The document outlines 8 rules for effective supply chain management. The rules are: 1) optimize internal processes before focusing externally, 2) inventory management requires collaboration across the chain, 3) coordination is needed across all players to minimize costs and bottlenecks, 4) time impacts costs and cash flow so reliable lead times are important, 5) customers drive the chain so their needs must be understood and met, 6) smooth continuous flow is preferable to optimize value, 7) take a holistic view to find trade-offs, and 8) information flow lubricates the chain and appropriate technology is critical. Following these rules can improve key metrics like inventory levels, on-time delivery, profits as a percentage of sales.

1. The Supply Chain Rules
Stuart Emmett
MSc. BA (Hons) FCILT

2. The Supply Chain: a
definition
One with four parts:
• Everything in & between Supply<>demand;
• Movement of materials/inventory/information;
• From Suppliers>Company>Customers;
• In a Timely manner to meet customer requirements.
More than one supply chain in any company
30 to70% of business cost is in the Supply chain
Can be “Local” “Regional” “Global” in reach
The aim of Supply Chain Management is to
“Integrate, coordinate and control the supply
chain”

3. SUPPLY
(SUPPLIER)
“BUY”
PURCHASEI
I
“DESIGN”
RAW
MATERIALS
DEMAND
GOODS FLOWS
RM
“MAKE”
PRODUCTION
I
WIP
“MOVE”
“SELL”
DISTRIBUTION MARKETING
I
FINISHED
GOODS
I
INFORMATION FLOWS
RECYCLING FLOWS
I = INVENTORY
SUPPLIERS
SUPPLIER
(CUSTOMER)
FINISHED
GOODS
ULTIMATE
CONSUMER

4. The Supply Chain
Supply
Demand
The Supply Chain
The Value Chain
The Demand Chain
“Buy/Make”
Flows of Products
akwe”e
“”
Flow of
-Ideas
-Order
creation
Flow of
-Product
-Order fill
Suppliers
“Move/Sell”
Customers
Flow of
-Cash
-Orders
Flows of Information including money
Intellectual capital
Physical capital
Profit/assets capital

5. Supply chain management
Is the key to competitive advantage in an
environment where:
―
―
―
―
―
―
―
―
―
More demanding customers and wider product ranges
Smaller order sizes
Customisation of products
New and fast changing technology
Increased competition
Increased outsourcing
Shorter product life and “time to market” cycles
Have to “do more with less”
Globalisation of operations
“The future is one not of competing companies but
of competing supply chains”

6. “OK, but what is involved?”
I therefore put together the following 8 Rules as my
answer to what companies need to do, when you say
SCM is important

7. Supply Chain Rule 1
The Buy/Make/Move/Sell processes:
• All are inter-related and inter connected
• SCM is a philosophy and is not a department
• Therefore, all internal and external connections,
must be viewed, as a whole /holistically
Supply Chain Rule number 1:
“Win the homes games first”

8. Win the home games
Procurement
Production
Logistics
Marketing

9. Joined up thinking
Procurement
Production
Logistics
Marketing

10. Supply Chain Rule 2
Inventory=the common component of all supply
chains
• Shorter lead times reduce stock levels and demand
lead times = faster responses
• Fixed and known lead times are critical
• “Uncertainty is the mother of inventory”
• But how far do we “collaborate” to minimise
uncertainty?
Supply Chain Rule number 2:
The format of inventory and where it is held is of
common interest to all supply chain players and
must be jointly investigated and examined

11. Supply Chain Rule 3
SCM requires the coordination of all players, then:
• Channel inventory is minimised
• Bottlenecks are eliminated = “Flow”
• Time frames are compressed = “Speed”
• Quality problems are eliminated
Supply Chain rule number 3:
The optimum and the “ideal” cost/service balance will
only ever be found by working and collaborating
fully with all players in the Supply Chain

12. Supply Chain Rule 4
Time is the finite resource and includes:
• The goods flows and information times,plus
• The storage and static times,plus
• The payment and credit times
Many individual items involved.e.g.:
-production preparation,processing
-in stock lead times
-receivers lead time etc
Supply chain rule number four:
Time is cash, cash flow is critical and so are the goods
and information flows; fixed reliable lead times are
more important than the length of the lead time

13. Supply Chain Rule 5
Serving the customer is the reason to be in
business.
• Customers can be internal and external
• The ultimate customer-the consumer-is the only
party who only puts money into, the supply chain.
Supply Chain Rule number five:
The customer is the business: it is their demand that
drives the whole supply chain; finding out what
customers value and then delivering it, is critical

14. Supply Chain Rule 6
SCM is about Flow, therefore:
• Make it faster, (try form changes)
• Move it faster,(try time changes)
• Get paid faster,(try place changes)
• It is only the movement to the customer that brings
the ultimate value, everything else adds cost
Supply Chain rule number six:
It is only the movement to the customer that adds the
ultimate value. Smooth continuous flow movements
are preferable.

15. Supply Chain Rule 7
Taking a total/holistic view of the cost/service
balance, from the customers perspective
Trade off’s are possible in three ways:
• Within functions
• Between functions
• Between companies
Remember to look “outside of the box”
for more possibilities and opportunities
Supply Chain rule number seven:
Trade Off by looking holistically; “Outside of the Box”

16. Supply Chain Rule 8
Information is needed for decision making, plus:
• Implements other activities
• Used for planning and organising
• Controls performance
• Coordinates and links internal activities
• Coordinates and links external suppliers/customers
Supply Chain rule number eight:
Information flows lubricate the supply chain, using
appropriate ICT is critical

17. Supply Chain Benefits
Silo / Functional
working
Internal Integrated
SC
External Integrated
SC
(only to 1st level)
Inventory days of 100
supply Indexed
78
62
Inventory
carrying cost
% sales
3.2%
2.1%
1.5%
OTIF
80%
91%
95%
Profit % Sales
8%
11%
14%

18. Questions please
Please ask whatever you want
and I will tell you………….
I do have “open book” approach
?

21. Thank You