SCM 1 :

ntroduction to Supply Chain

Grading System:
***Class Standing (60 %)
- Worksheet (Essay, Activities, Quizzes, etc)
30%

- Class Participation (Recitation, Forum Discussion)

20%

- Attendance
10%

***Major Examination (Midterm and Finals)

40%

100%

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Topic : Supply Chain
Management (SCM)
• Definition of terms
• How it works
• Origin
• Foundation
• Key Terms
• Flow
• Elements
• Strategies
• Importance
• Risk and Issues
• Opportunities
• Bullwhip effect
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 Any
Questions
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SUPPLY CHAIN & SUPPLY
CHAIN MANAGEMENT
Organizing to Produce Goods and
Services
- To create goods and services, all organizations perform
three (3) functions. These functions are the necessary
ingredients not only for production but also for an
organization’s survival. Here they are:
3 FUNCTIONS IN CREATING GOODS AND SERVICES

1. Marketing
- Marketing pertains to all aspects of a business, including product development,
distribution methods, sales, and advertising.
- which generates the demand, or at least takes the order for a product or service (nothing
happens until there is a sale);

2. Production/operations
- The creation of goods and services and the delivery of product

3. Finance/accounting,
- which tracks how well the organization is doing, pays the bills, and collects the
money
Through the three functions—marketing, operations,
and finance—value for the customer is created.
However, firms seldom create this value by
themselves. Instead, they rely on a variety of
suppliers who provide everything from raw materials
to accounting services. These suppliers, when taken
together, can be thought of as a supply chain.
A SUPPLY CHAIN for 1 bottle of Coke
SUPPLY CHAIN
- A CONNECTED SYSTEM OF
ORGANIZATIONS, ACTIVITIES, INFORMATION
AND RESOURCES DESIGNED TO SOURCE,
PRODUCE AND MOVE GOODS FROM
ORIGINATION TO A FINAL DESTINATION—
TYPICALLY FROM A SUPPLIER TO AN END
CUSTOMER.
PARTIES INVOLVED IN SUPPLY CHAIN

• Producers
• Vendors
• Warehouses
• Transportation companies
• Distribution centers
• Retailers
 6 SUPPLY CHAIN
Click icon to add picture
MODEL
1. Continuous Flow Model - A continuous model is a supply chain built for continued,
scheduled delivery of goods. This model ensures a continued, steady cadence of products
and resources. It only exists in an environment with supply and demand stability, typically
with mature supply chains for established brands, and requires minimal variation in the
customer
2. demand
Fast Model profile.
- A fast model is most often used by businesses that manufacture finished
products with a short market lifecycle, making it the most common for the delivery of
products considered to be trendy. This model applies when a business changes its
products frequently, delivering them to market before a trend loses its relevance.
3. Efficient Model - The efficient chain model is best for businesses that are in highly
competitive environments and must strive for high efficiency in their delivery logistics to
retain a competitive advantage. This model prioritizes proper inventory management and
maximizing output from production equipment and labor.
4. Agile Model - This model is a great fit for businesses that exist in markets with a high degree of
demand variation. This Model has 4 components to be consider.
a. Virtual integration - requires the business to track market demand changes in real time
b. Process alignment - is about sharing supply chain responsibilities across the business.
c. Network base - means that an equal contribution is made by every actor in the supply
chain
d. Market sensitivity - changes the rate of production immediately with any changes in
6 SUPPLY CHAIN MODEL
5. Customs - Configured Model - a combination of the agile and continuous flow models,
a custom-configured model is ideal in scenarios where multiple product configurations
are required. Whenever there are consumer customization options, it’s likely that a
custom-configured model is in use.

6. Flexible Model - The flexible model provides businesses the ability to meet peaks
of high demand as well as long periods where demand is low. There are three
components a supply chain must have to be considered a flexible model: part
segmentation, accurate stocking algorithms and flexible planning.
This is ensured through diversifying suppliers and incorporating automation on
factory floors.
SUPPLY CHAIN
MANAGEMENT
(SCM)
- Management of the flow of goods, data, and
finances related to a product or service, from
the procurement of raw materials to the delivery
of the product at its final destination.
“The planning and management of all activities involved in sourcing and procurement,
conversion and all logistics management activities. Importantly, it also includes
coordination and collaboration with channel partners, which can be suppliers,
intermediaries, third-party service providers and customers.”
- The Council of Supply Chain Management Professionals (CSCMP)

“The design and management of seamless, value-added processes across organizational

boundaries to meet the real needs of the end customer.”
- The Institute for Supply Management (ISM)

