Supply Chain Management Report: Analysis, Strategies, and Techniques

This comprehensive report on Supply Chain Management (SCM) provides a detailed overview of key concepts and practices within the field. It begins with an introduction to SCM and its core principles, including the integration of product, information, and financial flows. The report delves into the global dimensions of supply chains, exploring the rationale for global trade and its impact on organizational strategies. It examines the role of logistics in supply chains, highlighting its evolution, key activities (transportation, storage, order processing), and economic utilities. The report also covers sourcing materials and services, differentiating between purchasing, procurement, and strategic sourcing, and outlining the strategic evolution of the sourcing process. Finally, it addresses inventory management, discussing various types of inventory (cycle, safety, in-transit, work-in-process, seasonal, anticipatory) and the reasons for carrying them. This report is a valuable resource for understanding the complexities and strategies involved in effective supply chain management.

Supply Chain Management
Table of Contents
Week 1...................................................................................................................................................2
Chapter 1 – Supply Chain Management.............................................................................................2
Logistics & SCM Intro......................................................................................................................2
Chapter 2 – Global Dimensions of Supply Chains...............................................................................6
Chapter 3 – Role of Logistics in Supply Chains....................................................................................7
Week 2.................................................................................................................................................11
Chapter 5 – Sourcing Materials and Services....................................................................................11
Week 3.................................................................................................................................................17
Chapter 9 – Managing Inventory in the Supply Chain......................................................................17
Week 4.................................................................................................................................................26
Chapter 13 – Supply Chain Performance Measurement and Financial Analysis...............................26

Supply Chain Management
Week 1
Chapter 1 – Supply Chain Management
Logistics & SCM Intro
Logistics
- The process of planning, implementing and controlling the efficient and effective flow and
storage of raw materials, in process inventory, finished goods, related services and
information from point of origin to point of consumption for the purpose of conforming to
customer and organizational requirements
The logistics Pipeline
- The logistics Pipeline (Company Focused)
- Materials Management (Inbound)
- Physical Distribution (outbound)
- Goal of Logistics:
o To provide an acceptable level of customer service at the lowest possible total cost
Logistics
- The (customer service) goal of logistics is to get the right products, to the right people, in the
right place, in the right quantity, in the right condition, at the right time, for the right price
- 3 Key Logistics Activities:
o Transportation
o Storage
o Order Processing (outbound)/ Purchasing (inbound)
What has Logistics Done for us?
- Give access to new markets
- Increase economies of scale
- Increase competition
- Reduces prices to the consumer
- Increases consumer choice
- Allows companies to use comparative advantage to gain competitive advantage

Supply Chain Management
Five Major External Forces
Integrated Supply Chain – Basics
SCM is the art and science of integrating the flows of products, information and financials through
the entire supply pipeline from the supplier’s supplier to the customer’s customer

Supply Chain Management
Logistics Supply Chain Management (Introduction)
- Supply Chain Management
o Crosses Company Boundaries
o Aims to make the entire channel operate as efficiently as possible (not just one
company in the chain)
o Substitute information for inventory all along the chain
o Create win/win relationships with customers and suppliers
Integrated Supply Chain – Network
Supply Chain Flows
- Product Flow
o Physical movement of goods and materials
- Information Flow
o Enabling physical flow of products
o Decision making
o Supply chain collaborations
- Cash flow
o Management of working capital
- Demand Flow
o Detect and understand demand signals
o Synchronize demand vs. supply

Supply Chain Management
Major Supply Chain Issues
1. Supply Chain Network
a. Network system must be capable and flexible to respond to change with market
dynamics
2. Complexity
a. Increased requirements in simplifying and continually evaluating areas of complexity
in the various aspects of supply chain
3. Inventory Deployment
a. Increased requirements for coordination or integration to reduce inventory levels on
horizontal and vertical levels in the supply chain
4. Information
a. The sharing of information along the supply chain
b. The discipline to ensure the integrity of the vast amount of data collected and stored
5. Cost and value
a. The prevention of sub-optimization
6. Organizational relationship
a. Internal collaboration
b. External collaboration
7. Performance Measurement
a. Connecting lower-level metrics in an organization directly to the high-level
performance measures of the organization and the supply chain
8. Technology
a. Evaluate, strategically plan, and successfully implement the technology to make
improvements desired
9. Transportation management
a. Transport “perfect storm.” Transport market changes; driver shortages; fuel costs;
infrastructure constraints; and regulatory changes
10. Supply chain security
a. Risk of disruptions, vulnerability, and exposure to terroristic threats exacerbated by
distance and complexity in global supply chain
11. Talent management
a. Attract, develop, and maintain the appropriate pool of talent from entry level to
executive level

