SUPPLY CHAIN

Supply chain is a system of organizations, people, activities, information, and

resources involved in moving a product or service from supplier to customer.

SUPPLY CHAIN MANAGEMENT

Supply chain management, the management of the flow of goods and services,
involves the movement and storage of raw materials, of work-in-process inventory, and
of finished goods from point of origin to point of consumption.

SUPPLY CHAIN EVALUATION TECHNIQUES

REVERSE LOGISTICS

Reverse logistics is for all operations related to the reuse of products and
materials. It is "the process of moving goods from their typical final destination for the
purpose of capturing value, or proper disposal.

ANALYTIC HIERARCHY PROCESS

The analytic hierarchy process is a structured technique for organizing and

analyzing complex decisions, based on mathematics and psychology.

DISCRIMINANT ANALYSIS

Discriminant analysis is a technique that is used by the researcher to analyze the

research data when the criterion or the dependent variable is categorical and the predictor
or the independent variable is interval in nature.

LINEAR REGRESSION

Linear regression is a linear approach to modeling the relationship between a

scalar response (or dependent variable) and one or more explanatory variables (or
independent variables).
DESCRIPTIVE STATISTICS

A descriptive statistic is a summary statistic that quantitatively describes or

summarizes features of a collection of information, while descriptive statistics is the
process of using and analysing those statistics.

CASE STUDY

A case study is a research method involving an up-close, in-depth, and detailed

examination of a particular case. For example, a case study in medicine may examine a
specific patient a doctor treated, and a case study in business might study a particular
business's strategy.

SIMULATION

A simulation is an approximate imitation of the operation of a process or system;

that represents its operation over time. Simulation is used in many contexts, such as
simulation of technology for performance tuning or optimizing, safety engineering, testing,
training, education, and video games.

EXPLORATORY DATA ANALYSIS

Exploratory data analysis (eda) is an approach to analyzing data sets to

summarize their main characteristics, often with visual methods. A statistical model can
be used or not, but primarily eda is for seeing what the data can tell us beyond the formal
modeling or hypothesis testing task.

FACTOR ANALYSIS

Factor analysis is a statistical method used to describe variability among observed,

correlated variables in terms of a potentially lower number of unobserved variables called
factors.

EVALUATING RISK IN SUPPLY CHAINS

1. Define Stakeholder Concerns.

Shareholders, customers and employees dictate how companies compose their
downstream and upstream operations.
A. Customer relationship management: companies that perform particularly well adjust
their supply chain operations to specific audience segments.
B. Collaborative relationships: enterprises that use the same key performance indicators
as their suppliers can save logistical costs and increase product quality.
C. Flexible strategies: organizations usually benefit by developing multi-year supply chain
frameworks capable of adapting to changing conditions.

2. Identify Points Of Risk

After identifying what stakeholders want a company to achieve, supply chain
managers can assess which factors will hinder the business from accomplishing those
goals.

3. Develop A Risk Mitigation Strategy

Effective supply chain risk mitigation strategies utilize three resources: people,
processes and technology. Each of these has a role in analyzing data gathered from
suppliers. Therefore, it’s imperative enterprises establish an infrastructure dedicated to
continuously gathering, interpreting and acting on information.

4. Partner With Third-Party Auditors And Data Collection Agencies

The chief advantage of partnering with a third-party auditor and data collection
agency is that it can dedicate the bulk of its resources to collecting and validating supply
chain data.

5. Simulate Outcomes
Once companies understand how they can mitigate risks, they must confirm the
efficacy of specific threat-reduction efforts. Upstream partners may fail to provide their
procurement information, or neglect to conform to procurement standards and deadlines
set by the company.

BULLWHIP EFFECT

The bullwhip effect is a distribution channel phenomenon in which forecasts yield

supply chain inefficiencies. It refers to increasing swings in inventory in response to shifts
in customer demand as one moves further up the supply chain.

