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A presentation on

Supply chain

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What is a Supply Chain?

21-2All stages involved, directly or indirectly, in fulfilling a

customer request

Includes manufacturers, suppliers, transporters,

warehouses, retailers, customersWithin each company, the supply chain includes all

functions involved in fulfilling a customer request(product development, marketing, operations,

distribution, finance, customer service)

Examples: Fig. 1.1 (Wal-Mart), Dell

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What is a Supply Chain?

31-3Customer is an integral part of the supply chain

Includes movement of products from suppliers tomanufacturers to distributors, but also includes

movement of information, funds, and products inboth directions

Typical supply chain stages: customers, retailers,distributors, manufacturers, suppliers (Fig. 1.2)

All stages may not be present in all supply chains(e.g., no retailer or distributor for Dell)

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What is a Supply Chain?

41-4

Customerwants

detergent andgoes

to Jewel

JewelSupermark

et

Jewel orthird

party DC

P&G orother

manufacturer

PlasticProducer

Chemicalmanufacturer

(e.g. OilCompany)

TennecoPackaging

PaperManufacture

r

TimberIndustry

Chemicalmanufacturer

(e.g. OilCompany)

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The Objective of a Supply Chain

51-5Maximize overall value created

Supply chain value: difference between what the finalproduct is worth to the customer and the effort the

supply chain expends in filling the customers requestValue is correlated to supply chain profitability

(difference between revenue generated from thecustomer and the overall cost across the supply chain)

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The Objective of a Supply Chain

61-6Supply chain incurs costs (information, storage,

transportation, components, assembly, etc.)

Supply chain profitability is total profit to be shared

across all stages of the supply chainSupply chain success should be measured by total

supply chain profitability, not profits at an individualstage

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Decision Phases of a Supply Chain71-7Supply chain strategy or design

Supply chain planning

Supply chain operation

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Cycle View of Supply Chains

81-8

Customer OrderCycle

ReplenishmentCycle

ManufacturingCycle

ProcurementCycle

Customer

Retailer

Distributor

Manufacturer

Supp

lier

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Cycle View of a Supply Chain

91-9Each cycle occurs at the interface between two

successive stages

Customer order cycle (customer-retailer)

Replenishment cycle (retailer-distributor)Manufacturing cycle (distributor-manufacturer)

Procurement cycle (manufacturer-supplier)

Figure (see previous power point)

Cycle view clearly defines processes involved and theowners of each process. Specifies the roles andresponsibilities of each member and the desired

outcome of each process.

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Customer Order Cycle

101-10Involves all processes directly involved in receiving

and filling the customers order

Customer arrival

Customer order entry

Customer order fulfillment

Customer order receiving

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Replenishment Cycle

111-11All processes involved in replenishing retailer

inventories (retailer is now the customer)

Retail order trigger

Retail order entry

Retail order fulfillment

Retail order receiving

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Manufacturing Cycle

121-12All processes involved in replenishing distributor (or

retailer) inventory

Order arrival from the distributor, retailer, or

customerProduction scheduling

Manufacturing and shipping

Receiving at the distributor, retailer, or customer

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Procurement Cycle

131-13

All processes necessary to ensure that materials areavailable for manufacturing to occur according toschedule

Manufacturer orders components from suppliers toreplenish component inventories

However, component orders can be determinedprecisely from production schedules (different from

retailer/distributor orders that are based onuncertain customer demand)

Important that suppliers be linked to themanufacturers production schedule

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Push/Pull View of Supply Chains

141-14

Procurement,ManufacturingandReplenishmentcycles

CustomerOrderCycle

CustomerOrder

Arrives

PUSH

PROCESSES

PULL

PROCESSES

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Push/Pull View ofSupply Chain Processes

151-15Supply chain processes fall into one of two categories

depending on the timing of their execution relative tocustomer demand

Pull: execution is initiated in response to a customerorder (reactive)

Push: execution is initiated in anticipation ofcustomer orders (speculative)

Push/pull boundary separates push processes frompull processes

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Push/Pull View ofSupply Chain Processes

161-16Useful in considering strategic decisions relating to

supply chain design more global view of how supplychain processes relate to customer orders

Can combine the push/pull and cycle viewsL.L. Bean (Figure 1.8)

Dell (Figures 1.9 and 1.10)

The relative proportion of push and pull processes canhave an impact on supply chain performance

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Thank you

Presented by

Sarvesh Kumar Shukla