1 DSCI 3123 Supply Chain Management Def: Supply Chain What is Supply Chain Management? Strategic Importance of SCM –Purchasing –Operations/Materials Management –Marketing and Customer Service Uncertainty In Supply Chain & Some Solutions Supply Chain Design Accounting and Finance

2 DSCI 3123 Supply Chain Facilities, functions, activities for producing & delivering product or service from supplier to customer Planning, managing, acquiring, producing, warehousing, distribution, delivery

3 DSCI 3123 Customer Manufacturer or Service Provider Supplier Customer Scheduling Information Cash Flow Order Flow Credit Flow Material Flow Inv. Purchasing- Vendors What is Supply Chain Management? Operations/ Materials Man. Marketing/ Sales/ Cust. Serv. Accounting and Finance

4 DSCI 3123 Strategic Importance of SCM Deals w/the complete cycle of materials flows SCM plays key role in –Product customization –Quality control –Cost reductions –Speed-to-market Effective SCM is to balance the production stream with uncertainty (customer, supplier, economic, etc.)

5 DSCI 3123 Purchasing Why Important? –Substantial % of sales, both goods and services –e.g., Industry% of Sales All 54% Lumber 60% Food 63% Petroleum 83% –Quality of goods and services produced are directly related to those purchased/received

6 DSCI 3123 Purchasing Selecting suppliers Ordering materials Shipping & delivery of raw materials Information management Quality management - w/regard to suppliers Customer service - w/regard to suppliers and fellow workers

7 DSCI 3123 Operations/Materials Management Ordering materials - in conjunction w/purchasing Inventory control Scheduling production & capacity Shipping & delivery - in conjunction w/warehouse Information management - linked to 3 major business areas Quality management - garbage in/garbage out principal Customer service - vendors and final customer

8 DSCI 3123 Marketing and Customer Service Forecasting demand Selecting suppliers - in conjunction w/purchasing Shipping & delivery - contract requirements Information management Quality management - first place customer complaints and/or compliments Customer service - make the sale next time?

9 DSCI 3123 Uncertainty In Supply Chain Wrong forecasts Late deliveries Poor quality Machine breakdowns Canceled orders Erroneous information

10 DSCI 3123 Some Solutions Vertical integration Single sourcing JIT - moving suppliers closer Keiretsu - Japanese concept of partnering a small # of suppliers and vertical integration Information technology improvements- MRP, ERP Improved inventory control - goods as well as services

11 DSCI 3123 Supply Chain Design Strategic issue Apply quality management principles Control inventory Work with suppliers & customers to achieve goals Major goal of distribution is speed Locate close to major markets Use IT to speed information flow - e.g., EDI, Internet, etc. Outsource international distribution

12 DSCI 3123 Summary Def: Supply Chain What is Supply Chain Management? Strategic Importance of SCM –Purchasing –Operations/Materials Management –Marketing and Customer Service Uncertainty In Supply Chain & Some Solutions Supply Chain Design Accounting and Finance