Chapter 1 – p.

Introduction to
Supply Chain
Management

Le Thi Thanh Ngan, MSc

Le Thi Thanh Ngan, MSc

Chapter objectives
After completing this chapter, you should be able to:
 Describe a supply chain and define supply chain management.
 Describe the objectives and elements of supply chain management.
 Describe a brief history and current trends in supply chain
management.

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 Le Thi Thanh Ngan, MSc

Lecture outline
In this chapter, you will learn about:
1. Introduction
2. Supply Chain Management Defined
3. The Importance of Supply Chain Management
4. The Flows of in Supply Chain Management
5. Current Trends in Supply Chain Management
6. Summary

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What is a Supply Chain?

 Introduction to Supply Chains
A supply chain is a network of partners who collectively
convert a basic commodity (upstream) into a finished
product (downstream) that is valued by end‐customers.
(Alan Harrison and et., 2014)

A supply chain is the global network used to deliver

products and services from raw materials to end customers
through an engineered flow of information, physical
distribution, and cash” (Blackstone 2013)

Le Thi Thanh Ngan, MSc

Supply chain in manufacturing: Practice

❖ TOPIC: Research and determine the supply chain of fabrics in
Vietnam noting that Vietnamese fabrics are one of the main
exporting products.

❖ REQUIREMENTS:

✓ Can be presented in any form

✓ Indicate specifically the activities in

every stage
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 Le Thi Thanh Ngan, MSc

Supply chain in services

Supplier Manufacturer Warehouse Retailers Consumer

Distributor

Buy Make Move Sell Serve

things things things things things

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What is a Supply Chain?

A supply chain consists of the flow of products and services from:
 ?
 ?
 ?
 ?
 ?

Connected by ……………………
Integrated through…………………………..
 Le Thi Thanh Ngan, MSc

What is a Supply Chain?

Why don’t firms just become more vertically integrated ?

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Le Thi Thanh Ngan, MSc

Introduction to Supply Chain management

 For every business transaction, there is a
supplier and a customer and there are
activities, facilities and processes linking
the supplier to the customer.

 Supply chain management (SCM): The

management process of balancing these
links to deliver best value to the customer
at minimum cost and effort for the supplier

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 Le Thi Thanh Ngan, MSc

What is supply chain management?

Supply chain management is a set of approaches utilized to efficiently

integrate suppliers, manufacturers, warehouses, and stores, so that
merchandise 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.
- Simchi-Levi et al. (2003) -

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Le Thi Thanh Ngan, MSc

Introduction to Supply Chain management

materials equipment

supplier customer

• inventory & facilities management

• demand forecasting
• capacity management
• scheduling and quality management
facilities ➔ minimize customer queues
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 Le Thi Thanh Ngan, MSc

Introduction to Supply Chain management

airline company airport airline service agency you

• inventory & facilities management
• demand forecasting
• capacity management
• scheduling and quality management
The key objective of supply chain management is to provide
best value to the customer by measuring, planning and
managing all the links in the chain.
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Le Thi Thanh Ngan, MSc

Flows in a supply chain

Information flow
Reverse product flow

Supplier Manufacturer Warehouse Retailers Consumer

Distributor
Primary Secondary Secondary Secondary
product product product product
flow flow flow flow

Cash flow
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 Le Thi Thanh Ngan, MSc

DISCUSSION QUESTIONS
1. Can a small business like a local sandwich or bicycle shop benefit
from practicing supply chain management? What aspects would
they most likely concentrate on?
2. What types of organizations would benefit the most from practicing
supply chain management? What sorts of improvements could be
expected?

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 17

Importance of Supply Chain Management

Firms with large system inventories gain the most from successful
SCM
 Lower purchasing & carrying costs
 Better product quality
 Higher customer service levels
 Increased sales and profits

Le Thi Thanh Ngan, MSc

The process views of a supply chain

Planning and
Demand cycle Supply cycle
procurement cycle

Simplified process cycles in supply chain

Push process in supply chain Pull process in supply chain

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 Le Thi Thanh Ngan, MSc

The process views of a supply chain

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Le Thi Thanh Ngan, MSc

The process views of a supply chain

PUSH PULL

vs.
Make what’s needed when we
Make all we can just in case
need it
• Production approximation
• Production precision
• Based on forecasting
• Based on actual demand
• High production cost
• Waste reduction
• High inventory cost
• Low inventory cost
• Poor communication
• Better communication

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 Le Thi Thanh Ngan, MSc

Logistics vs Supply Chain Management

Supplier Manufacturer Warehouse Retailers Consumer

Distributor
Buy Make Move Sell Service
things things things things things
Procurement Production Transportation
or Purchasing Inventory
Warehousing
Operations management Distribution Marketing management
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Logistics management

Le Thi Thanh Ngan, MSc

Inbound and Outbound Logistics

Upstream processes Downstream processes

5/3/2023 Figures 1.2 and 1.3, p.10 22

 23

Origins of Supply Chain Management

24

Origins of Supply Chain Management (continued)

Today
Emphasis is being placed on the environmental and social impacts of
supply chains

 Sustainability - ability to meet the needs of current supply chain

members without hindering the ability to meet the needs of future
generations
 Triple bottom line – taking care of people, planet and profits
 25

Current Trends in Supply Chain Management

Supply Chain Analytics - examining raw supply chain data and

reaching conclusions or making predictions with the information

 Growth being pushed by the rise in computing capabilities and big data
 Huge volumes of data generated in business organizations including
retail, healthcare, manufacturing, and electronics

26

Current Trends in Supply Chain

Management
Most companies are trying to improve their supply chain
sustainability performance
 Can lead to
 enhance processes
 reduce costs
 increase productivity
 uncover product innovation
 achieve market differentiation
 improve societal outcomes
 27

Current Trends in Supply

Chain Management (continued)

Increasing Supply Chain Visibility

 Knowing exactly where products are, at any point in the supply
chain
 Inventory visibility is made easier by technology
 Sophisticated software applications for tracking orders,
inventories, deliveries, returned goods, and even employee
attendance

CONCLUSION
- A supply chain consists of

Supplier Manufacturer Distributor Retailer Customer

Upstream
Downstream

- aims to Match Supply and Demand,

profitably for products and services

SUPPLY SIDE DEMAND SIDE

achieves
The right
Product
+ + + +
Right
price
Right
Store
Right
Quantity
Right
Customer
+ Right
Time
= Higher
Profits
 Le Thi Thanh Ngan, MSc

Summary
Supply chain management is the integration of trading partners’ key business
processes from initial raw material extraction to the final or end customer,
including all intermediate processing, transportation and storage activities
and final sale to the end product customer. Today, the practice of supply chain
management is becoming extremely important to reduce costs and improve
quality and customer service, with the end objective of improving
competitiveness. Many firms are just now becoming aware of the advantages
of supply chain integration. Supply chain management is an outgrowth and
expansion of lean and Six Sigma activities and has grown in popularity and
use since the 1980s. The foundations of supply chain management can be
found in the areas of purchasing, production, logistics and process integration
or collaboration between trading partners. Finally, as markets, political forces,
technology and economic conditions change around the world, the practice of
supply chain management must also change and grow.

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