Its all about the history of SCM, Supply chain & supply chain management also bullwhip effect

1. Mekelle university
Institute of Mechanical
and
Industrial Engineering
I
EVOLUTION OF SCM
SC & SCM PROCESS AND
THE BULLWHIP EFFECT

2. Samuel G
Content
II
1. What is SC & SCM
2. Evolution of SCM starting from
 1960 up to early 80s
 1980 up to early 90s
 1990 up to early 00s
 2000 up to early now
3. SC & SCM process case of louis Vuitton for
leather product
4. What bullwhip effect
5. How to improve bullwhip it taking the LV firm for
a leather product

3. Objective
 To have understanding of what SC and SCM is.
 Is to develop understanding on the historical of SCM and development
of technological trend.
 Have understudying on SC and SCM process of LV leather product
company
 Have bet know how about Louis Vuitton firm
 Know what bullwhip effect is
 Know the Cause of bullwhip effect
 Develop understanding on how to get rid of the bullwhip effect
III Samuel G

4. THE HISTORICAL DEVELOPMENT AND TECHNOLOGY APPLICATION TREND IN
SUPPLY CHAIN MANAGEMENT
What is SC?
Is a set of organizations directly linked by one or
more of the upstream and downstream flows of
products, services, finances, and information from a
source to a customer
What is SCM?
It is managing SC.
Samuel G.
፩

5. The 100-year history of supply chain management began with improvements of
basic, labor-intensive processes and progressed to current day engineering and
complex international networks.
Time-sensitive freight transportation steered
toward trucking rather than railroad as a trend in
the 1960s. “Physical Distribution” ” became a joint
need..
This meant optimizing the movement of goods
from the manufacturer to the customer.
Cont.….
፪ Samuel G.
 Supply chain management in 1960s up to early 70S

6. o Some of the key concepts and practices that were developed include:
Distribution requirements planning (DRP): is a system that helps businesses to
plan their distribution activities based on their production schedules and
forecasted demand.
Transportation management: is the process of planning, implementing, and
controlling the movement of goods from one location to another.
Warehousing: is the storage of goods in a facility until they are needed.
፫ Samuel G.
Cont.…
Management focus was Organization design was
Reduction of cost Decentralized function
Improving efficiency

7. ፬
The focus of supply chain management was on logistics. Logistics
is a broader term that encompasses all of the activities involved
in getting a product from the supplier to the customer.
This includes physical distribution, but it also includes other
activities such as inventory management, supplier relationships,
and customer service.
The development of new technologies, such as electronic data
interchange (EDI) and barcoding, helped to improve the visibility
and coordination of supply chains. This led to a better
understanding of the costs and risks involved in managing supply
chains.
Samuel G.
 Supply chain management in 1970s up to early 80S

8. ፭
o Some of the key concepts and practices that were developed include:
Total quality management (TQM): is a philosophy that focuses on continuous
improvement of all aspects of the business, including the supply chain. This can help
to improve the quality of products and services, reduce costs, and improve customer
satisfaction.
Just-in-time (JIT) inventory: is a system that aims to deliver products to customers as
they need them, rather than storing them in inventory. This helps to reduce the
amount of excess inventory & improve efficiency.
Bill of materials(BOM): is centralized source for information containing a list of an item
used to manufacture a product and the instruction on how to do so.
Samuel G.
Cont.…
Management focus was Organization design was
Optimization operation cost Centralized function
Customer serves

9. The focus shifted to Supply chain management. SCM is a more
holistic approach that considers all of the activities involved in
the supply chain, from the supplier to the customer.
The goal of SCM is to optimize the entire supply chain, not just
individual parts of it.
Samuel G.
 Supply chain management in 1980s up to early 90S
፮

