SCM: Supply Chain Management
Institute: laSalle UNIVERSITAT RAMON LLULL
Understand how SCM works and its main functionalities.
Identify types of SCM.
Explore a case study on the use of SCM in a business setting.
Determine when and where to implement SCM.
Definition of Supply Chain:
A network of organizations and business processes for:
Procuring raw materials.
Transforming them into intermediate and finished products.
Distributing finished products to customers.
Incorporates secondary and tertiary suppliers.
Upstream portion includes suppliers.
Downstream portion includes distributors.
Upstream Activities:
Capacity, inventory levels, delivery schedules, and payment terms.
Downstream Activities:
Contract suppliers, retailers, and customers.
Flow of orders and requests between various supply chain participants.
Strategic Decision Making
Tactical Planning
Routine Decision Making
Execution and Transaction Processing
Network Design
Warehouse & Transportation Planning
Customer Relationship Management (CRM)
Supplier Relationship Management (SRM)
Enterprise Resource Planning (ERP)
Freight Transportation Spending (1998):
$352B, $455B
Transportation manager in charge.
Inventory Expense (Early 2000s):
$221B, $311B.
Administrative Expense: $27B, $31B.
Logistics Activities Cost: 10.5% of GNP.
Supply Chain Cost: 20%
Marketing Cost: 25%
Manufacturing Cost: 45%
Profit margin: 10%
Supply chain activities often invisible to customers.
Estimated savings of $30 billion in the grocery industry from effective logistics.
Turnaround time examples:
Cereal: 104 days to sale.
Car: 15 days to dealership.
Case Laura Ashley:
10 inventory turns/year, relocated warehouse near FedEx, improved speed.
National Semiconductor: Used air transport, closed warehouses, increased sales and decreased delivery time.
Compaq: Lost up to $1 billion in laptop sales due to availability issues.
P&G: Saved $65 million over 18 months by better supply-demand alignment.
Price decrease of 30% for AMD processors following new product launch.
AMR Research:
Publishes reports on supply chains.
Top 25 Supply Chains Report: Released in November.
Companies ranked based on ROA, growth, social responsibility
Top companies included Unilever, Inditex, Cisco, Colgate-Palmolive, Intel, Nike, and others.
Aim: Match supply and demand profitably.
Key factors:
Right product, customer, time, quantity, price, store.
Balancing supplier and customer needs.
Types of flows:
Customer, material, information, and funds.
Resemble a chain reaction within the system.
SCM manages material, information, and financial flows effectively in supply chains.
Tasks include design, planning, and execution to ensure service levels are met profitably.
In 2000, US companies spent $1 trillion on supply-related activities.
Potential to eliminate inefficiencies leading to millions in savings.
Bullwhip Effect: Demand distortion leads to excess inventory and costs.
Just-in-time strategy aims for perfect supply-demand alignment.
Inaccurate information propagates demand fluctuations through the supply chain, causing excess inventory.
Forecasting approaches to manage supply and demand effectively.
Distinction between actual customer demand and forecasted distributor orders.
Planning Systems: Demand planning, order planning, advanced scheduling.
Execution Systems: Manage product flow through warehouses and distribution centers.
Importance of intermittent demand forecasting using tools like Smart Forecasts.
Execution systems ensure efficient flow through logistics and distribution management.
The internet aids in sharing information across incompatible systems and enhances coordination with supply chain partners.
Lists of products related to major brands, showcasing diversity in product offerings across supply chains.
Intranets integrate internal processes, while extranets extend coordination to external partners.
Push-based: Build-to-stock based on forecasts.
Pull-based: Demand-driven, responding to actual customer orders.
Push System: Inventory kept to meet anticipated demand.
Pull System: Relies on actual demand, potentially leading to longer lead times.
Customer Order Cycle involves both push and pull processes across the supply chain.
Push model: “Make what we sell.”
Pull model: “Sell what we make.”
Digital infrastructure enables real-time adjustments in inventory and orders across the entire network.
Key benefits include matching supply to demand, improving delivery services, reducing inventories, and increasing profitability.
Challenges with outdated systems addressed through supply chain software to improve inventory allocation and demand forecasting.
Cycle for improving information flows includes mapping processes, identifying gaps, and utilizing PDCA (Plan-Do-Check-Act) methods.
Reflection of process mapping:
Identify gaps and causes.
Continuous improvement leads to better efficiency and quality in SCM.