Introduction to

Supply Chain
Management

Presented by Erlangga Arfan, MSc

Supply Chain Management Lecture
Surya University
2016
Hello!
I am Erlangga Arfan
◉  Working as Division Head of Information Technolgy & Supply Chain
at PT Bakrie Building Industries, Jakarta
◉  Previous working at Oracle Indonesia, Ericsson Indonesia
◉  Master Degree in Supply Chain Management from Chalmers
University of Technology, Sweden and Bachelor Degree in
Mechanical Engineering from University of Indonesia
◉  Married with one son 7 years old loving to play drums
◉  You can find me at erlangga.arfan@gmail.com
 Big concept
Supply Chain Management?
 “Over time this unwieldy monster
became increasingly expensive,
unmanageable, and horrendously
unprofitable”
(Peter Drucker 1990 – Perceptions
of Ford’s River Rouge plant)

“
Agenda

◉ What is the Supply Chain Management?

◉ Understanding Supply Chain Management
◉ What is the Supply Chain Management?
◉ Supply Chain Network
◉ Unit of Analysis in SCM
◉ Lecture Plan
1 What is the Supply Chain Management?
 What is the Supply Chain Management?

Answer
1.  ?
2.  ?
3.  ?
4.  ?
5.  ?
2 Understanding Supply Chain Management
Understanding Supply Chain Management

The Ford Factory

 Understanding Supply Chain Management

Car Industry Transformations

•  Establishment of the Industry (The pre-Ford)

Many small and local assemblers

•  The Ford Factory

Mass-Production and Vertical Integration

•  Outsourcing and core competence

Increasing use of supplier capabilities
 Understanding Supply Chain Management

I The Pre-Ford Car Industry

•  Early 1900s: 200 US car-assemblers

•  Craft system relying on external resources
•  Early cars cloud easily put together from components developed
for other purposes such as bicycle wheels or form variations on
know themes, such as wooden bodies
•  Frames, axles, motors, radiators, electrical systems were
available – ready to install
Understanding Supply Chain Management

The pre-Ford Network -

Car assembly with
strong and weak
connections
 Understanding Supply Chain Management

II The Ford Car Industry (Modern Business Enterprise-MBE)

•  Cost rationalization: Mass production

•  Coordination: Integrating the flow of materials through the plant:
economics speed
•  Control:
1.  Ownership of all strategic resources
2.  Avoiding dependence on other companies
3.  Using sub-contractors rather than suppliers
•  Innovation: Cross-functional benefits
 Understanding Supply Chain Management

About Henry Ford’s Idea

•  He built his own steel mill and glass plant

•  He founded plantation in Brazil to grow rubber
•  He bought the railroad that brought supplies to River Rouge and
carried away finished cars
•  He even toyed with the idea of building his own service center
nation-wide and staffing them with mechanics trained in Ford-
owned schools
Understanding Supply Chain Management

FORD T1 FORD T2
 Understanding Supply Chain Management

Technology changes go hand-in-hand with

organizational changes

•  T1: Efficient mass production possible through new

manufacturing techniques
•  T2: Mass distribution made possible through a “revolution in the
infrastructure of communication and transportation”
•  Organizational innovation in the MBE:
1.  The visible hand – the internal hierarchy
2.  The divisionalized company
Understanding Supply Chain Management

Movie
Understanding Supply Chain Management
 Understanding Supply Chain Management

Crack in the wall of the MBE

•  Expansion of the technology frontier: New areas and increasing

relatedness
•  Impossible to cover “all” technologies
•  MBE must grow to maintain control – upstream, downstream,
merger & acquisition with competitors
•  Standardized exchange: Innovation in the MBE received little
stimulus from outside
•  Lack of economies of specialization
•  Large hierarchies became inflexible
 Understanding Supply Chain Management

Call for new business recipes

•  Organizational changes were required to handle ongoing

technological changes
•  Increasing buyer interest in customized and tailor-made
solutions
•  Opportunities for reorganization of activity structures
1.  Flexible manufacturing techniques
2.  A new revolution in the infrastructure for communication and
transportation
 Understanding Supply Chain Management

III A new business recipe: Reduce ownership integration

Ownership integration replaced by strong

connection across boundaries of firms

•  Activity links: Process Integration

•  Resources ties: Knowledge combining
•  Actor bonds: Human interaction
Understanding Supply Chain Management
Understanding Supply Chain Management
3 What is the Supply Chain Management?
 What is the Supply Chain Management?

Answer
1.  ?
2.  ?
3.  ?
4.  ?
5.  ?
4 Supply Chain Network
 Supply Chain Network
Supply Chain Network A

Competitor

Supplier of
Equipment Distributor 1 Retailer

Supplier to Supplier of
Supplier Key Component Focal Company

Supplier to Supplier of
Supplier Component
Distributor 2 End Customer

Supplier of
Materials
Complementary
Supply Chain Network B Producer
 Supply Chain Network

