Sie sind auf Seite 1von 56

SUPPLY CHAIN MANAGEMENT

1&2
UNDRSTANDING THE SUPPY CHAIN

LT Col ( R ) Syed Athar Hussain Gardezi

MS (SCM), MBA, CSCP

athargardezi@Hotmail.com

03215196781
 Supply Chain: The sequence of business processes and
information that provides a product or service from
suppliers through manufacturing and distribution to the
ultimate consumer.
 Supply Chain Management: Planning, designing, and control of
the flow of information and materials along the supply
chain in order to meet customer requirements in an
efficient manner, now and in future.
 Distribution Channel: The route from producer forward
through the distributors to the customer.
SUPPLY CHAIN

SOURCE SUPPLIERS PRODUCTION WAREHOUSING


DISTR

SUPPLIER CUSTOMERS
 Logistics: According
to the Council of Logistics
Management, it is that part of the supply chain
management process that plans, implements, and
controls the efficient, effective, forward and reverse
flow and storage of goods, services, and related
information between the point of origin and point of
consumption in order to meet customers’ requirements.
 Logistics Management:
when broadly defined it is identical
to supply chain management. Some managers however,
define logistics narrowly as only concerned with
inbound transportation and outbound distribution, in
which case logistics is a subset of supply chain
management.
 Demand Management:Managing the demands for goods or
services along the supply chain. Demand can be
managed through such mechanisms as products,
pricing, promotion, and distribution – tasks that are
generally assigned to marketing.
 Virtual Corporation:
A corporation or a company that
produces a product or a service without employees or
buildings. It exists to coordinate other companies that
do the design, production, and distribution work.
 consists of at least one virtual company
Virtual Supply Chain:
that coordinates all of the activities of supply chain.
Supply chain management:

