1000 words journal
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3Whatissupplychainmanagement2.pptxWhat is Supply Chain Management?
John Wu, Ph.D.
Professor of Supply Chain and Transportation
CSU San Bernardino
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What is Supply Chain Management?
Here are two definitions:
The design and management of seamless, value-added process across organizational boundaries to meet the real needs of the end customer
-- Institute for Supply Management
Managing supply and demand, sourcing raw materials and parts, manufacturing and assembly, warehousing and inventory tracking, order entry and order management, distribution across all channels, and delivery to the customer
-- The Supply Chain Council
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Academic definitions also help. Please also Google SCM so that you understand the different focus each organization places. Compare them to the plain English one in the next slide.
What is Supply Chain Management?
In plain English:
Supply chain management (SCM) is the management of the flow of goods from point of production to point of consumption.
SCM includes the movement and storage of raw materials, work-in-process inventory, and finished goods throughout networks, channels, and nodes in the provision of products and services required by end customers in a supply chain.
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Could you define SCM in your own words? What is your perspective? Activities? Players involved? Goals and objectives? Functional orientation?
The Value Chain Perspective
Porter‘s Value Chain
Supply side:
raw materials, inbound logistics and production processes
Demand side: outbound logistics, marketing and sales.
suppliers
customers
The value chain concept comes from Michael Porter, a Harvard professor. In every step of the way when goods are moving from suppliers to customers, each supply chain member adds value to it. A supply chain consists of many value chains (your suppliers have their own value chains and so do your customers). We will discuss the value chain more in depth in a separate PPT but right now you need to know the supply and demand sides of this supply chain and where value is being added.
Long supply chains in ancient times: the Silk Roads, spice trade, international trading by land and sea
History of SCM: Ancient Trading Routes
Ancient trading routes are supply chain routes/networks. Why did people engage in trading?
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Why did Columbus sail west from Spain in 1492?
History of SCM: Ancient Trading Routes
Ancient trading routes also included water/ocean routes. In 15th century, Indian Ocean saw busy merchant fleets from many countries, transporting china, silk, spices from mainly East and South Asia to the Arabian Peninsula, Africa, and Europe.
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Derived from military logistics: logistics moves before military maneuvers.
Tooth to Tail Ratio (T3R): ratio of combat force vs. support personnel (think the almighty Mongolian army in the 13th century!)
History of Supply Chain Management
We want more of this.
And less of this.
Soldiers carry 50-100 lbs.
Please research the T3R. We need more fierce teeth than body for the dog, more combat soldiers than cooks in the army, and have soldiers carry less into battlefield. Do you see the same T3R in 1) your everyday life, 2) your organization, and 3) anything that the government (or CSUSB) does?
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U.S. Military T3R: Efficient?
The Other end of the spear : the tooth-to-tail ratio (T3R) in modern military operations, John J. McGrath, 2007, p. 83.
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In the end of World War II (ETO 1945 or European Theater Operations), about 2 in 5 soldiers were combat solders or teeth. Sixty years later, it’s one in four. Why such a change and how can we build a military with more “teeth” and less “tail?”
A Supply Chain Web:
Videos
Watch the following videos from Arizona State and Deutsche Post :
What is Supply Chain Management
Supply Chain Brings Everything to People
It involves managing people
It involves managing information
It involves managing physical assets
It involves managing finances
It involves managing products and services
It is versatile and all encompassing
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SCM covers almost everything in a n organization!
American Football Analogy
Objective: Outscore your opponents.
How? Run or pass the ball to advance 10 yards or more in 4 tries… delivering the ball to the right person at the right time in the right place.
Quaterback job description:
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What is the job of the quarterback? Is it similar to a corporate manager/leader?
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Retail Supply Chain
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The roles identified on this page show how we manage a global supply chain that has become ever more complex.
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Seafood Supply Chain
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How seafood comes to our dining tables.
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Regional Food Supply Chain: Eat Local
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Recent trends of eating locally produced food to reduce food-miles.
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Supply Chain Analytics
Business Partner Processes
Strategy,
Operations
& Talent
Analyze & Influence Client Requirements
Plan Supply & Demand
Distribute & Global Logistics, Deliver
Manage Strategic Sourcing
Manage Client Contracts & Orders
Manufacture Products
Cash Management, Invoice & Payment
Manage Suppliers & Commodities
Asset Management
Supplier Order Execution
Proof of Concept Solutions
Procurement & Mfg Engineering
Fulfill Solutions & Services
Post Sales Support
Green & SC Social Responsibility
Supply Chain Functions
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The roles identified on this page show how we manage a global supply chain that has become ever more complex.
Best Supply Chains are Invisible
Nobody appreciates it when it’s there.
Everybody feels inconvenienced when it’s not there.
It’s the underappreciated urban water, electricity, gas, sewage systems and the information infrastructure.
It’s the US Navy Submarine Fleet! (Silent Victory: 2% of fleet that sank 55% enemy ships!)
Amateurs talk about strategy; professionals talk about logistics.
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Some analogies of supply chain functions. Can you come up with a few on your own?
When Supply Chain Fails…
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Efficient Supply Chain Management
Logistics costs include: inventory carrying costs, transportation costs, and administration costs. It’s every dollar the country spends on getting goods from manufacturers/importers to consumers 9and some returns processing). Research what’s included in these cost items.
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More Efficient SCM in the U.S.!
Source: CSCMP State of Logistics Report, 2013
So we are more efficient! We have a better tooth to tail ratio! Yeah! Okay, seriously, what’s the next questions?
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Case Study: Twinkies
150 years old bakery bankrupted in 2012, revived by private equity in 2013.
Direct deliveries to customers using 5000+ trucks, with logistics costs at 36% of total revenues.
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Case Study: Twinkies
New management changed Twinkies formula so they stay fresh for 65 days instead of 30. This allows them to deliver directly to distribution centers of their customers who then distribute to stores.
Logistics costs drop to 16% of revenues.
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Case Study: Twinkies
1800 Target stores vs. 37 Distribution Centers
5100 Walmart stores vs. 158 Distribution Centers
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# of SKUs: Amazon: 350MM; Walmart: 4MM; Supermarket: 50K
Amazon Order Fulfillment
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Amazon Logistics Network
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Through Multi-Modal Transportation
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