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Supply Chain Management

The document discusses supply chain management (SCM). SCM involves integrating suppliers, manufacturers, warehouses, and distribution centers to efficiently produce and distribute products in the right quantities, locations, and times, while minimizing system-wide costs and meeting service requirements. SCM is difficult due to inherent uncertainties and complexity in optimizing global supply chains. The importance of SCM is highlighted by examples of companies experiencing losses due to supply chain issues and the growing demands and opportunities around SCM from technologies like the Internet.

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hurricane2010
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40 views

Supply Chain Management

The document discusses supply chain management (SCM). SCM involves integrating suppliers, manufacturers, warehouses, and distribution centers to efficiently produce and distribute products in the right quantities, locations, and times, while minimizing system-wide costs and meeting service requirements. SCM is difficult due to inherent uncertainties and complexity in optimizing global supply chains. The importance of SCM is highlighted by examples of companies experiencing losses due to supply chain issues and the growing demands and opportunities around SCM from technologies like the Internet.

Uploaded by

hurricane2010
Copyright
© © All Rights Reserved
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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SUPPLY CHAIN

MANAGEMENT
BROAD OUTLINE
• Be on time… 10 minutes from start.
• Quizzes….(5-10%)
• Assignments…(15-20%)
• Grand Quizzes…(10-15%)
• Mid-Term…(25-30%)
• End-Term….(35-40%)
Basics of Supply Chain
Management
MUHAMMAD UMER

3
Definitions

4
What Is the Supply Chain?
• Also referred to as the logistics network
• Suppliers, manufacturers, warehouses,
distribution centers and retail outlets – “facilities”
Suppliers Manufacturers Warehouses & Customers
Distribution Centers

and the

• Raw materials
• Work-in-process (WIP) inventory Transportation Transportation
Costs

• Finished products Material Costs Costs Transportation


Manufacturing Costs Inventory Costs
Costs

that flow between the facilities


The Supply Chain
Suppliers Manufacturers Warehouses & Customers
Distribution Centers

Transportation Transportation
Costs Costs
Material Costs Transportation
Manufacturing Costs Inventory Costs Costs
The Supply Chain – Another View

Plan Source Make Deliver Buy

Suppliers Manufacturers Warehouses & Customers


Distribution Centers

Transportation Transportation
Material Costs Costs Costs Transportation
Manufacturing Costs Inventory Costs Costs
What Is Supply Chain Management
(SCM)?
Plan Source Make Deliver Buy

• A set of approaches used to efficiently integrate


– Suppliers
– Manufacturers
– Warehouses
– Distribution centers
• So that the product is produced and distributed
– In the right quantities
– To the right locations
– And at the right time
• System-wide costs are minimized and
• Service level requirements are satisfied
History of Supply Chain
Management
• 1960’s - Inventory Management Focus, Cost
Control
• 1970’s - MRP & BOM - Operations Planning
• 1980’s - MRPII, JIT - Materials Management,
Logistics
• 1990’s - SCM - ERP - “Integrated” Purchasing,
Financials, Manufacturing, Order Entry
• 2000’s - Optimized “Value Network” with Real-
Time Decision Support; Synchronized &
Collaborative Extended Network
Why Is SCM Difficult?
Plan Source Make Deliver Buy

• Uncertainty is inherent to every supply chain


– Travel times
– Breakdowns of machines and vehicles
– Weather, natural catastrophe, war
– Local politics, labor conditions, border issues

• The complexity of the problem to globally optimize a


supply chain is significant
– Minimize internal costs
– Minimize uncertainty
– Deal with remaining uncertainty
The Importance of Supply Chain
Management
• Dealing with uncertain environments – matching supply
and demand
– Boeing announced a $2.6 billion write-off in 1997 due to
“raw materials shortages, internal and supplier parts
shortages and productivity inefficiencies”
– U.S Surgical Corporation announced a $22 million loss in
1993 due to “larger than anticipated inventories on the
shelves of hospitals”
– IBM sold out its supply of its new Aptiva PC in 1994 costing
it millions in potential revenue
– Hewlett-Packard and Dell found it difficult to obtain
important components for its PC’s from Taiwanese suppliers
in 1999 due to a massive earthquake
• U.S. firms spent $898 billion (10% of GDP) on supply-
chain related activities in 1998
The Importance of Supply Chain
Management
• Shorter product life cycles of high-technology products
– Less opportunity to accumulate historical data on customer
demand
– Wide choice of competing products makes it difficult to
predict demand
• The growth of technologies such as the Internet enable
greater collaboration between supply chain trading
partners
– If you don’t do it, your competitor will
– Major buyers such as Wal-Mart demand a level of “supply
chain maturity” of its suppliers
• Availability of SCM technologies on the market
– Firms have access to multiple products (e.g., SAP, Oracle)
with which to integrate internal processes

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