General Introduction of Supply Chain Management (Decision Phases)

I prepared these notes named “General introduction of Supply Chain Management” for a demo class held in Institute of supply chain management on 22-Sep-2014. I tried to cover all basic topics of Supply Chain Management generally.

Now you can ask why I tried to cover all topics for a demo class?

The reason is because there were lots of students some of them are going to get enroll in logistics courses which cover basic topics and diploma in supply chain management which covers extended and detailed topics.

Objective

•  Maximize the overall value generated – is the difference between what the final product is worth to the customer and the effort the supply chains expends in filling the request of the customer
•  Supply chain profitability is the difference between the revenue generated from the customer and the overall cost across the supply chain
• It is the total profit to be shared across all supply chain stages
• Supply chain success is measured in terms of supply chain profitability and not in terms of the profits at an individual stage
•  Revenue is from customer–  Positive cash flow
• All other cash flows are simply fund exchanges that occur within the supply chain given that different stages have different owners
•  All flows of information, product or funds generates costs within the supply chain
• Supply chain management involves the management of flows between and among stages in a supply chain to maximize total supply chain profitability

Decision Phases (useful for logistics courses aptitude tests)

Three categories - Depending on the frequency of each decision and the time frame, over which a decision has an impact,

1. Supply chain strategy or design
2. Supply Chain Planning
3. Supply chain operations (detailed definition are provided in diploma in supply chain management notes)

 (This image is courtesy of: AIMS College UK)

(Supply chain strategy notes are available in Supply chain management degree section of many educational and e-learning websites)

Supply chain strategy (Core subjects in Supply chain management degree)

• Decides how to structure the supply chain over the next several years

-          Chain configuration,

-          Resource allocated and

-          Process at each stage should perform

• Decisions include

-          Location and capacities of production and warehousing facilities,

-          The products to be manufactured or stored at various locations,

-          The method of transportation to be made available along different shipping legs, and

-          The type of information system to be utilized

Supply chain planning

• Under the given configuration decisions are made which has impact on a time frame of quarter to a year
• Starts with a forecast the coming year or a comparable time frame
• Planning decisions include – which market will be supplied from which locations, 
• – the subcontracting for manufacturing,
• – the inventory policies to be followed, and
• – the timing and size of marketing promotions
• Companies in the planning phase try to incorporate any flexibility built into the supply chain in the design phase and exploit it to optimize performance
• Configuration is fixed and policies are defined
• Objective is to handle incoming customer orders in the best possible manner
• Decisions related with
• –        Allocation of inventory or production to individual orders,
• –        Set a date that an order is to be filled,
• –        Generate pick lists at a warehouse,
• –        Allocate an order to a particular shipping mode and shipment,
• –        Set delivery schedules of trucks, and
• –        Place replenishment order
•  Exploit the reduction in uncertainty and optimize performance
• Very useful when considering strategic decisions relating to supply chain
•  Forces more global consideration of supply chain processes as they relate to a customer order
• More the pull process better the supply chain

Supply chain operation

•  Decisions are taken regarding individual customer order
• and the time frame is week or days
• Configuration is fixed and policies are defined
• Objective is to handle incoming customer orders in the best possible manner
• Decisions related with
• –        allocation of inventory or production to
• individual orders,
• –        set a date that an order is to be filled,
• –        generate pick lists at a warehouse,
• –        allocate an order to a particular shipping mode
• and shipment,
• –        set delivery schedules of trucks, and
• –        place replenishment order
• Exploit the reduction in uncertainty and optimise
• performance