1. By: Marifel Grace C. Kummer

2. Supply Chain Management
The objective is to build a chain of
suppliers that focuses on maximizing
value to the ultimate customer

3. What is Supply Chain Management?
Supply Chain Management is the design and
management of processes across organizational
boundaries with the goal of matching supply and
demand in the most cost effective way.

4. What is Supply Chain?
A supply chain is the system of
organizations, people, activities,
information and resources involved in
moving a product or service from supplier
to customer. Supply chain activities
transform raw materials and components
into a finished product that is delivered to
the end customer.

5. Supply Chain Management

6. Major Issues Affecting SCM
 Information technology – enablers include the Internet,
Web, EDI, intranets and extranets, bar code scanners, and
point-of-sales demand information
 E-commerce and e-business – uses internet and web to
transact business
 Business-to-business (B2B) E-commerce – businesses selling
to and buying from other businesses
 Business-to-Business (B2B) Evolution:
 Automated order entry systems started in 1970’s
 Electronic Data Interchange (EDI) started in the 1970’s
 Electronic Storefronts emerged in the 1990’s
 Net Marketplaces emerged in the late 1990’s

7. Major Issues Con’t
Benefits of B2B E-Commerce
 Lower procurement administrative costs,
 Low-cost access to global suppliers
 Lower inventory investment due to price
transparency/reduced response time
 Better product quality because of increased
cooperation between buyers and sellers,
especially during the product design and
development

8. Major Issues Con’t
 SCM must consider the following trends, improved
capabilities, & realities:
 Consumer Expectations and Competition – power has
shifted to the consumer
 Globalization – capitalize on emerging markets
 Government Regulations and E-Commerce – issues
of Internet government regulations
 Green Supply Chain Management – recycling,
sustainable eco-efficiency, and waste minimization

9. Global SCM Factors
 Managing extensive global supply
chains introduces many complications
 Infrastructure issues like transportation,
communication, lack of skilled labor, & scarce
local material supplies
 Product proliferation created by the need to
customize products for each market

10. Sourcing Issues
 Which products to produce in-house and which are
provided by other supply chain members
 Vertical integration – a measure of how much of the
supply chain is owned by the manufacturer
 Backward integration – owning or controlling of sources of
raw material and component parts
 Forward integration – owning or control the channels of
distribution
 Vertical integration related to levels of insourcing or
outsourcing products or services

11. The Role of Purchasing
 The purchasing dept plays important role in
SCM and is responsible for:
 Selecting suppliers
 Negotiating and administering long-term contracts
 Monitoring supplier performance
 Placing orders to suppliers
 Developing a responsible supplier base
 Maintaining good supplier relations

12. The Traditional Purchasing Process

13. E-Purchasing Process

14. Ethics in Supply Management
Global Standards of Supply Management
Conduct from ISM:
 Loyalty to your organization
 Justice to those with whom you deal
 Faith in your profession

15. The Supply Chain’s Strategic Importance
Supply chain management is the integration
of the activities that procure materials and
services, transform them into intermediate
goods and final products, and deliver them
through a distribution system
Competition is no longer between companies;
it is between supply chains

16. Supply Chain Management
Important activities include determining
1.Transportation vendors
2.Credit and cash transfers
3.Suppliers
4.Distributors
5.Accounts payable and receivable
6.Warehousing and inventory
7.Order fulfillment
8.Sharing customer, forecasting, and production
information

17. Supply Chain Decision Impact Strategy

20. Supply Chain Risks
More reliance on supply chains means more
risk
Fewer suppliers increase dependence
Compounded by globalization and logistical
complexity
Vendor reliability and quality risks
Political and currency risks

21. References:
 Heizer and Render
Operation Management, 10e
Principles of Operations Management, 8e
© 2011 Pearson Education, Inc. publishing as Prentice Hall
 R. Dan Reid & Nada R. Sanders
Operations Management
4th Edition © Wiley 2010