1. SUPPLY CHAIN
MANAGEMENT
as taught in MGTC44 and MRK
200
.
last updated 2005 July 11
INTRODUCTION The purpose of this section is to introduce the student to the important of
the Supply Chain in Business and International Business. Upon completion
of this section, students will be able to
• understand the various components of the Supply Chain and how
they are interdependent
o including understanding the relationship between
materials, information and funding
• identify who is involved in the Supply Chain
• identify the different levels and involvement of suppliers
o first tier
o second tier
o third tier
WTGR
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KEY The Key point to understanding the importance of the Supply Chain is to consider
POINTS how the Supply Chain is effected by the
• Political / Legal / Regulatory Environment
o ie. tariffs, import restrictions
• Geographic Environment
o ie. topographical barriers, waterways, air travel
• Economic Environment
o ie. currency exchange rate considerations
• Technological Environment
o ie. shipping technology, packaging, document processing ..
• Competitive Environment
• and to some extent the
o Social / Cultural Environment
.
4 P's It is also important for students to understand that the things which effect the
Supply Chain also have a consequence for the 4P's
• Product

2. o the features, colours, shape and texture of the product will depend
on your source of supply for the materials
• Price
o your price will depend on the competitive cost of the materials
• Promotion
o promotion is developed in part based on the product and price so
various promotion "things" are reflected by where the parts are
supplied from
 eg. quality leather from Italy
 eg. fine wine from the ...... region
• Place
o the place at which a company assembles their product, or vends a
product is often dependent on the distance from the source of
supply since decreasing the distance will decrease the cost and
allow the price to be more competitive
o this also has to be done in co-operation with the "place"
considerations for the customers' location
.
What is the Supply Chain?
www.supply-chain.org/Resources/faq.htm
"The supply chain -- a term now commonly used internationally -- encompasses every
effort involved in producing and delivering a final product or service, from the supplier's
supplier to the customer's customer. Supply Chain Management includes managing
supply and demand, sourcing raw materials and parts, manufacturing and assembly,
warehousing and inventory tracking, order entry and order management, distribution
across all channels, and delivery to the customer."
Why is the supply chain important?
"In years past, manufacturers were the drivers of the supply chain -- managing the pace
at which products were manufactured and distributed. Today, customers are calling the
shots, and manufacturers are scrambling to meet customer demands for options / styles /
features, quick order fulfillment, and fast delivery."
.
.
Supply Supply-Chain Management as explained in the FAQ of the
Chain Center for Electronic Commerce
Management
an
industry

3. http://cism.bus.utexas.edu/resources/ecfaq/ecfaqc2.html
term !
Q. What is supply chain management?
"A supply chain is a collection of inter-dependent steps that, when followed,
accomplish a certain objective such as meeting customer requirements. Supply-chain
management is a generic term that encompasses the coordination of order generation,
order taking, and offer fulfillment/distribution of products, services, or information.
Numerous, independent firms and customers are involved in a supply chain (e.g.,
manufacturers and parts suppliers; parcel shippers, senders and receivers;
wholesalers and retailers). The WWW and extranets (connected intranets) have
shown a great potential in linking and managing these entities into a virtual
organization."
key points, as translated by witiger
Supply
Chain
Management • coordination of order generation
• order taking
an • offer fulfillment
industry • distribution of products, services, or information
term !
who is involved
• suppliers (at three different levels)
• parcel shippers (documents)
• wholesalers - on the pull side
• retailers - on the pull side
What might be missing from the definition above
• order taking and offer fulfillment can sometimes be considered "information"
• you also have to have some words noting the money required to make it all
happen
.
.
Definition
of Global Manufacturing &
terms Supply Chain Mgmnt
"a company's supply chain

4. encompasses the
• coordination of materials
• information
• and funds
from the initial raw material supplier to the ultimate customer"
Daniels p. 628
this definition is OK, on a general level, but it is not complete enough for a full
understanding
.
Definition
of Supply Chain Mgmnt
terms - expanded definition
(our MGTC44 / MRK 200
expanded version)
Expanded
"a company's supply chain encompasses the
• coordination of materials
o time of the materials arrival
o location related to the production process
 warehousing
 storage
o packaging of the materials inbound
• information
o information about materials quality
o price fluctuations
o currency exchange rate considerations
• and funds
o borrowing money from the bank to pay for
 materials before they are assembled then sold
 labour to assemble the product
from the initial raw material supplier to the ultimate customer"
.
Definition
of Supply Chain Mgmnt
terms - expanded definition
when we say "... from the
initial raw material supplier to the ultimate customer"
Expanded - the suppliers are broken down into 3 categories.
These terms are used in all types of manufacturing industries but are particularly
common in the automotive and electronic consumer products industries.
• third tier supplier - raw materials
o (eg. the polyethylene [plastic] pellets which get heated, then
blowmoulded into the shape of the fan blades)
o (eg. the company that takes the raw copper ingots and extrudes