Supply Chain Network A

Competitor

•  Activity links: Process Integration Supplier of

Equipment

Distributor 1 Retailer

•  Resources ties: Knowledge combining Supplier to

Supplier
Supplier of
Key Component Focal Company

•  Actor bonds: Human interaction Supplier to

Supplier
Supplier of
Component

Supplier of
Materials
Distributor 2 End Customer

Complementary
Supply Chain Network B Producer
 Supply Chain Network

Activity Links: Process Integration

•  In the MBE: The ability to integrate and coordinate the flow of

materials through the plant
•  Now: Across firm boundaries
Coordination extended to include customers and suppliers:
1.  Just In Time (JIT)
2.  Collaborative Planning, Forecasting and Replenishment (CPFR)
Supply Chain Network
End product related activity structure

activity

end product
 Supply Chain Network

Resources Ties: Knowledge Combining

•  Firm focus on core capabilities and outsource operation to suppliers

•  Because of increasing relatedness among technologies firms must
rely on external organizations to maintain access to those
complementary resources which they require but no longer wish to
control
Supply Chain Network
Resource structure

Business unit

Facility
Relationship

Product
 Supply Chain Network

Actor Bonds: Human Interaction

•  Cross-functional teams involving people from the buyer and the

suppliers
•  Effectives means of communication
•  Supplier assistance and training programs

Mutual teaching and learning between the buying firm and the suppliers
Supply Chain Network
Actor structure

R&D Buying Firm

Logistics
Design
Procurement
•  Conflict and co-operation
•  Power and dependence
•  Trust and commitment

Sales
R&D Logistics

Selling Firm
 Supply Chain Network

Supply Chain Network A

Competitor

•  Activity links: Process Integration Supplier of

Equipment

Distributor 1 Retailer

•  Resources ties: Knowledge combining Supplier to

Supplier
Supplier of
Key Component Focal Company

•  Actor bonds: Human interaction Supplier to

Supplier
Supplier of
Component

Supplier of
Materials
Distributor 2 End Customer

Complementary
Supply Chain Network B Producer
 Supply Chain Network
Supply Chain Network A

Competitor

Supplier of
Equipment Distributor 1 Retailer

Supplier to Supplier of
Supplier Key Component Focal Company

Supplier to Supplier of
Supplier Component
Distributor 2 End Customer

Supplier of
Materials
Complementary
Supply Chain Network B Producer
 Supply Chain Network

Flow in Supply Chain Management

•  (1) Physical – the actual movements and flows within and

between firms, transportation, service mobilization, delivery
movement, storage, and inventories.
•  (2) Financial – the flows of cash between organizations,
incurrence of expenses, and use of investments for the entire
chain/network, settlements, A/R and A/P processes and
systems.
•  (3) Informational – the processes and electronic systems, data
movement triggers, access to key information, capture and use
of data, enabling processes, market intelligence.
 Supply Chain Network

Flow in Supply Chain Management

•  (4) Relational – the appropriate linkage between a supplier, the

organization and its customers for maximum benefit; includes
internal supply matter relationships throughout the organization.
•  (5) Innovational – the processes and linkages across the firm,
its customers, suppliers, and resource parties for the purpose of
discovering and bringing to market product, service, and
process opportunities.
5 Unit of Analysis in Supply Chain
 Unit of Analysis in Supply Chain
Supply Chain Network A

Competitor

Supplier of
Equipment Distributor 1 Retailer

Supplier to Supplier of
Supplier Key Component Focal Company

Supplier to Supplier of
Supplier Component
Distributor 2 End Customer

Supplier of
Materials
Complementary
Supply Chain Network B Producer
 Unit of Analysis in Supply Chain
Supply Chain Network A

Competitor

Supplier of
Equipment Distributor 1 Retailer

Supplier to Supplier of
Supplier Key Component Focal Company

Supplier to Supplier of
Supplier Component
Distributor 2 End Customer

Supplier of
Materials
Complementary
Supply Chain Network B Producer
 Unit of Analysis in Supply Chain
Supply Chain Network A

Competitor

Supplier of
Equipment Distributor 1 Retailer

Supplier to Supplier of
Supplier Key Component Focal Company

Supplier to Supplier of
Supplier Component
Distributor 2 End Customer

Supplier of
Materials
Complementary
Supply Chain Network B Producer
 Unit of Analysis in Supply Chain
Supply Chain Network A •  Buyer and Seller Relationship
•  Supply Chain Risk Management
Competitor •  Technology in SCM

Supplier of
Equipment Distributor 1 Retailer

Supplier to Supplier of
Supplier Key Component Focal Company

Supplier to Supplier of
Supplier Component
Distributor 2 End Customer

Supplier of
Materials
Complementary
Supply Chain Network B Producer
6 Lecture Plan
 Lecture Plan

Lecture Plan
1.  Introduction to Supply Chain Management
2.  Internal Collaboration
3.  External Collaboration: Supply side
4.  External Collaboration: Demand side
5.  Buyer Supplier Relationship
6.  Supply Chain Risk Management
7.  Technology in SCM
8.  Project Task
9.  Project Task
10.  Presentation
11.  Presentation
12.  Summary
7 Reference
 Reference

•  Cavinato, J.L. (2004), “Supply Chain Logistics Risk: From the Back Room to
the Board Room”, International Journal of Physical Distribution & Logistics
Management, Vol. 34, No. 5, pp. 383-387
•  Dubois, A, (2004), Lecture of SCDM1, Chalmers University of Technology,
Gotheburg, Sweden
•  Gadde, L-E. (2004), Lecture of SCDM 2, Chalmers University of Technology,
Gotheburg, Sweden
Thanks!
Any questions ?