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SUPPLY CHAIN MANAGEMENT

SUPPLY CHAIN MANAGEMENT. INTRODUCTION. Value Adding Process in Firms. Inputs. Outputs. Material. Product. Workforce. Value Adding Process. Capital. Service. Knowledge. What is Supply Chain Management?.

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SUPPLY CHAIN MANAGEMENT

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  1. SUPPLY CHAIN MANAGEMENT INTRODUCTION

  2. Value Adding Process in Firms Inputs Outputs Material Product Workforce Value Adding Process Capital Service Knowledge

  3. What is Supply Chain Management? • “Supply chain management is a set of approaches utilized to efficiently integrate suppliers, manufacturers, warehouses, and stores, so that product is produced and distributed at the right quantities, to the right locations, and at the right time, in order to minimize system wide costs while satisfying service level requirements.”

  4. Logistics vs. Supply Chain Management • What is "Supply Chain Management?" Supply Chain Management is the integration of key business processes from end user through original suppliers, that provides products, services, and information that add value for customers and other stakeholders. • What is "Logistics Management?" 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 point of origin to point of consumption in order to meet a customers' requirements.

  5. Suppliers Manufacturers Distributors Retailers Customers Material, Information and Funds Flow A Simple Supply Chain Example Consumers Raw Material Sources

  6. A Supply Chain Example – More Complex Raw Material and Semi-Finished Products Suppliers Manufacturing Centres Distributors and Warehouses Consumers Material, Information and Funds Flow

  7. Plan Make Deliver Make Deliver Source Deliver Make Deliver Deliver Source Deliver Flows in a Supply Chain Why is it called “chain”? Material Information Supplier Customer Funds

  8. Location Transportation and logistics Inventory and forecasting Marketing and channel restructuring Sourcing and supplier management Information and electronic mediated environments Product design and new product introduction Service and after sales support Reverse logistics and green issues Outsourcing and strategic alliances Metrics and incentives Global issues Key Components of Supply Chain

  9. Decision Making in Supply Chain • Strategic level decisions – (long term) • Location, capacity, new product development, technology management • Scale: years • Tactical level decisions – (medium term) • Inventory policies, distribution channel, resource and product allocation • Scale: month- year • Operational level decisions – (short term) • Scheduling, vehicle assignment and routing, sourcing and production orders • Scale: minute, hour and days

  10. The Objective: The objective of SCM, is minimize the cost while making decisions. while keeping a reasonable service level customer satisfaction / quality / on time delivery, etc. A Key Concept: Integration • Systems Approach: • SCM takes into account every facility that has an impact on cost and customer service • The objective of SCM is to be cost-effective across the entire system [total costs: distribution (from supplier to manufacturers, from manufacturers to warehouses, from warehouses to retailers), inventories (raw material, WIP, finished goods), manufacturing costs] • In other courses the focus is on local minimization (inventory costs at a single location, distribution costs from one location to another). Here we should think in terms of the system-wide costs and service levels.

  11. Strategic Partnerships • Supply Chain Management requires a closer customer - supplier relationship. • Information Sharing (cost, demand data) • Investments for Co design of products • Co-process development and sharing the benefits.

  12. Strategic Partnerships • It’s a win-win game • Obtaining access to the distribution network, technological facilities and core competencies of the partners • Coordination will improve the efficiency • Global optimization will reduce the costs • Benchmarking management and human resources policies • Obtaining better data which will improve the planning • Building the confidence of our partners – Sharing Information – Enhancing collaboration in win-win situations

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