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Supply Chain Management

Supply Chain ManagementSupply Chain Management

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Supply Chain Management

Value Adding Process in FirmsValue Adding Process in Firms

InputsOutputs

Product

Material

Value Adding

Process

or orce

Service

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Supply Chain Management

ASimpleSupplyChainExample

RawMaterialSourcesSuppliers Manufacturers Distributors Retailers Customers

Material, Information and Funds Flow

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Supply Chain Management

whatwhat is a supply chain?is a supply chain?

A supply chain encompasses all activities involved in the

transformation of goods from the raw material stage to the final stage

w en goo s an serv ces reac t e en customer

.

Exam le: A deter ent su l chain:

CustomerManufacturer

(P&G)

Wal-Mart

DC

Wal-Mart

Store

Chemical PlasticPackaging

aper

Manufacturer

m er

IndustryIndustry

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Supply Chain Management

The Supply ChainThe Supply Chain

Suppliers Manufacturers Warehouses & Distribution Centers

Customers

Material Costs

CostsTransportation

CostsTransportation

CostsInventory CostsManufacturing Costs

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Supply Chain Management

Supply Chain StagesSupply Chain Stages

A typical supply chain involves a variety ofstages

All sta es involved in fulfillin customer demand

Manufacturer Distributor Retailer Customer Su lier

Not a one-way chain; Most SCs are actually supply network of stages

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Supply Chain Management

Supply Chain FlowsSupply Chain Flows

Manufacturer Distributor Retailer Customer Su lier

Value-Added Services

Material/Product Flow

Funds/Demand Flow

Information Flow

Returns/Recylcing

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Supply Chain Management

What is a Supply Chain?What is a Supply Chain?

The system of suppliers, manufacturers, transportation, distributors, and

vendors that exists to transform raw materials to final products and supply

consists of all parties involved, directly or indirectly, in fulfilling a customer

re uest

{ Suppliers, manufacturers, transporters, warehouses, retailers, and customers

includes all functions involved in receiving and filling a customer request

{ New product development, marketing, operations, distribution, finance, and

customer service

{ An integrated group of processes to source, make, and deliver products

That ortion of the su l chain which comes after the manufacturin

process is sometimes known as the distribution network.

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Supply Chain Management

What Is a Supply Chain?What Is a Supply Chain?

Also referred to as the logistics network

Suppliers, manufacturers, warehouses, distribution centers and retail

outlets facilities

Suppl iers Manufacturers Warehouses & Customers

and the

{ Raw materials

{ - -

{ Finished products

that flow between the facilitiesMaterial Costs

TransportationCosts

TransportationCosts Transportation

CostsInventory CostsManufacturing Costs

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Supply Chain Management

Definition of a Supply ChainDefinition of a Supply Chain

consists of multiple firms, both upstream (ie supply) and downstream (ie

distribution)

A network of organizations that are involved thru upstream anddownstream linkages, in different processes and activities that produce

value in the form of products and services in the hands of the ultimate

customer

{ Basic supply chain

{ Extended supply chain

{ Ultimate supply chain

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Supply Chain Management

Types of Supply ChainTypes of Supply Chain

SELLER BUYER

SUPPLIER FOCAL FIRMCUSTOMER

SUPPLIERS

SUPPLIERFOCAL FIRM CUSTOMER

SUPPLIER

CUSTOMERS

CUSTOMER. .

A

THIRD PARTY

LOGISTICS SUPPLIER

SUPPLIER

SUPPLIER

CUSTOMER. .

FINANCIAL

PROVIDER

MARKET

RESEARCH FIRM

ULTIMATE/EXTENDED SUPPLY CHAIN

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Supply Chain Management

A Sample Supply ChainA Sample Supply Chain

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Supply Chain Management

Components of Supply ChainsComponents of Supply Chains

Upstream Supply Chain

{ Organizations first tier suppliers & their suppliers.

Internal Supply Chain{ Processes used by an organization to transform their inputs to outputs.

Downstream Supply Chain

{ Processes involved in delivering the product to the final customers.

Value Chain

{ Su l side- raw materials, inbound lo istics and roduction rocesses

{ Demand side- outbound logistics, marketing and sales.

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Supply Chain Management

Components of Supply ChainComponents of Supply Chain

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Supply Chain Management

Supply Chain and SCMSupply Chain and SCM

Supply chains exist whether they are managed or not

{ Can come in all shapes and sizes and may be fairly complex

{

Can be bi-directional and involve the return of products (reverse logistics)

If none of the organizations implements any of the SCM concepts to

manage the supply chain, the SC as a phenomenon of business still

exists

One organization can be part of numerous supply chains