Supply Chain Management 1

Supply Chain Management

Presented by:
1- Emad Eldeen Elgarhy
2- Shaimaa Hussien Selim
3- Samir Sabry Aldeeb
Contents:
1. Introduction
2. Meaning of supply chain
3. Define of SCM
4. Scope of SCM
5. Benefits and challenges of SCM
6. New trends in SCM
7. Summary

Supply Chain Management 3

Coal Storage

Coal Mill HFO Grinding

Raw Material
Storage Raw Mill Clinker production
L.S,CLAY,IRON
ORE Packing

Spare parts  Alternative

storage Fuel

NG

4
Supply Chain Management
Introduction:

• Supply Chain Functions:

 Procurement of raw material
 Transformation of raw material into
products
 Distribution of products to final
customers.
• Supply chain is a combination of various
facilities like supply, manufacturing,
assembly, distribution and logistics facilities.
• Supply chain exists in both manufacturing
and Service sectors.

Supply Chain Management 5

Introduction:
• Supply chain management (SCM):
 SCM is an information system approach
to managing supply chain procedures
like flow of information, material and
services from raw material suppliers
through manufacturing units, warehouses
to end customers.
 SCM information system helps
businesses to plan, execute and track SC
operations. It includes a various features
to manage the inventories ,orders and
transportation.
 SCM is a key to increase the productivity
and competitiveness in manufacturing
and service enterprises

Supply Chain Management 6

 1- Introduction:
• The major decisions taken through SCM:
 Procurement(supplier selection, optimal procurement
policies,….)
 Manufacturing(plant location , product line selection ,
capacity planning, production schedule,…)
 Distribution (warehouse location , customer
allocation, demand forecasting, inventory management,
…)
 Logistics(selection of logistics mode, selection of
ports, direct delivery, vehicle ,…..)
 Global Decisions (product and process selection,
planning under uncertainty , real time monitoring and
control).
Traditionally ,organization work with warehouse mentality, products
were hoarded in a warehouse as security of supplies were the main
requirement.
As warehouses reorganized , so did supplies and suppliers , With
supply chain management, no need for securing supplies at
warehouse or at shelves.
Supply Chain Management 7
Supply Chain Management 8
 2- Meaning of Supply chain
According to the council of logistics management, Supply chain is:
“The process of planning, implementing, and controlling the efficient and cost-effective
flow of raw materials, in process inventory, finished goods and related information from
the point of origin to the Point of consumption for the purpose of conforming the
customer requirements”

Supply chain is a system or network of

facilities in which people, information,
raw material and resources are involved
to enable smooth movement of a product or
a service from supplier to customer.
Supply chain in steps :
 Procuring raw material/natural resources
 Transforming material into finished products
 Distributing products to customers.

Efficient and optimized supply chain leads to cost saving to organization

Supply Chain Management 9

 Simple supply chain elements:
1. Customer: a customer place an order for certain quantity of a product(s) to
sales department of an organization
2. Planning: the sale order for a product is then combined with other orders by
the planning department and prepared a production plan to manufacture the
requested products and to purchase the needed raw material.
3. Inventory: the raw material is received, checked for quality and moved into
warehouse
4. Production: according to production plan, raw material moved from warehouse
to the production line, then perform quality control for the final product and stored in
the warehouse.
5. Transportation: the transportation department decide the most efficient
transportation method to deliver the final product to the customer on or before the
specified date in a perfect conditions.

