What is a supply chain management?

A generic supply chain structure is as simple as

supplier, manufacturer, wholesaler, retailer and
end user. *read the definition sa slide* So
supply chain management is concerned with-
the way operations managers have to look
beyond internal view so ibigsabihin they should
also look externally, kailangan iconsider yun
performance of suppliers, suppliers’ supplier as
well as customers and customers’ customer to
create value to end users.
*the supply chain concept applies to the internal
relationships between processes as well as the
external relationships between operations*
(metro combined logistics solution/FedEx)
Supply networks are all the operations linked
together so as to provide products and services
through to end customers.
This is an example of supply chain,(best supply
chain in the wold)apple purchases components
and materials from various suppliers, then gets
them shipped to assembling plant in China. From
there, products are shipped directly to
consumers via UPS/ FedEx who bought from
Apple’s Online Store. From other distribution
channels such as retail stores and other
distributors, Apple keeps products at ELK Grove
California (where central warehouse and call
center are located) and ships product from
there. At the end of product’s life, customer can
send products back to the nearest apple stores
or dedicated recycling facilities.
Example of companies with good supply chain
management is the Walmart “Big Box store”, as
the world’s largest retailer in the last decade, it
succeeds by having fewer links in its supply
chain, and buying more generic goods directly
from manufacturers rather than from suppliers
with brandnames and mark up. And yungmga
manufacturers are responsible in managing
products in warehouse owned by Walmart
”vendor managed inventory”. Yung company
din is particularly choosy sa suppliers,
9nakikipagpartner lang sila sa mga suppliers
who can meet the quantity and frequency it
demands with low prices and with locations that
limit transportation needs. They manage their
supply chain like one firm, with all partners
operating on the same communication network.
Amazon is also one example of a unique supply
chains, (world’s largest online retailer) as an e
commerce shop, obviously they cut the retail
store out and ship from distribution center to
consumer’s home directly. Amazon produces
everyday goods cheaply and underbids
suppliers. Next their warehouse make serious
use of automation to store items going to like
destinations together, ready for immediate
transport. Finally is ung investment sa delivery
staff and technology make 2 day shipping a basic
expectation and even the same day delivery a
possibility.
Example sa financial institutions or sa banks, ang
lumalabas na supply is yung money from
depositors , then after maideposit sa banks,
pupunta si client para magppafinance ng project
or business then the business will operate for
end users.
Tangible and intangible – universities, health
care operations, consultants, insurance
providers
*the supply chain concept applies to non
physical flow between operations and processes
as well as physical flows.

Next question how should supply chain

compete?
This picture illustrates incorrect competition in
the supply chain. Kapagangisasa network ay
nagkaproblema, example is the supplier, the
distributor and end user will also be affected.
Remember that SCM shares one common and
central goal which is to satisfy the end
customer.Lahat ng stages sa various chains
dapatiniincludeyung consideration sa final
consumer, kahitgaanokalayoyung individual
operations sa end customer. Bawat operation in
each chain should be satisfying its own customer
but also making sure na eventually si end user is
also satisfied.
Performance objectives-read the slide- so dito
dapat each operation in the chain should
contribute this mix of quality speen
dependability flexibility and cost sa end user.
Lean vs Agile- read the slides-
Lean SCM is about reducing cost and lowering
waste as much as possible. This methodology is
important for organizations with high volume of
low variability.
Agile SCM is considered important for
organizations that want to be able to adapt to
unanticipated external economic changes, such
as changes in technology and customer demand.
Implementing this also allows organization to
quickly adjust sakanilang sourcing, logistics and
sales.
But remember that supply chains with different
end objectives needs managing differently. By
applying the correct functions, the company will
be able to save money and be able to easily
adapt to rapid fluctuations.
HOW SHOULD RELATIONSHIPS IN SUPPLY
CHAINS BE MANAGED? Managing supply chains
is about managing relationships, because
relationships influence the smooth flow
between operations and processes. Two
dimensions are particularly important-what the
company chooses to outsource and who
chooses to supply it.
What –Key questions are how many activities
are outsourced (from doing everything in-house
at one extreme to outsourcing everything at the
other extreme) and how important are the
activities outsourced?
Who- How many suppliers will be used by the
operation? How close are the relationships?
So, ditto na pumapasok ang contracting and
relationship. *Whatever is the arrangement
with its supplier that a firm chooses to take, it
can be described by the balance between
contracts and relationships.
Contract based advantage
1. Nagpopromote ito ng constant drive
between suppliers to provide best value.
2. A supplier specializing in a small number
of products or services, but supplying them
to many customers, can gain natural
economies of scale, enabling the supplier to
offer theproducts and services at a lower
 price than if customers performed the
activities themselves on a smaller scale.
3. Kapag nagbago ung demand, customers
can simply change the number and type of
suppliers- syempre yung mas mabilis and
cheaper alternative to redirecting internal
activities.
4. Specialist suppliers are more likely to
come up with innovations that can be
acquired ng mas mabilis at mura kesa
magdevelop in-house.

