SCM - 2018

MSPM _A

Supply Chain Management

 Dr Aamer Ahmed

• Qualification:
• PhD Manufacturing System Design Optimization
• MS Design and innovation (Industrial and Manufacturing Engineering)
• BSc Mechanical engineering

• Research Interest:
• Manufacturing Processes & Computer Aided Process Planning,
• PLM Solutions and Supply Chain Management
• Manufacturing Systems and their Design
• Optimization and Process Plan Optimization
• Computer Integrated Manufacturing
• Ontologies

SCM - 2018
 Supply Chain Management

Required Text book and Reference

Book
Supply Chain Management (Strategy,
Planning & Operations) by Sunil Chopra
& Peter Meindl
Fundamentals of Supply Chain
Management By Dawei Lu
Supply Chain Management (Theories &
Practices) by R.P. Mohanty & S.G.
Deshmukh

SCM - 2018
 Grading Policy

SCM - 2018
 Class policy and Academic
Honesty
 I highly encourage you to ask questions and
discuss the course material with me and your
classmates
 However, I expect that the work you submit
for this course will be original
 No cheating, fabrication, falsification and
forgery, multiple submission, plagiarism,
complicity and computer misuse
 Please switch off / put on silent your cell
phones
 Adhere to the fixed date for assignment /
project submission.

SCM - 2018
 Supply Chain Management
 The focus of the Supply Chain is to maximize the value generated by
the organization, fulfilling customer demands, and at the same time
minimizing cost and maximizing profitability. Organizations need to
understand, determine and align the role of Purchasing,
Manufacturing, and Distribution with their overall business Goals and
objectives to achieve competitive advantage and business benefits.
 This course provides students with an introduction to the concepts,
theory, and procedures associated with supply chain management.
 Supply chain management seeks to synchronize organizations’
processes and those of its suppliers to match the flow of materials,
services and information with customer demand. It also involves the
coordination of the key processes in the organization such as order
placement, order fulfillment, and purchasing which are supported by
marketing, finance, engineering, information systems, operations and
logistics.

SCM - 2018
 Course Outline
• Supply Chain Introduction and Supply Chain strategy
• Supply Chain & the Bullwhip effect
• Global Supply Chain Management
• Achieving Strategic Fit in Supply Chain Management.
• Design and Planning of Supply Chains
• Demand Forecasting in Supply Chain
• Strategic Sourcing
• Lean and Agile Supply Chains
• Supply Chain Performance Metrics and Drivers
• Managing Economies Of Scale in Supply Chains
• Inventory Models and Management
• Customer Returns Processes (Reverse Supply Chain)
• Logistics / Transportation in SCM
• Warehouse Management
• Distribution Management
• SCM Integration
Project Presentations
SCM •- 2018
Basics of Supply Chain
Management

SCM - 2018
What Is the Supply Chain?

 Also referred to as the logistics network

 Suppliers, manufacturers, warehouses,
distribution centers and retail outlets –
“facilities” Suppliers Manufacturers Warehouses & Customers
Distribution Centers

and the

 Raw materials
 Work-in-process (WIP) inventory
Transportation Transportation
Material Costs Costs Costs Transportation
Manufacturing Costs Inventory Costs
Costs

 Finished products

that flow between the facilities

SCM - 2018
The Supply Chain
Suppliers Manufacturers Warehouses & Customers
Distribution Centers

Transportation Transportation
Costs Costs
Material Costs Transportation
Manufacturing Costs Inventory Costs Costs
SCM - 2018
The Supply Chain – Another View

Plan
Plan  Source
Source  Make
Make  Deliver
Deliver  Buy
Buy

Suppliers Manufacturers Warehouses & Customers

Distribution Centers

Transportation Transportation
Material Costs Costs Costs Transportation
Manufacturing Costs Inventory Costs
Costs

SCM - 2018
What Is Supply Chain Management
(SCM)?
Plan  Source Make Deliver  Buy

 A set of approaches used to efficiently integrate

 Suppliers
 Manufacturers
 Warehouses
 Distribution centers
 So that the product is produced and distributed
 In the right quantities
 To the right locations
 And at the right time
 System-wide costs are minimized and
 Service level requirements are satisfied