10. o Some of the key concepts and practices that were developed include:
Collaborative planning, forecasting, and replenishment (CPFR): is a process
where supply chain partners share information and collaborate on planning,
forecasting, and replenishment. This can help to improve the accuracy of
demand forecasting and reduce inventory levels.
Quick response (QR): is a system that allows retailers to quickly replenish their
inventory based on sales data. This can help to improve customer service and
reduce stockouts.
Global sourcing: is the practice of sourcing goods and services from suppliers
around the world. This helps to reduce costs and improve efficiency.
Samuel G.
Cont.…
Management focus was Organization design was
Tactics/strategy’s logistics planning Integration of logistics function
፯

11. The focus of supply chain management was on collaboration and
integration.
Businesses began to realize that they could not optimize their supply
chains alone. They needed to collaborate with their suppliers,
customers, and other partners to achieve their goals..
o Some of the key concepts and practices that were developed
Vendor-managed inventory (VMI): is a system where the supplier
manages the inventory levels for the customer. This can help to
reduce the workload on the customer and improve the efficiency of
the supply chain
Samuel G.
 Supply chain management in 1990s up to early 00S
፰

12. Third-party logistics (3PL): is a service where a company outsources its
logistics operations to a third-party provider. This can help businesses to
reduce costs and focus on their core competencies.
Demand-driven supply chain (DDSC): is a system that uses demand data
to drive supply chain decisions. This can help businesses to improve the
accuracy of demand forecasting and reduce inventory levels.
Samuel G.
Cont.…
Management focus was Organization design was
supply chain strategies partnering
channel coevolution virtual organization
market coevolution
፱

13. Digital supply chain: is one that uses digital
technologies to improve its efficiency and
transparency. Can be done by using tools such as
Blockchain & artificial intelligence.
Sustainable supply chain: is one that minimizes its
environmental impact. This can be done by using
sustainable materials, reducing waste, and improving
energy efficiency.
Samuel G.
 Supply chain management in 2000s up to date
The focus of SCM has continued to evolve in recent years, with a growing focus
on Optimized “Value Network” with Real-Time Decision Support; Synchronized
Collaborative Extended Network.
o Some of the key concepts and practices that are being developed
፲

14. Resilient supply chain: is one that is able to withstand disruptions. This can be
done by diversifying suppliers, having backup plans, and using agile
manufacturing techniques.
Socially responsible supply chain: is one that ensures that its operations are
ethical and fair. This can be done by ensuring that workers are treated fairly,
that the environment is protected, and that the supply chain is free of
corruption.
Samuel G.
Cont.…
The management focus Organization design
SCM synchronization networked channel
e-business exchange agility/scalability
e-marketing
፲፩

15. History of the supply chain management in a glance
፲፪

16. Louis Vuitton is both a manufacturer and a distributor.
The company has its own manufacturing facilities in
France, Italy, and the United States. However, it also
distributes its products through a network of authorized
retailers around the world.
LV does not publicly disclose the names of its suppliers.
However, there are a number of companies that are
believed to be suppliers, are
Tannerie d'Annonay (leather, French), Judith Leiber
(Hardware, germen), Hermès(textile,French), tassels,
beads, and sequins(Trim, germen, French)
፲፫ Samuel G.
THE SC & SCM PROCESS AS OF CASE COMPANY.
(LOUIS VUITTON FOR A LEATHER PRODUCTS)

17. The SC & SCM process for LV leather products is complex
and involves many different steps. Here is a simplified
overview of the process
 Raw materials procurement: Sources its row material
from limited suppliers
 Production: Manufactures its leather goods in-house
at a network of factories,
 Quality control: rigorous quality control process
 Warehousing and distribution: are stored in a central
warehouse
 Customer service: LV offers a comprehensive
customer service program to ensure that its
customers are satisfied
፲፬ Samuel G.
THE SC & SCM PROCESS AS OF CASE COMPANY.
(LOUIS VUITTON FOR A LEATHER PRODUCTS)

