Lecture 1: Introduction to supply chain management
What is a supply chain?
• Flow of products and services from:
o Raw materials manufacturers.
o Intermediate products manufacturers.
o End product manufacturers.
o Wholesalers and distributors and
o Retailers.
• Connected by transportation and storage activities.
• Integrated through information, planning, financial and coordination activities.
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 requirements.
Other definitions
• The design and management of seamless, value-added process across organizational
boundaries to meet the real needs of the end customer (Institute for Supply Management)
• 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 Supply Chain Council)
Challenge: (a) Coordination among partners to (b) match supply with demand
,The SCM network
The goods – services continuum
• Many firms offer a combination of goods and services.
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 costs need to be considered.
o Suppliers’ suppliers
o Customers’ customers
• Efficiency and cost-effectiveness throughout the system is required.
o System level approach
• Multiple levels of activities
o Strategic – tactical – operational
,What type of questions does SCM address?
What activities constitute SCM?
Strategic:
Tactical & Operational:
, Part 1: Supply chains: an evolutionary perspective
In the beginning
➢ Fewer channel intermediaries
➢ Sole suppliers
➢ Limited interactions and transactions
Henry Ford & fully integrated supply chains
➢ Vertical integration
➢ Firm boundary was drawn to cover as many activities as possible
➢ Ford Rouge plant
Disintegrated with geographical proximity emergence of the Toyate City concept
➢ Component and material suppliers are different firms
➢ Located in the same geographical area
➢ Toyota city
• Early supply chains
o Geographical proximity
o Integrated ownership structures
• Why
What is a supply chain?
• Flow of products and services from:
o Raw materials manufacturers.
o Intermediate products manufacturers.
o End product manufacturers.
o Wholesalers and distributors and
o Retailers.
• Connected by transportation and storage activities.
• Integrated through information, planning, financial and coordination activities.
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 requirements.
Other definitions
• The design and management of seamless, value-added process across organizational
boundaries to meet the real needs of the end customer (Institute for Supply Management)
• 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 Supply Chain Council)
Challenge: (a) Coordination among partners to (b) match supply with demand
,The SCM network
The goods – services continuum
• Many firms offer a combination of goods and services.
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 costs need to be considered.
o Suppliers’ suppliers
o Customers’ customers
• Efficiency and cost-effectiveness throughout the system is required.
o System level approach
• Multiple levels of activities
o Strategic – tactical – operational
,What type of questions does SCM address?
What activities constitute SCM?
Strategic:
Tactical & Operational:
, Part 1: Supply chains: an evolutionary perspective
In the beginning
➢ Fewer channel intermediaries
➢ Sole suppliers
➢ Limited interactions and transactions
Henry Ford & fully integrated supply chains
➢ Vertical integration
➢ Firm boundary was drawn to cover as many activities as possible
➢ Ford Rouge plant
Disintegrated with geographical proximity emergence of the Toyate City concept
➢ Component and material suppliers are different firms
➢ Located in the same geographical area
➢ Toyota city
• Early supply chains
o Geographical proximity
o Integrated ownership structures
• Why