1. The term “supply chain management” arose in the late


1980s and came into widespread use in the 1990s. Prior
to that time, terminologies such as “logistics” and
“operations management” were used by the businesses.
2. One school of thought is that art of chain supply
management is as old as over 2300 hundred years. They
link it up with Alexander the great and suggest that
supply chain is nothing new. It is just an evolution of
logistics accepting the change of time.
Nothing Entirely New. . . Just a Significant
Evolution
 The practice of supply chain management is guided by
some basic underlying concepts that have not changed
much over the centuries.
 Alexander the Great based his strategies and campaigns
on his army’s unique capabilities and these were made
possible by effective supply chain management. In the
spirit of the saying, “amateurs talk strategy and
professionals talk logistics,” let’s look at the campaigns
of Alexander the Great. For those who think that his
greatness was only due to his ability to dream-up bold
moves and cut a dashing figure in the saddle, think
again. Alexander was a master of supply chain
management and he could not have succeeded
otherwise.
 The authors from Greek and Roman times who recorded
his deeds had little to say about something so
apparently unglamorous as how he secured supplies for
his army. Yet, from these same sources, many little
details can be pieced together to show the overall
supply chain picture and how Alexander managed it. A
modern historian, Donald Engels, has investigated this
topic in his book Alexander the Great and the Logistics
of the Macedonian Army (Engles, Donald W., 1978,
Alexander the Great and the Logistics of the
Macedonian Army, Los Angeles, CA: University of
California Press).
 He begins by pointing out that given the conditions and
the technology that existed in Alexander’s time, his
strategy and tactics had to be very closely tied to his
ability to get supplies and to run a lean, efficient
organization.
 The only way to transport large amounts of material
over long distances was by ocean-going ships or by
barges on rivers and canals. Once away from rivers and
sea coasts, an army had to be able to live off the land
over which it traveled. Diminishing returns set in
quickly when using pack animals and carts to haul
supplies because the animals themselves had to eat and
would soon consume all the food and water they were
hauling unless they could graze along the way.
 Alexander’s army was able to achieve its brilliant
successes because it managed its supply chain so well.
The army had a logistics structure that was
fundamentally different from other armies of the time.
In other armies the number of support people and camp
followers was often as large as the number of actual
fighting soldiers because armies traveled with huge
numbers of carts and pack animals to carry their
equipment and provisions, as well as the people needed
to tend them. In the Macedonian army the use of carts
was severely restricted. Soldiers were trained to carry
their own equipment and provisions. Other
contemporary armies did not require their soldiers to
carry such heavy burdens but they paid for this because
the resulting baggage trains reduced their speed and
mobility.
 The result of the Macedonian army’s logistics structure
was that it became the fastest, lightest, and most
mobile army of its time. It was capable of making
lightning strikes against an opponent often before they
were even aware of what was happening. Because the
army was able to move quickly and suddenly, Alexander
could use this capability to devise strategies and
employ tactics that allowed him to surprise and
overwhelm enemies that were numerically much larger.
 The picture that emerges of how Alexander managed
his supply chain is an interesting one. For instance,
time and again the historical sources mention that
before he entered a new territory:
- He would receive the surrender of its ruler and arrange
in advance with local officials for the supplies his army
would need. If a region did not surrender to him in
advance, Alexander would not commit his entire army
to a campaign in that land. He would not risk putting
his army in a situation where it could be crippled or
destroyed by a lack of provisions.
- He would gather intelligence about the routes, the
resources, and the climate of the region and then set
off with a small, light force to surprise his opponent.
The main army would remain behind at a well-stocked
base until Alexander secured adequate supplies for it to
follow.
- Whenever the army set up a new base it looked for an
area that provided easy access to a navigable river or a
seaport. Then ships would arrive from other parts of
Alexander’s empire bringing in large amounts of
supplies.
- The army always stayed in its winter camp until the
first spring harvest of the new year so that food
supplies would be available.
- When it marched, it avoided dry or uninhabited areas
and moved through river valleys and populated regions
whenever possible so the horses could graze and the
army could requisition supplies along the route.
 Alexander had a deep understanding of the capabilities
and limitations of his supply chain. He learned well how
to formulate strategies and use tactics that built upon
the unique strengths that his logistics and supply chain
capabilities gave him and he wisely took measures to
compensate for the limitations of his supply chain. His
opponents often outnumbered him and were usually
fighting on their own home territory. Yet their
advantages were undermined by clumsy and inefficient
supply chains that restricted their ability to act and
limited their options for opposing Alexander’s moves.
 Several hundred years ago, Napoleon made the remark,
“An army marches on its stomach.” Napoleon was a
master strategist and a skillful general and this remark
shows that he clearly understood the importance of
what we would now call an efficient supply chain.
Unless the soldiers are fed, the army cannot move.
 Along these same lines, there is another saying that
goes, “Amateurs talk strategy and professionals talk
logistics.” People can discuss all sorts of grand
strategies and dashing maneuvers but none of that will
be possible without first figuring out how to meet the
day-to-day demands of providing an army with fuel,
spare parts, food, shelter, and ammunition. It is the
seemingly mundane activities of the quartermaster and
the supply sergeants that often determine an army’s
success. This has many analogies in business.
 There is another school of thought which feels that
there is a difference between the traditional concept
of logistics and the concept of supply chain
management.
- Logistics typically refers to activities that occur within
the boundaries of a single organization and supply
chains refer to networks of companies that work
together and coordinate their actions to deliver a
product to market.
- Also traditional logistics focuses its attention on
activities such as procurement, distribution,
maintenance, and inventory management. Supply chain
management acknowledges all of traditional logistics
and also includes activities such as marketing, new
product development, finance, and customer service.
 In the wider view of supply chain thinking, these
additional activities (marketing, new product
development, finance, and customer service) are now
seen as part of the work needed to fulfill customer
requests. Supply chain management views the supply
chain and the organizations in it as a single entity.
- Supply chain management brings a systems approach to
understanding and managing the different activities
needed to coordinate the flow of products and services
to best serve the ultimate customer. This systems
approach provides the framework in which to best
respond to business requirements that otherwise would
seem to be in conflict with each other.
 Summing up the difference between Logistics and Supply chain
management:

