Supply chain management
COURSE OUTLINE:
Lecture 1
What is a supply chain?
• All companies who have to work together to get the product at the consumer.
• Supplier → factory → distributors → customers
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.
Other definitions:
• Institute for supply management: the design and management of seamless, value-added
process across organizational boundaries to meet the real needs of the end consumer.
• The supply chain council: 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.
The SCM network
, • Very big, complicated networks.
The goods – services continuum
• Delivering the right product, at the right time, and the right location.
• Many companies combine services and goods.
o Products are supported by services such as warranties and training
o Services are enhanced through the inclusion of products.
Key observations
• Every facility that impacts the costs need to be considered.
o Suppliers’ suplliers
o Customers’ customers
• Efficiency and cost-effectiveness throughout the system is required
o Increased pressure for sustainability
o Increased risk / disruptions require agility and resilience.
• Multiple levels of activities
o Strategic – tactical – operational
What type of questions does SCM addresses?
What activities constitute SCM → 3 levels
1. Strategic
• How do I select suppliers, how many suppliers, outsource or inhouse? (procurement)
, • Strategic is about these 2 things!
2. & 3: Tactical and operational
➢ Forecast demand: how can I use past data / available data to forecast demand.
➢ Plan & manage inventory: how much inventory do I need? How many do I have to
produce / buy? → high inventory = high cost!
➢ Plan production: how many do I produce to meet the requirements
These 3 are based on long term decision making
➢ Process orders
➢ Move product: how do I schedule delivery to customer?:
These 2 are based on daily / weekly decision making
Supply chains: an evolutionary perspective
In the beginning
➢ Fewer channel intermediaries
➢ Sole suppliers
➢ Limited interactions and transactions (customers)
Henry Ford & Fully integrated supply chains( industrial revolution)
➢ Vertical integration
➢ Firm boundary was drawn to cover as many activities as possible
➢ Ford Rouge plant → do as many as possible
, Disintegrated with Geographical Proximity
Emergence of the Toyota City concept
➢ Component and material suppliers are different firms
➢ They don’t own the companies to who they provide products; but they work very closely
with the suppliers who are located in the same area
➢ Located in the same geographical area
➢ Toyota city
Early supply chains
• Geographical proximity
• Integrated ownership structures
Why?
• Transportation slow and costly
• Communication and information exchange challenges
Now: it has changed!
Today’s supply chains
➢ Fragmented supply chains
➢ SKU proliferation → more companies offer customers a huge variety of products.
In contrast to Ford:
Porsche get his materials for a auto from many companies
Globally dispersed manufacturing
• Complexity of manufacturing
• A product has a lot of components from different countries → that is why the production
time can be very long. (i.e. fashion products) → up to 9 months
COURSE OUTLINE:
Lecture 1
What is a supply chain?
• All companies who have to work together to get the product at the consumer.
• Supplier → factory → distributors → customers
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.
Other definitions:
• Institute for supply management: the design and management of seamless, value-added
process across organizational boundaries to meet the real needs of the end consumer.
• The supply chain council: 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.
The SCM network
, • Very big, complicated networks.
The goods – services continuum
• Delivering the right product, at the right time, and the right location.
• Many companies combine services and goods.
o Products are supported by services such as warranties and training
o Services are enhanced through the inclusion of products.
Key observations
• Every facility that impacts the costs need to be considered.
o Suppliers’ suplliers
o Customers’ customers
• Efficiency and cost-effectiveness throughout the system is required
o Increased pressure for sustainability
o Increased risk / disruptions require agility and resilience.
• Multiple levels of activities
o Strategic – tactical – operational
What type of questions does SCM addresses?
What activities constitute SCM → 3 levels
1. Strategic
• How do I select suppliers, how many suppliers, outsource or inhouse? (procurement)
, • Strategic is about these 2 things!
2. & 3: Tactical and operational
➢ Forecast demand: how can I use past data / available data to forecast demand.
➢ Plan & manage inventory: how much inventory do I need? How many do I have to
produce / buy? → high inventory = high cost!
➢ Plan production: how many do I produce to meet the requirements
These 3 are based on long term decision making
➢ Process orders
➢ Move product: how do I schedule delivery to customer?:
These 2 are based on daily / weekly decision making
Supply chains: an evolutionary perspective
In the beginning
➢ Fewer channel intermediaries
➢ Sole suppliers
➢ Limited interactions and transactions (customers)
Henry Ford & Fully integrated supply chains( industrial revolution)
➢ Vertical integration
➢ Firm boundary was drawn to cover as many activities as possible
➢ Ford Rouge plant → do as many as possible
, Disintegrated with Geographical Proximity
Emergence of the Toyota City concept
➢ Component and material suppliers are different firms
➢ They don’t own the companies to who they provide products; but they work very closely
with the suppliers who are located in the same area
➢ Located in the same geographical area
➢ Toyota city
Early supply chains
• Geographical proximity
• Integrated ownership structures
Why?
• Transportation slow and costly
• Communication and information exchange challenges
Now: it has changed!
Today’s supply chains
➢ Fragmented supply chains
➢ SKU proliferation → more companies offer customers a huge variety of products.
In contrast to Ford:
Porsche get his materials for a auto from many companies
Globally dispersed manufacturing
• Complexity of manufacturing
• A product has a lot of components from different countries → that is why the production
time can be very long. (i.e. fashion products) → up to 9 months