Supply Chain Management 10

 3- Defining SCM
According to institute of supply management:
“The design and management of seamless ,value-added process across organizational
boundaries to meet the real needs of the end customer “
According to the supply chain council:
“managing supply and demand, sourcing raw material and parts, manufacturing and assembly ,
warehousing and inventory tracking ,order entry and order management ,distribution across all
channels and delivery to the customer.”
 SCM is a specialized process that is implemented to ensure the efficient and effectiveness of
SC in an organization.
 SCM can also be defined as the synchronization of organization’s processes and those of its
suppliers to correlate the flow of material, services and information with customer demand.
 The organizations that are part of supply chain are linked together through:
 Physical processes OR visible parts(manufacturing, transportation, storage of raw material and final
products)
 Information processes which aren’t visible, but very important to enable supply chain partners to
coordinate their long-term plans and to control day to day flow of raw material and goods through the
supply chain.
Supply Chain Management 11
Objectives of SCM:
The main objective of SCM is to improve the overall organization performance and
customer satisfaction by improving the product and services delivered to the
customer.
The Supply chain ultimate objective is to maximizing the efficiencies, reducing cost
and increasing profits, by proactively ensuring that the right product delivered to
the right place at the right time.
A well-designed SCM system is expected to perform the following strategic
objectives:
1. maximize the overall value generated(supply chain profitability).
2. Minimize total system cost(cost of procurement , production, transportation,…..).
3. To achieve maximum efficiency of using labors , capital and plant utilization
4. To meet customer demand for guaranteed delivery of high quality and low cost with minimal
lead time.
5. To reduce the pre &postproduction inventory.
6. To increase inventory turns
7. to design and implement flexible planning and control procedures
Supply Chain Management 12
11.3.2 SCM Components:

Supply Chain Management 13

11.3.2 SCM Components:
There are Five basic components for SCM:
1- Planning: an organization must have a perfect plan in order to manage the all
resources required to meet the customers demand for their requested products and
services and in turn satisfy the customer.
2- Sourcing: The raw material procured for manufacture the required Customer’s
products must be according to the organization quality standards. The selected suppliers
for delivering the raw material must be qualified in accordance to the organization
qualifications policies.
The supplied raw material should be according to the quality specifications and
according to the time delivery plan.

Supply Chain Management 14

SCM Components:
There are Five basic components for SCM:
3- Making: Manufacturing of final products from the procured raw material. during
this step, supply chain manager must schedule and manage the products
manufacturing, testing and packing and preparing to delivery to customer.
4- Delivering: an efficient distribution system is required for delivering the finals
goods stored at warehouses to the customers.
5- Return: this step is concerned with the defective and excess products returned to
the organization. this phase of supply chain must be implemented carefully and
efficient so as not to affect the relation with the customer

Supply Chain Management 15

Difference between Logistics Management and SCM :
 Logistics Management :
 managing the flow of goods and services between the point of origin and the point of
consumption to meet the requirements and specifications of customers. Logistics
management is also referred by names such as materials management, channel
management or distribution management.
 Supply chain Management :
 a wider concept that encompasses designing, planning, execution, control and
monitoring of supply chain activities with the primary objective of creating net profit
and leveraging worldwide logistics.

16
Supply Chain Management
Difference between Logistics Management and SCM :
DIFFERENCE BETWEEN LOGISTICS
MANAGEMENT AND SUPPLY CHAIN MANAGEMENT
Logistics Management (LM) Supply Chain Management
(SCM)
Logistics management is concerned SCM encompasses all the activities
with providing goods & services when associated with movement of goods
and where they are required from raw material stage to the end user
Logistics is used within a single Supply chain management requires
organization coordination and implementation
between
various organizations in the supply
chain
Logistics is considered a subset of Supply chain management is an
supply chain management extension
of logistics management
Logistics adds value when inventory Effective SCM helps in reducing
is correctly positioned to facilitate operating
sales costs, improves asset productivity
and reduces order cycle time
The concept of Logistics management The concept of Supply chain 17
Supply Chain Management
 Scope of SCM:
The four major areas of SCM are: location, Supplier
Management
production, inventory and
transportation/distribution.
Sales force Inventory
Supply Chain Management includes, management management

planning, design, control and

implementation of all business processes
related to procurement, manufacturing,
distribution and sales order fulfillment Scope
functions of a business. Thus, Supply
Financial Distribution
Chain Management includes managing management management

supply and demand, sourcing raw

materials and parts, manufacturing and
assembly, warehousing and inventory
tracking, order entry and order Payment Channel
management, distribution across all management Management

channels, and delivery to the customer

Supply Chain Management 18
Benefits of SCM:
1. Reduced costs: with the help of SCM, a defective process(a process that
increase the cost without increasing the value of the final product) can be
identified. These processes are wasteful and once they identified , they
eliminated, and the overall cost will be reduced.
2. Increased Inventory turnover:

3. Increased efficiency: organization that implement SCM can easily reduce the
wastages and in turn increase the efficiency of its operations.
4. Increased output: organization that implement SCM, can enhance the
interpersonal relationship with both suppliers and customers.
5. Increased profit: by implementing SCM, the operations cost can be
drastically decreased due to eliminating the wasteful process