The coordinated set of techniques to plan and execute all steps in the global network used to acquire
raw materials from vendors, transform them into finished goods, and deliver both goods and services
to customers.
- The Singapore-based Logistics & Supply Chain Management Society
How Supply Chain Management
(SCM) Works ?
SCM attempts to centrally control or link the production, shipment, and
distribution of a product. By managing the supply chain, companies can cut excess costs and
deliver products to the consumer faster. This is done by keeping tighter control of internal
inventories, internal production, distribution, sales, and the inventories of company vendors.
Supply chain management (SCM) represents an effort by suppliers to develop and implement
supply chains that are as efficient and economical as possible.
Typically, empowered and perform by so called “Supply Chain Manager“
6 COMPONENTS OF SUPPLY CHAIN
MANAGEMENT
1. Planning- This is one of the most important stages. Before the beginning of the entire
supply chain, it is essential to finalize the strategies and put them into place. Checking the
demand for the product or service, checking the viability, costing, profit, and manpower etc.,

2. Sourcing- is one of the most critical of the entire supply chain as it is at this stage
that the biggest cost savings can be achieved. This process will also include the need to
not only find vendors but evaluate and qualify them.

3. Inventory - Having several suppliers so you can secure enough raw materials and
or products so you can remain fully stocked up is extremely important.
4. Production - is one among the most important aspects of this system. It is only
possible when all the other components of the supply chain are in tandem with each
other. For the process of production to start it is essential that proper planning and supply
of goods, as well as the inventory, are well maintained.
6 Components of SUPPLY CHAIN
MANAGEMENT
5. Transportation- Transportation is vital in terms of carrying raw materials to the manufacturing
unit and delivering the final product to the market. At each stage, timely transportation of goods is
mandatory to sustain a smooth business process.

6. Return of Goods- Transportation is vital in terms of carrying raw materials to the manufacturing
unit and delivering the final product to the market. At each stage, timely transportation of goods is
mandatory to sustain a smooth business process.
ORIGIN OF SUPPLY CHAIN
MANAGEMENT
The term ‘supply chain’ is attributed to newspaper ‘The Independent’ in 1905, the
concept of a network of suppliers, producers/manufacturers and consumers had been
around for a long time prior to that. ‘Supply chain management’ wasn’t coined until the
1980s, so the field is still young compared to related areas such as procurement,
logistics, and manufacturing, which all play a role in supply chain management.
1950s and 1960s, U.S. manufacturers were employing mass production techniques to reduce
costs and improve productivity, while relatively little attention was typically paid to creating
supplier partnerships, improving process design and flexibility, or improving product quality. New
product design and development was slow and relied exclusively on in-house resources,
technologies and capacity. Sharing technology and expertise through strategic buyer–supplier
partnerships was essentially unheard of back then. Processes on the factory floor were cushioned
with inventory to keep machinery running and maintain balanced material flows, resulting in large
investments in work-in-process inventories
Click icon to add picture
The early stages
The first example of production with a ‘truly global supply network’ was
most likely rum. The supply chain in this case started with slaves who
were moved from Africa to the Caribbean to grow the sugarcane, which
came from India, and it ended in distilleries in the US.
From these ancient times up until the 18th century, all parts of a supply
chain were kept mostly local due to the lack of larger transport options
and the high cost of moving goods around the world. Once shipping
capabilities expanded, the quantities of goods that could be transported
along any part of the supply chain grew exponentially.
Seismic shifts
In the late 1920s, the introduction of mass production along assembly
lines laid the foundations for supply chain management. First successfully
implemented by Ford, the idea of producing consistent products on a large
scale with increased efficiency changed trade and supply chains
irreversibly.
Mass production and the concept of interchangeable parts originated in
the late 18th century
with weaponry in America and ship pulley production in England, but had
not previously been combined with division of labor, continuous workflow
Birth of Containerization, or container shipping, not only increased the
and specialization.
quantity of available space for goods, but also increased the speed of the
freight movement while decreasing the cost.
Barcoding was another gamechanger for the industry, finally being used
in a commercial context in in the 1970s despite being patented more
than twenty years before. Once the barcode was adapted to become an
internationally used standard, it could be used from for ‘
Technological
advances
The innovation of the personal computer in the 1980s was the catalyst for more new
tech that impacted supply chain management immensely, such as
spreadsheets, optimization models and algorithms that could predict logistics issues for
a supply chain
. These solved problems with planning, resource management and forecasting, as well as
making oversight of the entire supply chain easier to visualize, save, and share.
Material Requirements Planning (MRP) 1960s and 1970s, computer technologies
began to flourish software applications and manufacturing resource planning (MRPII)
software applications were developed. These systems allowed companies to see the
importance of effective materials management.
The 1980’s
1980s were the breakout years for supply chain management. One of the
first widely recorded uses of the term supply chain management came
about in a paper published in 1982. Intense global competition beginning
in the 1980s (and continuing today) provided an incentive for U.S.
manufacturers to offer lower-cost, higher-quality products along with
higher levels of customer service. Manufacturers utilized just-intime (JIT)
and total quality management (TQM) strategies to improve quality,
manufacturing efficiency and delivery times. In a JIT manufacturing
environment with little inventory to cushion scheduling and/or production
problems, firms began to realize the potential benefits and importance of
strategic and cooperative supplier-buyer-customer relationships, which
are the foundation of SCM. The concept of these partnerships or alliances
emerged as manufacturers experimented with JIT and TQM.
 UP TODAY
Most recently, the rapid development of client/server supply chain
management software that typically includes integrated supply chain
management and electronic commerce components has aided in the
evolution and adoption of supply chain management. Sharing information
with supply chain partners through the Internet has enabled firms to
integrate stocking, logistics, materials acquisition, shipping and other
functions to create a more proactive and effective style of business
management and customer responsiveness.

