SUPPLY CHAIN MANAGEMENTSUPPLY CHAIN MANAGEMENT

Chris MingledorffCIS 2010

What is a Supply Chain??What is a Supply Chain??““A supply chain or logistics network is the system of A supply chain or logistics network is the system of

organizations, organizations, peoplepeople,, technologytechnology, activities, , activities, informationinformation and resources involved in and resources involved in MOVINGMOVING a a

product or service from product or service from suppliersupplier to to customercustomer.”.”

A Supply Chain includes…A Supply Chain includes…

-Procurement of raw materials, natural resources-Procurement of raw materials, natural resources

-Component manufacturing-Component manufacturing

-Product assembly-Product assembly

-Distribution and delivery to consumers-Distribution and delivery to consumers

So…why is Supply Chain So…why is Supply Chain MANAGEMENT so important today??MANAGEMENT so important today??

SUPPLY CHAIN MANAGEMENTSUPPLY CHAIN MANAGEMENT

““The process of planning, implementing and The process of planning, implementing and controlling the operations of the supply controlling the operations of the supply chain as efficiently as possible.”chain as efficiently as possible.”

OPERATIONS=OPERATIONS=

MaterialsMaterials

TransportationTransportation

InformationInformation

FinancingFinancing

A brief history of modern supply A brief history of modern supply chain management…chain management…

Creation Era-Creation Era- Early 20Early 20thth century- assembly line century- assembly lineIntegration Era-Integration Era- 1960s- Resource planning 1960s- Resource planning systems and software, MRP (later ERP). Used systems and software, MRP (later ERP). Used within a single company.within a single company.Globalization Era-Globalization Era- late 1980s- Reducing costs late 1980s- Reducing costs by integrating global sources into the supply by integrating global sources into the supply chain. Outsourcing manufacturing and assembly chain. Outsourcing manufacturing and assembly operations.operations.Specialization Era-Specialization Era- late 1990s to today- late 1990s to today- Focusing on “core competencies”, greater Focusing on “core competencies”, greater outsourcing of manufacturing activities, outsourcing of manufacturing activities, outsourcing of supply chain operationsoutsourcing of supply chain operations

SPECIALIZATION ERASPECIALIZATION ERA

PeoplePeople around the world are connected as around the world are connected as never before due to advances in never before due to advances in technologytechnology and reduced barriers to international tradeand reduced barriers to international trade

Integration of business alliances and strategic Integration of business alliances and strategic relationships necessitates systems that easily relationships necessitates systems that easily link together to integrate processes and share link together to integrate processes and share informationinformation

Supply Chain Management as a Supply Chain Management as a service??service??

Increasingly, companies add value by Increasingly, companies add value by outsourcing all activities unrelated to their outsourcing all activities unrelated to their core businesscore business

Rise of the 3PL (3Rise of the 3PL (3rdrd party logistics party logistics provider)- provider)- Is able to provide complex Is able to provide complex solutions to all or part of a company’s solutions to all or part of a company’s supply chain. supply chain.

3PL3PL

In 2003, 83% of large manufacturers reported using 3PL In 2003, 83% of large manufacturers reported using 3PL for at least some part of their supply chain managementfor at least some part of their supply chain management

77% reported “very positive” impact on overall supply 77% reported “very positive” impact on overall supply chain management costs, as well as increased service chain management costs, as well as increased service levelslevels

Specialization– “We can do it for less than you can do it Specialization– “We can do it for less than you can do it yourself…and we can do it better!”yourself…and we can do it better!”

Transportation – Customs – Distribution – Software Transportation – Customs – Distribution – Software Packages “End-to-end”Packages “End-to-end”

Companies that utilize 3PLCompanies that utilize 3PL

A company that does notA company that does not

Wal-Mart- Is it primarily a supply chain company Wal-Mart- Is it primarily a supply chain company or a retailer?or a retailer?

In 1966, Sam Walton attended an IBM school in In 1966, Sam Walton attended an IBM school in New York. When he returned to Bentonville, he New York. When he returned to Bentonville, he computerized the operations of all 20 stores he computerized the operations of all 20 stores he hadhad

Wal-Mart’s supply chain management system Wal-Mart’s supply chain management system led to complete domination of the discount retail led to complete domination of the discount retail sectorsector

Supply Chain Management andSupply Chain Management and TechnologyTechnology

Multiple software platforms enable companies to Multiple software platforms enable companies to synchronize entire distribution networkssynchronize entire distribution networks

What happens in an advanced fully integrated What happens in an advanced fully integrated automated supply chain system when a widget is automated supply chain system when a widget is purchased at a retail store?purchased at a retail store?

The system can:The system can:Automatically update the companies financial records to reflect the Automatically update the companies financial records to reflect the salesaleDirect the distribution center to pick, pack, and ship another widgetDirect the distribution center to pick, pack, and ship another widgetDirect the manufacturer of the widget to produce more and ship to Direct the manufacturer of the widget to produce more and ship to the distribution centerthe distribution centerAlert the suppliers of materials that make up the widget to ship to Alert the suppliers of materials that make up the widget to ship to the manufacturerthe manufacturer

Benefits of Effective Supply Chain Benefits of Effective Supply Chain Management Management InformationInformation Systems Systems

““Perpetual Inventory”Perpetual Inventory”

Warehouse Management ApplicationsWarehouse Management Applications Pick pack and shipPick pack and ship

““Just-in-time” shippingJust-in-time” shipping

Performance measurementPerformance measurement

Physical plant/space requirementsPhysical plant/space requirements

Reduction of financial liability for unneeded inventoryReduction of financial liability for unneeded inventory

Effective Supply Chain Effective Supply Chain Management=Value to Management=Value to

Company=Value toCompany=Value to PeoplePeople

Decrease in costs of goods and servicesDecrease in costs of goods and services

Decrease in space needed to warehouse Decrease in space needed to warehouse inventoryinventory

High availability of a diverse range of High availability of a diverse range of productsproducts

Reduced impact on the environmentReduced impact on the environment

Sources UsedSources Used

Material Handling Management Material Handling Management http://www.mhmonline.com/viewStory.asphttp://www.mhmonline.com/viewStory.asp?nID=1915?nID=1915Time Magazine Time Magazine http://www.time.com/time/time100/builder/http://www.time.com/time/time100/builder/profile/walton2.htmlprofile/walton2.htmlWikipedia.org Wikipedia.org http://en.wikipedia.org/wiki/Supply_chain_http://en.wikipedia.org/wiki/Supply_chain_managementmanagement