18. The company uses a variety of tools and techniques to manage its
supply chain, including:
Demand forecasting: uses to predict and meet the customer demand
Inventory management: carefully manage its inventory with out
having exceed or less inventory and meet the customer demand.
Logistics: uses a variety of logistic providers to transport its product
around the world. It ensures to delivered on time in good condition
Sustainability: is committed to SC practices and works with its
suppliers to reduce environmental impact also improve its
employees working condition.
The company is always looking for ways to improve its efficiency and
sustainability.
Samuel G.
፲፭
Cont.…

19. ፲፮
The bullwhip effect: is a phenomenon in SCM that occurs when small
changes in demand at the retail level can cause large swings in demand
further upstream in the supply chain.
Samuel G.
DESCRIBES THE BULLWHIP EFFECT AND HOW THIS COULD BE IMPROVED (CASE
OF LOUIS VUITTON FOR A LEATHER PRODUCTS)

20. ፲፯
This can lead to overproduction, underproduction, and waste.
In the case of Louis Vuitton leather products, the bullwhip effect can be
caused by a number of factors, including:
Fluctuating demand: The demand for LV leather products can fluctuate
wildly, depending on factors such as fashion trends, economic
conditions, and celebrity.
Long and complex supply chain: LV has a long and complex supply chain,
with many different suppliers and distributors involved. This can make it
difficult to communicate and coordinate demand information
throughout the chain.
Just-in-time (JIT) inventory management: LV uses a JIT inventory
management system, which means that it keeps very little inventory on
hand. This can make the company more vulnerable to fluctuations in
demand.
Samuel G.
Cont.…

21. ፲፰
The bullwhip effect can have a number of negative consequences for
Louis Vuitton, including:
Increased costs: The bullwhip effect can lead to increased costs for Louis
Vuitton, as the company may need to overproduce or underproduce
products. This can lead to excess inventory, which can tie up capital and
lead to spoilage or obsolescence.
Reduced customer service: The bullwhip effect can also lead to reduced
customer service, as Louis Vuitton may not be able to meet demand for
its products. This can lead to lost sales and unhappy customers.
Damage to reputation: The bullwhip effect can damage Louis Vuitton's
reputation if the company is seen as being unable to meet demand for
its products. This can make it more difficult for the company to attract
new customers and retain existing customers
Samuel G.
Cont.…

22. ፲፱
There are a number of things that Louis Vuitton can do to improve the
bullwhip effect in its supply chain, including
 Improve demand forecasting: by using more sophisticated forecasting
techniques and by collecting more data about customer demand.
 Shorten the supply chain: by reducing the number of suppliers and
distributors involved. This can make it easier to communicate and
coordinate demand information throughout the chain.
 Use a buffer stock: Louis Vuitton can use a buffer stock to help
smooth out demand fluctuations. This means keeping a certain
amount of inventory on hand, even if it is not immediately needed.
Samuel G.
Cont.…

23. ፳
Use a collaborative planning, forecasting, and replenishment (CPFR)
system: CPFR is a system that allows different members of the supply
chain to share information and collaborate on demand forecasting and
planning. This can help to reduce the bullwhip effect.
By taking these steps, Louis Vuitton can improve the bullwhip effect in its
supply chain and avoid the negative consequences that it can cause.
Samuel G.
Cont.…

24. Reference
 " Jeffrey J. Coyle, and Charles W. Langley. Journal of
Business Logistics, Vol. 26, No. 2, 2005, pp. 1-16.
 "The History of Supply Chain Management." By Thomas J.
Goldsby. Supply Chain Management Review, Vol. 16, No.
2, 2012, pp. 30-37.
 "Supply Chain Management: A Historical Perspective." By
Robert Handfield and Larry Menor. In Handbook of Supply
Chain Management, edited by David Simchi-Levi, David
Wu, and Michael P. Cohen. 3rd ed.,
 Hugos, M. H. (2011). Essentials of Supply Chain
Management. John Wiley & Sons.
Samuel G.
፳፩

25. ፳፪ Samuel G.