Chapter 2

Supply Chain Management

Strategy and Design

1
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The Management of Green Supply Chains Information

Lecture Supply Chains Technology: A Supply

Chain Enabler

Outline

Supply Chain Supply Chain

Integration Management (SCM)
Software
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Supply Chains
• All facilities, functions, and activities associated with flow
and transformation of goods and services from raw
materials to customer, as well as the associated information
flows
• An integrated group of processes to “source,” “make,” and
“deliver” products
The Supply Chain-

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Supply Chain for Denim Jeans

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Supply Chain for Denim Jeans (cont.)

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Supply Chain Processes

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More difficult than
manufacturing

Does not focus on the flow

of physical goods
Supply Chain
for Service
Providers Focuses on human
resources and support
services

More compact and less

extended

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Value chain
• every step from raw materials
to the eventual end user
• ultimate goal is delivery of
maximum value to the end
user
Value Chains
Supply chain
• activities that get raw
materials and subassemblies
into manufacturing operation
• ultimate goal is same as that
of value chain
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Demand chain

• increase value for any part or all

of chain

Terms are used

Value Chains interchangeably

Value

• creation of value for customer is

important aspect of supply chain
management
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Supply Chain Management (SCM)

• Managing flow of information through supply chain in order

to attain the level of synchronization that will make it more
responsive to customer needs while lowering costs
• Keys to effective SCM
• information
• communication
• cooperation
• trust
A major objective of SCM:
• respond to uncertainty in customer
demand without creating costly
excess inventory
Supply Chain
Negative effects of uncertainty
Uncertainty
• lateness
and Inventory
• incomplete orders
Inventory
• insurance against supply chain
uncertainty

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Supply Chain
Uncertainty and Inventory

• Factors that contribute to uncertainty

• inaccurate demand forecasting
• long variable lead times
• late deliveries
• incomplete shipments
• product changes
• batch ordering
• price fluctuations and discounts
• inflated orders

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Bullwhip
Effect
• Occurs when slight
demand variability is
magnified as
information moves
back upstream

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• Risks are aggregated to reduce the
impact of individual risks
Risk Pooling • Combine inventories from
multiple locations into one
• Reduce parts and product
variability, thereby reducing the
number of product components
• Create flexible capacity

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“Green” Supply Chains

• Sustainability
• Meeting present needs without compromising the ability of
future generations to meet their needs
• Sustaining human and social resources
• It can be cost effective and profitable
• Can provide impetus for product and process innovations
• Impetus comes from downstream in the supply chain and
moves upstream to suppliers

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• Reducing waste through quality
Sustainability programs helps achieve sustainability
and Quality goals
• Improving fuel efficiency of vehicles
Management
• Telecommuting
• Eco-friendly packing materials
• Energy-efficient facilities

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Information links all aspects
of supply chain

replacement of
physical business
Information E-business processes with
electronic ones

Technology:
A Supply Electronic data a computer-to-

Chain Enabler interchange

computer
exchange of
business
(EDI) documents

data creates an
Bar code and instantaneous
computer record
point-of-sale of a sale

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IT: Supply Chain Enabler

Radio frequency Internet Build-to-order (BTO)

identification (RFID)
technology can send product data allows companies to communicate direct-sell-to-customers model via
from an item to a reader via radio with suppliers, customers, shippers the Internet; extensive
waves and other businesses around the communication with suppliers and
world instantaneously customer

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Supply
Chain
Enablers

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Automated
data collection
system

Bar code
contains
identifying
information
Bar Codes Provide
instantaneous
tracking
information

Checkout • Update inventory records

• Identify trends
scanners • Order material
create point- • Schedule orders
of-sale data • Plan deliveries

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Radio Frequency Identification (RFID)

Use radio waves to Provides complete Continuous

transfer data from visibility of product inventory
chip to a reader location monitoring

Reduce labor to Reduce inventory RFID is not

manage inventory costs standardized yet

Difficult to track
between systems

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RFID Capabilities

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RFID Capabilities

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Share information among supply
chain members
• Reduced bullwhip effect
• Early problem detection
• Faster response
• Builds trust and confidence
Supply Chain
Integration Collaborative planning, forecasting,
replenishment, and design
• Reduced bullwhip effect
• Lower costs (material, logistics, operating,
etc.)
• Higher capacity utilization
• Improved customer service levels

