SCM Module1 Part 1
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Transcript of SCM Module1 Part 1
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Supply Chain Management
Module1
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What is a Supply Chain?
A supply chain consists ofall parties involved, directly orindirectly, in fulfilling a customer request Suppliers, manufacturers, transporters, warehouses, retailers, and
customers A supply chain includes all functions involved in receiving
and filling a customer request New product development, marketing, operations, distribution,
finance, and customer service
A supply chain is the entire process of moving a productor service from suppliers to customers
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Stages of a Detergent Supply Chain
CustomerWal-Mart
Store
Wal-Mart
or Third
Party DC
P&G or Other
Manufacturer
Pactiv
Corporation
Paper
Manufacturer
Timber
Company
Plastic
Producer
Chemical
Manufacturer
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Example: Wal-Mart
Customers Request:
Buying detergent,clothes, TV, ...
Wal-Mart
Stores
Wal-Mart
or third-party
distribution
centers
Procter & Gamble
Plastic Producer
Fabric Producer
Da-Fa Clothing, Inc. (China)
SONY Factory (Malaysia)
Electronics Components Producer
Chemical Producer
Zipper Producer
Thread Producer
Plastic Producer
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Example: Dell
Customers order
computers on
Dells website
Dell
Assembly
Plant
Monitors by SONY (Mexico)
Keyboards by Acer (Taiwan)
CPU by Intel (USA)
Other components
Dell is significantly revamping its entire supply
chain strategy and, in large measure, abandoning
its make-to-order model [April, 2008]
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Supply Chain Stages
A typical supply chain involves a variety ofstages
Manufacturer Distributor Retailer Customer Supplier
Most supply chains are actually supply networks
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Supply Chain Flows
Manufacturer Distributor Retailer Customer Supplier
Value-Added Services
Material/Product Flow
Funds/Demand Flow
Information Flow
Returns/Recylcing
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Supply Chain Cycle
Marketing
Product design
Suppliers
Manufacturing
Logistics
Customer
Reverse logistics
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The Objective of a Supply Chain
Supply chain value is the difference betweenwhat the final product is worth to the customerand the costs the supply chain incurs in filling thecustomers request
Supply chain profitability (orsupply chainsurplus) is the difference between the revenuegenerated from the customer and the overall costacross the supply chain
Maximize overall value created
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The Objective of a Supply Chain
Sources ofsupply chain revenue: Customer Best Buy receives $60 from a customer for a wireless router
Sources ofsupply chain cost: Flows of information,products, and funds between any pair of stages in thesupply chain Difference between $60 and the sum of all costs is the supply
chain profit or supply chain surplus
Supply chain profitability is the total profit to be shared
across all supply chain stages and intermediaries
Supply chain success should be measured by total supply
chain profitability, not profits at an individual stage
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The Importance of Supply Chain
Decisions Supply chain design, planning, and operation
play a significant role in the success or failure of afirm