Supply Chain Management
Chapter 2 – Global Dimensions of Supply Chains
Rationale for Global Trade
- Absolute advantage
o Lower cost and/or access to items not available locally
- Comparative advantage
o Differences in the cost of producing products in different countries
Global Markets and Strategy
Supply Chain Perspective
1. Strategically sourcing materials and components worldwide
2. Selecting global locations for key supply depots and DCs
3. Evaluating transportation alternatives and channel intermediaries
4. Understanding governmental influences on global SC flows
5. Examining opportunities for collaboration with 3 PLs or 4 PLs
Customer Service Perspective
1. Standardization to reduce complexity must maintain some customization.
2. Global Competition often reduces the product life cycle
3. Organizational structures and business models change with more outsourcing
4. Globalization introduces more volatility and complexity

Supply Chain Management
Chapter 3 – Role of Logistics in Supply Chains
Logistics Supply Chain Management (Introduction)
- Evolution and Background of Supply chain Management
o Logistics
 The process of planning, implementing and controlling the efficient and
effective flow and storage of raw materials, in process inventory, finished
goods, related services and information from point of origin to point of
consumption for the purpose of conforming to customer and organizational
requirements
- The Logistics Pipeline (company focused)
- Materials Management (inbound)
- Physical Distribution (outbound)
- Goal of Logistics:
o To provide an acceptable level of customer service at the lowest possible total cost
Dimensions of Logistics
- The customer Service goal of logistics is to get the right products, to the right people, in the
right place, in the right quantity, in the right condition, at the right time, for the right price
- 3 Key Logistics Activities
o Transportation
o Storage
o Order Processing (outbound), Procurement (inbound)
Value-added Roles of Logistics
Five Principal Types of Economic Utility
Generally, production/manufacturing activities are credited with providing form utility; logistics
activities with time, place and quantity utilities; and marketing activities with possession utility
TIM
E
FOR
M
PLAC
E Economic
Utility
QUANTIT
Y
POSSESS
ION

Supply Chain Management

Supply Chain Management
Important Logistics Activities
Production
Form utility
Marketing
Possession
utility
Logistics
Place, Time &
Quantity utility

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Micro Dimension of Logistics
Logistics Interfaces with other Functional Areas
Factors Affecting Cost & importance of Logistics
1. Competitive relationships
a. Customer service can be a very important form of competition
2. Order cycle length
a. Shorter order cycles reduce the inventory required by the customer
3. Substitutability
a. Customer service is important for highly substitutable products to reduce lost sales
cost
4. Inventory effect
a. Increasing inventory costs can reduce the cost of lost sales
5. Transportation effect
a. Cost of lost sales can be reduced by spending more on transportation service to
improve customer service
6. Product related factors
a. Dollar Value
i. The product’s dollar value typically affects warehousing costs, inventory
costs, transportation costs, packaging costs, and even materials-handling
costs
b. Density
i. Weight/space ratio affects transportation and warehousing costs. As Density
increases for a product, its transportation and warehousing costs tend to
decrease
c. Susceptibility to damage
i. The greater the risk of damage to a product, the higher the transportation
and warehousing cots
d. Special handling requirements

Supply Chain Management
i. Need for special handling (eg. Refrigeration, heating, or strapping) will
usually increase warehousing, transportation, and packaging costs
7. Spatial relationships
a. The location of fixed points in the logistics system with respect to demand and
supply points are very important to transportation costs
Logistics and Systems Analysis
Approaches to Analysing Logistics Systems
The analysis of Logistics systems may require different views or perspectives of logistics activities
- Materials management vs. Physical distribution
o Examine logistics as inbound vs outbound logistics
- Cost Centres
o Examine Logistics activities as cost centres, allowing trade-offs between them to be
analysed
- Nodes vs. links
o Examine nodes (fixed spatial points where goods stop for storage or processing) vs
links (transportation network that connect the nodes in the logistics system)
- Logistics Channels
o Examine supply chain of network organizations engaged in transfer storage,
handling, communication, and other functions that contribute to product flow

Supply Chain Management
Week 2
Chapter 5 – Sourcing Materials and Services
Purchasing vs. Procurement vs. Strategic Sourcing
Purchasing is an activity that follows conduct of a formal sourcing process, while procurement and
strategic sourcing are best described as process
Strategic Sourcing
- Managing procurement priorities such that they are well-aligned with goals and objectives of
the supply chain of the overall organization
Procurement
- Managing a broad range of activities within the procurement process (e.g. supplier selection,
price negotiation, contract management, supplier performance management)
Purchasing
- Managing a firm’s acquisition procedures and standards, involving largely transactional
activity of the buying of products & services
Traditional Purchasing Process
- Identify needs
- Define user requirements (specifications)
- Make or Buy decision?
- Identify type of purchase
o Straight rebuy/ routine purchase
o Modified rebuy
o New buy
- Conduct a market analysis
- Identify all possible suppliers
- Pre-screen all possible sources
- Evaluate remaining suppliers
- Choose a supplier
- Receive goods
- Evaluate / monitor performance
Effects of Supply Chain Management on Purchasing
- Effects of SCM on the purchasing process
o Reduce number of suppliers
o Substitute information for inventory
o Build long term win-win relationships
o Raised transportation cost per unit
o More focus on Procurement and Strategic Sourcing