Lect 1 Introduction to SCM (1)
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UNDERSTANDING THE
SUPPLY CHAIN MANAGEMENT
By Abdullah Athar
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Definition of Supply Chain Mgt :
Basic Supply Chain : a network used to deliver product and services from raw materials to end customers through an engineered flow of Information, physical distribution and cash.
Supply chain = supply + chain+ mgt
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SupplierManufactu
reWarehou
se
Distributor
RetailerCustome
r
Funds
Product
Information
SUPPLY CHAIN MANAGEMENT
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Generally key pillars of supply chain are
CustomerManufacturerRetailers Wholesaler/distributorWarehouse and transportationComponent /raw material suppliersEach stage in supply chain is
connected through flow of products , information and fund
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During operation, supply chain closely interacts with other functions like finance, sales , marketing etc
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Supply Chain in Reality
Supply chain process is not as simple as explained. Complexity includes due to involvement of various real scenarios like many suppliers, many distributors, many manufacturing options .
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SupplierManufactu
reWarehou
se
Distributor
RetailerCustome
r
Different Real Scenarios in Supply Chain
Add lines
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Services also have supply chains
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Sourcing , Procurement and supply
management (purchasing ,
supplier relationship)
Material Management(ForecastingInventory,
store , stoke keeping)
Logistics & Distribution
Supply Chain-Historical Perspective
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Objective of Supply Chain
To satisfy customers need by Matching variable demand with
variable supplyIn shortest possible timeWith minimum total cost
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Significance of Supply Chain :
◦Supply chain designing and its operation plays a significant role in the success of firm. o Supply chain is the channel which ensure product availability to end user, so it determines company success.
◦Successful supply chain operation requires well inter-connectivity within functions and efficient role of all functions.
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Some Strategies in Supply Chain
◦Few suppliers/ many suppliers ◦Make or buy decision◦Inventory Management◦Capacity Planning
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Decision Phase in Supply Chain
Supply chain strategy next several years
Supply chain planning◦Quarter to a yearly
Supply chain operation ◦(weekly/monthly)
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Process view of supply chainSupply chain is a consequence of
processes and flows that take place within and between different stages and combine to fill a customer need for a product.
Two views of supply chain are◦Cycle view : ◦Push/pull view
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Cycle ViewProcesses in supply chain are
divided into a series of cycles , each performed at the interface between 2 consecutive stages of supply chain.◦Customer order cycle◦Replenishment cycle◦Manufacturing cycle◦Procurement cycle◦Fig 1.3 page 11
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Push/pull viewThe process in supply chain are
divided into 2 categories depending on whether they are executed in response to a customer order on in anticipation of customer order. Pull processes are initiated by a customer order. Push process are initiated and performed in anticipation of customer need.
Fig 1.5 page 13
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Push/pull processMake to stock order
◦Pull process : customer order cycle◦Push process : procurement +
manufacturing +replenishment
Build to order ◦Pull process : customer order cycle
+manufacturing◦Push process : procurement
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Supply Chain Macro Process in a Firm
SRM ISCM CRM
Supplier Firm Customer
SourceNegotiateBuyDesign collaborationSupply collaboration
Demand planningSupply planningproductionWarehouse
MarketPriceSellOrder managementCall centre
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