Supply Chain Management

Def: Supply Chain What is Supply Chain Management? Strategic Importance of SCM
Purchasing Operations/Materials Management Marketing and Customer Service
Accounting and Finance

Uncertainty In Supply Chain & Some Solutions Supply Chain Design

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Supply Chain
Facilities, functions, activities for producing & delivering product or service from supplier to customer Planning, managing, acquiring, producing, warehousing, distribution, delivery

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What is Supply Chain Management?

Supplier
Inv.

Scheduling Information Cash Flow Order Flow

Customer

Supplier
Inv.

Manufacturer or Inv. Service Provider

Inv.

Customer

Supplier

Credit Flow Material Flow

Customer
Marketing/ Sales/ Cust. Serv.

PurchasingVendors

Operations/ Materials Man.

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Accounting and Finance

Strategic Importance of SCM

Deals w/the complete cycle of materials flows
SCM plays key role in
Product customization Quality control Cost reductions Speed-to-market

Effective SCM is to balance the production stream with uncertainty (customer, supplier, economic, etc.)
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Purchasing
Why Important?
Substantial % of sales, both goods and services e.g.,
Industry All Lumber Food Petroleum % of Sales 54% 60% 63% 83%

Quality of goods and services produced are directly related to those purchased/received DSCI 3123 5

Purchasing
Selecting suppliers Ordering materials Shipping & delivery of raw materials Information management Quality management - w/regard to suppliers Customer service - w/regard to suppliers and fellow workers

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Operations/Materials Management
Ordering materials - in conjunction w/purchasing Inventory control Scheduling production & capacity Shipping & delivery - in conjunction w/warehouse Information management - linked to 3 major business areas Quality management - garbage in/garbage out principal Customer service - vendors and final customer
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Marketing and Customer Service

Forecasting demand Selecting suppliers - in conjunction w/purchasing Shipping & delivery - contract requirements Information management Quality management - first place customer complaints
and/or compliments

Customer service - make the sale next time?

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Uncertainty In Supply Chain

Wrong forecasts Late deliveries Poor quality Machine breakdowns Canceled orders Erroneous information
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Some Solutions
Vertical integration Single sourcing JIT - moving suppliers closer Keiretsu - Japanese concept of partnering a small # of
suppliers and vertical integration

Information technology improvements- MRP, ERP Improved inventory control - goods as well as services
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Supply Chain Design

Strategic issue Apply quality management principles Control inventory Work with suppliers & customers to achieve goals Major goal of distribution is speed Locate close to major markets Use IT to speed information flow - e.g., EDI, Internet, etc. Outsource international distribution
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Summary
Def: Supply Chain What is Supply Chain Management? Strategic Importance of SCM
Purchasing Operations/Materials Management Marketing and Customer Service
Accounting and Finance

Uncertainty In Supply Chain & Some Solutions Supply Chain Design

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