SUPPLY CHAIN MANAGEMENT

Understanding the Supply Chain

Dosen : Dr. Idi Jahidi, S.Pd., M.Si.

 Fakultas Ekonomi dan Bisnis
School Economics and Business Referensi/Kepustakaan
Telkom University

Chopra, Sunil & Peter Meindl. (2001). Supply

Chain Management Strategy, Planning &
Operation. USA: Prentise Hall
Render Barry, Jay Heizer. (2011). Operations
Management. USA: Pearson-prentice Hall.

2 Creating the great business leaders

 Fakultas Ekonomi dan Bisnis
School Economics and Business Referensi/Kepustakaan
Telkom University

Supply Chain Management

(3rd Edition)

Chapter 1
Understanding the Supply Chain

3 Creating the great business leaders

 Fakultas Ekonomi dan Bisnis
School Economics and Business Summary of Learning Objectives
Telkom University

4 What are the cycle and push/pull views of a

supply chain?
How can supply chain macro processes be
classified?
What are the three key supply chain decision
phases and what is the significance of each?
What is the goal of a supply chain and what is
the impact of supply chain decisions on the
success of the firm?

4 Creating the great business leaders

 Fakultas Ekonomi dan Bisnis
School Economics and Business Traditional View: Logistics in the Economy (1990, 1996)
Telkom University

Freight Transportation $352, $455 Billion

Inventory Expense $221, $311 Billion
Administrative Expense $27, $31 Billion
Logistics Related Activity 11%, 10.5% of GNP

5 Creating the great business leaders

 Fakultas Ekonomi dan Bisnis
School Economics and Business Traditional View: Logistics in the Manufacturing Firm
Telkom University

6
Profit
Profit 4%
Logistics
Cost

Logistics Cost 21% Marketing

Cost

Marketing Cost 27%

Manufacturing
Cost
Manufacturing Cost 48%

6 Creating the great business leaders

 Fakultas Ekonomi dan Bisnis
School Economics and Business
Supply Chain Management: The Magnitude in the Traditional View
Telkom University

7 Estimated that the grocery industry could save $30

billion (10% of operating cost) by using effective
logistics and supply chain strategies
A typical box of cereal spends 104 days from factory to sale
A typical car spends 15 days from factory to dealership

Laura Ashley turns its inventory 10 times a year,

five times faster than 3 years ago

7 Creating the great business leaders

 Fakultas Ekonomi dan Bisnis
School Economics and Business Supply Chain Management: The True Magnitude
Telkom University

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Compaq estimates it lost $.5 billion to $1 billion in
sales in 1995 because laptops were not available when
and where needed
When the 1 gig processor was introduced by AMD, the
price of the 800 mb processor dropped by 30%
P&G estimates it saved retail customers $65 million by
collaboration resulting in a better match of supply and
demand

8 Creating the great business leaders

 Fakultas Ekonomi dan Bisnis
School Economics and Business Outline
Telkom University

9
What is a Supply Chain?
Decision Phases in a Supply Chain
Process View of a Supply Chain
The Importance of Supply Chain Flows
Examples of Supply Chains

9 Creating the great business leaders

 Fakultas Ekonomi dan Bisnis
School Economics and Business What is a Supply Chain?
Telkom University
All stages involved, directly or indirectly, in fulfilling a customer request
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Includes manufacturers, suppliers, transporters, warehouses, retailers,
and customers
Product development, Marketing, Operations, Distribution, Finance,
Customer service)
Examples: Fig. 1.1 Detergent supply chain (Wal-Mart), Dell
Customer
Includes movement of products, information, and funds in both
directions
supply network or supply web
Typical stages: customers, retailers, distributors, manufacturers,
suppliers (Fig. 1.2)
All stages may not be present (e.g., no retailer or distributor for Dell)

10 Creating the great business leaders

 Fakultas Ekonomi dan Bisnis
School Economics and Business What is a Supply Chain?
Telkom University

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Customer wants
P&G or other Jewel or third Jewel
detergent and goes
manufacturer party DC Supermarket
to Jewel

Chemical
Plastic Tenneco
manufacturer
Producer Packaging
(e.g. Oil Company)

Chemical
Paper Timber
manufacturer
Manufacturer Industry
(e.g. Oil Company)

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 Fakultas Ekonomi dan Bisnis
School Economics and Business Flows in a Supply Chain
Telkom University

12

Information

Product
Customer
Funds

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 Fakultas Ekonomi dan Bisnis
School Economics and Business The Objective of a Supply Chain
Telkom University

13

Maximize overall SC value created

Supply chain value:
Final Product Value Total Supply Chain Cost
SC Value = Price of Widget Cost of all Phases in SC
SC Value = Profit of SC

13 Creating the great business leaders

 Fakultas Ekonomi dan Bisnis
School Economics and Business The Objective of a Supply Chain
Telkom University

14
Dell receives $2000 from a customer
Supply Chain Costs (information, storage,
transportation, components, assembly, etc.)
Supply Chain Profit = $2000 - Supply Chain Costs
Supply Chain Profit is shared across all stages in SC
Supply Chain Success is measured by total supply
chain profitability, not profits at an individual stage

14 Creating the great business leaders

 Fakultas Ekonomi dan Bisnis
School Economics and Business The Objective of a Supply Chain
Telkom University

