Introduction to Supply Chain Management

Supply chain management refers to the coordination of activities involved in making and moving a product.

It is the network of businesses and business processes involved in the creation and selling of a product, from suppliers that procure raw materials through retail outlets and customers.

Supply Chain process is divided into 2 parts:

Upstream and Downstream

The upstream portion of the supply chain includes :the organization's suppliers and the processes formanaging relationships with them.

The downstream portion consists of the organizations and processes for distributing and delivering products to the final customers.

The manufacturer also has internal supply chainprocesses for transforming the materials and services furnished by

suppliers into finished goods and for managing materials and inventory.

Goal of SCM

• Supply chain management is concerned with the efficient integration of suppliers, factories, warehouses and stores so that merchandise is produced and distributed:

– In the right quantities– To the right locations – At the right time

• In order to– Minimize total system cost – Satisfy customer service requirements

Inefficiencies in the supply chain :

could include parts shortages, underutilized plant capacity, excessive inventory, or runaway transportation costs, Which are caused by inaccurate or untimely information and can waste as much as 25% of operating costs.

Uncertainties also arise because many events cannot be foreseen—product demand, late shipments from suppliers, defective parts or raw material, or production process breakdowns.

Drivers of Supply Chain Performance

• Facilities– places where inventory is stored, assembled, or

fabricated– production sites and storage sites

• Inventory– raw materials, WIP, finished goods within a supply chain– inventory policies

• Transportation– moving inventory from point to point in a supply chain– combinations of transportation modes and routes

• Information– data and analysis regarding inventory, transportation,

facilities throughout the supply chain– potentially the biggest driver of supply chain

performance

Classification of supply chain s/w

a)Supply chain planning system:

1) Generate demand forecasts for a product.2) Develop sourcing and manufacturing plans for that product3) Make adjustments to production and distribution plans, and4) Share information with relevant supply chain members.One of the most important supply chain planning functions is demand planning, which determines how much product a business needs to make to satisfy all of its customers' demands.

b) Supply chain execution system:

Physical flow of products through distribution centers and warehouses to ensure thatproducts are delivered to the right locationsin the most efficient manner.