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Lecture 1 MGMT3308

1) A supply chain is a network of entities involved in procuring materials, processing materials through manufacturing, and distributing finished products to customers. 2) Efficient integration of suppliers, manufacturers, distributors, and retailers is important so that goods and services are produced and distributed at the right time, location, quantity, quality and lowest cost while meeting service requirements. 3) If information flow is insufficient throughout the supply chain, visibility will diminish and the bullwhip effect can occur where demand information becomes distorted as it passes between entities in the supply chain.

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156 views6 pages

Lecture 1 MGMT3308

1) A supply chain is a network of entities involved in procuring materials, processing materials through manufacturing, and distributing finished products to customers. 2) Efficient integration of suppliers, manufacturers, distributors, and retailers is important so that goods and services are produced and distributed at the right time, location, quantity, quality and lowest cost while meeting service requirements. 3) If information flow is insufficient throughout the supply chain, visibility will diminish and the bullwhip effect can occur where demand information becomes distorted as it passes between entities in the supply chain.

Uploaded by

Jeremy Rusli
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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SUPPLY CHAIN MANAGEMENT LECTURE 1 MGMT3308

Basics of SCM
What is a supply chain?
Referred as the network of entities involved in different activities of procurement,
processing and distribution

Procurement refers to the purchasing and sourcing materials

Processing conversion of materials, manufacturing

efficient integration of different parties (suppliers, manufacturers, distributors, retailers) in


the supply chain so that goods and services are produced and distributed at the right time,
right location, right quantity, right quality and at minimum cost while satisfying the service
level.
SUPPLY CHAIN

They are then delivered to the different kinds of customers through a distribution network

3 main system SAP, Microsoft Dynamics, ORACLE


ERP enterprise wide planning systems

Examples of supply chain:


Planes, cargo on trains, shipping and trucks

WHAT WILL HAPPEN IF FLOW OF INFORMATION IS NOT ENOUGH?


Supply chian visibility the ability to view all areas up and down the supply chain will
diminish

Bullwhip effect occurs when distorted product demand information passes from one
entity to the next throughout the supply chain

SCM Processes in the lens of Supply Chain Operations Reference (SCOR)


SCOR
SCOR LEVEL 1 METRICS

SUPPLY CHAIN MANAGEMENT DRIVERS


The four primary drivers of supply chain management are:
1. Facilities the factories, warehouse
2. Inventory supplies of parts, products etc.
3. Transportation moving materials and people etc.
4. Information sharing, push / pull etc.

Organizations use these four drivers to support either a supply chian strategy focusing on
efficiency or a supply chain strategy focusing on effectiveness.

EFFICIENCY VS EFFECTIVENESS
Efficiency relates to the performance of the system including throughput time, speed,
cost, etc

Effectiveness - quality of output from the system e.g. customer satisfaction, service level,
etc

1. Facilities driver
Facility relates to processing (transforming inventory into another product) and
storing the inventory before shipping it to the next facility
Three primary facilities components:
1. Location
2. Capacity
3. Operational design
2. Inventory Driver
Inventory offsets discrepancies between supply and demand
Two primary inventory components:
1. Cycle inventory average inventory held
2. Safety inventory excess inventory held

3. Transportation driver
Transportation moves inventories between the different stages in the supply chain

Two primary transportation components:


1. Method of transportation
2. Transportation route
4 Information Driver
Information an organization must decide how and what information it wants to share with
its supply chain partners

Two primary information components:


1. information sharing
2. push verses pull strategy

APPLYING A SC DESING (WAL-MARTs STRATEGY)

SUPPLY CHAIN STRATEGIES AND ORGANISATIONAL STRATEGY


Organizational strategy & supply chain strategy shall fit together. For example if the
organization is trying to grow at a high speed, it must ensure reliability of supply
rather than cost. On the other hand, some companies emphasize on cost leadership
with required service levels.

WalMart: providing high availability of a variety of reasonable quality products at


low prices.
Dell Computer: stressing customization and variety at a reasonable cost, with
customers having to wait approximately 1 week to get their product.
VALUE CHAIN ANALYSIS AND SUPPLY CHAIN STRATEGY

Value chain analysis Views a firm as a series of business processes that add value to the
product or service. Companies need to analyze the value chain and then identify which
supply chain drivers & strategies need to be improved.

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