SCM

Supply Chain Management
Dr. Md. Mamunur Rashid, 2014

Contents :
Fundaments
The four interrelated flows in SCM
Strategic SCM
Time-based Competition
Other important factors in SCM
Supply Chain Profit Leverage
Greening the Supply Chain
The reprocessing flow
Greening the Supply Chain:
The 5 Rs of reprocessing
The sustainable Supply Chain
Supply Chains
Supply
SupplyChain
Chain
The connected chain of

all of the business
entities, both internal
and external to the
company, that perform or
support the logistics
function.
Supply Chain
Supply Chain is a set of activities:
purchasing,
manufacturing,
logistics,
distribution,
marketing,
that perform the function of
delivering value to end customer.

Supply Chains
Supply
SupplyChain
Chain
Management
Management
A management system that

coordinates and integrates
all of the activities
performed by supply chain
members into a seamless
process, from the source to
the point of consumption,
resulting in enhanced
customer and economic
value.
Supply Chain Paradigms
Functional: departments (procurement, operations,

design) are weakly connected.
Procurement: (supply side of SC) e.g. a company might
want to consolidate their demand for supplies. This
paradigm involves partnering with a supplier
Logistics: (downstream side of SC) e.g. consolidation of
outbound activities: warehousing, distribution centers
support
Information: ensuring information flow between
member of SC.
Components of Supply Chain

Management
There are five basic components for supply
chain management, these are:
1. Plan: This is the strategic portion of supply chain

management. This strategy need for managing all
the resources that go toward meeting customer
demand for product or service
2. Source: Choose the suppliers that will deliver the
goods and services to create new product or service.
Components of SCM (cont)
3.Make: This is the manufacturing step. Schedule the

activities necessary for production, testing, packaging and
preparation for delivery
4. Deliver: This is the part that many insiders refer to as
"logistics." Coordinate the receipt of orders from
customers, develop a network of warehouses.
5. Return: The problem part of the supply chain.
Create a network for receiving defective and excess
products back from customers and supporting
customers who have problems with delivered products.
Supply Chain Planning Processes

Material Requirement Planning
Component
Requirement
Supplier
Demand Forecasting
Demand Planning
Production
Plan
Plant
Warehouse
Order Management
Logistics
Retailer
Supply Chain Decisions

There are four major decision areas in supply chain
management:
1. Location Decisions: The geographic placement of
production facilities, stocking points, and sourcing points
is the natural first step in creating a supply chain.
2.Production Decisions: The strategic decisions

include what products to produce, and which plants to
produce them in, allocation of suppliers to plants,
plants to DC's, and DC's to customer markets.
Supply Chain Decisions(cont)

3. Inventory Decisions: These refer to means by which
inventories are managed. Inventories exist at every stage
of the supply chain as either raw materials, semifinished or finished goods.
4.Transportation Decisions: The mode choice aspect of

these decisions are the more strategic ones. These are
closely linked to the inventory decisions.
The Time Paradigm for Time

Based Competition
Competitive advantage: Provide the most

value to the customer at the lowest cost in the
least amount of time.
Aimed at minimizing the time it takes to
deliver a product or service to the customer.
Rapid response enables companies to quickly
redirect their value-delivery systems to the
most attractive customers
Supply Chain Managers
The philosophy behind supply chain

management is that by visualizing the entire
supply chain, supply chain managers can
maximize strengths and efficiencies at each
level of the process to create a highly
competitive, customer-driven supply system
that is able to respond immediately to changes
in supply and demand.

