SUPPLY CHAIN

MANAGEMENT
Introduction

Prepared by : Yuli Dwi Astanti, ST, MT

Based on Lecture Presentation by
Prof. Ir. I Nyoman Pujawan, Ph.D
 Text Books

The following text books are recommended, but not

required:
• Pujawan, I N. (2010). Supply Chain Management.
Guna Widya
• Chopra, S., and Meindl, P. (2007). Supply chain
management: Strategy, planning, and operations.
3rd Ed. New Jersey - Prentice-Hall.
• Wisner, J. D., Leong, G. K., and Tan, K-C. (2005).
Principles of supply chain management: A balanced
approach. Thomson South-Western.
 Lecture 1

Introduction to Supply
Chain Management
Top Performers in SCM
 SEVERAL CRITICAL QUESTIONS
• Where do you source your materials?
• Where do you process or convert them?
• What channels of distribution do you use?
• How do you build a strong relationship with your suppliers and
customers?
• How do you get direct information from your end-consumers?
• What logistics structure should you impose?
• How do you coordinate your information flows and systems
globally?
• And how do you set up incentive systems for all of your partners in
the supply chain to optimize overall performance?
 THOSE QUESTIONS SPAN DIFFERENT
DECISION HIERARCHY

Strategic Level
• Network design (for example: number, location,
capacity of plants and warehouses).
• Developing partnerships with supplier, 3PL, and
distributors.

Tactical Level
• Setting policies for sourcing, production, delivery,
after sales services, and inventory.

Operational Level
• Executing day to day operations on the above
activities.
 Evolution of Challenges Facing
Manufacturing Companies

FORD: any
1970 Manufacturing, Mass production colour as long as
1980 Quality → SQC, TQM it is black

1990 SCM dan e-SCM

SLOAN: a car
for every purse
Now, the new frontier is the and purpose
opportunity through
coordination, cooperation and
collaboration. •Competition
•More demanding
customers
•Globalization
 A product flows through a very long
process before consumed by customers
 What is SC?
• A series (or network) of companies who
work collectively to make and deliver
products and services to the end
customers. This span from the raw
materials extractors (at the upstream end)
to the retailers / shops (at the
downstream end).

• In a SC there are three flows: materials,

information, and cash / funds.
 SIMPLE SC STRUCTURE
UPSTREAM DOWNSTREAM

SUPPLIER MANUFAC DISTRIBU WHOLESA RETAILER END

TURER TOR LER CUSTOMER

physical flow
Materials/products, returns

Payments flow
Cash, invoice, pricing, credit terms flow

information flow

Capacity, delivery schedule, orders, point of sale

 What is a Supply Chain?
• All stages involved, directly or indirectly, in
fulfilling a customer request
• Includes manufacturers, suppliers, transporters,
warehouses, retailers, customers
• Within each company, the supply chain includes
all functions involved in fulfilling a customer
request (product development, marketing,
operations, distribution, finance, customer
service)
• All stages may not be present in all supply chains
(e.g., no retailer or distributor for Dell)
IN REALITY WE ARE DEALING WITH A NETWORK, NOT A
CHAIN
(Chopra & Meindl, 2001)

Wal-Mart DC Wal-Mart Customer wants

P&G store detergent

Plastics Packaging Chemical

Producer company manufacturer

Chemical Paper Timber

manufacturer manufacturer Industry
 SUPPLY CHAIN MANAGEMENT DEFINITION

• A process orientation, integrated approach to procuring,

producing, and delivering products and services to customers
(MIT)

• The delivery of enhanced customer and economic value

through synchronized management of the flow of physical
goods and associated information from sourcing to
consumption (LaLonde, Ohio State)

• The process of strategically managing the procurement,

movement and storage of materials, parts, and finished
inventory (and the related information flows) through the
organization and its marketing channels in such a way that
current and future profitability are maximized through the
cost-effective fulfillment of orders (Martin Christopher,
Cranfield University)
 SUPPLY CHAIN MANAGEMENT
FUNCTIONS
Two basic functions:
Physically converting raw materials and components into
products and delivering them to the end customers.

