Professional Documents
Culture Documents
An Overview
Some Definitions
Supply Chain Management encompasses every effort
involved in producing and delivering a final product
or service, from the supplier’s supplier to the
customer’s customer. Supply Chain Management
includes managing supply and demand, sourcing raw
materials and parts, manufacturing and assembly,
warehousing and inventory tracking, order entry and
order management, distribution across all channels,
and delivery to the customer.
The Supply Chain Council, U.S.A.
Customers,
Field demand
Sources: Regional Warehouses: centers
plants Warehouses: stocking sinks
vendors stocking points
ports points
Supply
Inventory &
warehousing
costs
Production/
purchase Transportation Transportation
costs costs costs
Inventory &
warehousing
costs
Flows in a supply chain
Information
Product
Customer
Funds
Some More Definitions
Supply Chain Management deals with the management of
materials, information, and financial flows in a network
consisting of suppliers, manufacturers, distributors and
customers.
Stanford Supply Chain Forum
Logistics involves “managing the flow of items,
information, cash and ideas through the coordination of
supply chain processes and through the strategic
addition of place, period and pattern values.
MIT Center for Transportation and Logistics
Key Observations
• Integrated activity:
* Among functions such as logistics, manufacturing, distribution,
design/engineering, marketing, finance,etc.
* Multiple organizations,i.e., suppliers, customers& 3 PL providers
* Coordination of conflicting goals, metrics, etc.
• Responsible for multiple flows:
* Information (orders, status, contracts)
* Physical (finished goods, raw material, w.i.p.)
* Financial (payment, credits, etc.)
Philosophy of SCM
• The entire supply chain is a single, integrated
entity.
• Cycle view
• Push/pull view
Customer order cycle
• Customer arrival
• Customer order entry
• Customer order fulfillment
• Customer order receiving
Replenishment cycle
• Geographical Integration
*From local to world-wide logistics
• Functional Integration
* From Function-dominated logistics to
Flow-dominated logistics
• Inter-Firm Integration
* From a Sector-based Logistics to Inter-sector Logistics
Supply Chain Integration is Difficult
for two main reasons
• Different facilities in the supply chain may
have different, conflicting objectives
* For instance, the suppliers are in direct conflict with
the manufacturers’ desire for flexibility.
• The supply chain is a dynamic system
that evolves over time
* Not only do demand and supplier capabilities change
over time, but supply chain relationships also evolve
over time.
Complexities Involved in
Supply Chain Management
• The supply chain is a complex network of
facilities and organizations with different,
conflicting objectives
• Matching supply and demand is a major
challenge
• System variations over time are also an
important consideration
• Many supply chain problems are new and there
is no clear understanding of all the issues
involved
Supply Chain:
The Complexity
National Semiconductors:
• Production:
– Produces chips in six different locations: four in the US,
one in Britain and one in Israel
– Chips are shipped to seven assembly locations in
Southeast Asia.
• Distribution
– The final product is shipped to hundreds of facilities all
over the world
– 20,000 different routes
– 12 different airlines are involved
– 95% of the products are delivered within 45 days
– 5% are delivered within 90 days.
Supply Chain Challenges
• Achieving Global Optimization
– Conflicting Objectives
– Complex network of facilities
– System Variations over time
Sequential Optimization vs.
Global Optimization
Sequential Optimization
• Global competition