The Supply Chain Management

Concept

BA 170
Class 1

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 Supply Chain Management
The process of planning, organizing, and controlling the
flow of materials services, and information from suppliers to
end users/customers.
This integrated approach incorporates suppliers, supply
management, integrated logistics, and operations.
Extend the reach beyond one organization’s effort to
deliver product or services from initial suppliers to final
customers
Manage bottlenecks and reduce impact on customers

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 Supply Chain Management Model
• Implies:
• Competitive Quotes and price analysis
• Target pricing
• Cost design
• Total cost of ownership
• Good cost information
• Production locations
• Buying plan development
• Marketing input
• Collaboration with suppliers
• Continuous improvement
• Technology
• Globalization

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 Tactics to Implement SCM
• Developing strong relationships with supply
chain management members
• Developing high-quality products and services
• Share information among SCM members
• Reducing the order cycle time
• Minimizing total inventory levels
• Reduce the number of suppliers and carriers
• Building commitment to SCM

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 Results from SCM

• Product/services moves faster to end user

• Increases perceived value

• Gain sustainable competitive advantage

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 Supply Management
• To many - supply management means
purchasing!
• Aims at:
• Anticipating requirements
• Sourcing
• Materials management
• Inbound logistics
• Purchasing and procurement
• Market efficiency and transparency
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 Elements of SCM
Part 1

• Supply Management
• Encompasses the planning and management of:
• Sourcing and procurement
• Conversion
• Logistics
• Channel partners,
• Including the coordination and collaboration with
suppliers, intermediaries, third-party service providers,
and customers.
• Supply chain management integrates supply and
demand management within and across companies.

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 Elements of SCM
Part 2
• Operations Management
• Activities that create goods and services through
the transformation of inputs into outputs.
• Integrated Logistics
• The part of supply chain management that:
• plans
• implements
• controls the efficient, effective forward, reverse
flow and storage of goods and services
• Manages the flow of information between the
point of origin and the point of consumption in
order to meet customers' requirements.
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 House of Purchasing & Supply

Strategy
Development

Purchasing/Supply
Organization

Strategic Supplier Day-to-Day

Sourcing Management and Purchasing
Development
Information Management Performance Management
Human Resource Management

03/14/10 Source: A. T. Kearney 9

 Operations
• Definition:
• The set of activities that create goods and services through
the transformation of inputs and outputs

• Production of both goods and services

• Factors of influence
• Industrial revolution
• Scientific management
• Human relations
• Management science
• Quality revolution
• Information age
• Globalization

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 Integrated Logistics

• Process of:
• anticipating customer needs and wants
• acquiring the capital, materials, people, technologies,
and information necessary to meet those needs and
wants
• optimizing the goods or service producing networks to
fulfill customer requests
• utilizing the network to fulfill customer request in a
timely way.

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 Integrated Logistics

• Integrated logistics has two categories:

• Logistics activities
• Transportation, facilities, inventory, material handling,
communications, and information
• Service response logistics activities
• Waiting time, capacity, and delivery

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 Evolution of Logistics
• Fragmented activities 1940 to1960
• 23 activities identified by author in figure 1.3, page 8
• Logistics – 1970
• Materials management
• Physical Distribution
• Integrated logistics – 1980
• Inbound Logistics
• Conversion Operations
• Outbound Logistics
• Total channel integration 1990-2000
• Supply chain management
• Customer focus

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 Components of
Logistics Management
Management actions
Inputs into Outputs of
logistics Planning Implementation Control logistics
Natural Marketing
resources orientation
(land, facilities, (competitive
and equipment) advantage)
Logistics management
Time
Human and place
Raw
Suppliers materials In-process Finished utility
resources inventory goods Customers
Efficient
Financial movement
resources to customer

Information Logistics activities Proprietary

resources • Customer service • Plant and warehouse site asset
• Demand forecasting selection
• Distribution • Procurement
communications • Packaging
• Inventory control • Return goods handling
• Material handling • Salvage and scrap disposal
• Order processing • Traffic and transportation
• Parts and service • Warehousing and storage
support
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 Marketing/Logistics linkage
Customer
Satisfaction

• Knowing Final
customers
• Suppliers
• Intermediate
customers

Integrated Company
Effort Objectives
• Product • Maximize long-term
profitability
• Price
• Lowest total costs
• Promotion given an
• Place (distribution) acceptable level of
customer service

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 Trade-off Required
in Marketing and Logistics
Product

MARKETING
Price Promotion

Place/
customer service
levels

Inventory Transportation
carrying costs costs
LOGISTICS

Lot quantity Warehousing

costs (production) costs

Order processing
and information
costs
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 Key Logistics Activities
• Customer service • Parts & service support
• Demand forecasting/ •
Plant & warehouse site
planning
selection
• Inventory
management • Purchasing
• Logistics • Return goods handling
communications • Reverse logistics
• Material handling • Traffic & transportation
• Order processing • Warehousing & storage
• Packaging • Others

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 Cost of Logistic Activities
• Customer service levels
• Transportation
• Warehousing
• Procurement
• Order processing
• Information systems
• Lot quantity
• Inventory carrying
• Others
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 Changing Skills Requirement
• Information management
• Key to integration of Logistics management
• Outsourcing, partnering, and strategic alliances
• Technology
• EDI, bar coding, point of sale data, & satellite transmission
• Green Marketing
• ISO 14000
• Examples
• Others

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 Logistics’ Challenges
• Strategic planning and participation
• Total quality management (TQM)
• Just-in-time (JIT)
• Quick response (QR)
• Efficient consumer response (ECR)
• Logistics as a competitive weapon
• Accounting for logistics costs
• Logistics as a boundary-spanning activity
• Global logistics

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