While many firms are part of supply chain not all are managed in any truly coordinated fashion. Many firms within supply chain wants to work independently. Firms with large system inventories, many suppliers, complex product assemblies and highly valued customers benefit most from the practice of supply chain management. For these firms, even moderate supply chain management success can mean lower purchasing and inventory carrying costs, better product quality and higher levels of customer service—all leading to more sales.

1. SUPPLY CHAIN
MANAGEMENT

2. While many firms are part of supply chain not all are managed in any
truly coordinated fashion.
Many firms within supply chain wants to work independently.
Firms with large system inventories, many suppliers, complex
product assemblies and highly valued customers benefit most from
the practice of supply chain management.
For these firms, even moderate supply chain management success
can mean lower purchasing and inventory carrying costs, better
product quality and higher levels of customer service—all leading to
more sales.
IMPORTANCE OF SUPPLY CHAIN
MANAGEMENT

3. Supply chain managers can start with small efforts with just one key
supplier.
Then include more supply chain participants such as other important
suppliers, key customers and logistics services.
Finally, supply chain management efforts can include second-tier
suppliers and customers.
More Coordination better Supply Chain better Profits
Cost savings and better coordination of resources are reasons
to employ Supply Chain Management
IMPORTANCE OF SUPPLY CHAIN
MANAGEMENT

4. IMPORTANCE OF SUPPLY CHAIN
MANAGEMENT

5. THE ORIGINS OF SUPPLY CHAIN
MANAGEMENT IN THE U.S.

6. THE ORIGINS OF SUPPLY CHAIN
MANAGEMENT IN THE U.S.
1950s & 1960s
U.S. manufacturers focused on cost reduction and productivity improvement
strategies
1960s-1970s
Introduction of new computer technology lead to development of Materials
Requirements Planning (MRP) to coordinate inventory management.
1980s & 1990s
Intense global competition led U.S. manufacturers to adopt
Supply Chain Management along with
Just-In-Time (JIT),
Total Quality Management (TQM), and
Business Process Reengineering (BPR) practices

7. THE ORIGINS OF SUPPLY CHAIN
MANAGEMENT IN THE U.S.
2000s and Beyond
Industrial buyers will rely more on third-party service providers to improve
purchasing and supply management
Wholesalers/retailers will focus on transportation and logistics more & refer
to these as quick response, service response logistics, and integrated
logistics

8. IMPORTANT ELEMENTS OF SUPPLY
CHAIN MANAGEMENT
Purchasing- Supplier alliances, supplier management,
strategic sourcing
Operations- Demand management, MRP, ERP, JIT,
TQM
Distribution- Transportation management, customer
relationship management, network design,
service response logistics
Integration- Coordination/Integration activities, global
integration problems, performance
measurement

9. IMPORTANT ELEMENTS OF SUPPLY
CHAIN MANAGEMENT
Purchasing Element:
Traditional purchasing strategies emphasized on many
suppliers, competitive bidding and short-term contracts. Now
trend shifting towards Long term relationships
Supplier management- improve performance through-
Supplier evaluation (determining supplier capabilities)
Supplier certification (third party or internal certification to assure
product quality and service requirements ISO Certifications)
Strategic partnerships- successful and trusting relationships
with top-performing suppliers

10. IMPORTANT ELEMENTS OF SUPPLY
CHAIN MANAGEMENT
Operations Element:
• Demand management- match demand to available capacity
• Linking buyers & suppliers via MRP and ERP systems
• Use JIT to improve the “pull” of materials to reduce inventory levels
• Employ TQM to improve quality compliance among suppliers and
internal production activities.

11. Retailers like Wal-Mart, for example, scan the barcodes of the products purchased,
causing the local store’s MRP system to deduct units from inventory until a preset
reorder point is reached. When this occurs, the local computer system automatically
contacts Wal-Mart’s regional distribution center’s MRP system and generates an
order. At the distribution center, the order is filled and sent along with other orders to
the particular Wal-Mart. Eventually, the inventory at the distribution center needs
replenishing, and at that time, the distribution center’s MRP system automatically
generates an order with the manufacturer who sells the product to Wal-Mart. This
order communication and inventory visibility may extend farther back up the supply
chain, reducing the likelihood of stock outs or excess inventories.

12. IMPORTANT ELEMENTS OF SUPPLY
CHAIN MANAGEMENT
Logistics Element:
• Transportation management- tradeoff decisions between cost &
timing of delivery/customer service via trucks, rail, water & air
• Customer relationship management- strategies to ensure
deliveries, resolve complaints, improve communications, &
determine service requirements
• Network design- creating distribution networks based on
tradeoff decisions between cost & sophistication of distribution
system
• For example, a firm may utilize a large number of regional or local
warehouses in order to deliver products quickly to customers. The
transportation cost from factory to warehouse, the inventory holding
cost and the cost to build and operate warehouses would be quite
high, but the payoff would be better customer service.

13. IMPORTANT ELEMENTS OF SUPPLY
CHAIN MANAGEMENT
Integration Element: (Most Important Element)
• Supply Chain Integration- when supply chain participants work
for common goals. Requires intrafirm functional integration. Based
on efforts to change attitudes & cooperative relationships
• Global Supply Chains- advantages that accrue from sourcing
from larger global market e.g., lower cost & higher quality suppliers.
May involve operating exposure, which is risk found in foreign
settings
• Supply Chain Performance Measurement- Crucial for firms to
know if procedures are working

14. THAT’S ALL