Disadvantage
1. If supply is difficult, there is no guarantee
of receiving supply.
2. Yung pag gather ng sufficient
information and making decision of course
take time and effort.
Long term partnership
Partnership relationships involve a longer term
commitment between buyers and seller. These
relationships emphasize co-operation, frequent
interaction, information sharing and joint
problem solving . At their core, partnerships are
close and trusting relationships, the degree to
which is influenced by a number of factors:
Sharing success – both partners jointly benefit
from the co-operation rather than manoeuvring
to maximize their own individual contribution.
This may sometimes involve formal profit-
sharing arrangements.
Long-term expectations – relatively long-term
commitments, but not necessarily permanent
ones.
Multiple points of contact – communication not
restricted to formal channels, but may take
place between many individuals in both
organizations.
Joint learning – a relationship commitment to
learn from each other’s experience.
Few relationships – a commitment on the part
of both parties to limit the number of customers
or suppliers with whom they do business.
Joint co-ordination of activities – fewer
relationships allow joint co-ordination of
activities such as the flow of materials or service,
payment, and so on.
Information transparency – confidence is built
through information exchange between the
partners. Joint problem solving – jointly
approaching problems can increase closeness
over time.
Trust – probably the key element in partnership
relationships. In this context, trust means the
willingness of one party to relate to the other on
the understanding that the relationship will be
beneficial to both, even though that cannot be
guaranteed. Trust is widely held to be both the
key issue in successful partnerships and, by far,
the most difficult element to develop and
maintain.
In partnership, the concept of mutuality is very
important. A supplier does not become a
“partner” merely by being called one. True
partnership implies mutual benefit and often
mutual sacrifice.
HOW IS THE SUPPLY SIDE MANAGED?
After makapagdecide na bumili ng products or
services, managers must decide on sourcing
strategies for different products or services,
select appropriate suppliers, manage ongoing
supplies and improve suppliers capabilities over
time. Yung activities na to are usually
responsibility ng procurement or purchasing
function ng isang business. Purchasing should
provide a vital link between the operation itself
and its suppliers. Kailangan naiintindihan nila
yung mga requirements sa processes within
their operation and yung capabilities ng supplier
na magpoprovide ng products or services for the
operation.
Sa chapter 5, na discuss ni Ms. Glenny yung sa
issues concerning the configuration of a supply
network. Yung pagchange ng shape of the
supply network may involve reducing the
number of suppliers to the operation so as to
develop closer relationships, and bypassing or
disintermediating operations in the network.
Lets go bit further by examining these four key
sourcing approaches.
Advantages of multiple sourcing are: it can help
maintain competition in the supply market,;
reduce supply risk and increase flexibility in the
face of supplier failure or changes in customer
demand. Disadvantages are: it becomes hard to
encourage supplier commitment and
naililimityungoopportunitynamagdevelop ng
partnershipapproach to supply management.
Single sourcing: advantages are have longer
term focus and focus on a wider range of
performance objectives however it can carry an
increased risk of lock in and a reduction in the
firms bargaining power.
RDelegated: this means that one supplier is
responsible for delivering an entire sub
assembly as opposed to a single part. Advantage
of reducing the number of tier 1 suppliers
significantly while simultaneously allowing a
focus on strategic partner. However it can alter
the dynamics of the supply market and risk
creating mega suppliers with significant power
in the network.
Parallel sourcing- advantage is that it maintains
competition and allows for switching however
managing sourcing arrangement is relatively
complex.

Making the sourcing strategy decision

All the sourcing strategy have advantages and
disadvantages so a key challenge is to decide
which is most suitable. We can explore 2 key
questions what is the risk in the supply market
and what is the criticality of the product or
service to the business. This figure is for high end
bicycle manufacturer.
Non critical: innertubes : A account for relatively
low proportion of the total cost of the product
with large number of alternatives, the supply
risk is low. Multiple sourcing strategies tend to
be most common.
Bottleneck: relatively low proportion of the total
cost of the product, the limited supply
alternatives and high switching costs increase
risks. Single sourcing is common because of lack
of choice in the supply market.
Leverage: a high proportion of the cost of this
bicycle but are relatively easy to source as there
are a relatively large number of available
suppliers. Delegated sourcing
Strategic- complex to source and account for a
high proportion of total spending. There are few
suppliers capable of manufacturing these
components to sufficient quality for high end
bikes and so the cost of switching is high.
Delegated or parallel approach.