Communicator
Communicator of
of customer
customer demand
demand
from
from point
point of
of sale
sale to
to supplier
supplier
Physical
Physical flow
flow process
process that
that engineers
engineers the
the
movement
movement of
of goods
goods
Benefits of Supply
Chain Management
Supply chain oriented companies commonly report:

Lower inventory, transportation, warehousing,
and packaging costs
Greater supply chain flexibility
Improved customer service
Higher revenues
Increased performance and profitability
Four Interrelated Flows of SCM

Management
Systems
Strategic
Decisions
Product
Design
Decisions
Measurement
Decisions
Reward
Decisions
Product
Decisions
Price
Decisions
Logistics
Systems
Process
Design
Decisions
Engineering
Systems
Promotion
Decisions
Place (How,
where, how
much)
Inventory
Decisions
Production
Capacity
Decisions
Transportation
Decisions
Production
Scheduling
Decisions
Sourcing
Decisions
Shop Floor
Decisions
Marketing
Systems
Manufacturing
Systems
Supply Chain Integration

Relationship
Relationship Integration
Integration
Firm-to-Firm
Firm-to-Firm Social
Social
Interactions
Interactions
Measurement
Measurement
Integration
Integration
Technology
Technologyand
and
Planning
PlanningIntegration
Integration
Operational
Operational
Planning
Planning and
and
Control
Control
Material
Material and
and Service
Service
Supplier
Supplier Integration
Integration
Internal
InternalOperations
Operations
Integration
Integration
Customer
CustomerIntegration
Integration
Customer
CustomerIntegration
Integration

Relationship
Relationship
Integration
Integration
Measurement
Integration
The
The ability
ability of
of two
two or
or more
more
companies
companies to
to develop
develop social
social
connections
connections that
that serve
serve to
to guide
guide
their
their interactions
interactions when
when working
working
together.
together.
The performance assessment of the
supply chain as a whole that also
holds each individual firm or
business unit accountable for
meeting its own goals

Technology and
planning
integration
Material and
service supplier
integration
The creation and maintenance of

information technology systems that
connect managers across and
through the firms in the supply chain
Requires firms to link seamlessly to

those outsiders that provide goods and
services to them so that they can
streamline processes and provide
quality customer experiences.

Internal
Operations
Integration
Links internally performed work into a

seamless process that stretches across
departmental
and/or
functional
boundaries, with the goal of satisfying
customer requirements
Customer
Integration
A competency that enables firms to offer

long-lasting, distinctive, value-added
offerings to those customers who
represent the greatest value to the firm
or supply chain
Key Business Processes
1.
2.
3.
4.
5.
6.
7.
8.
Customer relationship management

Customer service management
Demand management
Order fulfillment
Manufacturing flow management
Supplier relationship management
Product development and commercialization
Returns management
Customer Relationship
Management
Customer
Customer
Relationship
Relationship
Management
Management
(CRM)
(CRM)Process
Process
Allows companies to
prioritize their marketing
focus on different customer
groups according to each
groups long-term value to
the company or supply chain
Customer
Service Management
Customer
Customer
Service
Service
Management
Management
Process
Process
Presents
a
multicompany,
unified
response system to the
customer
whenever
complaints, concerns,
questions,
or
comments are voiced
Demand Management
Demand
Demand
Management
Management
Process
Process
Seeks to align supply and

demand throughout the supply
chain by anticipating customer
requirements at each level and
create demand-related plans
of action prior to actual
customer purchasing behavior
Order Fulfillment
Order
Order
Fulfillment
Fulfillment
Process
Process
A highly integrated process,

often requiring persons from
multiple
companies
and
multiple functions to come
together and coordinate to
create customer satisfaction
at a given place and time
Manufacturing Flow
Management
Manufacturing
Manufacturing
Flow
Flow
Management
Management
Process
Process
Concerned
with
ensuring that firms in
the supply chain have
the needed resources to
manufacture
with
flexibility and to move
products through a
multi-stage production
process
Supplier Relationship Management
Supplier
Supplier
Relationship
Relationship
Management
Management
Process
Process
Closely related to the

manufacturing
flow
management process and
contains
several
characteristics that parallel
the customer relationship
management process
Product Development and