Better Demand Forecasting

Minimizing the bullwhip effect begins with better forecasting of customer demand
to enable more accurate ordering. This may require an upgrade in inventory
management. Inventory software often allows companies to monitor the evolution of
buying over time and provides for real-time updates on buying expectations based on
current trends and recent patterns.

Consistent Pricing
One reason apparel retailer jc penney adopted an everyday low pricing model in
late 2011 was inconsistent customer demand resulting from constant price changes.
When businesses move prices up and down from regular points to discount prices, they
manipulate customer demand.

Eliminate Batch Orders

Batch orders are a common contributor to the bullwhip effect. This is when
businesses buy larger quantities of product less frequently. This can lead to excess if they
overshoot customer demand. It can also cause delays in responding to quick, dramatic
upshoots in demand. Using a more regular ordering system of smaller orders makes it
easier to keep up with buying patterns.

Eliminate Bottlenecks
Delays in receiving orders can lead to shortages of inventory initially and excess
inventory down the road. While a business can't control weather or transportation
problems that impede supplier shipments, they can make some adjustments. Backup
supplies of key products can mitigate problems resulting from obstructed supply lines.

SUPPLIER SELECTION ANALYSIS

Supplier selection is the process of selecting a supplier to acquire the necessary

materials to support the outputs of organisations. Selection of the best and/or the most
suitable suppliers is based on assessing supplier capabilities.

There are eight common supplier selection criteria, in no formal order:

Cost.
Quality & safety.
Delivery.
Service.
Social responsibility.
Convenience/simplicity.
Risk.
Agility.
 TRANSPORTATION MODE ANALYSIS
Predication is only a part of the process of analysis and technical analysis is only
a part of the broader problem, and the role of the professional transportation system
analysis is to model the process of bringing about changes in the society through the
means of transport.

Characteristics

Multi-modal: covering all modes or transport; air, land, and sea and both passenger and
freight.

Multi-sector: encompassing the problem,s and viewpoints of government, private

industry, and public.

Multi-problem: ranging across a spectrum of issues that includes national and

international policy, planning of regional system, the location and design of specific
facilities, carrier management issues, regulatory, institutional and financial policies.

Multi-objective: national and regional economic development, urban development,

environment quality, and social quality, as well as service to users and financial and
economic feasibility.

Multi-disciplinary: drawing on the theories and methods of engineering, economics,

operation research, political science, psychology, other natural and social sciences,
management and law.

Logistics Management
Logistics management is a supply chain management component that is used to meet
customer demands through the planning, control and implementation of the effective
movement and storage of related information, goods and services from origin to
destination. Logistics management helps companies reduce expenses and enhance
customer service.
The logistics management process begins with raw material accumulation to the final
stage of delivering goods to the destination.
By adhering to customer needs and industry standards, logistics management facilitates
process strategy, planning and implementation

Why Is Logistics Management Important?

The purpose of logistics management is obviously about finding more efficient and
effective ways to move resources and products from conception to completion and,
finally, to the customer. But the driving force of these actions is to meet customer
demand and provide the best service possible to retain customers and maintain their
satisfaction by meeting their requirements.
As customers demand better service, there’s a need to ship faster, more accurately and
with a high level of quality. It is through logistics management that customer satisfaction
is achieved.

Measuring Supply Chain Performance

The following is an example list of supply chain resource performance measures:

(1) Total cost. Total cost of resources used.
(2) Distribution costs. Total cost of distribution, including transportation and handling
costs.
(3) Manufacturing cost. Total cost of manufacturing, including labor, maintenance, and
re-work costs.
(4) Inventory. Costs associated with held inventory:
. Inventory investment. Investment value of held inventory.
. Inventory obsolescence. Costs associated with obsolete inventory; sometimes
includes spoilage.
. Work-in-process. Costs associated with work-in-process inventories.
. Finished goods. Costs associated with held finished goods inventories.
(5) Return on investment (ROI). Measures the profitability of an organization. The return
on investment is generally given by the ratio of net profit to total assets.