(1) Definitions:
Logistics management: As adopted by Council of
Logistics Management
“Logistics management is that part of the Supply Chain
Management process that plans, implements, and
controls the efficient, effective forward and reverse
flow and storage of goods, services, and related
information between the point of origin and the point
of consumption in order to meet customers'
requirements”.
Supply Chain Management:
“Supply Chain Management encompasses the planning
and management of all activities involved in sourcing
and procurement, conversion, and all Logistics
Management activities. Importantly, it also includes
coordination and collaboration with channel partners,
which can be suppliers, intermediaries, third-party
service providers, and customers. In essence, Supply
Chain Management integrates supply and demand
management within and across companies”.
(2) Boundaries and relationships:
Logistics Management:
"Logistics Management activities typically include
inbound and outbound transportation management,
fleet management, warehousing, materials handling,
order fulfillment, logistics network design, inventory
management of third party logistics services providers.
Supply chain management:
"Supply Chain Management is an integrating function
with primary responsibility for linking major business
functions and business processes within and across
companies into a cohesive and high-performing system.
(3) components:
Logistical system :
Facility structure.
Forecasting and order management.
Transportation.
Inventory.
Warehousing and packaging.
Supply chain:
- manufacturers and suppliers,
- transporters,
- warehouses,
- retailers,
- and even customers
Supply chain management (Activities)
- Supply chain management is a cross-function approach
including managing the movement of raw materials into
an organization, certain aspects of the internal
processing of materials into finished goods, and the
movement of finished goods out of the organization and
toward the end-consumer. As organizations strive to
focus on core competencies and becoming more
flexible, they reduce their ownership of raw materials
sources and distribution channels. These functions are
increasingly being outsourced to other entities that can
perform the activities better or more cost effectively.
The effect is to increase the number of organizations
involved in satisfying customer demand, while reducing
management control of daily logistics operations. Less
control and more supply chain partners led to the
creation of supply chain management concepts.
Strategic level
- Strategic network optimization, including the number,
location, and size of warehousing, distribution centers,
and facilities.
- Strategic partnerships with suppliers, distributors, and
customers, creating communication channels for
critical information and operational improvements such
as cross docking, direct shipping, and third-party
logistics.
- Product life cycle management, so that new and
existing products can be optimally integrated into the
supply chain and capacity management activities.
- Information technology chain operations.
- Where-to-make and make-buy decisions.
- Aligning overall organizational strategy with supply
strategy.
- It is for long term and needs resource commitment.
Tactical level
- Sourcing contracts and other purchasing decisions.
- Production decisions, including contracting, scheduling,
and planning process definition.
- Inventory decisions, including quantity, location, and
quality of inventory.
- Transportation strategy, including frequency, routes,
and contracting.
- Benchmarking of all operations against competitors and
implementation of best practices throughout the
enterprise.
- Milestone payments.
- Focus on customer demand and Habits.
Operational level
- Daily production and distribution planning, including all
nodes in the supply chain.
- Production scheduling for each manufacturing facility
in the supply chain (minute by minute).
- Demand planning and forecasting, coordinating the
demand forecast of all customers and sharing the
forecast with all suppliers.
- Sourcing planning, including current inventory and
forecast demand, in collaboration with all suppliers.
- Inbound operations, including transportation from
suppliers and receiving inventory.
- Production operations, including the consumption of
materials and flow of finished goods.
- Outbound operations, including all fulfillment
activities, warehousing and transportation to
customers.
- Order promising, accounting for all constraints in the
supply chain, including all suppliers, manufacturing
facilities, distribution centers, and other customers.
- From production level to supply level accounting all
transit damage cases & arrange to settlement at
customer level by maintaining company loss through
insurance company.
Definitions:
(1) Supply chain management (SCM) is the management
of a network of interconnected businesses involved in
the ultimate provision of product and service packages
required by end customers (Harland, 1996). Supply
chain management spans all movement and storage of
raw materials, work-in-process inventory, and finished
goods from point of origin to point of consumption
(supply chain).
(2) Another definition is provided by the APICS Dictionary
when it defines SCM as the "design, planning,
execution, control, and monitoring of supply chain
activities with the objective of creating net value,
building a competitive infrastructure, leveraging
worldwide logistics, synchronizing supply with demand
and measuring performance globally."
(3) “A supply chain consists of all stages involved,
directly or indirectly, in fulfilling a customer request.
The supply chain not only includes the manufacturer
and suppliers, but also transporters, warehouses,
retailers, and customers themselves.”— from Chopra
and Meindl in their book Supply Chain Management:
Strategy, Planning, and Operations.
(4) “A supply chain is a network of facilities and
distribution options that performs the functions of
procurement of materials, transformation of these
materials into intermediate and finished products, and
the distribution of these finished products to
customers.”—from Ganeshan and Harrison at Penn State
University in their article An Introduction to Supply
Chain Management.
 Effective supply chain management

