Supply Chain Management –An Overview

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 Management Dynamics' Global Trade Management
(GTM) Suite

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 Customer is the king

 In today’s global economy, cost and

quality are no longer “King.”
 But it is Rapid response to customer
needs

“Nowadays, it’s supply chains that compete with supply chains!”

Price Waterhouse Coopers

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 Supply Chain Management

Evolution
Introduction (Supply, Chain, Management)
SCM Decisions
– Procurement
– Production
– Logistics (Transportation)
• Role of IT in SCM
• Difficulties in SCM

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 Evolution

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 The Transition (1992 – 2002)

 Bullwhip effect-

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 What is Supply Chain

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 Or………., is it this ?

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 Supply Chain Management

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 Supply Chain Flow Diagram

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 Overview of Supply chain

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 Supply chain decisions

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 Levels of Decisions in SCM

 Three levels of decision hierarchy

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 Procurement Decisions

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 Production Decisions

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 Physical Distribution Decisions (logistics)

 When to deliver the products

 Where to deliver the products
 How to deliver the products
 At a reasonable cost.

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 Role of Information Technology in SCM

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 Radio Frequency Tags

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 Eight keys to Supply Chain Success

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 Supply Chain Management and Logistics

Both are concerned with efficient management of

physical flows, and matching supply & demand

Logistics Supply Chain Management

Scope: Within a firm Scope: Entire supply chain
Objective: Minimizing logistics Objective: Minimizing cost &
cost maximizing customer services
Tactical – Ignored by top mgmt Strategic -- Top mgmt attention

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 Challenges in SCM(Bullwhip Effect)

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 The “Bullwhip Effect”

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 Major Supply Chain Drivers

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 Supply Chain Drivers

 Drivers determine supply chain performance. For each

driver, managers must make tradeoffs between efficiency
(cost) and responsiveness.

Inventory

Transportation

Facilities

Information

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 Old Supply Chains vs. New

VERTICAL

INTEGRATION
has given way to
“VIRTUAL
INTEGRATION”

Companies now
focus on their core
competencies, and
partner with other
companies to create
supply chains for
fast moving
markets.

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 Supply Chain Collaboration

•Companies

perform operations
in one or more of
these supply chain
activities

•Entire supply
chains are more
efficient if each
company improves
their performance

•Collaborative
Planning,
Forecasting &
Replenishment 26
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 Activities in SCM

1. Transportation vendors
2. Credit and cash transfers
3. Suppliers
4. Distributors and banks
5. Accounts payable and receivable
6. Warehousing and inventory
7. Order fulfillment
8. Sharing customer, forecasting, and production
information

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 Supply Chain Operational Reference Model

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 Formulas for Measuring Supply-Chain Performance

 One of the most commonly used measures in all of operations

management is “Inventory Turnover”

Cost of goods sold

Inventory turnover =
AverageAggregateinventory value
 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

 Average aggregate inventory value 

Weeks of supply =   52 weeks
 Cost of goods sold 

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 Examples of Supply Chain

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 Examples of Supply Chain

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 Examples of Supply Chain

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 Push vs. Pull Processes

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 Why Study SCM?

 Wal-Mart vs. K-Mart:

 In 10 years, Wal-Mart transformed itself by changing its logistics system
(own fleet of trucks); over 80% shipped to stores from its own 27 DCs, rest
directly from suppliers; usually received within 48 hours. It has the highest
sales per square foot, inventory turnover and operating profit of any discount
retailer.
(crossdocking, Everyday Low Price, innovative IS/IT)

 K-Mart, on the other hand, ships less than 50% on own, and suffers from
supply chain inefficiency
(inability to respond quickly to customer demand)

Put your money where your mouth is…

(bought WMT 8/97, sold KM 5/99)

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 Why Study SCM?

 Effective supply chain management is a top priority

in many companies, e.g.,
Boeing: Streamlining its procurement process using Exostar
(internet exchange) -- to eliminate paper trail, facilitate information
exchange across the supply chain
General Motors: Reengineering its distribution operations, partnering
with Vector SCM (a thrid-party service provider) -- to reduce in-transit
inventory & achieve fast delivery from factories to dealers

ExxonMobil: Redesigned its logistics network after the merge of

Exxon and Mobil -- to drive down cost and complexity
P&G, Dell, Cisco, Amazon, Bristol-Myers Squibb, McDonald’s, etc.

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 Next Generation of Logistics
outsourcing Approaches?

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 2009: Top 20 supply chain management software suppliers

http://www.mmh.com/article/356221-2009_Top_20_supply_chain_management_software_suppliers.php

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 ERP vs. CRM and SCM

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 The Future of SCM:
Two Closing Thoughts of Wisdom

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 Conclusion

Information is the key to successful supply chain management

because “no product flows until information flows”.

Because the supply chain is so wide reaching, its success depends

on nearly all departments within a company its acceptance with the
supplier and vendors.

Since the supply chain has become the key opportunity to gain
competitive advantage, senior management needs to constantly
remind their organizations that an improved SCMIS performance is
a business issue, not a logistics or computer systems issue.

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 References

 http://www.supply-chain.org/resources/
 http://www.eil.utoronto.ca/profiles/rune/node5.html
 http://www.managementdynamics.com/
 http://en.wikipedia.org
 http://www.ng.undp.org/procurement_process.html
 https://www.mercy.edu
 http://www.mmh.com/article/356221-
2009_Top_20_supply_chain_management_software_suppliers
.php
 http://www.sysoptima.com/erp/erp_definition.php

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