Commercialization
Includes the group

activities that
facilitates the joint
Product
Product
Development
Development and
and development and
Commercialization
Commercialization marketing of new
Process
Process
offerings among a
group of supply
chain partner firms
Returns Management
Returns
Returns
Management
Management
Process
Process
Enables firms to manage

volumes
of
returned
product efficiently, while
minimizing returns-related
costs and maximizing the
value of the returned
assets to the firms in the
supply chain
Logistics
Logistics is
the process of strategically managing the

efficient flow and storage of raw materials,
in-process inventory, and finished goods
from point of origin to point of
consumption.
DEFINITION OF LOGISTICS
.is that part of the supply chain process that plans,

implements, and controls the efficient, effective flow
and storage of goods, services, and related information
from the point-of-origin to the point-of-consumption in
order to meet customers' requirements.
Council of Logistics Management, 1998;

www.CLM1.org
Management actions
Planning
Implementation
Outputs of
logistics
Control
Inputs into logistics

Natural resources
(land, facilities,
and equipments)
Logistics management
Suppliers
Raw
In-process
materials inventory
Finished
goods
Customers
Human resources
Financial
resources
Information
resources
Components of
logistics
management :
Logistics Activities
Customer Service
Plant and warehouse
site selection
Demand forecasting
Procurement
Distribution
communications
Packaging
Inventory control
Return goods handling
Material handling
Salvage and scrap
disposal
Order Processing
Traffic and
Parts and service
transportation
support
Warehousing and
storage
Marketing
orientation
(competitive
advantage)
Time and place
utility
Efficient
movement to
customer
Proprietary asset
Supply
Chain
Team
Logistics Information
Information System
System
Logistics
Logistical Components
of the Supply Chain
Sourcing
Sourcing &
& Procurement
Procurement
Production
Production Scheduling
Scheduling
Order
OrderProcessing
Processing
Inventory
Inventory Control
Control
Warehouse
Warehouse &
& Materials
Materials Handling
Handling
Transportation
Transportation
Sourcing and Procurement
The
The Role
Role of
of Purchasing:
Purchasing:
Plan purchasing strategies
Develop specifications
Negotiate price and service levels
Reduce costs
iStockphoto.com/Maria Toutoudaki
Select suppliers
Production Scheduling
Traditional Focus
Customer Focus
Push / Pull
Strategy
Push
Pull
Start of
Production
InventoryBased
Customer-Order
Based
Manufacturing
Mass Production
Mass Customization
Just-in-Time Manufacturing
JIT
JIT
A process that redefines and

simplifies manufacturing by
reducing inventory levels
and delivering raw materials
at the precise time they are
needed on the production
line.
Benefits of JIT
For manufacturers: reduces raw material

inventories; immediate shipping of
products
For suppliers: daily or hourly deliveries
rather than weekly
For customers: lower costs; shorter lead
times; products tailored to customer needs
Order Processing
An Order Processing System is
a system whereby orders are entered
into the supply chain and filled.
Order processing is becoming more automated

through the use of computer technology known as
ELECTRONIC DATA INTERCHANGE (EDI).
Inventory Control
Inventory
Inventory
Control
Control
System
System
A method of
developing and
maintaining an
adequate assortment
of materials or
products to meet a
manufacturers or a
customers demand
Inventory Control
Tools for managing inventory include:

materials requirement planning (MRP)
materials management supplier
manufacturer
distribution resource planning (DRP)
manufacturer to end user
automatic replenishment programs
minimal forecasting
or
to
Warehousing and
Materials Handling
A Materials-Handling System
is
a method of moving inventory into, within,
and out of the warehouse.
Most manufacturers today have moved to

AUTOMATED materials-handling systems to
minimize the amount of handling.
Transportation
Airways
Water
Pipelines
Motor Carriers
Railroads
Transportation Mode Choice
Cost
Transit time
Reliability
Capability
Accessibility
Traceability
Trends in Supply Chain

Management
Advanced
Advanced computer
computertechnology
technology
Outsourcing
Outsourcing of
of logistics
logistics functions
functions
Electronic
Electronic distribution
distribution
Advanced Computer
Technology
Automatic identification systems
- Bar coding
- Radio frequency technology
Communications technology
Supply chain software systems