SCM - 2018
History of Supply Chain Management

 1960’s - Inventory Management Focus, Cost

Control
 1970’s - MRP & BOM - Operations Planning
 1980’s - MRPII, JIT - Materials Management,
Logistics
 1990’s - SCM - ERP - “Integrated” Purchasing,
Financials, Manufacturing, Order Entry
 2000’s - Optimized “Value Network” with
Real-Time Decision Support; Synchronized &
Collaborative Extended Network

SCM - 2018
Why Is SCM Difficult?
Plan  Source Make Deliver  Buy

 Uncertainty is inherent to every supply chain

 Travel times
 Breakdowns of machines and vehicles
 Weather, natural catastrophe, war
 Local politics, labor conditions, border issues

 The complexity of the problem to globally

optimize a supply chain is significant
 Minimize internal costs
 Minimize uncertainty
 Deal with remaining uncertainty

SCM - 2018
The Importance of Supply Chain
Management
 Dealing with uncertain environments – matching
supply and demand
 Boeing announced a $2.6 billion write-off in 1997
due to “raw materials shortages, internal and
supplier parts shortages and productivity
inefficiencies”
 U.S Surgical Corporation announced a $22 million
loss in 1993 due to “larger than anticipated
inventories on the shelves of hospitals”
 IBM sold out its supply of its new Aptiva PC in 1994
costing it millions in potential revenue
 Hewlett-Packard and Dell found it difficult to obtain
important components for its PC’s from Taiwanese
suppliers in 1999 due to a massive earthquake
 U.S. firms spent $898 billion (10% of GDP) on
supply-chain related activities in 1998
SCM - 2018
The Importance of Supply Chain
Management
 Shorter product life cycles of high-technology
products
 Less opportunity to accumulate historical data on
customer demand
 Wide choice of competing products makes it
difficult to predict demand
 The growth of technologies such as the Internet
enable greater collaboration between supply
chain trading partners
 If you don’t do it, your competitor will
 Major buyers such as Wal-Mart demand a level of
“supply chain maturity” of its suppliers
 Availability of SCM technologies on the market
 Firms have access to multiple products (e.g., SAP,
Oracle) with which to integrate internal processes
SCM - 2018
 Supply Chain

 All facilities, functions, activities,

associated with flow and transformation
of goods and services from raw materials
to customer, as well as the associated
information flows
 An integrated group of processes to
“source,” “make,” and “deliver” products

SCM - 2018
 Supply Chain Illustration
SCM - 2018
Supply
Chain
for
Denim
Jeans

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 Supply
Chain
for
Denim
Jeans
(cont.)

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 Supply Chain Processes

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 Supply Chain for Service
Providers

 More difficult than manufacturing

 Does not focus on the flow of physical
goods
 Focuses on human resources and support
services
 More compact and less extended

SCM - 2018
 Value vs. Supply Chain

 Value chain
 every step from raw materials to the
eventual end user
 ultimate goal is delivery of maximum value
to the end user
 Supply chain
 activities that get raw materials and
subassemblies into manufacturing
operation
 Terms are used interchangeably

SCM - 2018
 Supply Chain
Management (SCM)
 Managing flow of information through
supply chain in order to attain the
level of synchronization that will
make it more responsive to customer
needs while lowering costs
 Keys to effective SCM
 information
 communication
 cooperation
 trust

SCM - 2018
 Supply Chain Uncertainty

 One goal in SCM:  Factors that

 respond to uncertainty contribute to
in customer demand uncertainty
without creating costly
excess inventory
 inaccurate demand
forecasting
 Negative effects of  long variable lead times
uncertainty  late deliveries
 lateness
 incomplete orders
 incomplete shipments
 Inventory
 product changes batch
ordering
 insurance against
supply chain
 price fluctuations and
uncertainty discounts
 inflated orders

SCM - 2018