15

Supply chain management is the

management of flows between
and among supply chain stages to
maximize total supply chain
profitability

15 Creating the great business leaders

 Fakultas Ekonomi dan Bisnis
School Economics and Business Decision Phases of a Supply Chain
Telkom University

16

Strategy or Design
Planning
Operation

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 Fakultas Ekonomi dan Bisnis
School Economics and Business Supply Chain Strategy or Design
Telkom University

17
Structure of the supply chain
Strategic supply chain decisions
Locations and capacities of facilities
Products to be made or stored at various locations
Modes of transportation
Information systems
Supply chain design must support strategic objectives
SC design decisions are long-term and expensive to
reverse

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 Fakultas Ekonomi dan Bisnis
School Economics and Business Supply Chain Planning
Telkom University

18

A set of policies that govern short-term

operations
Fixed by the SC design
Starts with a forecast of demand for the
coming year

18 Creating the great business leaders

 Fakultas Ekonomi dan Bisnis
School Economics and Business Supply Chain Planning
Telkom University

19
Planning decisions:
Which markets will be supplied from which
locations
Planned buildup of inventories
Subcontracting, backup locations
Inventory policies
Timing and size of market promotions
Must consider demand uncertainty, exchange
rates, competition over the time horizon

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 Fakultas Ekonomi dan Bisnis
School Economics and Business Supply Chain Operation
Telkom University

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Time horizon is weekly or daily
Decisions about individual customer orders
Configuration is fixed and operating policies are determined
Goal is to implement the operating policies as effectively as
possible
Allocate orders to inventory or production, set order due dates,
generate pick lists at a warehouse, allocate an order to a
particular shipment, set delivery schedules, place
replenishment orders
Much less uncertainty (short time horizon)

20 Creating the great business leaders

 Fakultas Ekonomi dan Bisnis
School Economics and Business Process View of a Supply Chain
Telkom University

21 Cycle view: Supply chain is a series of cycles, each

performed at the interfaces between two successive
supply chain stages
Push/pull view: processes in a supply chain are divided
into two categories:
Pull are executed in response to a customer order
Push in anticipation of a customer order
Pull Systems are Leaner

21 Creating the great business leaders

 Fakultas Ekonomi dan Bisnis
School Economics and Business Cycle View of Supply Chains
Telkom University
Customer
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Customer Order Cycle

Retailer
Replenishment Cycle

Distributor

Manufacturing Cycle

Manufacturer

Procurement Cycle
Supplier

22 Creating the great business leaders

 Fakultas Ekonomi dan Bisnis
School Economics and Business Cycle View of a Supply Chain
Telkom University

23 Each cycle is at the interface between two successive stages

Customer order cycle (customer-retailer)
Replenishment cycle (retailer-distributor)
Manufacturing cycle (distributor-manufacturer)
Procurement cycle (manufacturer-supplier)
Figure 1.3
Cycle view clearly defines processes involved and the owners of
each process. Specifies the roles and responsibilities of each
member and the desired outcome of each process.

23 Creating the great business leaders

 Fakultas Ekonomi dan Bisnis
School Economics and Business Push/Pull View of Supply Chains
Telkom University

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Procurement, Customer Order
Manufacturing and Cycle
Replenishment cycles

PUSH PROCESSES PULL PROCESSES

Customer
Order Arrives

24 Creating the great business leaders

 Fakultas Ekonomi dan Bisnis
School Economics and Business Push/Pull View of Supply Chain Processes
Telkom University

25

Pull: execution is initiated in response to a

customer order (reactive)
Push: execution is initiated in anticipation of
customer orders (speculative)
Push/pull boundary separates push processes
from pull processes

25 Creating the great business leaders

 Fakultas Ekonomi dan Bisnis
School Economics and Business Push/Pull View of Supply Chain Processes
Telkom University

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Useful in considering strategic decisions relating to
supply chain design more global view of how supply
chain processes relate to customer orders
Can combine the push/pull and cycle views
L.L. Bean (Figure 1.6)
Dell (Figure 1.7)
The relative proportion of push and pull processes can
have an impact on supply chain performance

26 Creating the great business leaders

 Fakultas Ekonomi dan Bisnis
School Economics and Business Supply Chain Macro Processes in a Firm
Telkom University

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Supply chain processes can be classified into (Figure
1.8):
Customer Relationship Management (CRM)
Internal Supply Chain Management (ISCM)
Supplier Relationship Management (SRM)
Integration among the above three macro processes is
critical for effective and successful supply chain
management

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 Fakultas Ekonomi dan Bisnis
School Economics and Business Tugas
Telkom University

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1. Bentuk kelompok dengan anggota berjumlah 6-7 orang.
2. Setiap kelompok memilih dan menentukan satu perusahaan go
internasional (global).
3. Susunlah company profile, struktur organisasi, dan gambaran umum
Supply Chain Management perusahaan tersebut.
4. Susunlah slide untuk presentasi dan diskusi kelompok dari materi
tersebut (nomor 3).
5. Tugas dikumpulkan h-1 dari jadwal perkuliahan (pukul 24.00) melalui
email idijahidi@yahoo.co.id.

28 Creating the great business leaders