Initial introduction to Supply Chain Management

1. Supply Chain Management
An overview
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2. Learning Objectives
• The contributions of a supply chain approach
to organizational efficiency and effectiveness.
• The benefits that can accrue from
implementing effective supply chain practices.
• Major challenges and issues faced by
organizations in developing and implementing
supply chain strategies.
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3. Definition of a system
• A system is a collection of elements or components
those are organized following a fixed plan to achieve
common goals.
• A system is a group of interacting or interrelated things
that form a unified whole in purpose of achieving
common goals.
• A system is a way of working, organizing, or doing
something which follows a fixed plan or set of rules to
achieve common goals.
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4. Examples of Systems
• 1) Production system
• 2) Transportation system
• 3) Education system
• 4) Military system
• 5) Banking system
• 6) Eco System (a biological community of interacting organisms and their
physical environment)
• 7) Healthcare system
• 8) Agricultural system
• 9) Waste management system
• 10) Water supply system
• 11) Energy generation and supply system
etc.
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5. Supply chain
• A supply chain is a system of organizations,
people, activities, information, and resources
involved in moving a product or service from a
supplier to a customer.
• A supply chain is the sequence of processes
involved in the production and distribution of
a commodity.
• A supply chain is actually a complex and
dynamic supply and demand network.
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6. Supply Chain Management
• Supply chain management (SCM) is the
management of the flow of goods and services.
• It includes the movement and storage of raw
materials, semi-finished goods, finished goods
and inventory of work-in-process, during
transportation and finished goods.
• Thus it includes all the activities starting from the
point of origin to the point of consumption in
supplying a product or a service.
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7. Essential features of SCM
• 1) Concentration (the ability to think carefully about
something you are doing and nothing else)
• 2) Coordination (the process of organizing people or
groups so that they work together properly and well)
• 3) Cooperation (refers to the voluntary collective efforts of
various persons working together in an enterprise for
achieving common objectives)
• 4) Collaboration (Collaboration is a synchronized and coordinated
activity in which the participants continuously try to develop and
sustain the solution to a problem shared between them).
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8. Change in organizations
Change
Time
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9. Change in organizations
• Leading Retailers from 1930
• Montgomery Ward – lost the market because
of the failure to deliver its products to suburbs
after World War II.
• Sears and Roebuck succeed in that respect in
1950 by opening multiple, smaller stores in
the suburbs providing locational convenience
and parking.
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10. Change in organizations
• Kmart replaced Sears in 1970 providing discount on
its products.
• In 1990 Wal-Mart replaced kmart by providing
multi-faceted strategy such as
1) Discount pricing on brand name products
2) locating its store in smaller communities
3) Providing more customer service, etc.
Continual focus of Wal-Mart on improving supply
chain process provided the ability to discount brand
name product.
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11. Change in organizations
• Change is inevitable, but growth and
improvement are optional.
• An organization either changes and gets better
or gets worse without any change.
• When the rate of change outside an organization
is faster than inside, the end is near.
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12. Change in organizations
• The dynamics of the global environment today
requires new thinking and perspectives.
• So, an examination of the major external forces or
change drivers shaping the economic and political
environment is essential.
• Here we have the intention to understand the
impact of these forces of change on business and
other organizations.
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13. Forces driving the change
• There are five major external forces seem to
drive the rate of change: These are
1) Globalization
2) Technology
3) Organizational consolidation
4) The empowered consumer
5) Government policy and regulations
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14. Globalization
• Globalization is the tendency of businesses,
technologies, or philosophies to spread
throughout the world, or the process of making
this happen.
• The global economy is characterized as a totally
interconnected marketplace, unhampered by
time zones or national boundaries (time and
distance are compressed).
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15. Globalization
• Thus companies seeking to rationalize their
global networks ask questions as follows:
Where in the world
1) Should we source our materials and/or services?
2) Should we manufacture or produce our
products and/or services?
3) Should we market and sell our products and/or
services?
4) Should we store and/or distribute our products?
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16. Globalization
• What global transportation alternatives should we
consider?
• Some important issues or challenges for supply
chains of the global economy are
1) More volatility (instability) of supply and demand
created by acts of terrorism, contamination of
food products, Natural catastrophes, global
competition of sources of supply and markets,
etc.
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17. Globalization
• 2) Shorter product life cycles
i) Leads to duplication of products and services
quickly, and hence imposes challenges for
inventory management.
ii) Technology companies are particularly
vulnerable to the threat of their new
products being reengineered.
iii) The risk of obsolescence in certain sectors
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18. Globalization
• The blurring (vague impression) of traditional
organizational boundaries.
• It is the result of companies necessity to adjust
or transform their business model or the way
that they do business in a competitive global
economy.
• Outsourcing to another domestic or global
company that can provide what they need
more efficiently.
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19. Technology
• Vast stores of data and information at our
fingertips via internet which can be used to
create unbelievable set of opportunities for
collaboration in supply chain.
• Outsourcing to less-developed countries has been
enhanced by technology.
• Collaboration opportunities with individuals and
companies throughout the globe have been
enhanced.
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20. Technology
• Organizational managers have been taking
advantage of opportunities presented by
technology on warehousing operations, order
fulfillment, transportation carrier collaboration,
procurement (action of obtaining something) and
in customer service.
• Thus technology has had more impact on supply
chain as a facilitator of change as companies have
transformed their processes.
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21. Organizational Consolidation (the action or
process of making something stronger or more solid)
• After world War II, product manufacturer became
the driving force in the supply chain.
• During the 1980 and especially the 1990, retail
giants such as Wal-Mart, Sears, Kmart, Home
Depot, Target, Krogner, McDonald’s etc. became the
powerful market leaders.
• The importance of consolidation and power shift is
that the large retailers are accorded special
consideration from consumer companies.
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22. Organizational Consolidation
• The retailers may be provided value-added
services such as vendor-managed inventory.
• More collaboration is being practiced between
organizations in the supply chains to gain
mutual cost savings and improved customer
service.
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23. The empowered customer
• Understanding customer behavior.
• Educated enlightened economically viable
consumers are empowered by updated
information.
• Consumers want and demand quality products
within a time frame and more convenient offerings
according to their schedules.
• Thus the ‘power’ of the consumer has caused
much change in how supply chains function.
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24. Government Policy and regulation
• The impacts of government policy and
regulations on individual businesses and their
supply chains.
• Impact on transportation
• Impact on financial sector
• Impact on communication industry
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25. The supply chain and its issues
• Integrated supply chain: The supply chain can be
viewed as a series of integrated enterprises that
must share information and coordinate physical
execution to ensure a smooth, integrated flow of
goods, services, information and cash through the
pipeline. The scenario can be shown as follows:
•
•
• Product/Services
• Information
• Finances
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Suppliers Wholesalers Manufacturers Wholesalers Retailers/
Customers

26. Major Supply chain Issues
• The challenge to develop efficient and effective
supply chain(s) requires organizations to address
a number of issues as follows:
• Supply Chain Networks
• Complexity
• Inventory Deployment
• Information
• Cost/Value
• Organizational Relationships
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27. Major Supply chain Issues
• Performance Measurement
• Technology
• Transportation Management
• Supply Chain Security
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