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UMMC – Supply Chain Mgmt. Course 1 Introduction to Supply Chain Management Concepts Mike Almich and Tony Bucko. Course List. Intro to SC Concepts Financials Logistics and Distribution Purchasing Inventory Management 1 Inventory Management 2 SC Technology Production Management

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Ummc supply chain mgmt

UMMC – Supply Chain Mgmt.

Course 1

Introduction to Supply Chain Management Concepts

Mike Almich and Tony Bucko

Course list

Course List

  • Intro to SC Concepts

  • Financials

  • Logistics and Distribution

  • Purchasing

  • Inventory Management 1

  • Inventory Management 2

  • SC Technology

  • Production Management

  • Quality Control and Improvement

What will we cover today

What will we cover today?

  • Importance of SC Management

  • Development of the SC Concept

  • Components of SC Management

  • Flow of Materials and Information

  • Issues and Challenges

  • Opportunities

What is scm

What is SCM

  • Supply chain management can be viewed as a pipeline or conduit for the efficient and effective flow of products/materials, services, information, and financials

Importance of scm

Importance of SCM

  • Dollars

    • SCM expenses average 25% of U.S. corporate budgets

    • Dollar value of U.S. inventory in 2004 equal to U.S. federal budget

  • Leverage

    • Cost reductions in SCM go directly to bottom line

    • Efficiency is amplified in ROA

    • SCM have direct effect on customer perceptions (timely delivery, quality, etc)

  • Opportunity

    • SCM has much opportunity for improvement in most organizations

Ummc supply chain mgmt


Ummc supply chain mgmt

Development of the Supply Chain Concept

Physical Distribution Concept

Logistics Management Concept

Value Chain Concept


Physical distribution concept

Physical Distribution Concept

  • 1950s and 1960s

  • Focused on outbound logistics

    • Logical due to value of finished goods

  • Total systems costs and analyzing tradeoff scenarios

Logistics management concept

Logistics Management Concept

  • 1970s and 1980s

  • LMC integrated inbound logistics into the Physical Distribution Concept

  • Came about due to deregulation of transportation

  • More international sourcing also led to focusing on inbound side

Ummc supply chain mgmt

Logistics Management Concept

Physical supplyPhysical distribution

materials managementoutbound logistics

inbound logistics

Value chain concept

Value Chain Concept

  • 1990s

  • Further deregulation in the areas of finance and communication

  • Developed as a tool for evaluating competitive advantage

  • Integrated sales, marketing, purchasing, and manufacturing with logistics.

Supply chain management

Supply Chain Management

  • Mid 1990’s to present

  • Globalization

  • Technology

  • Organizational consolidation

  • The empowered consumer

Ummc supply chain mgmt

Manufacturing Supply Chain

Supply chain management1

Supply Chain Management


Supply chain management2

Supply Chain Management

  • Organizational Consolidation

    • Move from adversarial relationships with suppliers to collaborative relationship

Supply chain management3

Supply Chain Management

  • The Empowered Consumer

    • Technology and globalization has shifted power to the consumer

    • This increases pressure on supply chain

An example in fairview system terms

An example in Fairview System terms…

Scm components

SCM Components

  • Financials

  • Inventory Management

  • Logistics and Distribution

  • Supply/Demand Management

  • SC Technology

  • Production Management

  • Quality Control and Improvement

  • Purchasing



  • Basic Business Financials

    • Income Statement

    • Balance Sheet

    • Cash Flow Statement

    • General Ledger

      • Accounting Practices

      • ROA/ROI



The Supply Chain Financial Impact

  • A major financial objective for any organization is to produce a satisfactory return for stockholders.

  • The absolute size of the profit must be considered in relation to the stockholders’ net investment, or net worth.

  • An organization’s financial performance is also judged by the profit it generates in relationship to the assets utilized, or return on assets (ROA).

  • The supply chain plays a critical role in determining the level of profitability in an organization.

Inventory management

Inventory Management

  • In U.S. Inventory investment averages about 14% of GDP or $2.1 Trillion

  • When to Order/How much to Order

  • Balancing Supply with Demand

  • Large Impacts on Financials and Customer Service

Inventory management1

Inventory Management

  • Critical Decision-making for Inventory Control

    • Quantity Issues

    • Classifying Inventory

    • Timing Issues

    • Systems for Inventory Control

      • Continuous/Periodic

        • Two Bin/Kanban

Inventory management2

Inventory Management

  • Approaches of Inventory Management

    • JIT

    • MRP and DDMRP

    • EOQ

      • Fixed Order Quantity/Order Interval

        • Condition of certainty

        • Condition of Uncertainty

Logistics distribution


  • In U.S. Logistics and Distribution accounts for 8.3% of GDP or $1.2 Trillion (2010)

  • The physical flow of goods and services up and down the supply chain

  • Critical to demand fulfillments

Supply demand management

Supply/Demand Management

  • Focused efforts to manage input fluctuations

  • Focused efforts to process, influence, manage, and anticipate customer demand


Supply demand management1

Supply/Demand Management

  • VMI

  • EDI

  • CPFR

  • Bullwhip Effect

  • Buyer/Seller Relationships

Sc technology

SC Technology

  • Supports critical supply chain capabilities and strategies

  • A well-designed SCIS framework links people, processes, and technology in a manner that provides actionable information and enhances decision making.

Sc technology1

SC Technology

Production management

Production Management

  • Production Systems

    • Made to Stock (MTS)

    • Assemble to Order (ATO)

    • Make to Order (MTO)

    • Engineer to Order (ETO)

  • Push/Pull Systems

Quality control and improvement

Quality Control and Improvement

  • Service Process Design/Analysis

    • Factors Influencing Process Design

  • Strategic Importance

  • Continuous Process Improvement

  • Pareto Analysis

  • Ishikawa Diagrams

  • Modeling Principles

Quality control and improvement1

Quality Control and Improvement

  • Lean Principles

  • 6 Sigma

  • Benchmarking

  • Just-In-Time

  • TQM (Total Quality Management)

  • ISO:9000

Quality control and improvement2

Quality Control and Improvement



  • Purchasing Activities

  • Strategic Sourcing

  • Vendor Management

  • Total Cost of Ownership

Ummc supply chain mgmt

Supply Chain Issues

So what can we do

So what can we do?

  • Control our costs

    • Reduce Pricing to reduce cost

    • Reduce variation/standardize product to reduce costs

    • Manage our Inventory

Ummc supply chain mgmt

6 Drivers of Supply Chain Excellence

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