Supply Chain Management

Md. Tamzidul
Islam

Future of Supply chain

What is Supply Chain?

Supply Chains refers to networks of companies that work together
and coordinate their actions to deliver a product/service to
market

How many suppliers/companies work to deliver ONE Boeing 787

Aircraft?

3 25

What is Supply Chain?

Leaf
Farmers: 30,000

Leaf
Export

Company
Leaf
Factory

Cigarette
Factory

Consumers

Sales
Warehouses

Distributors

MAR

WMs & Spares

Total Supplier: 47
Supplier
Companies

Retail

KET

Supply Chain process in a

company is a system/network of
organizations, people, technology,
activities, information and
resources involved in moving a
product or service from

supplier to supplier or
customer or consumer

Why does it matter for business?

100%

19.8%

20.7%

Productivi
ty Savings

Price
negotiations &
OH review

Leaf

WMS Leaf Export

57% of Value
Chain

Capital Investment
Appraisal

6.7
%

9.0
%
0.7
%

Pricing
Strategy

NTO

Supply Chain
influences

Mfg

PSC

1.3
%

Royalties
Gross Margin
Marketing SpendOOH

UOP

Definition of SCM
The
management
of
upstream
and
downstream relationships with suppliers &
customers to deliver superior customer value
at less cost to the supply chain as a whole.
(Christopher, M. 1998)
A network of connected & interdependent
organisations
mutually
&
cooperatively
working together to control, manage and
improve the flow of materials and information
from suppliers to end users. (Aitken, J., 1998)

Functions of SCM ?
SCM is a business network covering from buying,
making, moving, warehousing to selling
Making
Making
Moving
Moving
Buying
Buying

Selling
Selling

Ware
Ware
housing
housing

Service Level & Inv. Costs

Costs
Opportunity cost curve.

Total costs

A
Inventory + Service costs.

Low

Service levels

High

Interpretation:
At low service levels, costs due to lost opportunities are very high.
I

When service levels are raised, inventory + service costs increase

marginally
but costs due to lost opportunities come down
drastically.
Enlarged
view of portion marked
at A is shown in the next graph
for further explanation.

ENLARGED VIEW OF PORTION A

Zone of
Improvement

Zone of
Indifference

Zone of
Perfection.

Explanation:
1. In zone of improvement , as service level goes up by
increasing stocks and incurring in extra expenditure for
giving better service, the gains obtained due to better
sales outweigh the costs incurred.
2. In zone of indifference, the gains and costs are more or
less balanced.
3. In zone of perfection, as service levels are raised to near
to 100%, the costs outweigh the gains but in modern
competitive environment, this may become a necessity for
survival

Supplier Selection
FactorsinfluenceSupplierSelection:
Price
ReplenishmentLeadTime
OntimePerformance
SupplyFlexibility
DeliveryFrequency/MinimumLotSize
SupplyQuality
TransportationCost
InformationCoordinationCapability
DesignCollaborationCapability
SupplierViability
Environmentalimpact

Factors influencing network design

Customer needs that are meet
Response time
Product variety
Product availability
Customer experience
Time to market
Order visibility
Returnability

Cost of meeting customer needs

Quick Exercise:
Background
Youareresponsibleformanagingthesupplychainofareasonablesizedgarment
companyproducingbothknitandwovenproducts.
YouproduceawidevarietyofproductsrangingfromTshirttosweater,Jacketsetc.
TheproductisproducedandpackagedatasingleplantinGazipur,BD.
Rawmaterialscomefromallovertheworld(mainsourcesincludeIndia,SriLanka,
Egypt,IndonesiaandChina)
RawmaterialsareusuallytransportedbyshiptoChittagongandthenbyTruckto
yourplant
Packagingsuppliersarelocalandtransportationisbyroad
YoudistributeyourproductintheEurope.Alldistributiontakesplacebywaterand
thenfollowedbylocaldistributioncenter.
YouhaveonedistributioncentreintheUKandoneinFrance
YourmaincustomersaretwolargeUKbasedretailersandoneoperatingacross
Europe

Quick Exercise
1. DesignasuitableSupplyChainnetworkfor
yourCompany.
2. Brainstormandidentifydifferentfactorsthat
willinfluencewhiledesigningthissupply
chainnetwork.

Supply Chain Risk Management

ExamplesSupplyRisk

ExamplesProcessRisk

ExamplesDemandRisk

ExamplesEnvironmentalRisk

ExamplesofControlRisk

ToolsforSupplyChainRisk
Management

SupplyChainRiskProfiling

Quick Exercise:
Background
Youareresponsibleformanagingthesupplychainofareasonablesizedgarment
companyproducingbothknitandwovenproducts.
YouproduceawidevarietyofproductsrangingfromTshirttosweater,Jacketsetc.
TheproductisproducedandpackagedatasingleplantinGazipur,BD.
Rawmaterialscomefromallovertheworld(mainsourcesincludeIndia,SriLanka,
Egypt,IndonesiaandChina)
RawmaterialsareusuallytransportedbyshiptoChittagongandthenbyTruckto
yourplant
Packagingsuppliersarelocalandtransportationisbyroad
YoudistributeyourproductintheEurope.Alldistributiontakesplacebywaterand
thenfollowedbylocaldistributioncenter.
YouhaveonedistributioncentreintheUKandoneinFrance
YourmaincustomersaretwolargeUKbasedretailersandoneoperatingacross
Europe

Project Exercise
1. DesignasuitableSupplyChainnetworkfor
yourCompany.
2. Brainstormandidentifydifferentfactorsthat
willinfluencewhiledesigningthissupply
chainnetwork
3. Brainstorm 5 possible risks in this
supply Chain
4. Assess their likelihood and impact
5. Create a risk profile
6. Prioritize and define courses of

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