Supply Chain Management

Department of Industrial Engineering

Universitas Atma Jaya Yogyakarta
2011
In your opinion…

• What is supply chain (SC)?

• What is supply chain management (SCM)?
• What do you expect after completing this
subject?
• How far you have learned about supply
chain management?

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References

• Textbook:
– Chopra, Sunil and Meindl, Peter, 2004, Supply Chain
Management: Strategy, Planning, and Operations, 2nd ed., Pearson
Education, New Jersey
• Other references:
– Pujawan, I Nyoman, 2010, Supply Chain Management, 2nd ed.,
Penerbit Guna Widya, Surabaya
– ASCET (Achieving Supply Chain Excellence through
Technology) 7 site, 2008, Montgomery Research Inc.,
http://www.ascet.com/
– SCO (Supply Chain Online), 2011, SCO LLC, California,
http://www.supplychainonline.com/
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Rule and grading system

• Attendance:
– Minimum total attendance: 75%
– Allowance for lateness: 15 minutes
• Assignment:
– Must be on time
– Must be proper (no plagiarism, no cheating, etc.)
• Grading system:
– Exams: 50%
– Assignment & Project: 50%
• Other rule: enjoy to learn ….!
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Objective of this course

• Students are expected to be able to:

– understand the concept of SCM as a whole, as
well as the details
– understand, use, and develop quantitative
models to solve SCM problems
– apply the concept and tools to design an aspect
of SC
– understand the context of an SC problem and
do integrated analysis on the problem
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Lessons

• Lesson 1: Introduction to SCM

• Lesson 2: SC strategy
• Lesson 3: Product design under SC
perspective
• Lesson 4: Network configuration
• Lesson 5: Demand management and
production planning
• Lesson 6: Inventory management in SC

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Lessons
• Lesson 7: Procurement management
• Lesson 8: Transportation and distribution
management
• Lesson 9: Information distortion and
bullwhip effect
• Lesson 10: Information technology in SCM
• Lesson 11: Performance measurement of
SC
• Lesson 12: International SC
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Lesson 1

• Introduction to SCM
– SCM background
– SC and SCM
– Functions and players in SC
– Integration, coordination , collaboration in SC
– Physical function and market mediation
– SC challenges

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Why SCM?
Strategy
SC strategy
• Higher challenges
in management of Infrastructure
Design
& Support
industries Information
Product,
– Complexity Network
Global issue
– Uncertainty
• Maximize the
overall value Measure and Planning
improve Demand,
generated Quality Production,
Invent, Distrib,
• Integration of IE SC performance Procurement

sciences and tools Operations

Demand,
Production,
Invent, Distrib, 9
Procurement
What is SC? (1)

• SC:
– consists of all parties involved, directly or
indirectly, in fulfilling customer request
– not only manufacturer and suppliers, but also
transporters, warehouses, wholesalers, retailers,
and end customers
– covered all functions involved in receiving until
fulfilling customer request

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What is SC? (2)

• Micro SC
– Internal
– Simple
– Local
• Macro SC
– External
– Complex
– Global
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What is SC? (3)

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What is SC? (4)
Most SC are actually network

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SC viewed as process cycles
Customer
Customer order cycle
customer arrival – order entry – fulfillment –
receiving
Retailer
Replenishment cycle
order trigger – order entry – fulfillment –
receiving
Distributor
Manufacturing cycle
order arrival – scheduling – manufacturing –
shipping – receiving
Manufacturer
Procurement cycle
order trigger – order entry – fulfillment –
receiving
Supplier
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Example of SC --- Chocolate bar

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Example of SC --- Dell Computer

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Example of SC --- Pharmaceutical

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Example of SC --- Apparel

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Example of SC --- Seafood

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SC viewed as pull – push process

Process Process Process Process Process Process Process

1 2 … n n+1 n+2 …

PUSH (speculative) PROCESS PULL (reactive) PROCESS

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Example of SC --- Coca cola

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Example of SC --- Totoya

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What is SCM?

• SCM terminology was founded by Oliver & Weber (1982)

• Systematic, strategic coordination of the traditional
business functions within a particular company and across
businesses within the supply chain for the purpose of
improving the long term performance of the individual
company and the supply chain as a whole (Council of
Logistics Management)
• Method and/or tools and/or approach to manage SC
• A brief quote of SCM: “A supply chain is as strong as its
weakest link”

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Which are the SC functions?

• Product development --- SCM based

• Procurement
– Collaborative
– SRM (Supplier Relationship Management)
• Planning and control
– CPFR (Collaborative Planning, Forecast, and Replenishment)
– VMI (Vendor Managed Inventory)
• Production --- priority: lean vs agile
• Distribution --- 3PL (third party logistic service providers)

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Who are responsible to SCM?

• Product development --- Product

Development Division/R& D Division
• Procurement --- PPIC, Warehouse, QC,
Finance
• Planning and control --- PPIC, QC
• Production --- PPIC, Engineering, QC
• Distribution --- Warehouse, Finance
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What are the key principles to SCM success?

• Integration
– Manage as a whole
• Coordination
– All stages take action that together increase total supply
chain performance
• Collaboration
– Joint planning and execution
– Complete coordination
– Sharing of information
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Physical function vs market mediation

Example of Example of
physical activities market mediation
Sourcing Market reseacrh

Production Product development

Distribution Marketing program

Product return After sales service

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What are the main challenges in SCM?

• Complexity
– Conflict of interest
– Region
– Capability
• Uncertainty
– Customer: demand fluctuation
– Supplier: lead time, quality, quantity, price
– Internal: operational error

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Thank you… see you…

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