S UPPLY C HAIN M ANAGEMENT G UIDE Compiled by: Ioannis Dermitzakis

1. Introduction

I NTRODUCTION The series of slides is a basic introduction into Supply Chain Management and it should be used as such, to introduce to the staff of your organisation to the concepts, theories, working and advantages of having a fully functioning integrated Supply Chain. Successful introduction, training and acceptance of supply chain concepts throughout the whole organisation has been achieved in large and small organisation including SABIC in the middle east.

K EY C ONCEPTS S UPPLY C HAIN S UPPLY C HAIN IS : the sequence of suppliers that contribute to the creation and delivery of a good or service to end customers. Logistics is: the management of the storage and flow of goods, services and information throughout your organisation. Supply Chain Management is: organizing the cost effective flow and storage of materials, in-process inventory, finished goods and related information from point of origin to point of consumption to satisfy customer requirements.

A Business Philosophy A way of doing business with your customers and suppliers. K EY C ONCEPTS : A P HILOSOPHY

P RINCIPAL I SSUES : S UPPLY C HAIN (1) Supply Chain The supply chain of a company consists of different departments, ranging from procurement of materials to customer service. The supply chain includes activities associated with inventory (materials) acquisition, storing, use in production, transit, and delivery to customers.

P RINCIPAL I SSUES : S UPPLY C HAIN (2) The activities are planned, executed, and monitored under the guidelines set by the company’s chosen customer service levels and in line with the company’s other operating goals.

P RINCIPAL I SSUES : E LEMENTS OF L OGISTICS Elements of Logistics: materials management: sourcing and receiving of raw materials or unfinished products for subsequent use material flow system: the ability to locate and schedule material through to end production and disposition physical distribution: the delivery of finished goods to customers

P RINCIPAL I SSUES :L OGISTIC G OAL Logistic goal and objectives The right products The right quantity The right moment At minimal cost Flexibility Delivery reliability Delivery time/ lead time Inventory level

P RINCIPAL I SSUES : L OGISTIC S TEPS Logistic steps: accepting a customer order receive and enter credit clearance / authorize delivery commitment supplier ordering forecasting demand scheduling manufacturing inventory management delivery to customer.

P RINCIPAL I SSUES. E VOLUTION Quality products Lowest possible cost Quality products Lowest possible cost Order fulfillment Integration of supply chains Customer service Integration of supply chains Customer service Preferred partners Communication Preferred partners Communication Supply chain communities Common goals, objectives Supply chain communities Common goals, objectives

P RINCIPAL I SSUES : T HE G OAL Supply Chain Management Goal To evolve a company’s supply chain into an optimally efficient, customer-satisfying process, where the effectiveness of the whole supply chain is more important than the effectiveness of each individual department.

P RINCIPAL I SSUES : F OCUS Supply Chain Management focuses on business processes: product design planning order management stock management instead of functions: sales purchasing production

P RINCIPAL I SSUES : D RIVERS OF C HANGE (1) Drivers of change: outsourcing trend actual customer demand: speed, flexibility and competitive pricing new software: ERP, sophisticated application software

new technologies Electronic Data Interchange (EDI) internet, intranet, extranet wireless communications teleconferencing and telecommuting bar coding. P RINCIPAL I SSUES : D RIVERS OF C HANGE (2)

P RINCIPAL I SSUES : A CTIVITIES Supply chain management activities: Forecasting demand Selecting suppliers Ordering material Managing inventory Scheduling production Shipping and delivery Organizing information exchange

A NALYSIS : D IAGRAM Understand the customer Understand the product Understand the process Understand the information flow

A NALYSIS :U NDERSTAND THE C USTOMER (1) Know and understand the customers: Your existing customers, i.e., demographics existing and potential number income levels? Who are your potential customers? How might these customers be grouped? For which percentage of sales is each group responsible?

A NALYSIS : U NDERSTAND THE C USTOMER (2) What is the effect of various methods of communications (i.e., telephone, fax, e- mail, internet telephone systems) in your relation with your customers? What do your customers want from you? How well do your competitors meet customers needs?

A NALYSIS : U NDERSTAND THE P RODUCTS Understand the products: How many? Where are they? Which percentage of sales? What is the product life cycle? What is the product mix?

A NALYSIS : U NDERSTAND THE P ROCESS Understand the production process: process flow linear flow job shop - batch flow assembly line continuous flow project flow order fulfillment strategy make-to-order make-to-stock.

A NALYSIS : U NDERSTAND THE I NFORMATION F LOW Understand the information flow: What information is required for effective decision-making at each stage in the supply chain? What data has to flow between each part of the supply chain?

P ERFORMANCE I NDICATORS (1) A total view must be taken in assessing performance. Performance measurements need to be focused on what factors add to total performance, total value or total cost. The principle performance indicator is customer service. Optimum service levels are necessary from each supplier to each customer throughout the supply chain.

P ERFORMANCE I NDICATORS (2) Suppliers Inputs Adding value Adding value Outputs Customers Results Effectiveness Efficiency Productivity Profitability Customer Service + Quality Customer Service Customer Service

P ERFORMANCE I NDICATORS (3) Effectiveness: accomplishment of the right things, on time, within the requirements specified. Efficiency: resources expected to be consumed divided by resources actually consumed.

P ERFORMANCE I NDICATORS (4) Productivity: measures of output divided by measures of input for a given period of time. Profitability: relationship between revenues and costs.

C ONCLUSION Intro to SCM Process of SCM KPI’s of SCM