1/30/2015

Operations as a
Transformation Process
INPUT
Material
Machines
Labor
Management
Capital

TRANSFORMATION
PROCESS

OUTPUT
Goods
Services

Feedback & Requirements

LSM-306 Supply Chain Management

Evolution of Operations and Supply

Chain Management
Craft production
process of handcrafting products or services for
individual customers

Division of labor
dividing a job into a series of small tasks each
performed by a different worker

Interchangeable parts
standardization of parts initially as replacement parts;
enabled mass production

Evolution of Operations and

Supply Chain Management
Scientific management
systematic analysis of work methods

Mass production
high-volume production of a standardized product for
a mass market

Lean production
adaptation of mass production that prizes quality and
flexibility

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What is SC and SCM ?

What is SC and SCM ?

Contd..

Supply Chain (SC)

Supply Chain Management (SCM)
.

Flow of products and services from:

Raw materials, Intermediate products,
End product manufacturers,
Wholesalers and distributors and also
Retailers
Connected by transportation and
storage activities
Integrated through information,
planning, and integration activities
Cost and service levels

What is SC and SCM ?

. 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.

is a set of approaches utilized to

efficiently integrate suppliers,
manufacturers, warehouses, and
stores
So that merchandise is produced and
distributed

Contd..

Why need ?

What makes Supply Chain

and what we manage

a way to link and

balance the Supply
Demand
Cost effective

Supply

Demand

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Evolution of Supply Chain Management

Further Refinement of
SCM Capabilities

Importance of SCM understood by

some
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

SCM Formation/
Extensions
JIT, TQM, BPR,
Alliances

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

Inventory Management/Cost
Optimization
Traditional Mass Manufacturing

1950s

1960s

1970s

1980s

1990s

2000s

Beyond

Importance of SCM understood by

some
AMR Research
"The biggest issue enterprises face today is
intelligent visibility of their supply chains
both upstream and down"
Forrester Research
"Companies need to sense and proactively
respond to unanticipated variations in supply
and demand by adopting emerging
technologies such as intelligent agents. To
boost their operational agility, firms need to
transform their static supply chains into
adaptive supply networks "

The Supply Chain Council

Importance of SCM understood by

some
Gartner Group
" By 2004. 90% of enterprises that fail to apply
supply-chain management technology and
processes to increase their agility will lose
their status as preferred suppliers "
Open ended statement, Agility can be increased
continuously.

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Supply Chain Network (SCN)

SCM Definition
Material Flow

Supplier
Source

Converter

Distributor

Retailer

Distributor

End-User

Converter
Supplier

Consumers

Value-Added Services
Funds/Demand Flow

The system of organizations, people,

technology, activities, information and resources
involved in moving a product or service from
supplier to customer.
Transform natural resources, raw materials and
components into a finished product that is
delivered to the end customer.
Just-in time , cost effective
Resilience is an objective function for SCN

Information Flow
Reuse/Maintenance/After Sales Service Flow

Supply Chain Management Network

SCM - Network Perspective

Suppliers

Manufacturers Distributors

Retailers

R
Distributor

Supplier
Supplier

R
R

Plant
R

Supplier

Distributor

R
R

c
u
s
t
o
m
e
r
s

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Supply Chain Network Flows

Current Supply Chains are Networks

Real-Time Access to SCM Information is Critical to Maintain CostEfficient Operations

Components of SCM
The major components to the SCM are
Supplier Network or Supply Chain
Enterprise
Distribution Network
Customers

Components of SCM (2)

Upstream Supply Chain
Organizations first tier suppliers & their
suppliers.
Internal Supply Chain
Processes used by an organization to
transform their inputs to outputs.
Downstream Supply Chain
Processes involved in delivering the
product/service to the final customers.

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SCM - Flows Perspective

Supply Chain stages

Supplier

Raw Material
Manufacture

SCM Stages perspective

Manufacturer

Component
Manufacture

Distriubtor

Component
Distribution

Retailer

Customer

Sub Contractor
Manufacture

OEM
Producer

Key Issues in Supply Chain

Management
Supply Chain Development Chain

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Key Issues in Supply Chain

Management

Supply Chain Processes & Functions

Material Requirement Planning

Chain
Distribution Network Configuration
Inventory Control
Production Sourcing
Supply Contracts
Distribution Strategies

Strategic Partnering
Outsourcing and Off shoring
Product Design
Information Technology
Customer Value
Smart Pricing

Supply
Supply
Supply
Both
Supply
Development
Development
Development
Supply
Both
Supply

Global Optimization

Managing Risk and

Uncertainty

Component
Requirement

Demand Forecasting
Demand Planning

Production
Plan

Y
Y
Y
Y
Y
Y
Y
Y
Y

Y
Y

Y
Y
Y

Supplier

Plant

Warehouse

Logistics

Retailer

Order Management

Supply Chain Processes & Functions

Examples of supply chain

Li & Fung SUPPLY CHAIN