Session08_MIS1_Y2024_SCM
Page 1: Introduction to Supply Chain Management
SCM: Supply Chain Management
Institute: laSalle UNIVERSITAT RAMON LLULL
Page 2: Learning Objectives
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.
Page 3: Supply Chain Management Systems
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.
Page 4: Nike's Supply Chain
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.
Page 5: Functions of Supply Chain Information Systems
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)
Page 6: Traditional View of Supply Chains in the Economy
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.
Page 7: Cost Breakdown of Manufactured Goods
Supply Chain Cost: 20%
Marketing Cost: 25%
Manufacturing Cost: 45%
Profit margin: 10%
Supply chain activities often invisible to customers.
Page 8: Benefits of SCM
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.
Page 9: Magnitude of SCM Impact
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.
Page 10: Supply Chain Research and Reports
AMR Research:
Publishes reports on supply chains.
Top 25 Supply Chains Report: Released in November.
Page 11: Companies with Strong Supply Chains
Companies ranked based on ROA, growth, social responsibility
Top companies included Unilever, Inditex, Cisco, Colgate-Palmolive, Intel, Nike, and others.
Page 12: Supply Chain Goals
Aim: Match supply and demand profitably.
Key factors:
Right product, customer, time, quantity, price, store.
Balancing supplier and customer needs.
Page 13: Flows in a Supply Chain
Types of flows:
Customer, material, information, and funds.
Resemble a chain reaction within the system.
Page 14: SCM in a Supply Network
SCM manages material, information, and financial flows effectively in supply chains.
Tasks include design, planning, and execution to ensure service levels are met profitably.
Page 15: Economic Importance of SCM
In 2000, US companies spent $1 trillion on supply-related activities.
Potential to eliminate inefficiencies leading to millions in savings.
Page 16: Supply Chain Management Information
Bullwhip Effect: Demand distortion leads to excess inventory and costs.
Just-in-time strategy aims for perfect supply-demand alignment.
Page 17: The Bullwhip Effect Explained
Inaccurate information propagates demand fluctuations through the supply chain, causing excess inventory.
Page 18: Supply Chain Management Systems
Forecasting approaches to manage supply and demand effectively.
Distinction between actual customer demand and forecasted distributor orders.
Page 19: Categories of SCM Applications
Planning Systems: Demand planning, order planning, advanced scheduling.
Execution Systems: Manage product flow through warehouses and distribution centers.
Page 20: Demand Planning Software Example
Importance of intermittent demand forecasting using tools like Smart Forecasts.
Page 21: Managing Product Flow
Execution systems ensure efficient flow through logistics and distribution management.
Page 22: Role of the Internet in SCM
The internet aids in sharing information across incompatible systems and enhances coordination with supply chain partners.
Page 23: Motion of Various Products
Lists of products related to major brands, showcasing diversity in product offerings across supply chains.
Page 24: Intranets and Extranets for SCM
Intranets integrate internal processes, while extranets extend coordination to external partners.
Page 25: Supply Chain Models
Push-based: Build-to-stock based on forecasts.
Pull-based: Demand-driven, responding to actual customer orders.
Page 26: Push vs Pull System Characteristics
Push System: Inventory kept to meet anticipated demand.
Pull System: Relies on actual demand, potentially leading to longer lead times.
Page 27: Push/Pull Supply Chain Processes
Customer Order Cycle involves both push and pull processes across the supply chain.
Page 28: Summary of Push vs Pull Models
Push model: “Make what we sell.”
Pull model: “Sell what we make.”
Page 29: Internet-Driven Supply Chain
Digital infrastructure enables real-time adjustments in inventory and orders across the entire network.
Page 30: Value of SCM Systems
Key benefits include matching supply to demand, improving delivery services, reducing inventories, and increasing profitability.
Page 31: Case Study: Whirlpool
Challenges with outdated systems addressed through supply chain software to improve inventory allocation and demand forecasting.
Page 32: Addressing Performance Gaps in SCM
Cycle for improving information flows includes mapping processes, identifying gaps, and utilizing PDCA (Plan-Do-Check-Act) methods.
Page 33-38: Continuous Improvement Techniques
Reflection of process mapping:
Identify gaps and causes.
Continuous improvement leads to better efficiency and quality in SCM.