scm

Supply Chain Management

A Supply Chain for BreadA Supply Chain for Bread

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What is Supply chain?

• Consists of all parties involved, directly or indirectly, in fulfilling a customer request

Supplier Manufacturer Distributor Retailer Customer

Is supply chain so simple?

Supplier Manufacturer Distributor Retailer Customer

Supplier Manufacturer Distributor Retailer Customer

Supplier Manufacturer Distributor Retailer Customer

Upstream Downstream

Objective of a Supply Chain

• Maximise overall profit

• Profit– Revenue generated from customer - costs

incurred along the entire chain

(e.g. manufacturing / storing / distributing the product)

• When is Supply chain effective?– Manage Product, Information and Fund flow

Simple Product Supply ChainSimple Product Supply Chain

Supply Chain: A sequence of activities And organizations involved in producingAnd delivering a good or service

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Stage of Production Value Added

Value of Product

Farmer produces and harvests wheat $0.15 $0.15

Wheat transported to mill $0.08 $0.23

Mill produces flour $0.15 $0.38

Flour transported to baker $0.08 $0.46

Baker produces bread $0.54 $1.00

Bread transported to grocery store $0.08 $1.08

Grocery store displays and sells bread $0.21 $1.29

Total Value-Added $1.29

A Supply Chain for BreadA Supply Chain for Bread

So, what is SCM?

• Objective is to be able to have the right products in the right quantities (at the right place) at the right moment at minimal cost.

Causes

• Little or no communication between supply chain partners.

• Delay times between order processing, demand, and receipt of products.

• Over reacting to the backlog orders.

• Inaccurate demand forecasts.

Distribution

• Steps taken to move and store a product from supplier

• Design Options– Manufacturer storage with direct shipping– Manufacturer storage with direct shipping and

in-transit merge

Logistics

• Logistics is the management of the flow of goods, information and other resources, including energy and people, between the point of origin and the point of consumption

• Logistics involves the integration of information, transportation, inventory, warehousing, material-handling, and packaging, and occasionally security

• Logistics is a channel of the supply chain which adds the value of time and place utility.