30B210-B-6 - Supply Chain Management Introduction lecture 1

Introduction lecture 1

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

- raw materials manufacturers

- component and intermediate manufacturers

- final product manufacturers

- wholesalers and distributors

- retailers

 connected by transportation and storage activities, and integrated through information, planning, and integration activities

Many firms have found that managing a vertically integrated firm – a firm whose business boundaries include former suppliers and/or customers – is quite difficult. Consequently, firms are selling off many business units and otherwise paring down their organization to focus more on core capabilities, while trying to create alliances or strategic partnerships with suppliers, transportation and warehousing companies, distributors and other consumers who are good at what they do.

Service supply chains?

They are bi-directional in nature (customers are also suppliers = customer-supplier duality)

What is supply chain management?

 the design and management of seamless, value-added processes across organizational

boundaries to meet the real needs of the end consumer  institute for supply management

 the coordinated set of techniques to plan and execute all steps in the global network used to

acquire raw materials from vendors, transform them into finished goods, and deliver both

goods and services to customers  logistics and supply chain management society

 the planning and management of all activities involved in sourcing and procurement,

conversion, and all logistics management activities .. also includes coordination with channel

partners, which can be suppliers, intermediaries, third party service providers and customers.

 council of supply chain management professionals.

Origins of supply chain management:

- 1950’s & 1960’s: manufacturers focused on mass production techniques as their principal cost reduction and productivity improvement strategies.

- 1960s-1970s: introduction of new computer technology lead to develoment of materials requirements planning (MRP) and manufacturing rescource planning (MRPII) to coordinate inventory management and improve internal communication.  they could now recognize and quantify the impact of high levels of inventories on manufacturing, storage and transportation costs

- 1980s & 1990s: intense global competition led manufacturers to adopt:

- supply chain management (SCM)

- just-in-time (JIT)

- total quality management (TQM)

- business process reengineering (BPR) = radical rethinking and

Redesigning of business processes to reduce waste and increase

Performance.

- 2000s and beyond: companies will focus on relationships, sustainability, and social responsibility

The companies will focus on improving supply chain capabilities with initiatives such as:

- third party service providers (3PLs)

- integrating logistics (sharing information with supply chain partners through the internet has enabled firms to integrate stocking, logistics, materials acquisition, shipping and other functions to create a more proactive and effective style of business management and customer responsiveness)

- using transportation to facilitate rapid response

What is supply chain management?

New paradigm : firm in a supply chain focuses activities in its area of specialization and enters into voluntary and trust-based relationships with supplier and customer firms.

> all participants in the supply chain benefit

> boundaries are dynamic and extend from ‘’the firm’s suppliers’ suppliers to its customers’ customers (second tier suppliers and customers)

> supply chains now deal with reverse logistics to handle returned products, warranty repairs, and recycling.