Introduction to Supply Chain Management Done by Bodoor Ghousheh

MBA student

Learning Outcomes

By the end of this presentation you should be able to: Describe the Historical background behind the concept of the supply

chain. Understand the Importance of the supply chain. Define supply chain management. List supply chain types. Describe the objectives of the supply chain. Analyze supply chain components. Mention supply chain activities. Understand how to implement supply chain into action. Discuss technical challenges associated with supply chain management. Relate the role of E- Business applications on the supply chain.

Introduction

The concept of supply chain management(SCM) appeared as a hot topic during the pervious years, especially during the decade of 90’s , which was characterized by the shift of power from the manufacturer towards the customer, using friendly technology, and shifting the process of making profit from outside the organization to the inside environment.

Historical perspective

After the Second world war ,production exceeded demand . The war emphasized the importance of reaching the right

product ,at the right time and at the right amount and quality.

This supply chain was referred to as “The Logistics management”.

History shows that logistic capabilities have helped countries win wars, The case of the USA and allies winning the gulf war was due to the effective logistics, on theother hand the defeat of Napoleon in Russia Was due to poor logistics.

Logistics Management

Every organization and firm started to understand the importance of logistic management, but the focus was always on the outbound activities, not inbound , because they believed that profit will come from outside only.

Customer Revolution

Before Globalization and Changing in government policy

After Globalization and Changing in government policy

The manufacturers were the kings(they controlled everything and the customer had to accept and take what they offered)

The Customer is the king, he can demand new things and gets what he really wants.

Bad relationship between the suppliers and manufacturers

Good relationship between the suppliers and manufacturers

Departments of the organization functioned in isolation

Departments of the organization started to cooperate with each other

“The element of strategic purchasing as a vital component in the corporate planning process is aimed at gaining competitive advantage .slowly but surely the importance of strategic supply management is coming out of its closet”

Michael Porter

Importance of supply chain

It determines the competitiveness of the organization in the market.

It determines its profitability.

For winning the end user,companies need to take every part of its supply chain together,

“the competition is now between supply chains”

Defining SCM

A supply chain includes all the processes that add customer-desired value to material and bring it to the customers. This value gets added at various stages of the journey that materials takes till it reaches the customer. Supply chain encompasses all these value adding stages.

Literature definitions of SCM

“SCM aims to increase sales, reduce costs, and make full use of assets by streamlining the interaction and communication of all participants along the supply chain, SCM solutions use networking technology to link suppliers, distributors, and business partners to better satisfy the end customer, while feeding real time data about the customer demand into the partners’ production and distribution process”

Cisco

Supply chain types

Raw supply chains. Ripe supply chains. Internal supply chains. External supply chains. Self-monitored supply chains. Outsourced supply chain. Production oriented supply chain. Financial -oriented supply chain. Market – oriented supply chain. Value chains.

Raw supply chains

Very basic type, found in small scale industries, loosely organized , not enough cooperation between units of the organization.

Ripe supply chain

This supply chain is more advanced than the previous one, more organized, better relations with suppliers, some amount of information flowing, but there is no other supply chain initiative appearing.

This type of food chain exists in food sector.

Internal supply chain

This type is the most common type , here the organization has implemented ERP (Enterprise resource planning),they are well-organized from the inside, but not connected to the suppliers or distributors

In their fold.

Extended supply chain

This type of supply chain is internally optimized , and extend well beyond the company boundaries, but the problem is that this type only concentrate on partial integration.

This type is very common, especially in the automotive sector.

Self-monitored supply chain

This type of supply chain is company centric not customer centric, it brings all partners together, it can achieve a considerable speed to market, but it is not because of total optimization.

Outsourced supply chain

This type of supply chain let the logistic partner take care of everything (inbound, outbound logistics relationship, information flow…. Etc.This type is very rare and can be found in some of the export houses.

The Risks and Benefits of Outsourcing Supply Chain Management

Risks Benefits

Unanticipated Costs Focus on Other Business Aspects

Potential for Setbacks Minimize Overall Costs

Quality Suffers Meet Customer Demand

http://www.businessbee.com/

Production –Oriented supply chain

This type of supply chains focuses its energy on production by optimizing the capacity and labor,Law value items are made and sold through various channels, marketing and distribution are not issues.