Supplier selection
Initial Qualification- May mga pre qualification
criteria like financial viability, accreditation like
ISO 9000 and its location.
Agree measurement criteria- For key
performance objectives, measurable criteria are
needed, for example, for cost of a firm might
conside unit price, pricing term (for instance
volume discounts), exchange rate effects)
Obtain relevant Information- as firms narrow
down to a smaller group of potential suppliers,
further information can be gathered to inform
the selection decision. This includes site visits
and test (test orders in small quantities)
Make selection- multi criteria decision making
model such as weighted score method and
analytical hierarchy process. Ang aim ng mga
model nito is magprovide ng quantifiable
information para sa selection criteria and
weighting of their relative importance to allow
for an objective assessment of different
suppliers.

managing ongoing supplies- May mga cases kasi

nakakalimutan ni suppliers or customers na
iinform yung isat isa about sa mga bagay or
instances na makakaapekto sa supply. Si
customer ang tingin kay supplier, syempre
responsibility nya na iprovide yung supply na
kailangan nya in any circumstances. Si Supplier
naman di iniinform si customer kapag
nagkaproblema sa supply kasi iniisip nya na dahil
maririsk yung relationship nya kay customer so
free flow of communication and a mutually
supportive tolerance of occasional problems is
the best way to ensure smooth supply.
Service Level Agreement- Important tool in
TQM and mas maeexplain sya sa chapter 17.
Improving supplier capabilities-in any
relationship other than the market based
transactional relationships, it is the customers
long term interests to take some responsibility
for developing supplier capabilities para
maimprove yung effectiveness ng supply chain
as a whole.
How customer and supplier see each other?
*unsatisfactory supplier relationships can be
caused by requirements and fulfillment
perception gaps.
This perception gap shows that gap may exist
between four sets of ideas. The gap between
how you as a customer interpret what is
required and how the supplier interprets it is the
requirements perception gap while your view as
a customer on how your supplier is performing
in terms of fulfilling your requirements is the
fulfillment perception gaps. Another gap is the
supplier performance gap, indicates how the
supplier should initially see itself improving its
own performance and it should coincide with
the customer’s views of requirements and
performance.