Related to physical costs

Make sure that products/services delivered satisfy customer’s
aspiration.

Related to market mediation costs

ACTIVITIES THROUGHOUT THE SUPPLY CHAIN

PHYSICAL MARKET MEDIATION

Sourcing
Marketing Research
Production
Product Design
Distribution
Warehousing After Sales Services

Inventory Control
 SCM Related Functions in a
Manufacturing Company
Division Examples of Activities / Processes

Product development Market research, product development, involving supplier in

product development

Purchasing Selecting suppliers, evaluating supplier performance,

purchasing raw materials, monitoring supply risks,
designing and managing relationships with suppliers

Planning and Control Demand planning, demand forecasting, capacity planning,

material planning, production planning and inventory
control, distribution planning
Operations / Productions Production execution, Quality control

Distribution Designing distribution network, Delivery scheduling, Selecting

logistics service providers, monitoring service levels in
each distribution centre.
Supply Chain
Strategy
Different Product
Characteristics
I
N
N
O F
V U
A N
T C
I T
V I
E O
N
A
L
 SC Strategies
Distribution
Supplier Manufacturer Channels
Supplier Distribution
Channels
Efficient supply chain
Emphasis on physical activities

Distribution
Supplier Manufacturer Channels
Supplier Distribution
Channels
Market responsive supply chain

Emphasis market mediation activities

 Product Types (Reflect Market
Requirements)
Aspek Fungsional Inovatif
Siklus hidup Panjang, bisa lebih dari 2 Pendek, antara 3 bulan
tahun sampai 1 tahun
Variasi per ketegori Sedikit, 10 – 20 variasi Banyak, bisa mencapai
ribuan
Volume per SKU tinggi rendah
Peramalan permintaan Relatif mudah, akurasi Sangat sulit, kesalahan
tinggi ramalan tinggi
Tingkat kekurangan Hanya 1% - 2% Bisa sampai 10% - 40%
produk (stockout rate)
Kelebihan persediaan di Jarang karena musim jual Sering terjadi
akhir musim jual sangat panjang
Biaya penurunan harga Mendekati 0% 10 – 25%
jual (markdown)
Marjin keuntungan per rendah tinggi
unit yang terjual
dengan harga normal
Elements of SC Strategy

SC Strategy

Facility Production Supply Product

Inventory Transport
location system develop
ment
 Two Distinctive SC Strategies
(reflect resource consolidation)

Keputusan taktis Efisien Responsif

Lokasi fasilitas Tempatkan pabrik di negara Cari lokasi yang dekat pasar,
yang ongkos tenaga punya akses tenaga terampil
kerjanya murah. dan teknologi yang memadai
Sistem produksi Tingkat utilitas sistem produksi Sistem produksi harus fleksibel
harus tinggi dan ada kapasitas ekstra
Persediaan Perlu upaya meminimasi tingkat Diperlukan persediaan
persediaan pengaman yang cukup di
lokasi yang tepat
Transportasi Pengiriman TL / CL atau Diperlukan transportasi cepat.
subkontakkan ke pihak Bila perlu tetapkan
ketiga kebijakan LTL / LCL
Pasokan Pilih supplier dengan harga dan Pilih supplier berdasarkan
kualitas sebagai kriteria kecepatan, fleksibilitas, dan
utama kualitas
Pengembangan Fokus ke minimasi ongkos Gunakan modular design dan
tunda differensiasi produk
produk
sebisa mungkin
(postponement)
 Strategic Fit

responsif
Tidak cocok

Strategic
Fit

Tidak cocok
efisien

fungsional inovatif
 Decoupling Point
Strategy
• A point where to deploy inventory to
buffer against uncertainty
• A point where products are
customised according to customer
orders
• A point where activities can be done
(based on forecast) prior to receiving
customer orders
Differences In DP Strategies
perancangan fabrikasi perakitan pengiriman
produk

MTS

ATO

MTO

ETO
Any Question ???