, Chapter 10 - Supply Chain Management
Supply Chain Management
• Things happening outside the company
• Obtaining materials and delivering products
• Supply chain manager
• Negotiating contracts
• Evaluating suppliers
• SCM activities are generally the same across di erent industries
Supply Chain Management explained
SCM is the management of the ow of information, products and services (material ow) across a
network of customers, enterprises and supply chain partners in order to attain the level of
synchronisation that will make it more responsive to customer needs while lowering costs.
Keys to e ective SCM
• Information
• Communication
• Co-operation / trust
Operations Management
• Things happening inside the company
• Operation manager
• Planning and overseeing daily operations and processes
• Operations management roles and responsibilities can vary widely on product or service the
business produces
Overview di erent types of industry’s
Industry 1.0
• 1784
• Mechanisation, steam power and weaving loom
Industry 2.0
• 1870
• Mass production
• Assembly line
• Electrical energy
Industry 3.0
• 1969
• Automation
• Computers
• Electronics
*During this module we focus on Industry 3.0, however there are some points covering industry
4.0 these days.
Industry 4.0
• Cyber physical systems
• Internet of things
• Network
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, Uncertainty and inventory
• A major objective of SCM: respond to uncertainty of customer demand without creating costly
excess inventory.
• Negative e ects of uncertainty
• Lateness
• Incomplete orders
• Inventory (= insurance against supply chain uncertainty)
Causes of uncertainty
• Inaccurate demand forecasting
• Long variable lead-times
• Late deliveries
• Incomplete shipments
• Product changes
• Batch ordering
• Price uctuations and discounts
• In ated orders
Supply chain nightmare
Can be explained with the bullwhip e ect
• Slight demand variability is magni ed as information moves upstream.
Upstream vs. Downstream
Upstream -> resources -> supply -> manufacture
Downstream -> sales > use > disposal
Often, di erent stages within the supply chain are referred to as upstream or downstream.
Upstream operations are those in which the materials ow into the organisation. Downstream
operations are those in which materials (mostly in the form of nished products) ow away from
the organisation to the customers.
https://mfgtec.org/supply-chain-explained/
Enablers to ght uncertainty
• Internet: Fast communication all around the world.
• RFID (AMAZON go)
• Build to order (BTO): direct-sell-to-customers model via the internet; extensive communication
with suppliers and customer.
• VMI
Risk management
Process for coping with supply chain uncertainty
• Evaluate / anticipate supply chain disruptions
• Plan for possible disruptions
Risk pooling
Risk are aggregated to reduce their impact
• Combine inventories from multiple locations
• Reduce parts and product variability (Eli W.)
• Create exible capacity
Supply chain integration
Collaborative planning, Forecasting and Replenishment (CPFR) = POOLING
• Two or more companies in a supply chain synchronise their demand forecasts into a single plan.
• Parties share data / information
• Past sale trends
• Point of scale data
• On-hand inventory
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