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Coordinated workflow,
production and operations,
procurement
• Production efficiencies
• Fast response
• Improved service
Supply Chain • Quicker to market
Integration
Adopt new business models and
technologies

• Penetration of new markets

• Creation of new products
• Improved efficiency
• Mass customization
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Two or more companies in a

supply chain to synchronize their
Collaborative demand forecasts into a single
plan to meet customer demand
Planning,
Forecasting,
and
Replenishment
(CPFR) Parties electronically exchange

past sales point-of- on-hand scheduled

forecasts
trends sale data inventory promotions
Computer-to-computer exchange of documents
in a standard format

Purchasing, shipping and receiving

Improve customer service

Electronic
Data Reduce paperwork

Interchange
Increase productivity

Improve billing and cost efficiency

Reduce bullwhip effect through information

sharing
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Savings due to lower transaction costs

Reduction of intermediary roles

Shorter supply chain response times

E-Business & Wider presence and increased visibility

Supply Chain
Management Greater choices & more info for customers

Improved service

Collection & analysis of huge amounts of

customer data & preferences

Access to global markets, suppliers & distribution

channels
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• Read these real world case studies
on how SCM reduced cost
https://www.logisticsbureau.com/7
-mini-case-studies-successful-
supply-chain-cost-reduction-and-
Good management/
Reading on
SCM • Read these real world cases on
multifacet SCM approach by
companies of different industries
https://supplychainminded.com/su
pply-chain-management-case-
study-executives-guide/

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• Enterprise resource planning
(ERP)
• software that integrates the
SCM Software components of a company by
sharing and organizing
information and data

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• can be defined as powerful innovative
technologies that is capable of changing the
traditional way of doing various processes of
supply chain like supply chain planning, task
execution, interacting with all the participants of
supply chain, achieving integration among the
members of supply chain and enabling new
business model Digital Supply Chain
• is the result of the application of electronic
Digital Supply technologies to every aspect of the end to end
Supply Chain.
Chain • electronic connectivity is at the heart of the
Digital Supply Chain as enabled by a plethora of
Management enabling, and disruptive, technologies such as :
- Big Data
- Internet of Things
- Robotics
- 3D Printing
- Nanotech
- Block Chain

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Digital Supply Chain Management

• Digital transformation is a change and hence every initiative of organizational change

should be managed with extreme care (Wade and Marchant 2014).
• Digital transformation cannot be achieved by the effort of single person rather it is a
portfolio of initiatives that work together to achieve the change.
• As suggested by Farhani, Meier and Wilke 2017, every supply chain consist of various
activities that are executed to procure raw materials, convert that material into final
products, store that as finished product inventory and at the end deliver them to the
ultimate customers. They have divided SCM into seven dimensions which are suppliers,
production, inventory and logistics, customers, information technology, human resources
and performance measurement

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7 Dimensions of Digital
Supply Chain Management
Benefits of Digital Supply Chain Management

Clear visibility of inventory

Reduced inventory levels levels because of fully More decentralized
Greater transparency leading
because more just-in-time integrated system warehousing in order to
to better decision making.
procurement will be used. throughout the entire value reduce delivery times.
chain.

Reduce the delivery times Better understanding of Improved supply chain

Higher sales, higher profit
since it will reduce the customer‟s requirement flexibility and reducing the
margin, strong bonding with
number of stages in the through demand sensing and risks and costs involved in
customer.
selling chain. up-to-date sales information. supply chain.

More number of alternatives

will be available in the
Maintenance of competitive
decision-making process
advantage.
leading to better supply
chain management decision.

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References

• http://128.171.57.22/bitstream/10125/41665/paper0516.pdf
• http://128.171.57.22/bitstream/10125/41666/paper0517.pdf
• https://iopscience.iop.org/article/10.1088/1757-
899X/455/1/012074/pdf
• https://www.logisticsbureau.com/7-mini-case-studies-
successful-supply-chain-cost-reduction-and-management/
• https://supplychainminded.com/supply-chain-management-
case-study-executives-guide/

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