Supply Chain Management 2024

Supply Chain Management
- It involves strategic management of all operations linking an organization and its

suppliers, including such areas as purchasing, manufacturing, transportation, and
distribution.
- The goals of supply chain management are to achieve efficiency in all aspects of the
supply chain while assuring on-time availability of quality resources and products.
- The basic purpose of a supply chain is to coordinate the flow of materials, services,
and information among the elements of the supply chain to maximize customer
value.
- The key functions: sales and order processing; transportation and distribution,
operations, inventory and materials management, finance, and customer service.
- Supply chains must focus on exploiting demand information to better match
production levels to reduce costs; tightly integrate design. Development, production,
delivery, and marketing; and provide more customization to meet increasingly
demanding customers.
The Supply Chain Operations Reference (SCOR) Model

- This is based on five basic functions involved in managing a supply chain and
provides an excellent framework for understanding the scope of SCM. The functions
are:
1. Plan
- Developing a strategy that balances resources with requirements and
establishes and communicates plans for the entire supply chain.
2. Source
- Procuring goods and services to meet planned or actual demand.
3. Make
- transforming goods and services to a finished state to meet demand
4. Deliver
- Managing orders, transportation, and distribution to provide the goods and
services
5. Return
- Processing customer returns; providing maintenance, repair and overhaul; and
dealing with excess goods.
Designing Supply Chain
Supply chains should support an organization’s strategy, mission and competitive priorities.
Both strategic and operational perspectives must be included in supply chain design decisions.
Contract manufacturer – is a firm that specializes in certain types of goods-producing activities,

such as customized design, manufacturing, assembly, and packaging, and works under contract
for end users. Outsourcing to contract manufacturers can offer significant competitive
advantages, such as access to advance manufacturing technologies, faster product time-to-
market, customization of goods in regional markets, and lower total costs resulting from
economies of scale.
Efficient supply chains – they are designed for efficiency and low cost by minimizing inventory
and maximizing efficiencies in process flow.
Responsive supply chains – focus on flexibility and responsive service and are able to react
quickly to changing market demand and requirements.
Push system – it produces goods in advance of customer demand using a forecast of sales and
moves them through the supply chain to points of sale where they are stored as finished goods
inventory.
Pull system – produces only what is needed at upstream stages in the supply chain in response
to customer demand signals from downstream stages.
Supply Chain Metrics
These metrics are used to evaluate performance and identify improvements to the design and
operation of the supply chains.
1. Delivery reliability – often measured by perfect order fulfillment.
2. Responsiveness – measured by order fulfillment lead time or by perfect delivery
fulfillment.
3. Customer-related measure – focus on the ability of the supply chain to meet customer
wants and needs.
4. Supply chain efficiency measures include average inventory value and inventory
turnover.
5. Financial measures show how supply chain performance affects the bottom line. These
might include total supply chain costs and costs of processing returns and warranties.
Order amplification – it is a phenomenon that occurs when each member of a supply chain
“orders up” to buffer its own inventory. This results to what is called “bullwhip effect.”
Other Issue in Supply Chain Management

1. Selecting transportation services
2. Supplier evaluation
3. Technology

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Supply Chain Management

- It involves strategic management of all operations linking an organization and its

The Supply Chain Operations Reference (SCOR) Model

Designing Supply Chain

Contract manufacturer – is a firm that specializes in certain types of goods-producing activities,

Supply Chain Metrics

Other Issue in Supply Chain Management

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