scm 300

Lecture 1: Strategy

Key Concepts

• Business Strategy: Choosing what to do and what not to do based on the best available information.

• Supply Chain Strategy: The blueprint of choices made to deliver what was promised in the corporate/business strategy.

• Supply Chain Management (SCM): Managing the movement of materials, money, people, services, and information to fulfill customer needs efficiently.

Key Definitions

• Michael Porter's Definition of Business Strategy:
  "A broad formula for how a business is going to compete, what its goals should be, and what policies will be needed to carry out those goals."

• CSCMP Definition of SCM:
  "The planning and management of sourcing, procurement, conversion, logistics, and collaboration with suppliers, intermediaries, and customers."

Key Takeaways

• Future CEOs are expected to have backgrounds in SCM.

• Compensation in SCM: Highly competitive salaries, with Chief Procurement Officers (CPOs) earning over $260,000 annually.

Lecture 3: Inventory & Warehouse Management

Key Concepts

• Definition of Inventory: Materials and resources purchased by an organization.

• Purpose of Inventory:

  • Buffer against demand fluctuations.

  • Mitigate supply chain disruptions.

  • Allow for flexible production.

  • Take advantage of economies of scale.

Types of Inventory

1. Raw Material – Basic inputs (e.g., flour, eggs).

2. Work-in-Process (WIP) – Partially completed products.

3. Finished Goods (FG) – Ready-to-sell products.

4. Safety Stock – Extra inventory for demand fluctuations.

5. Market Inventory – Inventory positioned close to consumers.

6. Anticipation Inventory – Stock held for future demand surges.

7. Pipeline Inventory – Products in transit.

8. Maintenance and Repair Operations (MRO) – Spare parts and tools.

Inventory Costs

1. Purchase Cost – Cost to buy inventory.

2. Holding/Carrying Cost – Storage, insurance, depreciation, taxes.

3. Ordering Cost – Cost to place an order.

4. Stockout Cost – Lost revenue when items are unavailable.

Warehouse Processes

1. Receiving

2. Putaway

3. Storage

4. Picking

5. Packing

6. Shipping

Lecture 4: Inventory Cost & Economic Order Quantity (EOQ)

Key Formulas

• Total Cost (TC):

  • = Annual Demand

  • = Order Quantity

  • = Cost per Order

  • = Cost per Unit

  • = Annual Holding Cost per Unit

• EOQ Formula:

  • Optimizes order size to minimize total costs.

• Inventory Turnover:

  • Measures how quickly inventory is sold.

Pareto Principle (80/20 Rule)

• ABC Classification:

  • A Items – 20% of inventory, 80% of value.

  • B Items – 40% of inventory, 15% of value.

  • C Items – 40% of inventory, 5% of value.

Lecture 5: Sourcing

Procurement Risks

1. Supply Risk – Ensuring timely product delivery.

2. Price Risk – Managing cost fluctuations.

3. Quality Risk – Ensuring product consistency.

Sourcing Strategies

• Centralized Procurement – A single team handles purchasing.

• Decentralized Procurement – Local teams manage procurement.

Buying Contracts

1. Spot Buy – One-time purchase.

2. Long-term Contract – Fixed agreements for future needs.

3. Options Contract – Paying a fee to secure future purchase rights.

Lecture 6: Manufacturing (Making-1)

Manufacturing 1.0 - 4.0

1. 1.0: Steam & Water Power.

2. 2.0: Assembly Line & Electricity.

3. 3.0: Automation & Robotics.

4. 4.0: AI, Big Data, Sustainable Manufacturing.

Production Strategies

• Make to Stock (MTS) – Predict demand and produce inventory.

• Make to Order (MTO) – Produce items only when an order is placed.

• Assemble to Order (ATO) – Produce components and assemble when needed.

• Engineer to Order (ETO) – Custom-made complex products.

Manufacturing Layouts

1. Assembly Line – High-efficiency mass production.

2. Job Shop – Small-scale custom manufacturing.

3. Project Layout – Large-scale, stationary production (e.g., shipbuilding).

4. Cell Layout – Self-contained work units.

Lecture 7: Line Balancing

Key Formulas

• Cycle Time (C):

• Theoretical Minimum Workstations (TM):

• Line Efficiency:

Lecture 18: Blockchain 101

History of Blockchain

• 1982: David Chaum proposes a blockchain-like protocol.

• 2008-09: Satoshi Nakamoto releases Bitcoin whitepaper.

• 2013: Ethereum is conceived by Vitalik Buterin.

How Blockchain Works

• Immutable, distributed ledger with linked cryptographic blocks.

• Used to prevent fraud and ensure transparency.

Types of Blockchain

1. Public – Open, decentralized (e.g., Bitcoin, Ethereum).

2. Private – Restricted access, controlled by an entity.

3. Hybrid – Mix of public and private features.

4. Sidechains – Parallel chains for efficiency.

Use Cases in Supply Chain

1. Cryptocurrencies – Bitcoin, Ethereum, etc.

2. Smart Contracts – Self-executing agreements.

3. Supply Chain Tracking – Walmart uses blockchain for food traceability.

4. Healthcare – Secure storage of medical data.

5. Real Estate – Digital property records.

Key Blockchain Terms

• Proof of Work (PoW) – Miners solve cryptographic puzzles to validate transactions.

• Proof of Stake (PoS) – Validators stake assets to confirm transactions.

• Smart Contract – Code executing business logic automatically.

• NFT (Non-Fungible Token) – Unique digital assets.