Global sourcing
advantages
There can be significant cost saving by sourcing
from low- cost country suppliers.
The barriers to sourcing outside one’s country
have been lowered.
Disadvantages
The risks of increased complexity and increased
distance need managing carefully.
The risk of delays and hold ups can be greater
than sourcing locally
Negotiating with suppliers whose native
language is different from one’s own makes
communication more difficult and can lead to
misunderstandings over contract terms.
So global sourcing decision require business to
balance cost, performance, service and risk
factors .
Global sourcing and Social responsibility-
example ditto is yung nasa book which is levis,
meron silang operating guidelines na ginagamit
para magselect ng partner na nagfofollow ng
workplace standard and business practices na
consistent sa kanilang company values. Like di
sila makikipag partner kung ung company ay
merong child labor, forced labor and
discrimination and di sumusunod sa required na
working hours sa health and safety.
How is the demand side managed?
This will depend partly on whether demand is
dependent on some known factor and therefore
predictable, or independent of any known factor
and therefore less predictable which is nadiscuss
sa chapter 10.
Logistics services- it means moving products to
customers. Dito, ang important decision is how
much of the logistical process of organizing the
movement of goods to trust to outside service
provider. So ditto pumapasok ung first, second,
third or fourth party logistics. 1st party- the
logistic activity is an entirely internal process.
2pl-when the firm decides to outsource or
subcontract logistic services over a specific
segment of the supply chain. 3pl is when the
company contracts a logistic company to work
with other transport companies to manage the
firm’s logistics operation. 4 pl- can manage all
the aspects of a client’s supply chain5pl? often
link to e- business. . Example of company na may
best logistics is yung Amazon, naginvestment
sila sa delivery staff and technology make 2 day
shipping a basic expectation and even the same
day delivery a possibility.
Logistics and the internet
Dito pumapasok yung IOT na report ni celine,
yung gumagamit ng rfid para ma trace yung
progress ng items.
CRM- It is a method of learning more about
customers’ needs and behaviours in order to
develop stronger relationships with them. Wal-
Mart, the huge US-based supermarket chain, did
an analysis of customers’ buying habits and
found a statistically significant correlation
between purchases of beer and purchases of
diapers (nappies), especially on Friday evenings.
The reason? Fathers were going to the
supermarket to buy nappies for their babies, and
because fatherhood restricted their ability to go
out for a drink as often, they would also buy
beer. Supposedly this led the supermarket to
start locating nappies next to the beer in their
stores, resulting in increased sales of both.
Whether this is true or not, it does illustrate the
potential of analyzing data to understand
customers. This is the basis of customer
relationship management (CRM). CRM tries to
help organizations understand who their
customers are and what their value is over a
lifetime. It does this by building a number of
steps into its customer interface processes. First,
the business must determine the needs of its
customers and how best to meet those needs.
For example, banks may keep track of its
customers’ age and lifestyle so that it can offer
appropriate products like mortgages or pensions
to them when they fit their needs. Second, the
business must examine all the different ways
and parts of the organization where customer-
related information is collected, stored and
used. Businesses may interact with customers in
different ways and through different people. For
example, salespeople, call centres, technical
staff, operations and distribution managers may
all, at different times, have contact with
customers. CRM systems should integrate this
data. Third, all customer-related data must be
analysed to obtain a holistic view of each
customer and identify where service can be
improved.
Customer development
*unsatisfactory customer relationships can be
caused by requirement and fulfilment
perception gaps.
Earlier in the chapter, Figure 12.12 illustrated
some of the gaps in perception and performance
that can occur between customers and
suppliers. The purpose then was to demonstrate
the nature of supplier development. The same
approach can be used to analyse the nature of
requirements and performance with customers.
Dynamics of supply chains
There are dynamics that exist between firms in
supply chains that causes errors, inaccuracies
and volatility and these increase for operations
further upstream in the supply chain.
Bullwhip effect- means a phenomenon of
increasing fluctuations in inventory in response
to shifts in customer demand as one moves
further up to the supply chain. Most common
causes of this are forecast errors, order
batching- placing frequent orders for small
quantities creates less of a bullwhip effect than
placing larger orders less frequently. With order
batching, the retailer places orders with
suppliers madalas once a month ganun, so it
creates inconsistent demand for the supplier
over time.
Lead time- kailangan iconsider ung leadtime or
yung span ng time between when an order is
palced and when it is received. Kapag di
kinonsider yun lead time sa pagmanage ng
inventory magkakaroon ng overstocking of
products and in turn, nagkakaroom ng change sa
supplier demand over time.
Sales and price discounts din pwede maging
cause.
The first step in improving supply chain
performance involves attempting to reduce the
bullwhip effect. This means coordinating the
activities of the operations in several ways.
E-enabling- An obvious improvement is to make
information on end customer demand available
to upstream operations. Electronic point-of-sale
(EPOS) systems used by many retailers attempt
to do this. Sales data from checkouts or cash
registers is consolidated and transmitted to the
warehouses, transportation companies and
supplier manufacturing operations that form the
supply chain. Similarly, electronic data
interchange (EDI) helps to share information and
can affect the economic order quantities
shipped between operations in the supply chain.
Channel alignment means the adjustment of
scheduling, materials movements, stock levels,
pricing and other sales strategies so as to bring
all the operations in the chain into line with each
other. It means that the systems and methods of
planning and control decision making are
harmonized through the chain. For example,
even when using the same information,
differences in forecasting methods or
purchasing practices can lead to fluctuations in
orders between operations in the chain. One
way of avoiding this is to allow an upstream
supplier to manage the inventories of its
downstream customer. This is known as vendor-
managed inventory (VMI). Example ng company
na gumagamit ng VMI is Walmart.
‘Operational efficiency’ in this context means
the efforts that each operation in the chain
makes to reduce its own complexity, the cost of
doing business with other operations in the
chain, and its throughput time. For example,
imagine a chain of operations whose
performance level is relatively poor: quality
defects are frequent, the lead time to order
products and services is long, delivery is
unreliable, and so on. The behaviour of the chain
would be a continual sequence of errors and
effort wasted in re- planning to compensate for
the errors. Poor quality would mean extra and
unplanned orders being placed, and unreliable
delivery and slow delivery lead times would
mean high safety stocks. Just as important, most
operations managers’ time would be spent
coping with the inefficiency. By contrast, a chain
whose operations had high levels of operations
performance would be more predictable and
have faster throughput, both of which would
help to minimize supply chain fluctuations.
Forecasting in supply networks
improved forecast accuracy also helps to reduce
the bullwhip effect. Improving the accuracy of
forecasts directly reduces the inventory holding
requirements that will achieve customer
service-level targets. Reducing lead times means
that one needs to forecast less far into the
future and thus lead times have a large impact
on bullwhip and inventory costs. The exact
nature of how the bullwhip effect propagates in
a supply chain is also dependent on the nature
of the demand pattern. Negatively correlated
demands require less inventory in the supply
chain than positively correlated demand
patterns, for example. But the bullwhip effect is
not unavoidable. By using sophisticated
replenishment policies, designed using control
engineering principles, many businesses have
been able to eliminate bullwhip effects.
Sometimes this comes at a cost. Extra inventory
may be required in parts of the chain, or
customer service levels reduce. But more often,
bullwhip avoidance creates a ‘win–win’
situation. It reduces inventory requirements and
improves customer service.
In short, bullwhip effect can be reduced b
information sharing aligning planning and
control decisions, improving flow efficiency and
better forecasting.