Supply Chain Management
The nature of the supply chain
Learning Points
Understand what a supply chain is
Gain an appreciation of the behaviour of supply chains Understand some of the issues with highly dispersed supply chains
Supply Chain Management concerns…
The relationships and flows between different operations
Links between value-adding upstream and downstream
processes All issues concerning product / service delivery from raw materials to end user
Purchasing / Procurement
Physical Distribution / logistics
Materials management and inventory control Customer fulfilment - meeting the needs of the end customer
The next time you need milk…
Think: All you’ve had to do is go to the local shop. The milk is there to buy every time. But somebody must have delivered that milk to the shop: Starting from the beginning, someone must have raised a cow, got it pregnant, looked after the calf and milked the cow. Then, someone would have transported the milk to a dairy, pasteurised it, bottled it and distributed it to your local shop. Essentially, an lot of work must have taken place, across a network of firms – the supply chain, to deliver you a reliable supply of milk.
Supply Side
2nd tier Suppliers 1st tier Suppliers
Demand Side
1st tier Customers 2nd tier Customers
The Operation
Purchasing
Distribution Customer Fulfilment
Materials management
Supply Chain
Supply chain management is concerned with the flow of information as well as the flow of products and services
Supply Chain Performance Benefits
Benefits of looking at the whole supply chain:
• Puts the operation into its competitive context • Helps to identify the key players • Shifts emphasis to the long term • Sensitizes the operation to macro changes
Advantages of taking a whole supply chain perspective
Vertical integration
H ow much of the network should the operation seek to own?
Location of the operation
Where should the operation be
Learning Points
Understand what a supply chain is
Gain an appreciation of the behaviour of supply chains Understand some of the issues with highly dispersed supply chains
Supply Chain Management concerns…
The relationships and flows between different operations
Links between value-adding upstream and downstream
processes All issues concerning product / service delivery from raw materials to end user
Purchasing / Procurement
Physical Distribution / logistics
Materials management and inventory control Customer fulfilment - meeting the needs of the end customer
The next time you need milk…
Think: All you’ve had to do is go to the local shop. The milk is there to buy every time. But somebody must have delivered that milk to the shop: Starting from the beginning, someone must have raised a cow, got it pregnant, looked after the calf and milked the cow. Then, someone would have transported the milk to a dairy, pasteurised it, bottled it and distributed it to your local shop. Essentially, an lot of work must have taken place, across a network of firms – the supply chain, to deliver you a reliable supply of milk.
Supply Side
2nd tier Suppliers 1st tier Suppliers
Demand Side
1st tier Customers 2nd tier Customers
The Operation
Purchasing
Distribution Customer Fulfilment
Materials management
Supply Chain
Supply chain management is concerned with the flow of information as well as the flow of products and services
Supply Chain Performance Benefits
Benefits of looking at the whole supply chain:
• Puts the operation into its competitive context • Helps to identify the key players • Shifts emphasis to the long term • Sensitizes the operation to macro changes
Advantages of taking a whole supply chain perspective
Vertical integration
H ow much of the network should the operation seek to own?
Location of the operation
Where should the operation be
Links: Bullwhip Effect Example (P & G) Lee et al., 1997, Sloan Management Review