INTRODUCTION TO SUPPLY

CHAIN MANAGEMENT

Raja Khalid Hafeez

Overview
Introduction
Supply Chain Management Defined
The Importance of Supply Chain Management
The Foundations of Supply Chain Management
Some Current Trends in Supply Chain
Management
Evolution of Supply Chain Management
Introduction
Planning, organizing, directing, & controlling flows of
materials
Begins with raw materials
Continues through internal operations
Ends with distribution of finished goods
Involves everyone in supply-chain
Example: Your suppliers supplier
Objective: Maximize value & lower waste
Contd
What is Supply Chain Management

The design and management of seamless, value-added

processes across organizational boundaries to meet
the real needs of the end customer
Institute for Supply Management
Contd
Old paradigm - Firm gained synergy as a vertically integrated
firm encompassing the ownership and coordination of several
supply chain activities. Organizational cultures emphasized
short-term, company focused performance.
New paradigm - Firm in a supply chain focuses activities in its
area of specialization and enters into voluntary and trust-based
relationships with supplier and customer firms.
All participants in the supply chain benefit.
Boundaries are dynamic and extend from the firms
suppliers suppliers to its customers customers (i.e., second
tier suppliers and customers).
Supply chains now deal with reverse logistics to handle
returned products, warranty repairs, and recycling.
Importance of Supply Chain Management
Firms have discovered value-enhancing and long
term benefits

Who benefits most? Firms with:

Large inventories
Large number of suppliers
Complex products
Customers with large purchasing budgets
Importance of Supply Chain Management
Firms using Supply Chain Management:
1. Start with key suppliers
2. Move on to other suppliers, customers, and
shippers
3. Integrate second tier suppliers and
customers (second tier refers to the
customers customers and the suppliers
suppliers)
Importance of Supply Chain Management
Cost savings and better coordination of resources are
reasons to employ Supply Chain Management
Reduced Bullwhip Effect- the magnified reduction of
safety stock costs based on coordinated planning and
sharing of information
Collaborative planning, forecasting, and
replenishment activities reduce the Bullwhip Effect
and lead to better customer service, lower inventory
costs, improved quality, reduced cycle time, better
production methods, and other benefits.
The Foundations of Supply Chain Management
Current Trends in Supply Chain Management

Expanding the Supply Chain

The expansion involves:
breadth- foreign manufacturing, office & retail
sites, foreign suppliers & customers
depth- second and third tier suppliers & customers
Current Trends in Supply Chain Management

Increasing Supply Chain Responsiveness

Firms will increasingly need to be more flexible and
responsive to customer needs
Supply chains will need to benchmark industry
performance and meet and improve on a continuous
basis
Responsiveness improvement will come from more
effective and faster product & service delivery
systems
Current Trends in Supply Chain Management

The Greening of Supply Chains

- Producing, packaging, moving, storing, delivering and
other supply chain activities can be harmful to the
environment
Supply chains will work harder to reduce
environmental degradation
Large majority (75%) of U.S. consumers influenced
by a firms environmental friendliness reputation
Recycling and conservation are a growing alternative
in response to high cost of natural resources
Current Trends in Supply Chain Management

Reducing Supply Chain Costs

Cost reduction achieved through:
Reduced purchasing costs
Reducing waste
Reducing excess inventory, and
Reducing non-value added activities
Continuous Improvement through
Benchmarking- improve over competitors
performance
Trial & error
Increased knowledge of supply chain processes
Evolution Of SCM
From Functional to Process Perspective
From Operational to Strategic View point
Single Enterprise to Extended Enterprise
Transactional to Relationship Based
Engagement
Local to Regional and Regional to Global
THANK YOU