Supply Chain Management

What is a Supply Chain?

What is a Supply Chain?

A supply chain is the system of organizations, people, activities, information and resources involved in moving a product or service from supplier to customer. Supply chain activities transform raw materials and components into a finished product that is delivered to the end customer.

Supply Chain

Supplier

Manufacturer

Distributor

Retailer

Customers

A Supply Chain Example…

Kroger Coke JNJ GA FL AL TX Tier 1 suppliers Publix

V. Highlands Peachtree Ocean Drive Ft. Laud.

End customer

Kellog

P&G

State distributors

Local stores Super market chains

Supply Chain Management

Supply Chain Management is the design and management of processes across organizational boundaries with the goal of matching supply and demand in the most cost effective way.

Supply Demand

Mission impossible: Matching Supply and Demand

Why so Difficult to Match Supply and Demand?

Uncertainty in demand and/or supply Changing customer requirements Decreasing product life cycles Fragmentation of supply chain ownership Conflicting objectives in the supply chain Conflicting objectives even within a single firm

– Marketing/Sales wants: more FGI inventory, fast delivery, many package types, special wishes/promotions – Production wants: bigger batch size, depots at factory, latest ship date, decrease changeovers, stable production plan – Distribution wants: full truckload, low depot costs, low distribution costs, small # of SKUs, stable distribution plan

Losing Sight of the Common Objective

I'm glad that the hole is not on our side!

Supply Chain Story I

On tracing the journey of a part

Source: The Resilient Enterprise

Supply Chain Story II

On responding to a supply chain disruption

Nokia Ericsson

Philips factory in New Mexico

Source: The Resilient Enterprise

Supply Chain Story II

On responding to a supply chain disruption

Nokia Ericsson

Philips factory in New Mexico

Source: The Resilient Enterprise

Supply Chain Story III

On Internal communication and collaboration

In the mid-1990s, the Swedish car manufacturer Volvo found itself with excessive stocks of green cars. To move them along, the sales and marketing departments began offering attractive special deals, so green cars started to sell. But nobody had told the manufacturing department about the promotions. It noted the increase in sales, read it as a sign that consumers had started to like green, and ramped up production.

Source: Chain reaction, The Economist, Jan 31, 2002

Supply Chain Story IV

On external communication and collaboration

Supply Chain Story V

On supplier management

Suppliers

US auto man.

Arm’s Length

“The Big Three [US automakers] set annual costreduction targets [for the parts they purchase]. To realize those targets, they’ll do anything. [They’ve unleashed] a reign of terror, and it gets worse every year. You can’t trust anyone [in those companies]” -Director,