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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

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

Logistics Management Concept

Physical supply Physical distribution

materials management outbound 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
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
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.
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
  • Purchasing Activities
  • Strategic Sourcing
  • Vendor Management
  • Total Cost of Ownership
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