Supply chain management involves coordinating all parties involved in fulfilling customer requests, including suppliers, manufacturers, distributors, retailers, and customers. The objective is to maximize overall profit by generating revenue from customers that exceeds costs incurred along the entire supply chain. An effective supply chain manages product, information, and fund flows to have the right products in the right quantities available at the minimal cost. A simple example supply chain for bread shows the value added at each stage from farmer to grocery store. Logistics is the management of the flow of goods, information, and resources between the point of origin and consumption, integrating transportation, inventory, and warehousing to add time and place value.

1. Supply Chain Management

2. A Supply Chain for BreadA Supply Chain for Bread
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3. What is Supply chain?
• Consists of all parties involved,
directly or indirectly, in fulfilling a
customer request
Supplier Manufacturer Distributor Retailer Customer

4. Is supply chain so simple?
Supplier Manufacturer Distributor Retailer Customer
Supplier Manufacturer Distributor Retailer Customer
Supplier Manufacturer Distributor Retailer Customer
Upstream Downstream

5. Objective of a Supply Chain
• Maximise overall profit
• Profit
– Revenue generated from customer - costs
incurred along the entire chain
(e.g. manufacturing / storing / distributing the
product)
• When is Supply chain effective?
– Manage Product, Information and Fund flow

6. Simple Product Supply ChainSimple Product Supply Chain
Supply Chain: A sequence of activities
And organizations involved in producing
And delivering a good or service
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7. 1-7
Stage of Production Value
Added
Value of
Product
Farmer produces and harvests wheat $0.15 $0.15
Wheat transported to mill $0.08 $0.23
Mill produces flour $0.15 $0.38
Flour transported to baker $0.08 $0.46
Baker produces bread $0.54 $1.00
Bread transported to grocery store $0.08 $1.08
Grocery store displays and sells bread $0.21 $1.29
Total Value-Added $1.29
A Supply Chain for BreadA Supply Chain for Bread

8. So, what is SCM?
• Objective is to be able to have the right products
in the right quantities (at the right place) at the
right moment at minimal cost.

9. Causes
• Little or no communication between supply
chain partners.
• Delay times between order processing,
demand, and receipt of products.
• Over reacting to the backlog orders.
• Inaccurate demand forecasts.

10. Distribution
• Steps taken to move and store a product
from supplier
• Design Options
– Manufacturer storage with direct shipping
– Manufacturer storage with direct shipping and
in-transit merge

11. Logistics
• Logistics is the management of the flow of
goods, information and other resources,
including energy and people, between the point
of origin and the point of consumption
• Logistics involves the integration of information,
transportation, inventory, warehousing, material-
handling, and packaging, and occasionally
security
• Logistics is a channel of the supply chain which
adds the value of time and place utility.