➢ Today, there is an emphasis being placed on the environmental and social

impacts of supply chains. Customers are demanding that companies and
their supply chains act in an ethically and socially responsible manner. This
includes attention to how suppliers are hiring and training employees, how
they are harvesting plants and other materials, how their activities impact
the environment and what sorts of sustainability policies are being utilized.
FOUNDATION OF SUPPLY
CHAIN MANAGEMENT
 4 FOUNDATION OF SCM
1. Purchasing - a business or organization acquiring goods or services to accomplish
its goals.

2. Production - the process of making or manufacturing goods and products from raw
materials or components.

3. Logistics - The process of coordinating and moving resources—people, materials,

inventory, and equipment—from one location to storage at the desired destination.

4. Process integration- is a method by which businesses connect applications or

people and data. The company ensures that its resources, including personnel and
software, can work together to keep the business operational and help it reach its
primary objectives.
TREND IN SUPPLY CHAIN
MANAGEMENT
10 TREND IN SCM
1. Artificial Intelligence and Automation
The use of artificial intelligence (AI) and automation is on the rise in many industries.
Automation, which has been around for decades, utilizes technology to minimize human
inputs and is simply a machine performing a series of tasks. Automation isn’t intelligent,
which means the tech only performs tasks that it has been explicitly programmed to
perform.
2. Increased Focus on Sustainability
As a growing number of consumers prioritize the environment, more businesses have
increased their sustainability efforts, and this includes supply chains. Because there are
so many different ways to improve sustainability, you’ll need to tailor your efforts to suit
the unique needs of your organization.
3. Customization
Increasing customization becomes more realistic as you work on improving other aspects of your
supply chain. For instance, you may find it easier to manage personalized customer orders if you can
automate your order processing system by putting standard orders in one area and customized ones
in The
4. another.
Internet of Things
The Internet of Things (IoT) is a network of physical objects that, powered by a wireless network, are
digitally connected and accessible from anywhere. The IoT already plays a significant role in the
supply chain — particularly when it comes to logistics — but with increasingly diverse applications,
IoT will likely continue to grow in importance.
10 TREND IN SCM
5. Digitization
Digitization refers to the practice of putting information into a digital format. When it comes to
securing the future of the supply chain, digitization is non-negotiable. Experts believe that effective
supply chain digitization can make your entire supply chain more streamlined, mobile, and resilient —
all of which are highly beneficial for your organization’s bottom line. This is also a major trend in e-
SCM
6. or Electronic Supply
Strengthened Chain Management.
Relationships
Technology is a significant force in supply chain management, but so are the humans wielding it.
Maintaining good human relationships should be a high priority for every company, if not the highest
priority in doing business. It’s always a good idea to focus on fortifying your relationships with your
team members, vendors, and suppliers to increase collaboration and cooperation at each step in the
supply
7. Riskchain.
Management and Resiliency
It’s your responsibility to mitigate risk as much as possible so your supply chain remains stable
during uncertain times. For example, if you source raw materials from a politically volatile area, look
into sourcing that material from another geographic area that is more stable.
8. Increased Visibility
Few things are as important for supply chain management as transparency and visibility, aka the
ability to track components or products from the manufacturer to the next processing locations or the
end user. Increased visibility will help you understand the state of your supply chain at a high level, as
well as at indivitual links, to strengthen your supply chain as a whole.
10 TREND IN SCM
9. Circular Supply Chain
Traditionally, supply chains have been thought of as linear: starting as raw materials, goods
flow in a straight line through the supply chain until they are a finished, disposable product.
Now, more people subscribe to the idea of a circular supply chain process, wherein raw
materials, and even discarded products, are recycled and re-introduced into the
manufacturing process.
10. Cloud-Based Solutions
Similar to digitization, cloud-based software solutions are the way of the future in supply
chain management. Traditional and localized supply chain management solutions won’t cut
it. To stay competitive, you need accurate, agile, and accessible solutions for your
organization.
Software-as-a-Service (SaaS) models are beneficial for supply chain management. Not only
is SaaS reliable and secure, but it’s highly efficient and convenient. All of your
organization’s data is stored in the cloud, and you and your team can get the information
you need at any time, from any place.
 THE END

20XX 33
THANK
YOU
Presenter name:
Vince S. Capil
Instructor

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