow model

Relies on a manufacturer producing the same good over and over and expecting customer demand will show little variation.

Agile model

Prioritizes flexibility, as a company may have a specific need at any given moment and must be prepared to pivot accordingly.

Fast model

This model emphasizes the quick turnover of a product with a short life cycle.

Flexible model

Works best for companies affected by seasonality. Some companies may have much higher demand requirements during peak season and low volume requirements in others.

Efficient model

Companies competing in industries with very tight profit margins may strive to get an advantage by making their supply chain management process the most efficient.

Custom model

If any model above doesn't suit a company's needs, it can always apply a _________ model

6 Types of Supply Chain Models

• Continuous flow model

• Agile mode

• Fast model

• Flexible model

• Efficient model

• Custom model

Supply Chain’s 5 VARIETY OF STAGES:

• Customers

• Distributors

• Retailers

• Manufacturers

• Suppliers

Customer

The end users of the products

Distributors

Handles the logistics and inventory mgt; often bridge between manufacturer and retaile

Retailers

Purchase products from distributor to sell directly to customers

Manufacturers

Use the raw materials to produce finished goods

Suppliers

Provide raw materials, components or finished goods to manufacturers

Decision Phases in a Supply Chain

• Supply Chain Strategy or Design

• Supply chain planning

• Supply chain operation

2 Process Views of a Supply Chain

• Cycle View

• Push/Pull View

Cycle View

The processes in a supply chain are divided into a series of cycles, each performed at the interface between two successive stages of the supply chain.

Cycle View

includes Customer Order Cycle, Replenishment Cycle, Manufacturing Cycle and Procurement Cycle

Push/Pull View

The processes in a supply chain are divided into two categories, depending on whether they are executed in response to a customer order or in anticipation of customer orders

Pull Processes

Are initiated by a customer order

Push Processes

Are initiated and performed in anticipation of customer orders

Competitive Strategy

Defines how a company aims to compete in the marketplace and how it will create value and win customers over competitors

Supply Chain Strategy

This outlines how the supply chain will support the competitive strategy and it governs the design and management of the end-to-end flow of goods, information and money

Strategic Fit

This refers to consistency between the customer priorities that the competitive strategy hopes to satisfy and the supply chain capabilities that the supply chain strategy aims to build.

3 Basic Steps to Achieving Strategic Fit

• Understanding the customer and supply chain uncertainty

• Understanding the supply chain capabilities

• Achieving strategic fit

Understanding the customer and supply chain uncertainty

Understand the needs for each targeted segment and the uncertainty these needs impose. These needs define the cost and service requirements.

Understanding the supply chain capabilities

Know and understand what your supply chain is designed to do well

Achieving Strategic Fit

Ensuring that the degree of supply chain responsiveness is consistent with the implied uncertainty. Target high responsiveness for a supply chain.

Scope of Strategic Fit

Refers to the functions within the firm and stages across the supply chain that devise an integrated strategy with an aligned objective. This should extend to the entire supply chain.

5 Common Challenges in Managing Supply Chain

• Increasing Product Variety and Shrinking Life Cycles

• Globalization and Increasing Uncertainty

• Fragmentation of Supply Chain Ownership

• Changing Technology and Business Environment

• The Environment and Sustainability

Drivers of Supply Chain

• Information

• Sourcing

• Pricing

• Inventory

• Facilities

• Transportation
  

Facilities

Refers to the actual physical locations In the supply chain network where product is stored, assembled, or fabricated.

Inventory

Encompasses all raw materials, work in process, and finished goods within a supply chain

Transportation

Entails moving inventory form point to point in the supply chain

Information

Consists of data an analysis concerning facilities, inventory, transportation, costs, prices and customers throughout the supply chain

Sourcing

The choice of who will perform a particular supply chain activity such as production, storage, transportation, or the management of information

Pricing

Determines how much a firm will charge for the goods and services that it makes available in the supply chain

Supply Chain Metrics

These performance metrics are how companies measure how well their supply chain is working

Cost

How much money is spent to run the supply chain which includes buying materials, shipping, storage, labor, etc

Service Level

How often a company can meet customer demand without delay or stockouts

Order Accuracy

How often customers get exactly what they ordered – correct items, quantities, packaging, and delivery time

Fill rate

The percentage of customer orders that can be filled from existing inventory without backorders or delays