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Improving Supply
Chain Performance
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Day-01
Basics of
Supply Chain
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The supply chain encompasses all organizations and activities
associated with the flow and transformation of goods from the
raw materials stage, through to the end user, as well as the
associated information flows. Material and information flows
both up and down the supply chain.
-(Robert B Handfield and Ernest L Nichols, Supply Chain Redesign)
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A supply chain is ‘that network of the organizations that are
involved, through upstream and downstream linkages, in the
different processes and activities that produce value in the form
of products and service in the hands of the ultimate customer’.
- Martin Christopher, logistics and Supply chain Management
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Integration of supply chain activities
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Principal flows in a simple supply chain
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Supply Chain Management
• A supply chain is a term covering all activities associated with the flow of
goods from the raw materials stage through to the end user. Supply
chain management is the art of integrating these activities through
improved supply chain relationships in order to obtain sustainable
competitive advantage.
• Supply Chain Management is the linkage of the immediate
buyer/supplier relationships into a longer series of events.
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Dyadic supply relationships
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A simple supply network!
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Supply chain networks
An inter business supply chain is a linked sequence of
contributors of different firms. Seeing the supply chain as a
network is helpful for a number of reasons:
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Clear implications for procurement roles and
operation for Inter business supply chain
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Internal supply chains
• The internal supply chain (or value chain) describes a
similar flow of information and other resources within -
into and through – a given organization from inbound
activities to outbound activities.
• Internal customer concept suggests that any unit of a firm
whose task contributes to the task of other units can be
regarded as a supplier of goods and services to those
units.
• The procurement function is part of internal supply chain.
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Supplier Base
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Multi Sourcing
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Supplier Base Optimisation
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Risks for a very
narrow Supplier Base
• Over-dependence on a few suppliers.
• Supply disruption.
• The loss of preferred suppliers’ goodwill and co-operation.
• Preferred suppliers growing complacent.
• Being ‘locked in’ to long-term relationship and co-
investment with suppliers.
• Missing out on seeking or utilising new or more
competitive suppliers in the wider supply market.
Developed by Rashed Morshed MCIPS
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Single sourcing
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Dual sourcing
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Supply Chain Management
• The management of upstream and downstream
relationships with suppliers and customers to deliver
superior customer value at less cost to the supply chain as a
whole (Christopher)
• SCM consists primarily of building collaborative relationships
across the supply chain.
• It is the co-ordination across functional lines and
organisational boundaries.
• Business processes is another key focus of SCM. It implies
the planning and management of whole sequence of
activities.
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Drivers for supply chain management
• Cost pressures
• Time pressures
• Reliability pressures
• Response pressures
• Transparency pressures
• Globalisation pressures
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Benefits of an SCM approach
• Reduced costs, by eliminating waste activities
• Improved responsiveness to customers’ requirements
• Access to complementary resources and capabilities
• Enhanced product and service quality
• Improving supply chain communication
• Sharing demand forecasting and planning information
enables Just in time supply
• Faster lead times for product development and delivery
– ‘Agile’ supply
• Better communication allows greater transparency
Developed by Rashed Morshed MCIPS
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Supply Chain Management
changes from traditional ways
From Traditional ways To new ways
Independence Integration
Independent to next link Dependency
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