Abhi_Introduction Scope and Historical Background of SCM

7/28/2019 Abhi_Introduction Scope and Historical Background of SCM

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Introduction, Scope and

Historical Background Of

SCM

ABHINAV MS3 MBA


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DEFINITION

Supp ly Chain Managementis a set of

synchronized decisions and activities

utilized to efficiently integrate suppliers,

manufacturers, warehouses,transporters, retailers, and customers so

that the right product or service is

distributed at the right quantities, to the

right locations, and at the right time, in

order to minimize system-wide costs

while satisfying customer service level

requirements.


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What is Supply Chain Management?

The design and management of seamless, value-added

processes across organizational boundaries to meet the

real needs of the end customer

Institute for Supply Management

Managing supply and demand, sourcing raw materials

and parts, manufacturing and assembly, warehousing

and inventory tracking, order entry and ordermanagement, distribution across all channels, and

delivery to the customer

The Supply Chain Council

The planning and management of all activities involved

in sourcing and procurement, conversion, and alllogistics management activities also includes

coordination with channel partners, which can be

suppliers, intermediaries, third party service providers,

and customers.

Council of Supply Chain Management Professionals


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Importance of Supply Chain

Management

Firms have discovered value-enhancing

and long term benefits

Who benefits most? Firms with:

Large inventories

Large number of suppliers

Complex products Customers with large purchasing budgets


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Management (Cont.)

Firms using Supply Chain

Management:

1. Start with key suppliers

2. Move on to other suppliers,customers, and shippers

3. Integrate second tier suppliers

and customers (second tier refersto the customers customers and

the suppliers suppliers)


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Management (Cont.)

Cost savings and better coordination of resources

are reasons to employ Supply Chain Management

Reduced Bullwhip Effect- the magnified

reduction of safety stock costs based on

coordinated planning and sharing of

information

Collaborative planning, forecasting, and

replenishment activities reduce the Bullwhip

Effect and lead to better customer service,lower inventory costs, improved quality,

reduced cycle time, better production

methods, and other benefits.


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Origins of Supply Chain

Management

1950s & 1960sU.S. manufacturers focused on mass

production techniques as their principal cost

reduction and productivity improvement

strategies

1960s-1970s

Introduction of new computer technology

lead to development ofMaterialsRequirements Planning (MRP) and

Manufacturing Resource Planning (MRPII)

to coordinate inventory management and

improve internal communication


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Management (Cont.)

1980s & 1990s

Intense global competition led U.S.manufacturers to adopt

Supply Chain Management alongwith

Just-In-Time (JIT),

Total Quality Management (TQM),

andBusiness Process Reengineering

(BPR) practices


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Management Cont.

2000s and Beyond

Industrial buyers will rely more onth i rd-party serv ice pro viders (3PLs)

to improve purchasing and supplymanagement

Wholesalers/retailers will focus on

transportation and logistics more &refer to these as quick response,serv ice response log ist ics,andintegrated log ist ics


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Management Cont.


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The Foundations of Supply

Chain Management

Supply

Management

Supplier management, supplierevaluation, supplier certification,

strategic partnerships

Operations

Demand management, MRP, ERP,

inventory visibility, JIT (AKA lean

production & Toyota Production

System), TQM (AKA Six Sigma)

Distribution

Transportation management, customer

relationship management, distribution

network, perfect order fulfillment, globalsupply chains, service response

logistics

IntegrationProcess integration, performance

measurement


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The Foundations of Supply

Chain Management (Cont.)

Purchasing Trends:

Long term relat ionships

Suppl ier management-improve

performance through Supplier evaluation (determining supplier

capabilities)

Supplier certification (third party or internal

certification to assure product quality and service

requirements)

Strategic partnersh ips -successful and

trusting relationships with top-performing

suppliers


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Important Elements of Supply


Operations Trends:

Demand management- match

demand to available capacity Linking buyers & suppliers via MRP

andERPsystems

Use J ITto improve the pul l of

materials to reduce inventory levels Employ TQMto improve quality

compliance among suppliers


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Important Elements of Supply


Distribution Trends: Transportation management- tradeoff

decisions between cost & timing of

delivery/customer service via trucks, rail,

water & air Customer relationship management-

strategies to ensure deliveries, resolve

complaints, improve communications, &

determine service requirements Network design- creating dist r ibut ion

networks based on tradeoff decisions

between cost & sophistication of

distribution system


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Current Trends in Supply Chain

Management

Expanding the Supply Chain

U.S. firms are expanding

partnerships and building facilities

in foreign markets The expansion involves:

breadth- foreign manufacturing, office

& retail sites, foreign suppliers &

customers

depth- second and third tier suppliers

& customers


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Current Trends in Supply Chain

Management (Cont.)

Increasing Supply ChainResponsiveness

Firms will increasingly need to be more

flexible and responsive to customer

needs Supply chains will need to benchmark

industry performance and meet and

improve on a continuous basis

Responsiveness improvement will comefrom more effective and faster product &

service delivery systems


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REFERENCES

Sunil Chopra and Peter Meindi,

Supply Chain Management,2nd

ed.(Pearson Education,2004)

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THANK YOU!

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Abhi_Introduction Scope and Historical Background of SCM