The Concept of “Supply Chain Management”The Concept of Supply Chain Management – where it came from?Slide 3What is the Supply Chain Management concept?What does the Supply Chain Concept consist of?Slide 6Types of Supply Chain ConfigurationsDirect Supply ChainExtended Supply ChainUltimate Supply ChainThe management of the Supply Chain – What is it?Slide 12Slide 14Slide 15Slide 16Slide 17Key Attributes of Supply Chain ManagementSlide 19Typical Supply ChainWith all that have been said previously, What does this Mean?Supply Chain Management TrendsDemand Driven ExcellenceDemand Driven Overlapping PrinciplesOperational and Innovation ExcellenceSlide 26Slide 27Slide 28The Hierarchy of Supply Chain Metrics: Operational ExcellenceThe Hierarchy of Supply Chain Metrics: Innovation ExcellenceLean ManufacturingSlide 32Radio Frequency IdentificationRFID in PracticeTransportation & LogisticsSlide 36Supply Chain Top 10 CompaniesFinancial Metrics Used to Rank SCM Top 10Supply Chain Management - ChallengesSlide 40RecommendationsSlide 42BibliographyThe Concept of “Supply Chain Management” EIN5346 Logistics ManagementMendez LynchDonovan RichardsMaurice RobinsonVaughn MignottThe Concept of Supply Chain Management – where it came from? The concept of Supply Chain Management is a relatively new concept, prior to the 1990s in relation to both:-Academic Literature, and -Practitioner LiteratureRecognition: The early to mid-1990s witnessed a growing recognition that there could be value in coordinating the various business functions, both:-Within Organizations, and -Across Organizations•With this recognition, came into being the Philosophy of “Supply Chain Management."Recognition (contd):What is the Supply Chain Management concept?•The Supply Chain Management Concept is that concept that encompasses all activities associated with:i. Flow and transformation of Goods – From the raw material stage (extraction) through to the end userii. Information flows to and from the end userWhat does the Supply Chain Concept consist of?•The Supply Chain Concept consists of all parties involved (directly and/or indirectly), in fulfilling customers’ requests. The parties involved are:-Manufacturers-Suppliers-Transporters-Warehouses-Retailers-Customers•The Supply Chain Concept may also include:-New product development-Marketing-Operations-Distribution-Finance-Customer serviceSupply Chain Concept (contd)Types of Supply Chain Configurations Three types of supply chain configurations are looked at. These are:▫Direct Supply Chain▫Extended Supply Chain▫Ultimate supply chainDirect Supply Chain Source – Prof. Dr. Ted Lee’s Class Presentation - 2010Supplier Organization Customer•2 Source – Prof. Dr. Ted Lee’s Class Presentation - 2010Extended Supply ChainSupplierOrganizationCustomerSupplier’ssuppliersCustomer’scustomersUltimate Supply ChainSupplierOrganizationCustomerUltimatesupplierUltimatecustomerFinancial Provider Source – Prof. Dr. Ted Lee’s Class Presentation - 2010Market Research3rd Party Logistic SupplierThe management of the Supply Chain – What is it? Supply chain management, according to the Council of Supply Chain Management Professionals, is the: Planning and Management of all activities involved in the following:-Sourcing and procurement-Conversion-Logistics managementThis involves coordination, and collaboration with channel partners such as:-Suppliers-Intermediaries-Third party service providers, and-Customers In general, Supply Chain Management integrates supply and demand management within and across organization(s)Management of the Supply Chain (contd)Why Manage the Supply Chain?Companies that excel in supply chain management perform BETTER in every financial measure of success • Supply-chain excellence improves demand-forecast accuracy, which results in approximately: 5% higher profit margin 15% less inventory up to 17% stronger “perfect order” ratings 35% shorter cash-to-cash cycle times than the competitionSource: BusinessWeek (2004)1. Planning: • The strategic portion of supply chain management. • A strategy for managing all the resources that goes toward meeting customer demand for your product or service.• Balances aggregate demand and supply to develop a course of action which best meets the requirements for:-Sourcing- Production, and-DeliveryFIVE BASIC COMPONENT OF SUPPLY CHAIN MANAGEMENT2. Sourcing: •Choose the suppliers that will deliver the goods and services you need to create your product or service. •Develop a set of pricing, delivery and payment processes with suppliers and create metrics for monitoring and improving the relationships.•Put together processes for managing the inventory of goods and services you receive from suppliers.BASIC COMPONENT OF SUPPLY CHAIN MANAGEMENT (contd)3. Making: (The manufacturing step. )•Schedule the activities necessary for production, testing, packaging and preparation for delivery. •Is the most metric-intensive portion of the supply chain, it measures- Quality levels- Production output, and- Worker productivity4.Delivering: ( The "logistics” portion of SCM. )It Involves:- Coordinating the receipt of orders from customers- Developing network of warehouses- Picking carriers to get products to customers, and - Set up an invoicing system to receive payments.BASIC COMPONENT OF SUPPLY CHAIN MANAGEMENT (contd)5.Return: (The problem part of the supply chain. )• Create a network for receiving defective and excess products back from customers•Supporting customers who have problems with delivered products. BASIC COMPONENT OF SUPPLY CHAIN MANAGEMENT (contd)Key Attributes of Supply Chain Management•Customer Power – Customer has become highly knowledgeable about individual organization and its product as well as about competing organizations and products•Long-term Orientation – Seeks relational exchanges rather than transaction exchanges•Leveraging Technology – Supply chains can be very complex entities which require appropriate technology to maximize shareholder wealth and reduce costs. This as opposed to what obtained historically.•Enhanced communication across Organization –Accurate, real time, seamless information flow within and across organizations is necessary as Supply chain relies on high volumes of information•Inventory Stock – Better control flow of
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