WHAT IS SUPPLY CHAIN MANAGEMENT

" Is the strategic management of activities involved in

the acquisition and conversion of materials to finished
products delivered to the customer"

Supplier
Management

Schedule /
Resources

Material Flow
Information Flow

Conversion

Stock
Deployment

Customer
Management

Delivery

Leads to Business Process Integration

 Supply chain is the system by which

organizations source, make and deliver
their products or services according to
market demand.
Supply chain management operations
and decisions are ultimately triggered by
demand signals at the ultimate consumer
level.
Supply chain as defined by experienced
practitioners extends from suppliers
suppliers to customers customers.

 SUPPLY CHAIN INCLUDES :

MATERIAL FLOWS
INFORMATION FLOWS
FINANCIAL FLOWS

 SUPPLY CHAIN
FACILITATED BY :
PROCESSES
STRUCTURE
TECHNOLOGY

MANAGEMENT

IS

 Supply chain objectives may differ from

situation to situation.
For functional products, cost efficiency is
the critical factor.
For innovative products, responsiveness
is the important factor.
Leanness + Agility together make up
Leagility

Supply Chain Structure

SUPPLIER

FACTORY

DC

RDC

RETAILER

Raw Materials
Finished Goods
Information Flow

SUPPLY CHAIN DRIVERS

Not new. Value system of Michael Porter
Why sudden interest?
Demanding customers
Shrinking product life cycles
Bad product offerings
Growing retailer power in some cases
Emergence of specialized logistics providers
Globalization
Information technology

SUPPLY CHAIN ELEMENTS

Strategic

Supply Chain Design

Resource Acquisition
Long Term Planning (1 Year ++)

Tactical

Production/ Distribution Planning

Resource Allocation
Medium Term Planning (Qtrly,Mont

Operational

Shipment Scheduling
Resource Scheduling
Short Term Planning (Weekly,Daily)

Adversarial vs partnerships
Short term vs long term contracts
Large vs small order quantity
Full truck load vs small parcels
Inspection vs no inspection

Dealer Management
Conventional functions

Inventory ownership and management

Sales and technical support
Order handling
Credit

Dells Direct Business Model of

Virtual Integration
Advantages of a tightly coordinated supply chain
traditionally facilitated by vertical integration.
Combined with focus and specialization.
Leveraging on investments others have made and
focusing on delivering solutions and systems to
customers
Fewer things to manage - fewer things go wrong
Suppliers engineers part of Dells Design team
Have only a few partners

Dells Direct Business Model of

Virtual Integration
Share information with partners in Real time
fashion.
Stitch together a business with partners that are
treated as if they are inside the company.
Change focus from how much inventory there is to
how fast it is moving
Assets collect risks around them one way or the
other.
Limited or no testing - Eg. Sony Monitors

Dells Direct Business Model of

Virtual Integration
Only three Manufacturing centers - Austin, Ireland
and Malaysia.
Inventory levels and replenishment needs
sometimes conveyed to vendors on hourly basis.
Substitute information for inventory and ship only
when we have real demand from real end
customers
Clever segmentation - Focus on institutional
markets - 70% to very large customers with
annual purchases exceeding $1 million.

The Importance of Marketing Channels

Intermediaries make distribution and
selling processes more efficient.
Intermediaries offers supply chain
partners more than they could achieve on
their own.

Market Exposure
Technical Knowledge/Information Sharing
Operational Specialization
Scale of operation

Consumer and Business Marketing

Channels

Channel Cooperation &

Conflict
Channels are most effective when:
Each member performs the tasks it does best.
Channel members cooperate to attain overall channel
goals.

Channel Conflict
Horizontal Conflict: conflict among firms at the same level
of the channel (e.g., retailer to retailer).

Example: Two retailers compete to carry a suppliers exclusive product.

Vertical Conflict: conflict between different levels of the

same channel (e.g., wholesaler to retailer).

Example: Manufacturer competes with retailer in selling product to target market.

Some conflict can be healthy competition.

Lower inventories low financial cost.

Shorter recievable cycles
Optimal use of production resources
Faster response to market changes
Greater profitability

Thank You