Chapter 1 – p.

Introduction to
Supply Chain
Management

Do Thi Thu Ha, MSc.

 Do Thi Thu Ha, MSc.

Chapter objectives
After completing this chapter, you should be able to:
 Describe a supply chain and define supply chain management.
 Describe the objectives and elements of supply chain management.
 Describe local, regional and global supply chain management
activities.
 Describe a brief history and current trends in supply chain
management.
 Understand the bullwhip effect and how it impacts the supply chain.

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Lecture outline
In this chapter, you will learn about:
1. Introduction
2. Supply Chain Management Defined
3. The Importance of Supply Chain Management
4. The Foundations of Supply Chain Management
5. Current Trends in Supply Chain Management
6. Summary

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Introduction to Supply Chains

 For every business transaction, there is a
supplier and a customer and there are
activities, facilities and processes linking
the supplier to the customer.
 Supply chain management (SCM): The
Supply chains in some shape management process of balancing these
or form are required to deliver links to deliver best value to the customer
products and services we, or at minimum cost and effort for the supplier
our organization need, or think
is needed.

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Introduction to Supply Chains

r ch asing
pu

materials equipment

supplier customer

• inventory & facilities management

• demand forecasting
• capacity management
• scheduling and quality management
facilities  minimize customer queues
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 Do Thi Thu Ha, MSc.

Introduction to Supply Chains

r r cu cu
lp ie lp ie sto sto
p p m er m er
su su

airline company airport airline service agency you

• inventory & facilities management
• demand forecasting
• capacity management
• scheduling and quality management
The key objective of supply chain management is to provide best
value to the customer by measuring, planning and managing all the
links in the chain.
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What is supply chain management?

Supply chain management is a set of approaches utilized to efficiently

integrate suppliers, manufacturers, warehouses, and stores, so that
merchandise is produced and distributed at the right quantities, to the right
locations, and at the right time, in order to minimize system wide costs while
satisfying service level requirements.
- Simchi-Levi et al. (2003) -

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Supply chain in manufacturing

materials suppliers manufacturers warehouse

Supply chain of bottled water

end users retailers distribution center

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Supply chain in manufacturing: Example

potato farms traders potato chips factory

Supply chain of potato chips

customers supermarkets/ grocery distributors

stores/ convenient stores
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Supply chain in manufacturing: Practice

 TOPIC: Research and determine the supply chain of fabrics in
Vietnam noting that Vietnamese fabrics are one of the main
exporting products.
 REQUIREMENTS:

 Can be presented in any form

 Indicate specifically the activities in
every stage
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Supply chain in services

Supplier Manufacturer Warehouse Retailers Consumer

Distributor

Buy Make Move Sell Service

things things things things things

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Supply chain in services: Example

Buy Make Move Sell Service
things things things things things

• Lodgment • Ticket
• Furniture s • Swimming
• Staffs pool
• Technology • Reservations
• Restaurants
• Local • Wake-up
tours calls
• Breakfasts
• Wi-Fi
• Events • Views
organizing
07/21/2022 Supply chain of hotel service13
 Do Thi Thu Ha, MSc.

Supply chain in services: Example

Buy Make Move Sell Service
things things things things things

• Plane + • Flights • Passengers (shuttle • Business • Check-ins

related • In-flight bus) class • Blankets/
equipment services city  airport • In-flight pillows
• Aeronautical • Shipping platform  airplane shopping • Newspapers
staffs services • Meals • Souvenir • Wheelchairs
• Airfield kitchen  airplane gifts • Special care
• Checkpoint airplane  passengers • Guiding • TVs/ music
• Technology • Luggage helps Luggage
airplane  passengers arrangement
Supply chain of airline service
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Supply chain in services: Practice

 TOPIC: Research and determine the supply chain in cinema service.
 REQUIREMENTS:

 Can be presented in any form

 List down at least 3 activities in every
stage

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Flows in a supply chain

Information flow
Reverse product flow

Supplier Manufacturer Warehouse Retailers Consumer

Distributor
Primary Secondary Secondary Secondary
product product product product
flow flow flow flow

Cash flow
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Supply chain in not-for-profit organizations

= Humanitarian logistics
 Charity organizations
 Volunteering programs
 Aid organizations

 Capability and
capacity of responding to
unpredictable demands

Case p.7: The National Health Service

(NHS) in the United Kingdom
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Logistics and Supply Chain Management

Supplier Manufacturer Warehouse Retailers Consumer

Distributor
Buy Make Move Sell Service
things things things things things
Procurement Production Transportation
or Purchasing Inventory
Warehousing
Operations management Distribution Marketing management
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Logistics management
 Do Thi Thu Ha, MSc.

Inbound and Outbound Logistics

Upstream processes Downstream processes

07/21/2022 Figures 1.2 and 1.3, p.10 21

 Do Thi Thu Ha, MSc.

Inbound and Outbound Logistics

Basis for
Inbound logistics Outbound logistics
comparison
The influx of raw material and The outward movement of
Meaning parts, from suppliers to the final goods, from the company
manufacturing plant to the end user
Material management and Customer service and
Related to
procurement channel of distribution
Deployment of resources and Movement of finished goods
Focuses on raw materials, within the or product from the business
manufacturing plant. to final customer.
Interaction Between supplier and the firm Between firm and customers
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How do you deliver value in supply chain management?

07/21/2022 Figure 1.7 Porter’s value chain, p.15. 25

 Do Thi Thu Ha, MSc.

The process views of a supply chain

Planning and
Demand cycle Supply cycle
procurement cycle

Simplified process cycles in supply chain

Push process in supply chain Pull process in supply chain

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The process views of a supply chain

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The process views of a supply chain

PUSH PULL

vs.
Make what’s needed when we need
Make all we can just in case
it
• Production approximation
• Production precision
• Based on forecasting
• Based on actual demand
• High production cost
• Waste reduction
• High inventory cost
• Low inventory cost
• Poor communication
• Better communication

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Summary
Supply chain management is the integration of trading partners’ key business
processes from initial raw material extraction to the final or end customer, including
all intermediate processing, transportation and storage activities and final sale to
the end product customer. Today, the practice of supply chain management is
becoming extremely important to reduce costs and improve quality and customer
service, with the end objective of improving competitiveness. Many firms are just
now becoming aware of the advantages of supply chain integration. Supply chain
management is an outgrowth and expansion of lean and Six Sigma activities and
has grown in popularity and use since the 1980s. The foundations of supply chain
management can be found in the areas of purchasing, production, logistics and
process integration or collaboration between trading partners. Finally, as markets,
political forces, technology and economic conditions change around the world, the
practice of supply chain management must also change and grow.
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All we are doing is

looking at the time line,
from the moment the
customer gives us an
order to the point when
we collect the cash. And
we are reducing the time
line by reducing the non-
value adding wastes.
– Taiichi Ohno –
father of Toyota Production System (TPS)

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