Supply Chain
Management
SESSION 1
BY
Saad Waqas
Operations & Productivity
Introduction
What is Supply? ? ? ? ? ? ? ? ? ?
Make (something needed or wanted) available to someone; provide.
Supply is a fundamental economic concept that describes the total amount of a
specific good or service that is available to consumers.
What is Chain? ? ? ? ? ? ? ?
A chain is a serial assembly of connected pieces.
Reference: Principle of Supply Chain Management 5th Edition by Wisner, Tan &
What is Supply Chain??????
Reference: Principle of Supply Chain Management 5th Edition by Wisner, Tan &
Basic Supply Chain Model
Reference: Principle of Supply Chain Management 5th Edition by Wisner, Tan &
Supply Chain Management? ? ? ? ? ? ? ? ? ?
Here are two definitions:
The design and management of seamless, value-added process across
organizational boundaries to meet the real needs of the end customer.
Institute for Supply Management
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
Reference: Principle of Supply Chain Management 5th Edition by Wisner, Tan &
Supply Chain Management? ? ? ? ? ? ? ? ? ?
Supply Chain Management is primarily concerned with
the efficient integration of suppliers, factories,
warehouses and stores so that merchandise is produced
and distributed in the right quantities, to the right
locations and at the right time, and so as to minimize
total system cost subject to satisfying customer service
requirements.
Reference: Principle of Supply Chain Management 5th Edition by Wisner, Tan &
Reference: Principle of Supply Chain Management 5th Edition by Wisner, Tan &
Importance of Supply Chain
Firms have discovered value-enhancing and Firms with Supply Chain Management:
long term benefits
Who benefits most? Firms with: Start with key suppliers
Large inventories Move on to other suppliers, customers,
Large number of suppliers and shippers
Complex products Integrate second tier suppliers and
Customers with large purchasing customers (second tier refers to the
budgets customer’s customers and the supplier’s
suppliers)
Reference: Principle of Supply Chain Management 5th Edition by Wisner, Tan &
Importance of Supply Chain
Cost savings and better coordination of resources are
reasons to employ Supply Chain Management
Reduced Bullwhip Effect- the magnified
reduction of safety stock costs based on
coordinated planning and sharing of information
Process Integration- Interdependent activities can
lead to improved quality, reduced cycle time,
better production methods, etc.
Reference: Principle of Supply Chain Management 5th Edition by Wisner, Tan &
Benefits of Supply Chain Management
This positively Contributes
Reduces affects inventory to overall
uncertainty levels, cycle increase in
& risks in time, business profitability
the supply processes & &
chain. customer competitive
service. advantage
Reference: Principle of Supply Chain Management 5th Edition by Wisner, Tan &
The Origin of Supply Chain Management
Reference: Principle of Supply Chain Management 5th Edition by Wisner, Tan &
Important Elements of Supply Chain
Management
• Long term relationships
• Supplier management- improve performance through
Purc • Supplier evaluation (determining supplier
hasin capabilities)
• Supplier certification (third party or internal
g certification to assure product quality and service
Tren requirements)
ds • Strategic partnerships successful and trusting
relationships with top-performing suppliers
Reference: Principle of Supply Chain Management 5th Edition by Wisner, Tan &
Important Elements of Supply Chain
Management
• Demand management- match demand to available
capacity
Oper • Linking buyers & suppliers via MRP and ERP
ation systems
• Use JIT to improve the “pull” of materials to reduce
s inventory levels
• Employ TQM to improve quality compliance among
Tren suppliers
ds
Reference: Principle of Supply Chain Management 5th Edition by Wisner, Tan &
Important Elements of Supply Chain
Management
• Transportation management- tradeoff decisions
between cost & timing of delivery/customer service via
Distri trucks, rail, water & air
• Customer relationship management- strategies to
butio ensure deliveries, resolve complaints, improve
n communications, & determine service requirements
Tren • Network design- creating distribution networks based
ds on tradeoff decisions between cost & sophistication of
distribution system
Reference: Principle of Supply Chain Management 5th Edition by Wisner, Tan &
Important Elements of Supply Chain
Management
• Supply Chain Integration- when supply chain
participants work for common goals. Requires intra-firm
functional integration. Based on efforts to change
Integ attitudes & adversarial relationships
ratio • Global Supply Chains- advantages that accrue from
sourcing from larger global market e.g., lower cost &
n higher quality suppliers. May involve operating
Tren exposure, which is risk found in foreign settings
ds • Supply Chain Performance Measurement- Crucial for
firms to know if procedures are working
Reference: Principle of Supply Chain Management 5th Edition by Wisner, Tan &
Important Definitions
The bullwhip effect on the supply chain occurs when changes in consumer demand causes the
companies in a supply chain to order more goods to meet the new demand. The bullwhip
effect usually flows up the supply chain, starting with the retailer, wholesaler, distributor,
manufacturer and then the raw materials supplier.
Safety stock is an additional quantity of an item held in inventory in order
to reduce the risk that the item will be out of stock
Safety stock inventory, sometimes called buffer stock, is a term used by inventory managers
to describe a level of extra stock that is maintained to mitigate risk of stock outs or (shortfall in
raw material or finished goods) due to uncertainties in supply and demand.
Reference: Principle of Supply Chain Management 5th Edition by Wisner, Tan &
Important Definitions
Benchmarking: the practice of copying what other business do best; studying how things are
done well in other firms to potentially make use of the same methods.
Business Process Reengineering (BPR): A radical rethinking and redesigning of
business processes that seeks to reduce waste and increase performance. The goal is
to create significant changes through assessment of current process, design of better
processes using modeling techniques, implementation of the new processes, and
continuing performance assessments
Integration: A Shared-process view of the supply chain that spans multiple
departments, processes and software applications for internal users and external
partners.
Reference: Principle of Supply Chain Management 5th Edition by Wisner, Tan &
Push Vs. Pull Process
Divided in to two categories..
Ma
ke t
Ma oO
ke t r
1. Executed in response to a customer order (Pull process) En g o S de r
in e e t o c k
2. Executed in anticipation of customer orders (Push process) r to
Ord
er
Reference: Principle of Supply Chain Management 5th Edition by Wisner, Tan &
Push Vs. Pull Process
Push
Execution is performed in anticipation of an order
Demand is forecasted
Proactive Process based on projected need/demand
Pull
Execution is performed in response to an order
Demand is actual and known with certainty
Reactive process based on actual need/demand
Reference: Principle of Supply Chain Management 5th Edition by Wisner, Tan &
SELF TEST
A. What types of organizations would benefit the most from practicing supply chain
management? What sorts of improvement could be expected?
B. What is the difference between an MRP system and ERP system?
C. What role does information play in supply chain management? Support your answer
with an example.
D. What is the triple bottom line.
E. What is demand management and why it is an important part of supply chain
management?
F. What does the term “Third Tier Supply” mean what about “Third Tier Customer”.
Reference: Operations management 12th Edition by Jay Heizer, Barry Render & Chuck
THANK
YOU
Video Links (if any
Topic Link
Push Vs. Pull Process [Link]
Supply Chain Management (Dr. Shujaat Mubarak) [Link]
