INTRODUCTION TO SUPPLY CHAIN

MANAGEMENT
 Learning objectives

 Define supply chain

 Draw and describe the diagram of the generic supply chain
 Explain the concept of supply chain management
 Explain the components of the supply chain
 Discuss the elements of supply chain management
 Describe the current trends in supply chain management
 Understand the benefits of supply chain management
 Describe the supply chain performance
 Explain the concept of supply chain network design
 Discuss the Porters value chain
 Discuss logistics management and its components
 Definitions
Supply Chain A system of organisations, people,
technology, activities, information and
resources involved in moving a product
or service from supplier to customer”
(Charted Institute of Purchasing &Supply
(CIPS)).

Supply chain Management Encompassing the planning and

management of all activities involved in
sourcing, procurement, conversion, and
logistics management.
Generic supply chain
Look at figure 1.1

Supply Chain Management. Source: quizlet.com

Supply chain management

Supply Chain Management at Walmart. Source: pinterest.com

 Types of a supply chain

1. Service chains:- Implement mission statement of

organisations. Banks-Hospitals
2. Concentrated chains :- Business with few customers and
many suppliers who apply EDI & JIT. AUTOMOTIVE industry
3. Retail and distribution chains :- comprise many customers
and relatively few sellers, that apply vendor –managed
inventory (VMI) software. Retail stores
4. Batch manufacturer chains :- Consist of many suppliers with
complicated relationships. Manufacturers
Basic components of supply chain management
1. Planning:- This is the strategic portion to monitor the supply chain so that it is
efficient, costs less and delivers high quality and value.
2. Sourcing:- After planning, companies must chose suppliers to deliver goods.
Therefore a set of pricing, delivery , payment processes and metrics for
performance measure are developed.
3. Making:- is the manufacturing step. SC managers schedule the activities
necessary for production, testing, packaging and preparation for delivery.
4. Delivery:- This is where receipts of orders are coordinated, network of
warehouses is developed and pick carries to get products to customers are used.
5. Returning:- A flexible network for receiving defective and excess product back
and from their customers and supporting customers who have problems
 Elements of supply chain management
1. Purchasing
2. Operations
3. Distribution
4. Integration
 Trends in supply chain management
• Reducing supply chain costs:- can be achieved by reducing waste,
purchasing and product distribution, excess inventories and non-value
adding activities . (lean manufacturing, JIT, outsourcing)
• Improved supply chain responsiveness:- identify end consumers needs,
the competition and position of the supply chain’s products and service.
(technology)
• Greening of the supply chain:- The state along with the firms companies
work towards reducing environmental problems through environmental
regulation. (environmentally friendly products)
• Expanding the supply chain:- firms are increasing their partnerships with
foreign firms and build foreign production facilities to increase
responsiveness to global economic conditions and demand. expansion
includes increasing the breadth and depth of the supply chain.
(globalization)
 Trends in supply chain management continued..

• More emphasis on visibility:- Todays supply chain solutions focus on

offering analytics data that facilitate decision making , as proposed to
merely providing static visibility. (real-time data through technology)
 CLASS ACTIVITY

• How has TakeALot improved its SC

responsiveness?
• Give an example of Greening in SC.
• Give an example of companies that expanded
their SC.
 Benefits of supply chain management
approach

 Enhanced product and service quality.

 Improved supply chain communication and collaboration.
 Reduced cost by eliminating waste activities.
 Faster lead times for product development and delivery-agile supply.
 Sharing demand forecasting and planning information enables JIT supply.
 Access to complementary resources and capabilities.
 Improved response to customer requirements.
 Supply chain network design decision
Supply chain design decisions would be based on the following questions…

 Where should the manufacturing plants be located?

 Which transport mode and carrier should be considered?
 What sourcing channels should be used to source materials?
 What is the role of the distribution centres relative to local warehouses?
 How many warehouses should the firm use and where should they be
located?
 What service providers and value added services should be used to meet
market requirements?
 Class activity

What are the various types of resources

required by companies in order to manage
successful supply chains?
 Supply chain performance drivers
• Facilities:- This is the physical location in the supply chain network where
the product is stored and assembled. The size, number and where the
warehouses are located should be considered carefully.
• Inventory:- Represents the materials and finished products in the firm
and supply chain. This can be work in progress, raw materials purchase
and finished goods.
• Information:- Information flows from both direction of the supply chain.
• Sourcing:- The selection of competent suppliers has a direct influence on
the firms competitive success.
• Pricing:- Is what the seller charges for a package of benefits offered to a
buyer.
• Transport:- Is a link between customers, suppliers, factories, warehouses,
and the individual participants in the supply chain.
Figure 1.2 Summary of the supply chain management key functions.
Summary of the supply chain management key
functions
 Procurement
 Purchasing
 Strategic sourcing
 Supplier development
 Supplier relationship Management
 Logistics
 Materials management
 Warehousing Transportation
 Distribution
 New product\service development
 Manufacturing/ product/ service flow management
 Customer service order fulfilment
 Client relationship management
 Supply chain strategy
 PORTER’S VALUE CHAIN

The value chain is a concept of business management that was first

described and popularised by Michael Porter in 1985. Competitive
advantage, he argues, can be understood only by looking at a firm as a
whole. Cost advantages and successful differentiation are found in the chain
of activities that a firm performs to deliver value to its customers.
Advantages or disadvantages can occur at any one of five primary and
four secondary activities:
• Primary activities: Inbound logistics, operations, outbound logistics,
marketing & sales, and service
• Secondary activities: Procurement, technology development, human
resource management, and infrastructure
PORTER’S VALUE CHAIN

Figure 1.3 The value chain

 DEFINING LOGISTICS

Logistics Management Definition

(Council of Supply Chain Management Professionals)

Logistics management is that part of supply chain management that

plans, implements and controls the efficient, effective forward and
reverse flow and storage of goods, services and related information
between the point of origin and the point of consumption in order to
meet the customer’s requirements.
 Activities of logistics management
• Customer service
• Demand forecasting
• Inventory management
• Logistics communication
• Materials handling
• Order processing
• Packaging
• Parts and service support
• Plant and warehouse site location
• Purchasing
• Reverse logistics
• Traffic and transportation
• Warehousing and storage
• )
 Integrated Logistics
 Facility network
 Order processing
 Inventory
 Transportation
 Warehousing , material handling and packaging
 Integrated logistics management
 Glossary of terms
• Supply Chain
• Supply Chain Management
• Supply Chain companies that you know of
• Suppliers
• Manufacturing
• Warehouse
• Costs reduction
• Supply Chain responsiveness
 HOMEWORK
1. As a procurement officer of a company, how would you define the
following:
• Supply Chain
• Supply Chain management
2. Identify a company of your own choice and illustrate its Supply Chain using
a similar diagram to the one used in this slide.
3. Describe the elements of Supply Chain management.
4. Discuss the current trends in Supply Chain management.
5. Identify a company of your own choice and explain its Supply Chain
performance drivers.
6. Define logistics and briefly discuss the components of it.
7. List the benefits of Supply Chain management.
 References
• Mbanje, S. & Lunga, J. (2023). Fundamental principles of
supply chain management. Pretoria: Van Schaik.
 The End

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