The following is an example list of supply chain output performance measures:

(1) Sales. Total revenue.
(2) Profit. Total revenue less expenses.
(3) Fill rate. Proportion of orders filled immediately:
. Target fill rate achievement. To what extent a target fill rate has been achieved.
. Average item fill rate. Aggregate fill rate divided by the number of items.
(4) On-time deliveries. Measures item, order, or product delivery performance:
. Product lateness. Delivery date minus due date.
. Average lateness of orders. Aggregate lateness divided by the number of orders.
. Average earliness of orders. Aggregate earliness divided by the number of orders.
. Percent on-time deliveries. Percent of orders delivered on or before the due date.
(5) Customer response time. Amount of time between an order and its
corresponding delivery.
(6) Manufacturing lead time. Total amount of time required to produce a particular item
or batch.
(7) Shipping errors. Number of incorrect shipments made.
(8) Customer complaints. Number of customer complaints registered.

What Is Supply Chain Modeling?

Supply chain modeling represents a conscious attempt to bring order into a supply
chain to achieve certain business objectives, such as lowest supply cost, on-time
delivery and an ability to cope with disruption. It deals with questions such as:
 What to produce
 Market identification
 Siting of production plants
 Finding the best suppliers
 Supplier and plant locations
  Transportation and inventory
 Distributing finished products
 Warehousing strategies

Why Is Supply Chain Modeling So Important?

The ultimate goal of any supply chain must be to satisfy the final customer. Satisfied
customers return to buy more products, and through this process, successful
organizations develop brand loyalty and recognition. According to customer service
consultant Micah Solomon, customer satisfaction starts with:
 A perfect product
 On time delivery
 Friendly service
 Effective problem resolution

Supply Chain Management (SCM)

- Process by which supply chain activities are managed to have advantages over
competitors as well as to maximize the value of our customers.
- Product development, sourcing of materials, production of quality goods and
logistics.

Issues/ Challenges in SCM

1. Quality Customer Service

- the scm is centralized in the needs of the customers.

- It is about giving the right quantity and quality of the product for the right amount
of money

2. Costing
- materials, energy and labor have increased due to economical constraints.
3. Risk Management

- constant change in the market, variety of sources such as consumer demands,

political agendas and global sourcing.
4. Supplier Relationship

- maintain a mutually sound and harmonious relationship with your partners or

suppliers
 5. Qualified Personnel
6. Unforeseen Delays

- procurement of materials and products may be easy but the delivery may not
always be 100% on time.
Make-or-Buy Decision

- Act of making strategic choice between producing an item internally (in-house) or

buying it externally. The buy side of the decision also is referred to as
outsourcing
- Make-or-buy decisions usually arise when there is a trouble with the current
suppliers

Outsourcing

- Strategic decision done by a company to reduce cost and increase efficiency by

hiring another individual or company to perform tasks, provide services, or
handle operations that were previously done by the company
- Practice of getting certain job functions done outside a company
- Also known as contracting out

Six Sourcing strategies in Supply Chain

1. Few Suppliers
- Long term relationship with few suppliers
- Encourage supplier to provide technical services and expertise
2. Many Suppliers
- Short term relationships with many suppliers
- Low risk
3. Vertical Integration

Developing the ability to provide goods and services previously purchased or

actually buying from a supplier.

- cost reduction
- higher quality
-inventory reduction

4. Joint Venture
 Formal collaboration between firms

- secure supply
- enhances technical skills

5. Kieretsu Network
- Describe supplier as partner who become part of the company
6. Virtual Companies

Rely on variety of supplier relationship to provide services on demand and also

known as hollow corporation or network
- flexibility
- speed

Supply Chain Risk

1. External Risk – outside of our control

- Demand risk
- Supply risk
- Environmental risk
- Business risk
- Physical plant risk

2. Internal Risk – those that are within your control

- Manufacturing risk
- Business risk
- Planning and control risk
- Mitigation and contingency risk
- Cultural risk