Supply Chain Management: Lesson 7

Supply Chain
Management
Lesson 7
Supply Chain
• A supply chain is the
sequence of organizations
—their facilities,
functions, and activities –
that are involved in
producing and delivering a
product or service
Supply Chain
Management
• is the strategic coordination
of business functions within
a business organization and
throughout its supply chain
for the purpose of
integrating supply and
demand management.
• is the part of a supply chain involved with the forward and reverse flow of
goods, services, cash, and information. Logistics management includes
management of inbound and outbound transportation, material handling,
warehousing, inventory, order fulfillment and distribution, third-party logistics,
and reverse logistics (the return of goods from customers).
Key aspects relate to:
• 1. Determining the appropriate
level of outsourcing
• 2. Managing procurement
• 3. Managing suppliers
• 4. Managing customer
relationships
• 5. Being able to quickly
identify problems and respond
to them
Measuring supply chain ROI
“Greening” the supply chain
Trends in Reevaluating outsourcing
Supply Chain Integrating IT

Management Managing risks
Adopting lean principles
Being agile
Resiliency
Know your suppliers
Key elements
of successful
Provide supply chain
risk visibility
management
include:
Develop event response
capability
Global Supply Chains
• As businesses increasingly make
use of outsourcing and pursue
opportunities beyond their
domestic markets, their supply
chains are becoming increasingly
global. For example, product
design often uses inputs from
around the world, and products
are sold globally.
ERP and Supply
• Supply chain management that
Chain Management integrates ERP is a formal
approach to effectively plan and
manage all the resources of a
business enterprise.
Implementation of ERP involves
establishing operating systems
and operating performance
measurements to enable them to
manage business operations and
meet business and financial
objectives.
Supplier Relationship
Management
an integrated
system that Performance Management
provides for system
wide visibility of
Sales and Order Fulfillment
key activities and
events in areas
Customer Relationship
Management
Ethics and The
Supply Chain
Small Businesses
• Small businesses do not always
give adequate attention to their
supply chains. However, there
are many benefits to be had for
small businesses by actively
managing their supply chains,
including increased efficiencies,
reduced costs, reduced risks, and
increased profits.
Three aspects of supply chain management that
are often of concern to small businesses are:
INVENTORY REDUCING RISKS INTERNATIONAL

MANAGEMENT TRADE
Use only reliable suppliers
Another area that
often needs
Determine which suppliers are critical; get to know
attention is risk them, and any challenges they have
management. The
key to reducing Measure supplier performance (e.g.,
risks is managing quality, reliability, flexibility)
suppliers.
Recognize warning signs of supplier issues (e.g., late
Important steps deliveries, incomplete orders, quality problems)
are:
Have plans in place to manage supply chain
problems
Work with someone who has expertise to help
Work oversee foreign suppliers, preferably someone
The Small who spends a good deal of time in that country.
Business Describe your buying patterns and schedules

Describe to set expectations for demand and timing.
Administration
Don't rely on a single supplier; a backup
has some tips Don't rely
on
supplier can reduce risk and provide
bargaining leverage.
for using Building goodwill can have benefits in
foreign Have negotiations and resolving problems when they

arise.
suppliers: Consider using domestic suppliers if the risks or

Consider other issues with foreign suppliers are formidable.
Management Responsibilities
• Legal responsibilities
include being knowledgeable
about laws and regulations
of the countries where
supply chains exist, obeying
the laws, and operating to
conform to regulations
Strategic Responsibilities
SUPPLY CHAIN NETWORK INFORMATION PRODUCTS CAPACITY

STRATEGY CONFIGURATI TECHNOLOGY AND SERVICES PLANNING
ALIGNMENT ON
STRATEGIC DISTRIBUTION UNCERTAINTY

PARTNERSHIP STRATEGY AND RISK
S REDUCTION
Procurement
• The purchasing department
of an organization is
responsible for obtaining the
materials, parts, supplies, and
services needed to produce a
product or provide a service.
Purchasing Interfaces
•Purchasing has
interfaces with a
number of other
functional areas, as
well as with outside
suppliers.
Operations
The interactions
between Accounting
purchasing and
these other areas
Design and engineering
are briefly
summarized in
the following Receiving
paragraphs.
Suppliers
Purchasing receives the requisition.
Purchasing selects a supplier.