Supply Chain Management 19

SCM challenges:
 Customer Service:
Supply chain management is called effective if it delivers the right product in the right quantity in
the right condition with the right documentation to the right place at the right time and at the
right price to the customer. Thus, the major challenge is to overcome these factors and rectify
any problem arising at any of these stages and ensure smooth supply chain in the organization.
 Planning and risk management:
Business world keeps changing everyday. There are new product launches, global sourcing,
new acquisitions, changing credit availability, the need to protect intellectual property, etc., that
supply chains must be planned accordingly and evaluated regularly to incorporate these
changes and, if required, redesigned. Supply chain risk must be identified and quantified.
 Cost Control:
There is a constant rise in freight prices, upgrades in technology, rise in labor rates, increase in
healthcare costs, and rise in commodity prices and so on. These challenges are to be overcome
by supply chain managers by taking correct decisions if the objectives of the organization
are not achieved.
Supply Chain Management 20
SCM challenges:
 Suppliers' relation management:
Different departments in an organization sometimes follow different methods of
implementing and measuring a performance and its results. Suppliers on the other hand
might follow some other method to assess a performance. This can lead to a problem if
the results do not match.
A few SCM provide a common language for supply chain classification and analysis that
makes the assessment easy for participants and on common grounds and parameters to
communicate, benchmark efforts, and enhances the evaluation of best practices.
 Talents:
Supply chain managers must have a thorough understanding of the key skills needed for
supply chain management roles. To keep abreast with latest trends and updates in the
supply chain requires job qualifications, methods for developing future talent and leaders,
and the ability to efficiently source specific skill sets.
Supply Chain Management 21
New trends in SCM

Demand planning

Closer
integration and
collaboration Globalization
with suppliers

Trends
in SCM
Shortened and Increased
more complex competition and
product life cycles price pressures

Outsourcing

22
Supply Chain Management
New trends in SCM
Demand Planning:
With the increase in sources and capacities for manufacturing, more and more organizations
are moving away from focusing their efforts on resource -level production planning.
They are adopting a more demand driven approach by trying to influence and manage
demand more efficiently. An efficient and advanced demand planning system and proper
strategies can help
uncover data and identify trends floating in organizations' information systems.
Globalization:
The increased integration of a global customer and supplier base has significantly impacted
all aspects of business-like manufacturing, distribution, sourcing of materials, invoicing and
returns. Thus, globalization has many companies realizing that their existing processes and
technology
are not flexible enough and have fallen short for incorporating this new business
environment.
23
Supply Chain Management
New trends in SCM
Increased competition and price pressures
Owing to increased competition and continued commoditization of many products,
organizations need to work on finding innovative ways to distinguish themselves
amongst other similar products in the market. Influx of other innovative products
and brand equity no longer allow a business to be complacent and command a
higher price in the market. Thus, in order to compete in this market significant
improvements in supply chain re-design and technology is required.
Outsourcing:
Some organizations are realizing that outsourcing is the latest trend in the market
and can prove to be advantageous for the growth of the organization.
A part or all of a supply chain can be outsourced to increase its efficiency. With
improvements in areas like information media, cost and quality of global
manufacturing and distribution, and product design capabilities, organizations are
going in for gaining additional synergies by outsourcing their supply chain. 24
Supply Chain Management
New trends in SCM
Shortened and more complex product life cycles
There is always a demand and pressure on business organizations to develop new
innovative products and float them in the market frequently without affecting the market of
existing products, which are still in high demand. In order to meet this growing demand from
both customers and consumers sides, organizations require a more efficient product lifecycle
management processes. An effective product lifecycle management process would lay
emphasis on managing new product introduction, discontinuation of product, design for
manufacturability and leveraging across their entire product and infrastructure characteristics.
Closer integration and collaboration with suppliers:
Many organizations are moving towards more intense collaboration between stakeholders'
customers and suppliers for the extended supply chain. The collaboration is carried out to
increase the exposure of an organization throughout the supply chain to make better
management decisions and decrease supply chain costs in return. Collaboration enables key
people associated with key processes throughout the supply chain to update themselves with
the information required to make critical business decisions with the best available
information. 25
Supply Chain Management