Outsourcing Logistics
Functions
Outsourcing
OutsourcingBenefits
Benefits
Reduce inventories
Locate stock at fewer plants and distribution
centers
Provide same or better levels of service
Electronic Distribution
Electronic Distribution is
a distribution technique that includes any kind

of product or service that can be distributed
electronically, whether over traditional forms
such as fiber-optic cable or through satellite
transmission of electronic signals.
Green Supply Chain

Management
Requires integrating green thinking into all

phases of the supply chain
Green materials sourcing
Environmental impact of packaging,
shipment, use
Incorporate end-of-life management
Recycling
Clean disposal
Green Manufacturing
Sustainable
Manufacturing
(Innovative, 6R based)
Green Manufacturing
(Environmentally-benign, 3R
based)
Lean Manufacturing
(Waste Reduction based)
Remanufacture
Redesign
Recover
Recycle
Reuse
Traditional
Manufacturing
(Substitution based)
Reduce
Year
1950
1975
2000
2025
2050
49
Eco-Attributes
Product
s
Manufacturing
EcoAttributes
Environmental
Burden
CO2 Footprint
(kg/kg)
Water Usage ( l/kg)
NOX emission (g/kg)
SOX emission (g/kg)
50
E-commerce and SCM
E-commerce describes Information

Technology based techniques utilized to
conduct business in a paperless environment.
E-commerce technologies:
Internet applications
Web services
Data bases and data warehousing
Decision support and data mining
Conclusions:
Supply chain Management is a critical

factor in the success and profitability
of a company. Improper planning can
take the company out of business.
Planning is an hard problem to
formulate as well as solve.
Thanks for your attentions !
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Supply Chain Management

Dr. Md. Mamunur Rashid, 2014

Supply Chain Management

Dr. Md. Mamunur Rashid, 2014

The connected chain of

Supply Chain is a set of activities:

that perform the function of

delivering value to end customer.

Dr. Md. Mamunur Rashid, 2014

A management system that

Supply Chain Paradigms

Functional: departments (procurement, operations,

Components of Supply Chain

1. Plan: This is the strategic portion of supply chain

Dr. Md. Mamunur Rashid, 2014

Components of SCM (cont)

3.Make: This is the manufacturing step. Schedule the

Supply Chain Planning Processes

Supply Chain Decisions

2.Production Decisions: The strategic decisions

Supply Chain Decisions(cont)

4.Transportation Decisions: The mode choice aspect of

Dr. Md. Mamunur Rashid, 2014

The Time Paradigm for Time

Competitive advantage: Provide the most

Supply Chain Managers

The philosophy behind supply chain

Supply Chain Management

Dr. Md. Mamunur Rashid, 2014

Supply chain oriented companies commonly report:

Dr. Md. Mamunur Rashid, 2014

Four Interrelated Flows of SCM

Dr. Md. Mamunur Rashid, 2014

Supply Chain Integration

Supply Chain Integration

Dr. Md. Mamunur Rashid, 2014

Supply Chain Integration

Dr. Md. Mamunur Rashid, 2014

The creation and maintenance of

Requires firms to link seamlessly to

Supply Chain Integration

Links internally performed work into a

A competency that enables firms to offer

Dr. Md. Mamunur Rashid, 2014

Key Business Processes

Customer relationship management

Dr. Md. Mamunur Rashid, 2014

Dr. Md. Mamunur Rashid, 2014

Dr. Md. Mamunur Rashid, 2014

Dr. Md. Mamunur Rashid, 2014

Seeks to align supply and

Dr. Md. Mamunur Rashid, 2014

A highly integrated process,

Dr. Md. Mamunur Rashid, 2014

Supplier Relationship Management

Dr. Md. Mamunur Rashid, 2014

Closely related to the

Product Development and

Includes the group

Dr. Md. Mamunur Rashid, 2014

Enables firms to manage

the process of strategically managing the

Dr. Md. Mamunur Rashid, 2014

.is that part of the supply chain process that plans,