Supply Chain Management

1. Supply Chain Management
By: Er. Vaibhav Agarwal
Asst. prof.
BBD University, Lucknow

2. Supply Chain Management
 Definition:
Supply Chain Management is primarily concerned with the efficient
integration of suppliers, factories, warehouses and stores so that
merchandise is produced and distributed in the right quantities, to the
right locations and at the right time, and so as to minimize total
system cost subject to satisfying customer service requirements.
 Notice:
 Who is involved
 Cost and Service Level
 It is all about integration

3. 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.

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

5. What is a supply chain?
Customer wants
detergent and goes
to Jewel
Jewel
Supermarket
Jewel or third
party DC
P&G or other
manufacturer
Plastic
Producer
Chemical
manufacturer
(e.g. Oil Company)
Tenneco
Packaging
Paper
Manufacturer
Timber
Industry
Chemical
manufacturer
(e.g. Oil Company)

6. Drivers of Supply Chain
Performance
Efficiency Responsiveness
Inventory Transportation Facilities Information
Supply chain structure
Drivers

7. Decision Phases in Supply Chain
 Supply Chain
Strategy & Design
 Supply Chain
Planning
 Supply Chain
Operations
Strategy & Design
Planning
Operations

8. Cycle View of Supply
Chains
Customer Order Cycle
Replenishment Cycle
Manufacturing Cycle
Procurement Cycle
Customer
Retailer
Distributor
Manufacturer
Supplier

9. Flows in a Supply Chain
Customer
Information
Product
Funds

10. Supply Chain Strategy &
Design
 Location & capacity of production and
warehouses
 Products to manufactured and in which locations
 Mode of transportation
 Types of information systems to be used
 Strategic sourcing decisions

11. The Value Chain: Linking
Supply Chain and Business
Strategy
New
Product
Development
Marketing
and
Sales
Operations Distribution Service
Finance, Accounting, Information Technology, Human Resources
Business Strategy
New Product
Strategy
Marketing
Strategy
Supply Chain Strategy

12. Supply Chain Planning
 Markets to be supplied & from which location
 Planned build-up of inventory
 Subcontracting of manufacturing
 Timing and size of market promotion
 Handling uncertainty in demand, foreign exchange
fluctuations
 Establishing production plan under fixed strategic
parameters

13. Procurement
Planning
Manufacturing
Planning
Distribution
Planning
Demand
Planning
Sequential Optimization
Supply Contracts/Collaboration/Information Systems and DSS
Procurement
Planning
Manufacturing
Planning
Distribution
Planning
Demand
Planning
Global Optimization
Sequential Optimization
vs.
Global Optimization
Source: Duncan McFarlane

14. Strategic Scope
Suppliers Manufacturer Distributor Retailer Customer
Competitive
Strategy
Product Dev.
Strategy
Supply Chain
Strategy
Marketing
Strategy

15. Strategic Scope
 Intracompany Intraoperation Scope
 Minimize local cost view
 Intracompany Intrafunctional Scope
 Minimize functional cost view
 Intracompany Interfunctional Scope
 Minimize company profit view
 Intercompany Interfunctional Scope
 Maximize supply chain surplus view

16. Supply Chain Challenges
 Achieving Global Optimization
 Conflicting Objectives
 Complex network of facilities
 System Variations over time

17. Key Issues in Supply Chain
Management
 Distribution Network Configuration
 Inventory Control
 Supply contract
 Distribution Strategies
 Supply Chain Integration & Strategic Partnering
 Outsourcing & Procurement Strategies

18. Key Issues of SCM (cont)
 Product Design
 Information Technology & Decision Support
System
 Customer Value

19. Relationships between key SCM Issues
and the business environment
Global
Optimization
Managing
Uncertainty
Dist. Conf. X
Inv. Control X
Sup. Contract X
Dist. Strategies X X
St. partnership X X
Outsourcing X
Pr. Design X
IT & DSS X X
Cust. Value X X

20. Prerequisites for Supply
Chain Management
 Top management understanding & commitment
 Quest for excellence
 Effective and efficient communication
 Relationship instead of exchange
 Cross-functional teams
 Reality of team, partnerships & alliances (based
on harmony & trust)

21. Considerations for Supply Chain
Drivers
Driver Efficiency Responsiveness
Inventory Cost of holding Availability
Transportation Consolidation Speed
Facilities Consolidation /
Dedicated
Proximity /
Flexibility
Information What information is best suited for
each objective