The
Purchasing places, the order with a
Purchasing vendor
Cycle Monitoring orders.
Receiving orders
Centralized versus Decentralized Purchasing
Ethics in Purchasing
• Ethical behavior is important in
all aspects of business. This is
certainly true in purchasing,
where the temptations for
unethical behavior can be
enormous. Buyers often hold
great power, and salespeople are
often eager to make a sale.
Unless both parties act in an
ethical. manner, the potential for
abuse is very real.
E-Business
• The commercial blossoming
of the Internet has led to an
explosion of ties many of
which have a direct impact
on organizations' supply
chains, even if those
organizations aren't
themselves users of the
Internet.
Supplier • Reliable and trustworthy suppliers
Management are a vital link in an effective supply
chain. Timely deliveries of goods or
services and high quality are just
two of the ways that suppliers can
contribute to effective operations.
Choosing Suppliers • In many respects, choosing a
vendor involves taking into
account many of the same
factors associated with making
a major purchase (e.g., a car or
stereo system). A company
considers price, quality, the
supplier's reputation, past
experience with the supplier,
and service after the sale.
• Periodic audits of suppliers are a means of
Supplier Audits keeping current on suppliers' production (or
service) capabilities, quality and delivery
problems and resolutions, and suppliers'
performance on other criteria.
Supplier Certification
• Supplier certification is a
detailed examination of the
policies and capabilities of
a supplier The certification
process verifies that a
supplier meets or exceeds
the requirements of a buyer.
Supplier Relationship Management
• Purchasing has the ultimate

responsibility for establishing
and maintaining good supplier
relationships. The type of
relationship is often related to
the length of a contract
between buyers and sellers.
Supplier Partnerships
• More and more business
organizations are
seeking to establish
partnerships with other
organizations in their
supply chains.
Strategic Partnering
• Strategic partnering occurs when
two or more business
organizations that have
complementary products or
services that would strategically
benefit the others agree to join so
that each may realize a strategic
benefit.
Order Fulfillment
• refers to the processes
involved in responding to
customer orders. Fulfillment
time can be an important
criterion for customers. It is
often a function of the degree
of customization required.
Engineer- Make-to-
to-Order Order
Here are some (ETO) (MTO)
common
approaches: Assemble-
to-Order
Make-to-
Stock
(ATO) (MTS)
Logistics
• Logistics refers to the

movement of materials,
services, cash, and
information in a supply
chain. Materials include all
of the physical items used
in a production process.
1. From incoming vehicles to receiving
2. From receiving to storage
3. From storage to the point of use (e.g., a work

Movement center)
within a 4. From one work center to the next or to temporary

storage
Facility 5. From the last operation to final storage
6. From storage to packaging/shipping
7. From shipping to outgoing vehicles

Creating an Effective Supply Chain
• Creating an effective supply
chain requires a thorough
analysis of all aspects of the
supply chain. Strategic
sourcing is a term that is
sometimes used to describe
the process.
Plan
Source
Steps that can be
used to create an
Make
effective supply
chain
Deliver
Manage returns
Effective
communication
Three
important Information velocity
aspects of
this are
Performance metrics
THAT’S ALL THANK YOU

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Supply Chain

“Greening” the supply chain

Trends in Reevaluating outsourcing

Supply Chain Integrating IT

INVENTORY REDUCING RISKS INTERNATIONAL

Business Describe your buying patterns and schedules

foreign Have negotiations and resolving problems when they

suppliers: Consider using domestic suppliers if the risks or

SUPPLY CHAIN NETWORK INFORMATION PRODUCTS CAPACITY

STRATEGIC DISTRIBUTION UNCERTAINTY

Purchasing selects a supplier.

• Purchasing has the ultimate

• Logistics refers to the

2. From receiving to storage

3. From storage to the point of use (e.g., a work

within a 4. From one work center to the next or to temporary

Facility 5. From the last operation to final storage

6. From storage to packaging/shipping

7. From shipping to outgoing vehicles

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