basic concept of supply chain Its objective functions and issues interantional sourcing

1. SUPPLY CHAIN MANAGEMENT
“The term “supply chain management” arose in the late
1980s and
came into widespread use in the 1990s”
A supply chain is a network of facilities and distribution
options that performs the functions of procurement of
materials, transformation of these materials into
intermediate
and finished products, and the distribution of these
finished
products to customers.

2. Supply chain management is the
coordination of production,
inventory, location, and transportation
among the participants
in a supply chain to achieve the best mix
of responsiveness
and efficiency for the market being
served.”

3. DIFFERENCE BETWEEN LOGISTIC & SUPPLY
CHAIN MANAGEMENT
LOGISTICS SUPPLY CHAIN MANAGEMENT
Refers to
Activities that occur within the
boundaries of a single
organization
Refer to networks of companies
that work together and
Coordinate their actions to
deliver a product to market.
Focuses its attention on
activities such as procurement,
distribution,
Maintenance, and inventory
management.
Acknowledges all of traditional
logistics and also includes
activities such as
Marketing, new product
development, finance, and
customer service.

4. SUPPLY CHAIN ORGANIZATION

5. EFFECTIVE SUPPLY CHAIN
MANAGEMENT
 Requires simultaneous improvements in both
customer service levels and the internal operating
efficiencies of the companies in the supply chain.
 Customer service at its most basic level means
consistently high order fill rates, high on-time
delivery rates, and a very low rate of products
returned by customers for whatever reason.
 Internal efficiency for organizations in a supply
chain means that these organizations get an
attractive rate of return on their investments in
inventory and other assets and that they find ways
to lower their operating and sales expenses

6. OBJECTIVE
Should obtain the right materials
(meeting quality requirements),
In the right quantity
For delivery at the right time and right
place
From the right source (a supplier who is
reliable and will meet its commitments
in a timely fashion)
With the right service (both before and
after the sale), and at the right price in
the short and long term

7. OBJECTIVE
To maximize
the overall
value
generated
To look for
sources of
revenue and
cost

8. FUNCTIONS
Supply chain management is a cross-functional
approach that includes
 managing the movement of raw materials into an
organization,
 certain aspects of the internal processing of
materials into finished goods, and
 the movement of finished goods out of the
organization and toward the end consumer.

9. FUNCTIONS
 Inventory Management
 Distribution Management
 Channel Management
 Payment Management
 Financial Management
 Supplier Management
 Transportation Management
 Customer Service Management

10. ISSUES IN SUPPLY CHAIN
MANAGEMENT
 SCM requires both internal support and supplier willingness •
In order to be operationally feasible, there must be sufficient
resources and appropriate systems in place to develop
supplier effectively • Investment in integrated systems,
supplier development and so on may not be worth the
potential gains for a given organization • Increased
collaboration and integration may expose the firm to risks of
over-investment in relationship-specific assets, dependence
on a smaller supply base or association with suppliers •
Network information-sharing may expose the firm to loss of
control over commercial informational, intellectual assets and
distinctive competencies • It is difficult to measure the
effectiveness of (or business case for) SCM co- operation in
meaningful ways • There may be problems in fairly distributing
the gains and risks of co- operation among supply chain
partners

11. SUPPLY CHAIN RELATIONSHIP
MANAGEMENT
Supply chain relationship management is business
strategy for improving communication between
companies and their channel partners.

12. The first ingredient to successful supply chain
relationship management is having the ability to
measure a supply chain partner's performance
The next is possessing technology that
assists with automating processes, thereby
diminishing busy work.
The third is shared knowledge, for the
purposes of openly measuring, managing,
and valuing partners.
The fourth is the relationships
themselves—which providers truly want to
build long-lasting, beneficial relationships

13. SOURCING
 Sourcing is the choice of who will perform a
particular supply chain activity such as production,
storage, transportation, or the management of
information.
 At the strategic level, these decisions determine
what functions a firm performs and what functions
the firm outsources.
 Sourcing decisions affect both the responsiveness
and efficiency of a supply chain.

14. SOURCING INTERNATIONALLY

15. INTERNATIONAL SOURCING
ADVANTAGES
 Access to required materials, facilities and/or skills
 Availability of culturally distinctive goods
 Access to a wider supplier base
 Opportunities for cost savings
 Exchange rate advantages
 Competitive quality
 Reduced regulatory and compliance burden
 Support for supply chain agility and the establishment
of a ‘local’ supply presence in global markets
 Ability to compete with competitors who are benefiting
from any or all of the above advantages

17. After Motorola outsourced much of its production to
contract manufacturers in China, it
saw its efficiency improve but its responsiveness
suffer because of the long distances. To
make up for the drop in responsiveness, Motorola
started flying in some of its cell phones
from China even though this choice increased
transportation cost

18. Thank
You…