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Supply Chain Management,: A Strategic Tool For Achieving Business Goal

This document discusses supply chain management as a strategic tool for achieving business goals. It defines business goals as what a company aims to accomplish over a set period of time, such as increasing revenue, profit, customer satisfaction, or building new products. The document then explains how supply chain management can help coordinate activities like procurement, production, and distribution across a company's network of suppliers and partners. When implemented strategically, supply chain management creates synergies that allow a business to provide higher customer value at lower overall costs compared to managing operations independently.

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80 views

Supply Chain Management,: A Strategic Tool For Achieving Business Goal

This document discusses supply chain management as a strategic tool for achieving business goals. It defines business goals as what a company aims to accomplish over a set period of time, such as increasing revenue, profit, customer satisfaction, or building new products. The document then explains how supply chain management can help coordinate activities like procurement, production, and distribution across a company's network of suppliers and partners. When implemented strategically, supply chain management creates synergies that allow a business to provide higher customer value at lower overall costs compared to managing operations independently.

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© © All Rights Reserved
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SUPPLY CHAIN

MANAGEMENT,
A STRATEGIC TOOL FOR ACHIEVING

BUSINESS GOAL
Presented by:
Isaac Owusu

MBA, MILT

Programme Coordinator, Logistics and Supply Chain Management

Pentecost University College


SUPPLY CHAIN MANAGEMENT, A STRATEGIC TOOL FOR ACHIEVING
BUSINESS GOAL
What are Business Goals?
What are Business Goals?

 Business goals describe what a company expects to


accomplish over a specific period of time
What are Business Goals?
Tomorrow

Today
Goals are used to help a business grow and achieve its objectives
help the business describe what it wants to accomplish in future
 Increase Revenue
 achieve sales targets/quota
 launch new product or service

 Increase Profit
 increase utilization rate
 reduce production cost
 Have Happy Customers
 reduce or eliminate lead time variability
 provide quick response

 Support the Community


 Sponsor charitable events
 Build Amazing Product (s)
 Increase feature set
 Apply new design
 Traditionally business activities such as
procurement, production and distribution were
managed independently with little coordinated
effort.
 Inventory was used to buffer between these
activities, resulting in large stocks of
inventories being held and duplication of effort
and stockholdings.
 Organizations focused more keenly on the
effectiveness of the activities as separate
functions.
Activities such as:
 purchasing
 production
 warehousing
 marketing and
 transportation
were decoupled into functions ignoring the fact
that these activities are dependent upon each
other.
 Now the picture is different
 Organizations are moving away from this
traditional model towards:

 Improved coordination and


 integration of activities

In order to provide their markets with higher


service levels at reduced costs.
 Organizations are now competing as supply
chains and NOT as individual firms
 This brings about synergy-
Where two or more organizations interact or
cooperate to produce a combined effect greater
than the sum of their separate effects.

Where
2+2 =5
 In simple terms, a supply chain consists of all parties
involved directly or indirectly in fulfilling a
customer’s request

 These parties include the manufacturer suppliers,


transporters, warehouse providers, retailers, and
customers (Chopra and Meindl, 2004).
A supply chain is a “network of facilities and activities
that perform the functions of product development,
procurement of material from suppliers, the movement of
materials between facilities, the manufacturing of
products, the distribution of finished goods to customers,
and after-market support for sustainment” (Mabert and
Venkataraman 1998)
It includes all functions involved in receiving and filling
a customer’s request such as:

New product development,


Marketing,
Operations/Production,
Distribution
Finance,
Customer service
Illustration: Detergent Supply Chain

Timber Paper Manu- Tenneco


Company facturer Packaging

P&G (Manu- Distributor Wal-Mart Customer


facturer) ’s DC Store

Chemical Plastic
Manufacturer Producer
 Supply chains are dynamic and involve the constant
flow of:

 information,
 product, and
 funds between different stages

 These are referred to as Supply Chain flows

 Supply chain flows provide the linkages between the various


stages of the supply chain
In our example,

 Wal-Mart provides the product, as well as pricing and availability


information, to the customer.

 The customer transfers funds to Wal-Mart.

 Wal-Mart conveys point-of-sales data as well as replenishment orders to


the warehouse or distributor, who transfers the replenishment order via
trucks back to the store.

 Wal-Mart transfers funds to the distributor after the replenishment. The


distributor also provides pricing information and sends delivery
schedules to Wal-Mart.

 Wal-Mart may send back packaging material to be recycled. Similar


information, material, and fund flows take place across the entire supply
chain.
The Concept has been variously defined
 Simply, SCM is the management of the chain of
suppliers.

 It is the management of upstream and


downstream relationships in order to deliver
superior customer value at less cost to the
supply chain as a whole” (Christopher 1998).
 SCM is the oversight of materials,
information, and finances as they move in a
process from supplier to manufacturer to
wholesaler to retailer to consumer.

 It involves coordinating and integrating these


flows both within and among companies.
 This coordination and control of processes
results in:

 smooth materials and goods flows in and out


of the organization

 clean, well-designed work processes

 sufficient production capacity for the demand


 This coordination and control of processes
results in:

 sufficient goods and service to satisfy the


customers

 sufficient logistical resources for distribution

 appropriate quality systems in place.


 Supply chain network design is the practice of
locating and rationalizing the facilities within the
supply chain,

 Determining the capacity of these facilities

 Determining how to source demand through the


network and selecting modes of transportation in a
manner that provides the required level of customer
service at the lowest cost
 Different businesses need different supply chains. Hence different Network Designs

 A company’s supply chain needs to support its business strategy in order to achieve

Strategic Fit

 Strategic Fit is when a company’s Supply Chain strategy and its competitive

(business) strategy have aligned goals

But different business strategies have different performance requirements (cost, lead
 SC Networks are therefore designed around the chains’ competitive

strategic goals which are defined by competitive priorities such as:

 cost,

 lead

 times,

 reliability,

 convenience,

 variety,
 The ultimate goal of a strategic network design project
is to gain competitive advantages and secure long-term

success by providing the right structure for the supply

chain.
Supply Chain Decisions

 Decisions for supply chain management have been classified into


two broad categories - strategic and operational.

 Strategic decisions are made typically over a longer time horizon.


These are closely linked to the corporate and guide supply chain

policies from a design perspective.


Supply Chain Decisions

 Operational decisions are short term, and focus on activities over


a day-to-day basis.

 The effort in these type of decisions is to effectively and efficiently


manage the product flow in the "strategically" planned supply

chain.
Supply Chain Decisions
 There are four major decision areas in supply chain

management namely:

 location
 production
 inventory
 transportation (distribution)
Supply Chain Decisions

 Inventory decisions - These refer to the means by which

inventories are managed.

 Inventories exist at every stage of the supply chain as either raw


materials, semi-finished or finished goods.
Inventory Decisions-Rough cut Methods
 The emphasis of the rough cut models is the development of inventory control
policies, considering several levels together.

 These models are referred to as "multi-level" or "multi-echelon" inventory control


models.

 Eg: the "OPTIMIZER", one of the most complex models to date - to manage IBM's
spare parts inventory.
Inventory Decisions-Rough cut Methods
The models have lot of criticism:

They ignore the production side of the supply chain. Their starting point in most
cases is a finished goods stockpile, and policies are given to manage these effectively

They assume that each site receives re-supply from only one higher level site
but can distribute to several lower levels

They largely focused on the inventory system only, and ignore possible trade

offs with other logistic activities


THANK YOU

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