Supply Chain Management basics, with basic information with a collage of information that I collected.

1. AYLİN ŞAHİN

2. What Is a Supply Chain?
Flow of products and services from:
• Raw materials manufacturers
• Intermediate products manufacturers
• End product manufacturers
• Wholesalers and distributors and
• Dealers
•Connected by transportation and storage activities
•Integrated through information, planning, and integration activities
•Cost and service levels

3. What Is Supply Chain
Management?
• Supply chain management is
a set of approaches used to efficiently integrate
suppliers, manufacturers, warehouses, and stores, so that
good is produced and distributed at the
right quantities,
to the right locations,
at the right time,
in order to minimize system wide costs while satisfying service level
requirements.

4. Two Other Formal Definitions
The design and management of smooth, value-added
process across organizational boundaries to meet the
real needs of the end customer
Institute for Supply Management
Managing supply and demand, sourcing raw materials
and parts, manufacturing and assembly, warehousing
and inventory tracking, order entry and order
management, distribution across all channels, and
delivery to the customer
The Supply Chain Council

5. PC Industry Supply Chain

6. Supply Chain in Cisco creates
value

7. Source
Supplier
Supplier
Distributor
Distributor
Retailer
End-User
Converter
Converter Consumers
Information Flow
Funds/Demand Flow
Value-Added Services
Material Flow
Reuse/Maintenance/After Sales Service Flow
SCM Definition

8. The SCM Network
FIGURE 1.1: The logistics network

9. Key Observations
•Every facility that impacts costs need to be
considered
• Suppliers’ suppliers
• Customers’ customers
•Efficiency and cost-effectiveness throughout the
system is required
• System level approach
•Multiple levels of activities
• Strategic – Tactical – Operational

10. Other Related Observations
• Supply chain strategy linked to the Value Chain
• Challenging to minimize system costs and maximize system service
levels
• Inherent presence of uncertainty and risk

11. Global Apparel Value Chain
Tracing back the dress you are wearing

13. Importance of Supply Chain Costs
Example: The Clothing Industry
Manufacturer Distributor Retailer Customer
Cost per Percent
Shirt Saving
$52.72 0%
$41.34 28%
$20.45 62%
Manufacturer Distributor Retailer Customer
Manufacturer Distributor Retailer Customer

14. 1.4 Uncertainty and Risk Factors
• Forecasting is not a solution
• Demand is not the only source of uncertainty
• Recent trends make things more uncertain
• Lean manufacturing
• Outsourcing
• Off-shoring

15. 1.4 Uncertainty and Risk Factors
•August 2005 – Hurricane Katrina
• P&G coffee supplies from sites around New Orleans
• Six month impact
•2002 West Coast port strike
• Losses of $1B/day
• Store stock-outs, factory shutdowns
•1999 Taiwan earthquake
• Supply interruptions of HP, Dell
•2001 India (Gujarat state) earthquake
• Supply interruptions for apparel manufacturers

16. 1.5 Evolution of Supply Chain
Management
1950s 1960s 1970s 1980s 1990s 2000s Beyond
Traditional Mass Manufacturing
Inventory Management/Cost
Optimization
JIT, TQM, BPR,
Alliances
SCM
Formation/
Extensions
Further
Refinement of
SCM Capabilities

17. Progression of Logistics Costs
FIGURE 1-4: Logistics costs’ share of the U.S. economy

18. Composition of Logistics Costs
FIGURE 1-5: Total U.S. logistics costs between 1984 and 2005

19. Complexity: The Importance
• U.S. companies spend more than $1 trillion in supply-
related activities (10-15% of Gross Domestic Product)
• Transportation 58%
• Inventory 38%
• Management 4%
• The grocery industry could save $30 billion (10% of
operating cost) by using effective logistics strategies
• A typical box of corn spends 104 days getting from factory
to supermarket.
• A typical new car spends 15 days traveling from the factory
to the dealership.

20. Complexity: The Importance
• Compaq computer’s loss of $500 million to $1 billion in sales in
one year
• Laptops and desktops were not available when and where customers
were ready to buy them
• Boeing’s forced announcement of write-downs of $2.6b
• Raw material lack, internal and supplier parts lack….
• Cisco’s multi-billion ($2.2b) dollar write-off of inventories in
2001-2002
• Customers balked on orders due to market meltdown

21. Formulas for Measuring Supply-Chain
Performance
• One of the most commonly used measures in all of operations
management is “Inventory Turnover”
• In situations where distribution inventory is dominant, “Weeks
of Supply” is preferred and measures how many weeks’ worth
of inventory is in the system at a particular time
valueinventoryaggregateAverage
soldgoodsofCost
turnoverInventory =
weeks52
soldgoodsofCost
valueinventoryaggregateAverage
supplyofWeeks 





=

22. The Hierarchy of Supply Chain Metrics:
Operational Excellence

23. The Hierarchy of Supply Chain Metrics:
Innovation Excellence

24. Supply Chain Top 10 Companies
Source: Gartner (2010)

25. Case: Delta Airlines
• 2007 bankrupt
• Consolidation with an Nortwest airline company
• Paying to whole workers %15 from the profit
• Changed all the reservation system
• Bought petrol refinery for vertical integration to supply chain

26. Clever fridge

27. Supply Chain in Data Transfer

28. Refences
• Mc-Graw Hills Companies Designing and Managing Supply Chain3th Edition
• http://www.hbrturkiye.com/x/delta-ceo-suyla-iflas-etmis-bir-havayolu-sirketini-inovatif-dusunceyle-diriltmek-uzerine-2
• http://enerjienstitusu.com/2012/01/11/lg-yeni-ev-enerji-yonetimi-sistemi-hemsi-one-cikartti/
• http://www.hbrturkiye.com/dergi/2014-temmuz-agustos/veri-yonetimi-ama-nasil
• http://en.wikipedia.org/wiki/Cloud_computing
• http://www.hbrturkiye.com/insight-center/kasirgalardan-fabrika-yanginlarina-2
• Chase Acquilano and Jacobs Operations Management for Competitive advantage M
• http://www.gartner.com/technology/supply-chain/top25.jsp
• http://www.businessweek.com/adsections/2004/pdf/0416_supplychain.pdf
• http://www.pwc.com/gx/en/transportation-logistics
• http://www.amrresearch.com
• http://www.ariba.com
• http://www.ifsna.com
• http://www.ipsmartpackaging.com
• http://www.matrics.com
• http://www.peoplesoft.com
• http://www.sap.com
• http://www.myyellow.com
• http://www.zebra.com
• Contemporary Logistics – 9th
Edition - by Paul R. Murphy, JR. & Donald F. Wood