Key concepts of supply chain management

1. Key Concepts
of Supply
Chain
Management

2. Objectives
Appreciate what a supply chain is and what it does
Understand where your company fits in the supply chain
it participates in and the role it plays in those supply
chains
Discuss ways to align your supply chain with your
business strategy
Start an intelligent conversation about the supply chain
management issues in your company

3. Definitions…
In its simplest form a supply chain is the activities required
by the Organization to deliver goods or services to the
consumer. A supply chain is a focus on the core activities
within our Organization required to convert raw materials or
component parts through to finished products or services.
A supply chain is a network between a company and its
suppliers to produce and distribute a specific product to the
final buyer. This network includes different activities,
people, entities, information, and resources. The supply
chain also represents the steps it takes to get the product or
service from its original state to the customer.

4. A supply chain consists of all stages involved, directly or
indirectly, in fulfilling a customer request. The supply
chain not only includes the manufacturer and suppliers,
but also transporters, warehouses, retailers, and
customers.
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
What Is a Supply Chain?

5. LOGISTICS VS SCM
Logistics refers to activities that occur within the
boundaries of a single organization and supply chains
refer to networks of companies that work together
and coordinate their actions to deliver a product to
market.
SCM acknowledges all of traditional logistics and
also includes activities such as marketing, new
product development, finance, and customer service.

6. Company Actions in SC
Companies in any SC must take decisions individually
and collectively regarding their actions in five areas:--
Production
Inventory
Location
Transportation
Information

7. Goal of SCM
The goal or mission of supply chain management can
be defined as increasing throughput while
simultaneously reducing both inventory and operating
expense. (here throughput means sales to the end
customer).
In some markets customers value and will pay for
high levels of service while in others customers
simply seek the lowest prices.

8. Production
The fundamental managerial decision is how to resolve
trade-off between responsiveness and efficiency.
Factories can be built to accommodate one of two
approaches to manufacturing; product focus or functional
focus.
Warehousing can also be done using any of three
approaches; stock keeping unit, job lot storage, or cross-
docking.

9. Inventory
Inventory is spread throughout the supply chain and
includes everything from raw material to work in
progress to finished goods.
There are three basic decisions to make regarding the
creation and holding of inventory; cycle inventory,
safety inventory, and seasonal inventory.

10. Location
Location refers to the geographical sitting of supply chain
facilities.
It also includes the decision related to which activities
should be performed in each facility.
The responsiveness versus efficiency trade-off here is the
decision whether to centralize activities in fewer locations
to gain economies of scale and efficiency, or to
decentralize activities in many locations close to
customers and suppliers.
Location decisions have strong impacts on the cost and
performance of supply chain.

11. Transportation
Transportation refers to the movement of everything
from raw material to finished goods between different
facilities in a supply chain.
Different modes of transportation are: ship, rail,
pipelines, trucks, airplanes, and electronic
transportation.

12. Information
All decisions are based on timely availability of
information regarding other four supply chain drivers.
Information is used for two purposes in supply chain;
coordinating daily activities and forecasting and
planning to anticipate and meet future demands.

13. Evolving Structure of
Supply Chains
Vertical Integration: slow moving mass markets of
the industrial age, it was common for successful
companies to own much of their supply chain.
Virtual Integration: companies now focus on their
core competencies, and partner with other companies
to create supply chains for fast moving markets.

14. Participants of Supply
Chain
Producers
Distributors
Retailers
Customers
Service Providers

15. Aligning Supply Chain
with Business Strategy
Understand the market your company serves
Define core competencies of your company
Develop needed supply chain capabilities

16. Understand Markets Your
Company Serves
The quantity of the product needed in each lot
The response time that customers are willing to tolerate
The variety of products needed
The service level required
The price of the product
The desired rate of innovation in the product.