SUPPLY CHAIN

MANAGEMENT
Group III
SUPPLY CHAIN MANAGEMENT
 Supply Chain - is the flow of materials,
information, money and services from raw
materials suppliers, through factories and
warehouses, to the end customers.
 A Supply Chain also includes the
organization and processes that create and
deliver products, information, and services to
end customers.
 Supply Chain improve trust and collaborative
among supply chain partners, thus improving
supply chain visibility and inventory velocity.
SUPPLY CHAIN VISIBILITY
 Ability for all organizations in a supply chain
to access or view relevant data on
purchased materials as these materials move
through their supplier’s production
processes and transportation network to
their receiving docks.
 The sooner a company can deliver products
and services after receiving the materials
required to make them- that is, the higher
the inventory velocity- the more satisfied
the company’s customers will be.
The Structure and Components of
Supply Chains
 UPSTREAM
 INTERNAL
 DOWNSTREAM
 The flow of information and goods can
be bidirectional.
 Example: damaged or unwanted products
can be returned, a process known as
reverse logistics.
UPSTREAM
 Upstream- where sourcing or
procurement from external suppliers
occurs.
 Internal- where packaging, assembly, or manufacturing takes place.

Tiers of Suppliers- a suppliers may have one or more subsuppliers, a subsupplier may have its own
subsupplier(s), and so on.
DOWNSTREAM
 Downstream- where distribution takes
place, frequently by external distributors.
The Flows in the Supply Chain
 There are typically three flows in the Supply Chain: material,
information, financial
 Material flows- are the physical products, raw materials,
suppliers and so forth that follow along the chain. Material
flows also include reverse flows (or reverse logistics)-
returned products, recycled products, and disposal of materials
or products. A supply chain thus involves a product life cycle
approach, from “dirt to dust”
 Information flows- consist of data related to demand,
shipments, orders, returns and schedules as well as changes in
any of these data.
 Financial flows- involves money transfers, payments, credit
card information and authorization, payment schedules, e-
payments and credit-related data.
Supply chain management
(SCM)
 Function- is to plan, organize, and
optimize the various activities performed
along the supply chain.
 Goal- is to reduce the problems, or
friction, along the supply chain.
Significantly, SCM system are type of
interorganizational information system.
Interorganizational information
system (IOS)
Information flows among two or more organizations. By
connecting the information systems of business partners,
IOS enable the partners to perform a number of tasks:
 Reduce the costs of routine business transactions;
 Improve the quality of the information flow by
reducing or eliminating errors;
 Compress the cycle time involved in fulfilling business
transaction;
 Eliminate paper processing and its associated
inefficiencies and costs;
 Make the transfer and processing of information
easier for user.
The Push Model VS the Pull Model
 Push Model- also known as make-to-stock,
the production process begins with a
forecast, which is simply an educated
guess as to customers demand.
 Pull Model- also known as make-to-order,
the production process begins with a
customer order.
Problem along the Supply Chain
1. Uncertainties- a major source of supply chain
uncertainties is the demand forecast
 Demand for products can be influenced by numerous
factors such as:
 Competition, prices, whether conditions technological
development overall economic conditions, and
customers general confidence.
 Another uncertainty is delivery times, which depend on
factors ranging from production machine failures to road
construction and traffic jams.
2. The need to coordinate multiple activities
One major challenge that managers face in setting accurate
inventory levels throughout the supply chain is known as the
Bullwhip Effect. Bullwhip Effect- refers to erratic shifts in
orders up and down the supply chains.
Solution to Supply Chain Problems
1. VERTICAL INTEGRATION- is a business strategy in which a company
purchases its upstream suppliers to ensure that its essential supplies are available
soon as they are needed.
2. USING INVENTORIES TO SOLVE SUPPLY CHAIN PROBLEMS-
undoubtedly, the most common solution to solve supply chain problems is
building inventories as insurance against supply chain uncertainties.
 All well-known initiative to optimize and control inventories is the just-in-time
(JIT) inventory system, which attempts to minimize inventories.
 That is, in manufacturing process, JIT system deliver the precise number parts,
called work-in-process inventory, to be assembled into a finished product at
precisely the right time.
3. INFORMATION SHARING- another common way to solve supply chain
problem,
and especially to improve demand forecasts, is sharing information along the
supply chain.
 This access enables to manage the Inventory Replenishment
 Vendor Managed Inventory (VMI)- occurs when the supplier, rather than the
retailer, manages the entire inventory process for a particular product or group of
Information Technology Support for
Supply chain Management
 SCM system are essential to the successful
operation of many businesses.
 IOS in general- rely on various forms of IT to
resolve problems.
Three technologies, in particular,
provide support for IOS and SCM
systems:
Electronic Data interchange
A communication standard that
enables business partners to
exchange routine documents, such as
purchasing orders, electronically.
EXTRANET
A company must connect the internets of its
various business partners to create extranet.
 Primary Goal- is to foster collaboration between
and among business partners.
 Open to selected B2B suppliers, customers and
other business partners.
 Extranet use virtual private network (VPN)
technology to make communication over the
internet more secure.
 Major Benefits- are faster process and
information flow, improved order entry and
customer service, lower costs and overall
improved business effectiveness.
Three major types of extranets.
 A Company and its Dealers Customers, or Suppliers. This type of extranet
centers on a single company.
 An Industry’s Extranet- just as a single company can set-up an extranet, the major
players in an industry can team up to create an extranet that will benefit all of them.
 Joint Ventures and other Business Partnerships- the partners in a joint venture
use the extranet as a vehicle for communication and collaboration.
Portal and Exchanges
Corporate Portal offers a single point of access through a Web browser to critical
business information in an organization.
Two basic types of corporate portal
 Procurement (sourcing) portals for a company’s suppliers (upstream in the supply
chain).
 Automate the business processes involved in purchasing or procuring products
between a single buyer and multiple suppliers.
 Boeing has deployed a procurement portal called the Boeing Supplier Portal.
 Distribution Portal for a company’s customers (downstream in the supply chain).
 Automate the business involved interaction process between the producer and
distributors.
An industry’s Extranet
 Just a single company cam set up an extranet
the major players an industry can team up to
create extranet that will be benefit all of them.
 GOD BLESS YOU!
Future FINANCIALISTA!