1. Supply Chain Management
22 April 2017
Supply Chain Management
Chang-Yang Lin, PhD
Professor and Coordinator of CIS
Eastern Kentucky University
EKU - CY Lin

2. SCM and Inaccuracy Problems
On a typical day in a U.S. supermarket, 8.2% of the items are out of stock.
33% of out-of-stock items are located in the store, just not in the correct location.
The cost of stockouts in U.S. supermarkets are estimated at $7 to $12 billion of sales.
Before being stored on store shelves, items pass through several processes, including order processing, fulfillment, staging, shipment, receiving, short-term storage, and finally shelving.
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3. A Typical Supply Chain a coordinated system of entities, activities,
information and resources involved in moving
a product or service from supplier to customer

4. A Supply Chain a network of organizations and facilities
that transforms raw materials into
products delivered to customers
also includes transportation companies, warehouses, & inventories and some means for transmitting messages & information

5. Dell’s own channel for
manufacturing and selling
eliminated
distributors and
retailers

6. Supply Chain Management
SCM is the process of planning, implementing, and controlling the operations of the supply chain with the purpose to satisfy customer requirements as efficiently as possible
SCM spans all movement and storage of raw materials, work-in-process inventory, and finished goods from point-of-origin to point-of-consumption
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7. SCM Problems
Distribution network configuration: Number and location of suppliers, production facilities, distribution centers, warehouses and customers.
Distribution strategy: Centralized versus decentralized, direct shipment, pull or push strategies, third party logistics.
Information: Integrate systems and processes through the supply chain to share valuable information, including demand signals, forecasts, inventory and transportation.
Inventory management: Quantity and location of inventory including raw materials, work-in-process and finished goods.
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8. SCM Activities/Functions
The purpose of SCM is to improve trust and collaboration among supply chain partners, thus improving inventory visibility and improving inventory velocity
SCM activities can be grouped into strategic, tactical, and operational level of activities
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9. The Bullwhip Effect
An observed phenomenon in forecast-driven distribution channels
Because forecast errors are a given, companies often carry "safety stock"
Moving up the supply chain from end-consumer to raw materials supplier, each supply chain participant has greater observed variation in demand and thus greater need for safety stock
The effect is that variations are amplified the farther you get from the end-consumer
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10. The bullwhip effect is a phenomenon in which the variability
in the size and timing of orders increase at each stage up
the supply chain, from customer to supplier

11. The Bullwhip Effect (continued)
One way to eliminate the bullwhip effect is to give all participants in the supply chain access to consumer-demand information from the retailer.
Each organization can thus plan its inventory or manufacturing based on true demand and not on the observed demand from the next organization up in the supply chain.
An interorganizational information system is necessary to share such data.
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12. Stabilizing the Bullwhip Effect: A Demand-Driven Supply Chain
Individual Wal-Mart stores transmit POS data from the cash register back to corporate headquarters several times a day
This demand information is used to queue shipments from the Wal-Mart distribution center to the store and from the supplier to the Wal-Mart distribution center
The result is near-perfect visibility of customer demand and inventory movement throughout the supply chain
A demand-driven supply chain which reacts to actual customer orders. In manufacturing, this concept is called Kanban (カンバン 看板)
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13. Supply Chain Management
22 April 2017
B2B One Section of the Supply Chain
EKU - CY Lin

14. Supplier Relationship Management (SRM)
SRM is a business process for managing all contacts between an organizational and its suppliers.
SRM applications support three basic processes: source, purchase, and settle.
SRM examines inventory, determines that items are required, and automatically creates the order via its connection to the supplier’s CRM
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15. SRM Process

16. Definition of Key Terms Inventory
Inventory consists of a list of goods and materials held available in stock
Manufacturing organizations usually divide their "goods for sale" inventory into:
Materials and components (or Raw materials) scheduled for use in making a product
Materials and components that have begun their transformation to finished goods (or Work in Process)
Finished goods - goods ready for sale to customers
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