Lect 1 Introduction to SCM (1)

UNDERSTANDING THE

SUPPLY CHAIN MANAGEMENT

By Abdullah Athar

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

SupplierManufactu

reWarehou

se

Distributor

RetailerCustome

r

Funds

Product

Information

SUPPLY CHAIN MANAGEMENT

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

During operation, supply chain closely interacts with other functions like finance, sales , marketing etc

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 .

SupplierManufactu

reWarehou

se

Distributor

RetailerCustome

r

Different Real Scenarios in Supply Chain

Add lines

Services also have supply chains

Sourcing , Procurement and supply

management (purchasing ,

supplier relationship)

Material Management(ForecastingInventory,

store , stoke keeping)

Logistics & Distribution

Supply Chain-Historical Perspective

Objective of Supply Chain

To satisfy customers need by Matching variable demand with

variable supplyIn shortest possible timeWith minimum total cost

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.

Some Strategies in Supply Chain

◦Few suppliers/ many suppliers ◦Make or buy decision◦Inventory Management◦Capacity Planning

Decision Phase in Supply Chain

Supply chain strategy next several years

Supply chain planning◦Quarter to a yearly

Supply chain operation ◦(weekly/monthly)

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

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

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

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

Supply Chain Macro Process in a Firm

SRM ISCM CRM

Supplier Firm Customer

SourceNegotiateBuyDesign collaborationSupply collaboration

Demand planningSupply planningproductionWarehouse

MarketPriceSellOrder managementCall centre