Supply chain management involves coordinating the flow of goods and services from suppliers to customers. The goal is to satisfy customer needs with minimum costs and delays. Key aspects of supply chain management include purchasing, manufacturing, warehousing, inventory management, and logistics. Coordinating these complex activities across different entities is challenging due to conflicting objectives. Overall integration and information sharing across the supply chain are important to improve efficiency and reduce costs.

1. Supply Chain Management
Introduction

2. Supply Chain Management
Management of the flow of goods or services between
entities in the chain to realize delivery of end products or
services, satisfying customers at minimum cost.
OR
Set of approaches utilized to efficiently integrate suppliers,
manufacturers, warehouses and stores, so that merchandise
is produced and distributed in the right quantities, to the
right locations at the right time in order to
minimize system wide costs while
satisfying service level requirements.

3. Supply Chain Management
1. PURCHASING
2. MANUFACTURING
3. WAREHOUSING
4. INVENTORY MANAGEMENT
5. LOGISTICS

5. Cash Flow
Material Flow
Consumer
Retailer
FactorySupplier
Supplier Distr. Center
Retailer
Information Flow
Returned Goods

6. Why is SCM difficult?
Different facilities may have different, conflicting
objectives
◦ Suppliers want manufacturers to commit themselves to
purchasing large quantities in stable volumes with flexible
delivery dates
◦ Manufacturers want large production runs
◦ Warehouses and Distribution Centers want to reduce
inventory
◦ Reduction in inventory levels increase transportation costs

7. Conclusion
 Supply chains compete, not companies
 Most of the opportunities for cost reduction and
value enhancement lie at the interface between
supply chain partners
 Supply chain integration implies process
integration

8. Purchasing

9. Purchasing
 The acquisition of goods and services needed to
support the various activities of an organization,
at the best possible cost and from reliable
suppliers.

10. Purchasing Topics
• Importance of Purchasing Today
• Purchasing Processes
• Import Documentation
• Negotiation Skills
• Make – or – Buy Analysis
• Ethics in Buying

11. Importance of purchasing:
• Competition
• Material cost
• Lead time
• Customer Demand
• Quality

12. Negotiation

13. Negotiation Definition and Comments:
 The process whereby two or more parties decide what each
will give and take in an Exchange between them.” (Lysons &
Farrinton)
 “Negotiation is the process by which we search for terms to
obtain what we want from somebody who wants something
from us.”
(Total Success Training)
 “Negotiation is discussing or bargaining in order to reach
agreement.” (Owen)

14. Types of negotiation:
 Adversarial Negotiation
 Collaborative Negotiation
Adversarial Negotiation (distributive or win-lose
negotiation)
Collaborative Negotiation (integrative or win
-win negotiation)

15. Make
OR
Buy

16. Why would we buy something
(items, components, services)
when we could provide it ourselves?

17. Reasons to buy:
 The unit cost is cheaper,
 We don't use it enough,
 We don't have space,
 We don't understand the technology,
 We don't have the skill,
 It's not our core business/expertise,
 It's expensive to set up the process,

18. Reasons to provide in-house:
 The unit cost is cheaper,
 It's critical to the business,
 Retain specialist knowledge/skills,
 We have control over the supply,
 Quality issues are critical,
 No suitable supplier,
 It's part of our core business/expertise

19. Manufacturing

20.  Manufacturing is all about converting raw material into
consumer or industrial products.
A firms manufacturing competency is based on
 Brand power
 Volume
 Variety
 Lead time

21. Warehousing

22. Warehouse
 A warehouse is a commercial building for storage of
goods.
 They are usually large plain buildings in industrial areas
of cities and towns.
 Today warehouses are not used to store things but rather
to receive, breakdown, repackage and distribute
components to a manufacturing location or finished
products to customers

23. FUNCTIONS OF A WAREHOUSE
 Receiving, Storing, switching, change SKU size,
 Allows stock rotation (FIFO, LIFO),
 Buffer stock for customers – retail or commercial,
 Command and control centre – inventory control,
 Enables off-the-shelf (JIT) for customers,
 Provides a more-local 'Market Presence'.

24. FUNCTIONS OFA WAREHOUSE
 Consolidation and Break-Bulk
 Assortment (Cross Docking, Mixing)
 Postponement (Packaging, Labelling)
 Stockpiling (Seasonal, Bulk-Buy)
 Reverse Logistics

25. Plant 1
Plant 2
Plant 3
Consolidation
Warehouse Store B
Store C
Store A
Supply Chain Management

26. Plant
Break-Bulk
Warehouse
Store B
Store C
Store A
Supply Chain Management

27. CROSS-DOCK
=
No storage(?)
Cross-dock (from multiple suppliers):
● goods sorted as they arrive,
● goods moved across dock and loaded onto trailers,
● benefits - optimal vehicle use and low handling
costs,
● requires sophisticated planning techniques.

28. Cross Docking
• Transferring goods
• from incoming trucks
at receiving docks
• to outgoing trucks at
shipping docks
• Avoids placing goods
into storage
• Requires suppliers
provide effective
addressing (bar codes)
and packaging that
provides for rapid
transshipment
In-
coming
Outgoing

29. Safety and Maintenance
 Health and safety
 Incidents
 Environment

30. Warehouse management System (WMS)
• Computer software designed to manage the
storage and movement of items throughout the
warehouse.

31. Inventory Management

32.  Inventory is one of
the most expensive
assets of many
companies.
 It represents as
much as 60% of total
invested capital.
Inventory Management

33. Why do we hold Inventory?
 Improve customer service
 Reduce certain costs such as
◦ ordering costs
◦ stockout costs
 Contribute to the efficient and effective operation
of the production system

34. Why we do not hold Inventory?
 Certain costs increase such as
◦ Carrying costs, Handling cost
◦ Labor Cost
◦ Warehouse Cost
◦ Logistics Cost
◦ cost of return on investment
◦ reduced-capacity costs (Storage, warehouse)
◦ cost of production problems (Excess Inventory)

35. Two Fundamental Inventory Decisions
 How much to order of each material when
orders are placed with either outside
suppliers or production departments within
organizations
 When to place the orders

36. Logistics

37. Logistics is
“The process of planning, implementing and
controlling the efficient, effective flow and storage of
goods, services and related information from point of
origin to point of consumption for the purpose of
customer Satisfaction”
(council of logistics management)

38. THE PURPOSE OF LOGISTICS SYSTEM
 Right quantities of the
 Right goods to the
 Right places at the
 Right time in the
 Right condition at the
 Right cost.

39. A Simple Logistics Channel
Raw materials
supply point
Raw materials
supply point
Production
facility
Market
Customers
Market
Customers
Market
Customers
Product Flow

40. Raw materials
supply point
Raw materials
supply point
Production
facility
Retailer
Product Flow
Retailer
Retailer
Retailer
Retailer
Retailer
Warehouse
Warehouse
Raw materials
supply point

41. Two Main Types
 Inbound logistics: The management of materials
from suppliers and vendors into production processes
or storage facilities.
 Outbound Logistics: The process related to the
movement and storage of products from the end of
the production line to the end user.

42. Steps toward improving Logistics performance
• Make transport a customer service activity instead of a
cost
• Reduce your stock pipeline to cut costs and improve
service (go easy by low inventory)
• Pick as soon as you can (pick once, pick right and cut the
cost time and error)
• Is everything you are doing is really necessary