requires simultaneous improvements in both customer


service levels and the internal operating efficiencies of
the companies in the supply chain. Customer service at
its most basic level means consistently high order fill
rates, high on-time delivery rates, and a very low rate
of products returned by customers for whatever reason.
Internal efficiency for organizations in a supply chain
means that these organizations get an attractive rate of
return on their investments in inventory and other
assets and that they find ways to lower their operating
and sales expenses.
 Basic pattern to the practice of supply chain management.

- Each supply chain has its own unique set of market


demands and operating challenges and yet the issues
remain essentially the same in every case. Companies
in any supply chain must make decisions individually
and collectively regarding their actions in five areas:
(1) Production—What products does the market want?
How much of which products should be produced and
by when? This activity includes the creation of master
production schedules that take into account plant
capacities, workload balancing, quality control, and
equipment maintenance.
(2) Inventory—What inventory should be stocked at each
stage in a supply chain? How much inventory should be
held as raw materials, semi-finished, or finished goods?
The primary purpose of inventory is to act as a buffer
against uncertainty in the supply chain. However,
holding inventory can be expensive, so what are the
optimal inventory levels and reorder points?
(3) Location—Where should facilities for production and
inventory storage be located? Where are the most cost
efficient locations for production and for storage of
inventory? Should existing facilities be used or new
ones built? Once these decisions are made they
determine the possible paths available for product to
flow through for delivery to the final consumer.
(4) Transportation—How should inventory be moved from
one supply chain location to another? Air freight and
truck delivery are generally fast and reliable but they
are expensive. Shipping by sea or rail is much less
expensive but usually involves longer transit times and
more uncertainty. This uncertainty must be
compensated for by stocking higher levels of inventory.
When is it better to use which mode of transportation?
(5) Information—How much data should be collected and
how much information should be shared? Timely and
accurate information holds the promise of better
coordination and better decision making. With good
information, people can make effective decisions about
what to produce and how much, about where to locate
inventory and how best to transport it.
- The sum of these decisions will define the capabilities
and effectiveness of a company’s supply chain. The
things a company can do and the ways that it can
compete in its markets are all very much dependent on
the effectiveness of its supply chain.
- If a company’s strategy is to serve a mass market and
compete on the basis of price, it had better have a
supply chain that is optimized for low cost. If a
company’s strategy is to serve a market segment and
compete on the basis of customer service and
convenience, it had better have a supply chain
optimized for responsiveness. Who a company is and
what it can do is shaped by its supply chain and by the
markets it serves.
 Supply chain management is a confluence:

- Supply chain management is a confluence (meeting or


joining point) of at least three main streams of
knowledge and practical experience of the business
world spanning 60 years. The fusion of these streams
into one powerful movement, supply chain
management, has been brought about by intense
competition of the contemporary market:-
- Sourcing, procurement, and supply management,
- Material management,
- Logistics and distribution.
Sourcing, procurement, and supply management:
- business realized that that efforts required to increase
profits through sales were far greater than those
involved in generating equivalent returns through
reduction in procurement prices. Thus purchase
specialists were hired.
- Purchasing has an impact on cash flow and profitability.
- Economic buying was seen as a strategic function.
Material management:
Classic material management included the functions of:
- forecasting,
- Inventory management,
- Stores management,
- Warehousing,
- Stock keeping,
- and scheduling.
Since materials constituted almost 60% of the cost of
manufactured products, the importance of efficient
management of materials came to be recognized by
business during 1970s.
Logistics and distribution:
Derived from its military parlance, wherein it covered
all the functions related to movement and maintenance
of armies, the logistics function in its business
application came to be recognized as time-and-space-
related placement of goods to provide improved
customer service. According to the Council of Logistics
Management, it is that part of the supply chain
management process that plans, implements, and
controls the efficient, effective, forward and reverse
flow and storage of goods, services, and related
information between the point of origin and point of
consumption in order to meet customers’ requirements.
- Since transportation forms up to 50 % of the total
logistics costs, the efficient management of this
function became an important preoccupation of the
management; leading to adoption of best practices
resulting in containerization of cargo handling and
movement worldwide.
- Realization that there was an obvious trade-off
between transportation choices and inventory policies,
led to integration and logistics emerged as a cross-
functional approach that integrates all material
functions of purchasing, inventory management,
production control, inbound traffic, warehousing, and
store keeping as well as incoming quality control with
the objective of ensuring efficient operations. In this
sense business logistics may be regarded as a
forerunner of supply chain management.
- in this context of supply chain management, logistics
would fall at both ends, that is inbound logistics and
outbound logistics. Interestingly intra-company flow of
materials is referred as manufacturing logistics, giving
this discipline a breath of reach over end-to-end
movement of material at all stages of industrial and
business endeavour in delivering value to customers.
 what is a supply chain?
A supply chain consists of all parties involved, directly or
indirectly, in fulfilling customers request. The supply chain
includes:-
- manufacturers and suppliers,
- transporters,
- warehouses,
- retailers,
- and even customers
 A typical chain may involve a variety of stages:-
- customers,
- retailers,
- wholesalers and distributors,
- manufactures,
- component / raw material suppliers.
 The objective of supply chain:
(a) To maximize the overall value generated. The value
(also known as supply chain surplus) a supply chain
generates is the difference between what the final
product is worth to the customer and the costs the
supply chain incurs in filling the customer’s request.
The supply chain surplus is strongly correlated with
supply chain profitability, the difference between the
revenue generated from the customer and overall cost
across the supply chain.
(b) increasing the supply chain surplus:
- Inter-company inter-functional scope: the goal of only
maximizing a company’s profits can lead to a conflict
between the stages of a supply chain. For example,
both the supplier and the manufacturer in a supply
chain may
prefer to have the other side hold most of the inventory
with the goal of improving their own profits. If the
parties cannot look beyond their own profits, the more
powerful party will simply force the other side to hold
inventory without any regard for where the inventories
are best held. The result is decrease in the supply chain
surplus. The inter-company inter-functional scope
proposes a different approach. Instead of just forcing
the inventory onto the weaker party, the two parties
should work together to reduce the amount of
inventory required. By sharing the information they can
reduce inventory and total cost, growing the supply
chain surplus.
- supply chain surplus can also be increased by
collaborating at promotion stage. The promotion is
timed and executed to benefit both sides. This has
been successfully done by Wal-Mart and P&G.
- Sourcing decisions should be made to increase the size
of total surplus across the supply chain. The total
surplus is affected by the impact of sourcing of sales,
service, production costs, inventory costs,
transportation costs, and information costs.
Outsourcing to a third party is a meaningful if the third
party raises the supply chain surplus more than the firm
can by its own. In contrast, a firm should keep a supply
chain function in-house if the third party cannot
increase the supply chain surplus.
- Effective supply chain management which involves the
management of supply chain assets and products,
information, and fund flows to maximize total supply
chain surplus.
 Decision phases in a supply chain:
- Supply chain strategy or design:
How to structure the supply chain over the next several
years. It decides what the chain’s configuration will be.
These decision are expensive and are difficult to alter. The
decisions include:-
(a) whether to outsource or perform a supply chain function
in-house.
(b) the location and capacities of production and warehousing
facilities.
(c) the products to be manufactured and stored at various
locations.
(d) the modes of transportation and schedules.
Supply chain configuration must support strategic objectives
and increase the supply chain surplus.
- Supply chain planning:
The time frame considered is a quarter to a year. This
planning is to be made within the configuration
determined in strategic phase decision. The goal of
planning is to maximize the supply chain surplus. The
planning starts with forecasts of demands in different
markets for the coming year. Planning decisions
include:
(a) which market will be supplied from which locations.
(b) target production quantities at each location.
(c) the sub-contracting of manufacturing.
(d) the inventory policies to be followed.
(e) the time and size of marketing and price promotions.
- Supply chain operation: the time horizon here is
weekly or daily. Here the configuration is considered as
fixed and planning policies are also in place. The goal is
to handle incoming customers orders in the best
possible manner. During this phase companies decide:
(a) allocation of inventory or production to individual
order.
(b) set a date that an order is to be filled.
(c) generate pick lists at a warehouse.
(d) allocate an order to a particular shipping mode.
(e) set delivery schedule of trucks.
(f) place replenishment orders.
 Process views of a supply chain:
- Cycle view: The processes in a supply chain are
divided into a series of cycles, each performed at the
interface between two successive stages of a supply
chain. There are four supply chain cycles and five
stages of supply chain. Customer order cycle is
interface between customer and retailer,
replenishment cycle interface between retailer and
distributor, manufacturing cycle interface between
distributor and manufacturer, procurement cycle
interface between manufacturer and supplier.
note: it is not necessary that every supply chain will
have all four cycles and that too clearly separated.
Cycles Stages of a supply chain
Customer
Customer order cycle
Retailer
Replenishment cycle
Distributor
Manufacturing cycle
Manufacturer
Procurement cycle
Supplier
A cycle view of the supply chain is very useful when
considering operational decisions as it clearly specifies
the role of each member of the supply chain and
accordingly each supply chain designer can consider the
infrastructure required to support these processes.
- Push/Pull view:
With pull processes, execution is initiated in response
to customer orders. It is also referred as reactive
process. Push processes, execution is initiated in
anticipation of customer orders. It is also called as
speculative process.
Pull process operates in an environment in which
customer demand is known. Push process operates in
uncertain environment because customer demand is not
yet known and the production/supply decision has to be
made.
 Supply chain macro processes in a firm:
Supply chain macro processes are also a result of
interaction between Suppliers, Firms, and Customers.
All supply chain processes discussed in two process
views can be classified into following three macro
processes. These three macro processes manage the
flow of information, product, and funds required to
generate, receive, and fulfill a customer request and
they involve the three main players of supply chain
that is supplier, firm, and customer.
1. Supplier Relationship Management (SRM):
It aims to arrange for and manage supply sources for
various goods and services. The SRM process includes:
(a) the evaluation and selection of suppliers.
(b) negotiation of pricing and supplier terms.
(c) buying.
(d) communication regarding new product and orders
with suppliers.
(e) supply collaboration: sharing of demand and supply
plans with suppliers.
2. Internal Supply Chain Management (ISCM):
This process aims to fulfill demand generated by the
CRM process in a timely manner and at the lowest
possible cost. ISCM process includes:-
(a) the planning of internal production and storage
capacity.
(b) preparation of demand and supply plans.
(c) fulfillment of actual orders.
3. Customer Relationship Management (CRM):
It aims to generate customer demand and facilitates the
placement and tracking of orders. It includes process
such as:-
- Marketing.
- Pricing.
- Sales.
- Order management.
- Call center management.
 Examples of Supply Chains:

1. Zara: Apparel manufacturing and retail


Zara is a brand and a chain of fashion stores owned
by Inditex, Spain’s largest apparel manufacturer and
retailers. It has sales of over 10 billion euros. Its
strategy is to be highly responsive to changing trends
with affordable prices. Design to sales cycle time has
been reduced to 4-6 weeks whereas the apparel
industry have averaged more than six months. Mainly
because it starts production after locating the demand.
It has quick sources in Europe (mostly Portugal and
Spain) and low cost sources in Asia (mostly China and
Far East). Its production strategy is that it
manufacturing is always less than anticipated demand.
 W.W.Grainger and McMaster-Carr: MRO suppliers:
Sells maintenance, repair, and operations products.
Sells products by means of catalogue as well as web
pages. Stocks about 200,000 SKUs. It also has several
hundred stores from where the customers can buy
directly as well. It is not a manufacturer, has few DCs
(distributed control system) from where it replenishes
stores and fill customer order.
 McMaster-Carr on the other hand ships almost all its
orders within 24 hours of receipt of order. Its catalogue
carries almost 500,000 SKUs. It has very few DCs.
 Toyota: A global auto manufacturer:
The key issue facing Toyota is the design of its global
production and distribution network. It has adopted the
strategy of “global complementation”. Prior to 1996/97
Toyota used specialized local factories for each market.
After the Asian financial crises, Toyota redesigned its
plants so that it can also export to markets that remain
strong when the local market weakens. In other words
they have adopted.

Das könnte Ihnen auch gefallen