Supply chain management involves coordinating all activities involved in sourcing and delivering products, from raw materials to customers. The goal is to match supply and demand profitably by achieving the right product, price, place, promotion, quantity and time for both suppliers and customers. Effective supply chain management can lower costs, increase productivity and profits through improved forecasting, purchasing, inventory management, and information sharing across the entire chain. Current trends include expanding globally, reducing environmental impact, and decreasing supply chain costs through outsourcing, technology, and continuous improvement.
2. Supply Chain Management - Meaning
All facilities, functions, activities, associated with flow
and transformation of goods and services from raw
materials to customer, as well as the associated
information flows
An integrated group of processes to “source,” “make,”
and “deliver” products
3. What is Supply Chain Management?
- A supply chain consists of
Supplier
Manufacturer
Distributor
Retailer
Upstream
Customer
Downstream
- aims to Match Supply and Demand,
profitably for products and services
SUPPLY SIDE
DEMAND SIDE
- achieves
The right
Product
+ + +
The right
The right
The right
Price
Store
Quantity
+
The right
+
Customer
The right
Time
=
Higher
Profits
9. Need for Supply Chain Management
•Match Demand
•Improve Operations
• Increasing transportation cost
• Competitive pressures
• Increasing globalization
• Managing Inventories
• Increasing importance of e-commerce
• Complexity of supply chains
10. Benefits of Supply Chain Management
• Lower inventories
• Higher productivity
• Higher profitability
• Shorter lead times
•Greater customer loyalty by delivering on time
11. Challenges of Supply Chain Management
Difficulty in integration
•Getting top managements on board
•Dealing with trade-offs
•Small businesses
•Variability & Uncertainty
•Long lead times
•
12. Current Trends in Supply Chain Management
•Outsourcing of manufacturing is a major trend
•Outsourcing of the logistics function
•Moving towards more web based transactions
systems
•Improving the information flows along the entire
chain
13. Current Trends in Supply Chain Management
Expanding the Supply Chain
The expansion involves:
breadth- foreign manufacturing, office & retail sites, foreign
suppliers & customers
depth- second and third tier suppliers & customers
14. Current Trends in Supply Chain Management
The Greening of Supply Chains
- Producing, packaging, moving, storing, delivering and
other supply chain activities can be harmful to the
environment
Supply chains will work harder to reduce
environmental degradation
Large majority (75%) of U.S. consumers influenced by
a firm’s environmental friendliness reputation
Recycling and conservation are a growing alternative
in response to high cost of natural resources
14
15. Current Trends in Supply Chain Management
Reducing Supply Chain Costs
Cost reduction achieved through:
Reduced purchasing costs
Reducing waste
Reducing excess inventory, and
Reducing non-value added activities
Continuous Improvement through
Benchmarking- improve over competitors’
performance
Trial & error
Increased knowledge of supply chain processes