What is Supply Chain?

• Producing and delivering products and services requires suppliers, manufacturers and customers: all of which make up a supply chain

• From Suppliers to manufacturers to customers

• All supply chain links are interconnected and disruption with one will impact all

• Every product that reaches and end user represents the cumulative effort of multiple organizations (Collectivity these organizations are the supply chain)

Foundation of supply chain management

• Operations Management- Managing Internal Resources

• Supply Management- Involves all of the supplies and suppliers that you need to run your business

• Logistics Management- Involves all of the movement and storage of products and materials within the supply chain

• Integration- Involves all of the enabling systems, software packages, processes, policies, procedures, performance standards and measures, information, and risk management necessary to facilitate the complete integration of the operations supply, logistics functions

Scor Model

• Planning establishes the strategy for managing all of the resources necessary to address how a product or service will be created and delivered to meet the needs of their customers. Planning incudes the determination of marketing and distribution channels, promotions, quantities, timing, inventory and replenishment policies, and production policies

• Sourcing is the process of finding suppliers that provide the materials and services needed for the supply chain to deliver the finished products desired by the customers. Not only does this include finding reliable suppliers, but also building a strong relationship with those suppliers. Supply chain managers must also develop pricing, shipping, delivery, and payment processes with suppliers and creating metrics for monitoring and improving the performance

• Make or manufacturing is the series of operations performed to convert materials to products. Finished product is manufactured, tested, packaged, and scheduled for delivery. Quality management is an important aspect of the manufacturing process. This is the most metric-intensive portion of the supply chain, where companies are able to measure quality levels, production output, and worker productivity

• Deliver, is the part of the supply chain management that oversees the planning and execution of giving the product to customers. There are various points in the supply chain to meet customer requirements. Where companies coordinate the receipt of orders from customers, develop a network of warehouses, pick carriers to transport products to customers, and set up an invoicing system to receive payments

• Return is the part of supply chain management that deals with planning and controlling the process of when management deals with planning and controlling the process of returning products specifically from the point of consumption of the customers for repair, reclamation, remanufacture recycling or disposal. This process goes against the normal outbound flow of products to the market and supply chain managers have to create a responsive and flexible network for receiving defective and excess products back from their customers, and also supporting customers who have questions or problems.

• Demand includes trade requirements. This the demand that most people think of: the finished products that companies sell. However, there are other types of demand that impact a company’s resources and supply as well. The need to do maintenance on equipment and facilities, the need to do training and development of personnel, and the need to do research and development work on new products are all examples of activities that demand time from supply resources.

• Supply includes equipment and facilities, labor, suppliers and materials, lead time, warehousing and transportation, and even money/capital-all of the resources that a company amasses to be able to support its anticipated demand.

• Ideally Demand and Supply should be balanced which is the overall goal of supply chain management

• Inventory is a type of shock absorber for both demand and supply variability. Businesses do not always know exactly the demands and supply hence having additional inventory can hedge against potential supply shortage

• Flexibility is another shock absorber for both demand and supply variability. Flexibility might mean having extra capacity. If a company does sell more than was projected, having the flexibility to produce more may allow us to meet this unexpected demands.

Chapter 1 Summary

• A supply chain is the global network used to deliver products and services from raw materials to customers through an engineered flow of information, physical products, and cash. There are different ways to set up and operate a supply chain depending on the type of product or service a company provides. Most supply chains follow the basic Supply Chain Operations Research(SCOR) model: Plan, Source, Make, Deliver, Return, and Enable

• Supply Chain management is the coordination of a network of independent organizations all involved in creating a desired product or service so that they function like one seamless organization. It is about the production of products and services and also how people, process, technology, equipment, infrastructure, money, and information all integrate efficiently and effectively to facilitate the flow of products and services from the raw material stage to finished products desired by consumers, to the benefit of everyone. The goals are to improve customer service while reducing both inventory investment and operating expenses

• To fully understand a supply chain you need to understand the flow of products service, information, payments, and returns from end to end: Which entities form the links or nodes in the supply chain? Who are the suppliers, the manufacturers, the customers? How are the products being distributed?