Financial oriented supply chain

Known as cash to cash cycle it focuses on the financial goal by doing these steps:1-Reducing the inventory and increasing inventory turnover.2-Speed the invoicing process, reduce billing errors, speed response to overdue bills.Source :http://www.vitalentusa.com/

Market-Oriented supply chain

This type of supply chain is triggered when a customer places an order.It is highly flexibleExample: computer hardware sector.

Value chains

This is the ultimate integration that is aimed at total optimization , it addresses theses issues:Waster disposal, improving productivityNot very common.

What is SCM?

Value is added to the basic material procured from the first tier of suppliers and pass them on the next nodes, and so on….

The key aspects to success in supply chain management Are :speed and coordenation, and realizing customer needs and satisfaction, keeping the cost down and

keeping the quality up

Objectives of A supply chain

The most important objective is unification of all functions and activities that are required .

The principal objectives are: To reduce the physical supply chain. To define supply chain responsibilities to a

specific core service competency. To decrease the time and cost of getting

end user customer products in volume to markets worldwide.

Supply chain constituents

Information

• Is the key to CSM success.

• Getting the right information at the right time to the right people.

Supply

• Flawless , efficient CSM.

• Suppliers: velocity, quality, flexibility, low cost.

Production

• What customers want.

• Capacity• Quality• Qc• Maintenance• Scheduling.

Distribution

• Both in and out the manufacterer.

• Reaching customer on time

• Frequency of distribution.

• Enhance the competitiveness.

Supply chain constituents

Supplystock

• Balance between over stocking and under stocking

• The faster the better.

Supply chain activities

plan

Source

Make

Deliver

Return

Plan: Evolve a strategy, evolve metrics for performance evaluation.

Source: Choose the right supplier , control inventory, ensure smooth information flow.

Make :Converting raw to finished product, scheduling.

Deliver: all the steps to reach customers. Return: Handling exceptions and errors .

Supply chain organization

Implementing the supply chain

Crafting project vision.The focus should be on the project vision all across departments , it will lead to success. Managing organizational change.The organization has to change and form aSingle entity ,rearrangement of relations from inside and outside. Choosing the right implementation approach. Gradual change VS dramatic big bang

change

Implementing the supply chain

Managing technical challenges. Technology architecture: should be

addressed according to the needs of the business , as well as system response time.

Interfacing multiple system: interfacing multiple systems is a challenge, a strong

communication system is very important

Data accuracy and integrity: highlighting key data requirements early, to ensure data validation.

Web-centric supply chain

It is the latest generation of the supply chain.

Characterized by the combination between the internet and the supply chain.

Dynamic chain based on the ERP . E-business applications effectively provide

an information system that effectively links multiple companies in a chain The information hub would be a web site connected to different chains.

Web-centric supply chain

E- Business applications

First: E-commerce: B2B or B2C E-commerce tasks are: Executing orders by customers, Communication between the members of the

chain. Electronic order tracking Remote sensing testing and diagnosis of

problems in various parts of the supply chain. Recording useful performance data about the

supply chain.

Second :E-procurementIt is a process by which a manufacturer procures products from suppliers. Dynamic markets link manufacturers

and suppliers , buyers and sellers into virtual dynamic markets like: Ariba, free markets…etc.

Electronic market place example: chaconnes, (software needed)

Theses softwares include data storage, marketplace management and monitoring tools

E- collaborations

E- business thrive on effective collaboration between its employees , suppliers, franchises ,distributers ,dealers , stakeholders, and customers, by implementing group decision making in a cost effective way. E –collaboration allows companies to share

information, collaborative planning, reduce inventory cost and raise customer service level.

E- collaboration help in managing the product life cycle, exchanging information with customers, which made the supply chain operations more efficient.

Advantages of the internet-enabled supply chain

E-business

Efficiency

Quick returns

optimization

Internet and Ecommerce

“Within 18 months , all of our suppliers will supply us on the internet or they will not do business with us”

Jack Welch

Thank you for listening