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UMMC – Supply Chain Mgmt. Course 1 Introduction to Supply Chain Management Concepts Mike Almich and Tony Bucko.

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Presentation on theme: "UMMC – Supply Chain Mgmt. Course 1 Introduction to Supply Chain Management Concepts Mike Almich and Tony Bucko."— Presentation transcript:

1 UMMC – Supply Chain Mgmt. Course 1 Introduction to Supply Chain Management Concepts Mike Almich and Tony Bucko

2 Course List Intro to SC Concepts Financials Logistics and Distribution Purchasing Inventory Management 1 Inventory Management 2 SC Technology Production Management Quality Control and Improvement

3 What will we cover today? Importance of SC Management Development of the SC Concept Components of SC Management Flow of Materials and Information Issues and Challenges Opportunities

4 What is SCM Supply chain management can be viewed as a pipeline or conduit for the efficient and effective flow of products/materials, services, information, and financials

5 Importance of SCM Dollars SCM expenses average 25% of U.S. corporate budgets Dollar value of U.S. inventory in 2004 equal to U.S. federal budget Leverage Cost reductions in SCM go directly to bottom line Efficiency is amplified in ROA SCM have direct effect on customer perceptions (timely delivery, quality, etc) Opportunit y SCM has much opportunity for improvement in most organizations

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7 Development of the Supply Chain Concept Physical Distribution Concept Logistics Management Concept Value Chain Concept SCM

8 Physical Distribution Concept 1950s and 1960s Focused on outbound logistics Logical due to value of finished goods Total systems costs and analyzing tradeoff scenarios

9 Logistics Management Concept 1970s and 1980s LMC integrated inbound logistics into the Physical Distribution Concept Came about due to deregulation of transportation More international sourcing also led to focusing on inbound side

10 Physical supplyPhysical distribution materials managementoutbound logistics inbound logistics Logistics Management Concept

11 Value Chain Concept 1990s Further deregulation in the areas of finance and communication Developed as a tool for evaluating competitive advantage Integrated sales, marketing, purchasing, and manufacturing with logistics.

12 Supply Chain Management Mid 1990’s to present Globalization Technology Organizational consolidation The empowered consumer

13 Manufacturing Supply Chain

14 Supply Chain Management Globalization

15 Supply Chain Management Organizational Consolidation Move from adversarial relationships with suppliers to collaborative relationship

16 Supply Chain Management The Empowered Consumer Technology and globalization has shifted power to the consumer This increases pressure on supply chain


18 An example in Fairview System terms…

19 SCM Components Financials Inventory Management Logistics and Distribution Supply/Demand Management SC Technology Production Management Quality Control and Improvement Purchasing

20 Financials Basic Business Financials Income Statement Balance Sheet Cash Flow Statement General Ledger Accounting Practices ROA/ROI

21 Financials The Supply Chain Financial Impact A major financial objective for any organization is to produce a satisfactory return for stockholders. The absolute size of the profit must be considered in relation to the stockholders’ net investment, or net worth. An organization’s financial performance is also judged by the profit it generates in relationship to the assets utilized, or return on assets (ROA). The supply chain plays a critical role in determining the level of profitability in an organization.


23 Inventory Management In U.S. Inventory investment averages about 14% of GDP or $2.1 Trillion When to Order/How much to Order Balancing Supply with Demand Large Impacts on Financials and Customer Service gdp#axzz1cjqs0ph6

24 Inventory Management Critical Decision-making for Inventory Control Quantity Issues Classifying Inventory Timing Issues Systems for Inventory Control Continuous/Periodic Two Bin/Kanban

25 Inventory Management Approaches of Inventory Management JIT MRP and DDMRP EOQ Fixed Order Quantity/Order Interval Condition of certainty Condition of Uncertainty

26 Logistics/Distribution In U.S. Logistics and Distribution accounts for 8.3% of GDP or $1.2 Trillion (2010) The physical flow of goods and services up and down the supply chain Critical to demand fulfillments

27 Supply/Demand Management Focused efforts to manage input fluctuations Focused efforts to process, influence, manage, and anticipate customer demand eJmSXlg eJmSXlg

28 Supply/Demand Management VMI EDI CPFR Bullwhip Effect Buyer/Seller Relationships http://www.youtub LNdDSYqhNw

29 SC Technology Supports critical supply chain capabilities and strategies A well-designed SCIS framework links people, processes, and technology in a manner that provides actionable information and enhances decision making.


31 SC Technology

32 Production Management Production Systems Made to Stock (MTS) Assemble to Order (ATO) Make to Order (MTO) Engineer to Order (ETO) Push/Pull Systems

33 Quality Control and Improvement Service Process Design/Analysis Factors Influencing Process Design Strategic Importance Continuous Process Improvement Pareto Analysis Ishikawa Diagrams Modeling Principles

34 Quality Control and Improvement Lean Principles 6 Sigma Benchmarking Just-In-Time TQM (Total Quality Management) ISO:9000

35 Quality Control and Improvement


37 Purchasing Purchasing Activities Strategic Sourcing Vendor Management Total Cost of Ownership

38 Supply Chain Issues

39 So what can we do? Control our costs Reduce Pricing to reduce cost Reduce variation/standardize product to reduce costs Manage our Inventory

40 6 Drivers of Supply Chain Excellence

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