• Supply chains exist in the service industry. Service firms offer intangible products so customers are actually paying for the labor and intellectual property of the service provider. Supply chain models for service products operate differently from that of physical products as service products cannot be produced in advance or inventoried, and the frequently the customer of a service product provides the tangible item that will receive the service.

• The basic concept of supply chain management goes back to the 1950s and has evolved significantly over time from initially being almost exclusively internally focused to now embracing collaboration and strategic partnerships with external trading partners. In the modern supply chain, companies focus on activities in their core competencies and enter into voluntary, trust-based relationships with trading partners for activities outside their core competencies.

• Four Functional Areas: Operations Management, Supply Management, Logistics Management, and integration

• Two different strategic supply chain capability models: efficient and responsive. The type of products a company is producing, functional or innovative, is one of the major considerations for determining which model is best suited for that supply chain

• A push model is defined as a business response in anticipation of customer demand. The product is pushed through the supply chain toward the customer based anticipated need.

• A pull model is defined as a response resulting from customer demand. The manufacturer waits for the customer to pull production of the product through operations with an order.

• A formal, stepwise, and robust process of defined tasks must be in place for the supply chain to be managed efficiently and effectively in order to deliver products when and where the customers want them consistently

• One of the key challenges in supply chain management is the need to manage or balance demand versus supply. There are many components or elements of demand and supply to consider. Safety stock inventory and supply flexibility can be employed as shock absorbers to help maintain the balance when unexpected occurrences alter the operations plan.

• Supply chain planning and execution can be viewed as two mirror image processes complementing one another: planning and procurement followed by execution and order fulfillment. Companies make a plan and then execute against that plan on a cyclical, ongoing basis. The process facilitates the flow of information, orders, products, and funds along the supply chain.

• Supply chain management provides value for both internal and external customers. Some of the major benefits are improving customer service, increasing revenues, lowering costs, providing a better utilization of assets, reducing uncertainty, and eliminating rush activities

• Current trends in supply chain management include: – The impact of continued globalization on the complexity and competitiveness of the supply chain – Improving visibility and collaboration to combat increasing demand volatility and forecast inaccuracy – A focus on risk assessment and risk management – A focus on sustainability and greening the supply chain

Class Notes

• General Flow of the Supply Chain. Above in the photo it shows the flow of each thing.

• Tier 1 Suppliers means that you have a direct relationship with that supplier. Tier 2, 3 etc. means that you have an indirect relationship.

• Every link(company) in the Supply Chain is both a Customer of their Suppliers and a Supplier to their Customer

• Consumer is the person who actually consumes the product, but a Customer could be a reseller like a bodega

• Goals of Supply Chain Management

  • Increase Customer Service

  • Reducing Inventory and Operating Expenses

  

• 1950s & 1960s

  • Focus was on mass production at that time and they were focused on cost reduction and productivity improvement strategies. External collaboration and partnerships were nonexistent at that time

• 1970s & 1980s

  • New Computer Technology was introduced which led to newer and better planning techniques

    • Production Planning: a process to determine the overall level of manufacturing output to best satisfy the planned level of sales while meeting the company’s profitability objectives

    • Material Requirements Planning: a time-phrased method of determining what materials are needed and when they are needed to support the production plan

    • Manufacturing Resource Planning: a method for the effective e planning of all resources of a manufacturing company

• 1990s and 200s

  • Just in Time: Philosophy of manufacturing based in the planned elimination of all waste and continuous productivity improvement

  • Total Quality Management: a management approach to improve processes, goods, services, and the culture in which they work. Everyone in the organization has to take ownership for quality

  • Business Process Reengineering: redesigning business processes

  • Collaborative Planning, Forecasting and Replenishment: process where supply chain trading partners can jointly plan key supply chain activities from production to final product

  • Sales and Operations Planning: process where management strategically directs the business to achieve a competitive advantage

    

    

• Pull Business Model is made to order

• Push is the opposite

• Benefits of Supply Chain

  • Improve Customer Service, Lower Costs etc.

• The future of Supply chain is AI and Blockchain as may things are going to computerized.