This document provides an introduction to supply chain management. It defines key concepts like supply chain, logistics, and supply chain management. It describes the principal issues in supply chain like the components of the supply chain, logistics goals and steps, drivers of change, and management activities. It also discusses analyzing the supply chain through understanding customers, products, processes, and information flow. Finally, it outlines performance indicators for measuring effectiveness, efficiency, productivity, profitability, and customer service quality.

1. SUPPLY CHAIN
MANAGEMENT
GUIDE
Compiled by: Ioannis Dermitzakis

2. 1. Introduction

3. INTRODUCTION
The series of slides is a basic introduction into Supply
Chain Management and it should be used as such, to
introduce to the staff of your organisation to the
concepts, theories, working and advantages of having
a fully functioning integrated Supply Chain.
Successful introduction, training and acceptance of
supply chain concepts throughout the whole
organisation has been achieved in large and small
organisation including SABIC in the middle east.

4. KEY CONCEPTS SUPPLY CHAIN
SUPPLY CHAIN IS:
the sequence of suppliers that contribute to the
creation and delivery of a good or service to end
customers.
Logistics is:
the management of the storage and flow of goods,
services and information throughout your
organisation.
Supply Chain Management is:
organizing the cost effective flow and storage of
materials, in-process inventory, finished goods and
related information from point of origin to point of
consumption to satisfy customer requirements.

5. A Business Philosophy
A way of doing business with your
customers and suppliers.
KEY CONCEPTS: A PHILOSOPHY

6. PRINCIPAL ISSUES: SUPPLY CHAIN (1)
Supply Chain
The supply chain of a company consists of
different departments, ranging from
procurement of materials to customer
service.
The supply chain includes activities
associated with inventory (materials)
acquisition, storing, use in production,
transit, and delivery to customers.

7. PRINCIPAL ISSUES: SUPPLY CHAIN (2)
The activities are planned, executed, and
monitored under the guidelines set by
the company’s chosen customer service
levels and in line with the company’s
other operating goals.

8. PRINCIPAL ISSUES: ELEMENTS OF LOGISTICS
Elements of Logistics:
 materials management:
sourcing and receiving of raw materials or
unfinished products for subsequent use
 material flow system:
the ability to locate and schedule material
through to end production and disposition
 physical distribution:
the delivery of finished goods to customers

9. PRINCIPAL ISSUES:LOGISTIC GOAL
Logistic goal and objectives
The right
products
The right
quantity
The right
moment
At minimal
cost
Flexibility
Delivery
reliability
Delivery time/
lead time
Inventory
level

10. PRINCIPAL ISSUES: LOGISTIC STEPS
Logistic steps:
 accepting a customer order
receive and enter
credit clearance / authorize
delivery commitment
 supplier ordering
 forecasting demand
 scheduling manufacturing
 inventory management
 delivery to customer.

11. PRINCIPAL ISSUES . EVOLUTION
Quality products
Lowest possible cost
Order fulfillment
Integration of supply chains
Customer service
Preferred partners
Communication
Supply chain communities
Common goals, objectives

12. PRINCIPAL ISSUES: THE GOAL
Supply Chain Management Goal
To evolve a company’s supply chain into
an optimally efficient, customer-satisfying
process, where the effectiveness of the
whole supply chain is more important
than the effectiveness of each individual
department.

13. PRINCIPAL ISSUES: FOCUS
Supply Chain Management focuses on
business processes:
 product design
 planning
 order management
 stock management
instead of functions:
 sales
 purchasing
 production

14. PRINCIPAL ISSUES: DRIVERS OF CHANGE (1)
Drivers of change:
 outsourcing trend
 actual customer demand: speed,
flexibility and competitive pricing
 new software: ERP, sophisticated
application software

15.  new technologies
Electronic Data Interchange (EDI)
internet, intranet, extranet
wireless communications
teleconferencing and telecommuting
bar coding.
PRINCIPAL ISSUES: DRIVERS OF CHANGE (2)

16. PRINCIPAL ISSUES: ACTIVITIES
Supply chain management activities:
 Forecasting demand
 Selecting suppliers
 Ordering material
 Managing inventory
 Scheduling production
 Shipping and delivery
 Organizing information exchange

17. ANALYSIS: DIAGRAM
Understand the
customer
Understand the
product
Understand the
process
Understand the
information flow

18. ANALYSIS :UNDERSTAND THE CUSTOMER (1)
Know and understand the customers:
 Your existing customers, i.e.,
demographics
existing and potential number
income levels?
 Who are your potential customers?
 How might these customers be grouped?
 For which percentage of sales is each group
responsible?

19. ANALYSIS: UNDERSTAND THE CUSTOMER (2)
 What is the effect of various methods of
communications (i.e., telephone, fax, e-
mail, internet telephone systems) in
your relation with your customers?
 What do your customers want from
you?
 How well do your competitors meet
customers needs?

20. ANALYSIS: UNDERSTAND THE PRODUCTS
Understand the products:
 How many?
 Where are they?
 Which percentage of sales?
 What is the product life cycle?
 What is the product mix?

21. ANALYSIS: UNDERSTAND THE PROCESS
Understand the production process:
 process flow
linear flow
job shop - batch flow
assembly line
continuous flow
project flow
 order fulfillment strategy
make-to-order
make-to-stock.

22. ANALYSIS: UNDERSTAND THE INFORMATION FLOW
Understand the information flow:
 What information is required for
effective decision-making at each stage
in the supply chain?
 What data has to flow between each
part of the supply chain?

23. PERFORMANCE INDICATORS (1)
A total view must be taken in assessing
performance.
Performance measurements need to be focused
on what factors add to total performance, total
value or total cost.
The principle performance indicator is customer
service. Optimum service levels are necessary
from each supplier to each customer throughout
the supply chain.

24. PERFORMANCE INDICATORS (2)
Suppliers Inputs
Adding
value
Outputs Customers Results
Effectiveness
Efficiency
Productivity
Profitability
Customer Service + Quality
Customer
Service

25. PERFORMANCE INDICATORS (3)
Effectiveness:
 accomplishment of the right things, on
time, within the requirements specified.
Efficiency:
 resources expected to be consumed
divided by resources actually
consumed.

26. PERFORMANCE INDICATORS (4)
Productivity:
 measures of output divided by
measures of input for a given period of
time.
Profitability:
 relationship between revenues and
costs.

27. CONCLUSION
Intro to SCM
Process of SCM
KPI’s of SCM