Supply chain management (SCM)

SCM is the active integration and co-

ordination of all supply chain
activities to provide customer with
the best value. Best value means
providing customer with a quality
product for a reasonable price.
 Objectives
1. Satisfy the customer
2. Minimizing the time
3. Increase supply chain surplus
4. Improving visibility demand
5. Reduces warehouse cost
6. Increase competitiveness and efficiency
7. Service orientation
8. System orientation
 Decision phases

Three categories
1. Supply chain strategy or design
2. supply chain planning
3. Supply chain operation
1. Supply chain strategy: decide how to
structure the supply chain over the next
several years.
 Chain configuration
 Resources allocated and
 Process at each stage should perform
2. Decision include :
 Location and capacity of production
 Warehousing facility
 The product to be manufactured
 The method of transportation to be made
available
 The type of information system to be utilized
 Supply chain planning
Planning decisions include
• Which market will be supplied from
which locations
• The subcontracting for manufacturing
• The inventory policies to be followed and
• The timing and size of marketing
promotions
 Supply chain operation
Decision related with
• Production to individual orders
• Set a date that an order is to be field
• Set delivery schedules of trucks and
• Place replenishment order
 Process view of supply chain
Two ways to view the process in a
supply chain
1. Cycle view and
2. Push / pull view
Cycle view :
• define the processes involved and the owners
of each process
• Process in a supply chain are divided in to a
series of cycles
• Cycles are performed at the interface between
two successive stages of supply chain
Supply chain process can be broken into four
process cycles
 Customer order cycle
 Replenishment cycle
 Manufacture cycle
 Procurement cycle
Supply chain process cycles
Customer
Customer
order cycle Retailer

Replenishment
cycle Distributor

manufacturing Manufacturer
cycle

Procurement
cycle Supplier