5. them into copper wire, which is used to make the motor)
• second tier supplier - subcomponents
o (eg. motor in the fan assembly)
• first tier supplier - complete components
o (eg. cooling fan assembly in a computer)
.
.
Supply Supply Chain Management
Chain as explained in the Schneider and Perry book, Chapter 9
Component - the component parts
Parts
• Purchasing Activities
• Logistics Activities
• Support Activities,
Purchasing Activities include,
• identifying people who will sell parts and materials to you
• evaluating those potential suppliers
o quality
o cost competitiveness
o delivery costs and time of delivery
• selecting particular parts and materials
• placing the order
• resolving issues that arise (ie. late shipment, parts missing, wrong colour etc.)
.
Supply Logistics Activities include,
Chain
Component • managing the inbound movements of parts and materials
Parts
• outbound completed products
• warehousing
• inventory control
• vehicle scheduling
.
Supply Support Activities include,
Chain
Component • HR resources
o ie. employee travel policies
Parts
• document storage
• finance
o payroll processing
• technology development
larger firms are building some of these functions into their Intranet systems, like
information to track customers who have not paid

6. .
Supply Supply Chain Management
Chain Logistics Activities include, [added by witiger]
Component
Parts • managing the inbound movements of parts and materials
• outbound completed products
LOGISTICS
• warehousing
• inventory control
• vehicle scheduling
.
Supply Supply Chain Management
Chain
Component logistics = materials management
Parts Logistics is that part of the supply chain process that plans, implements, and controls the
efficient, effective flow and storage of goods, services and related information from the point of
LOGISTICS origin to the point of consumption in order to meet customer's requirements"
exploded to see more clearly what this long statement means
"Logistics is that part of the supply chain process that
• plans,
• implements, and
• controls
o the
 efficient,
 effective flow and
 storage of
 goods,
 services and
 related information
from the
• point of origin to the
• point of consumption
in order to meet customer's requirements"
this quote comes from the Council of Logistics Management
The Council of Logistics Management IN 2005 CLM is now the Council of Supply Chain

7. Management Professionals (CSCMP).
at www.cscmp.org
.
Supply Supply Chain Management
Chain
Component An interesting rant about why logistics has not been respected as an important part of
marketing.formerly posted at http://www.esg.uqam.ca/esg/crg/papers/04-99/04-99.htm
Parts
LOGISTICS LOGISTICS: "Mainstream marketing management, also referred to as sales and
THE OTHER promotion-based marketing, with its penchant for demand
HALF OF stimulation is almost entirely concerned with demand stimulation,
MARKETING that is creating and obtaining sales. One need only look at any
current marketing management textbook to note that the vast
majority of topics discussed deal mainly with what firms need to do in
order to get sales. The tools used to obtain sales are promotion-
based, i.e., advertising, sales promotion, personnel selling, and so
forth. These are all mixed with heavy doses of consumer behavior
analysis using the tools of marketing research for market and
segmentation analysis as well as understanding what makes the
consumer buy. What is missing in demand stimulation is servicing
demand, that is the supply side of marketing, or what Converse
(1954) called the other half of marketing. Servicing demand, the
other half of selling, assures that customers will get what they
bought, is almost never discussed in mainstream marketing thought."
.
Elements
of Chapter 18
Supply-
Chain page 634
Supply Chain
Management
Management
A comprehensive supply chain should include
text says }
1. customer service requirements }
2. plant & distribution network }
3. inventory management }
4. outsourcing and 3rd party logistics }
relationships } this all sounds very much like a list
5. key customer and supplier relationships of
6. business processes } the entire functions of a company
7. IT systems }
8. organizational design and training }
requirements }
9. performance metrics }
10. performance goals
.
.
Elements another way of looking at the supply chain

8. of
Supply-Chain •
Management This is a book written by Kalakota and Whinston which was
widely used in e-commerce courses in 1999 and 2000. You
are not required to buy this book.
We refer just to one part of one chapter.
Planning Systems
o means having the right product at the right place at the right time
o requires being able to obtain good "order information" from the
customer
o POS - Point of Sale data gathered at the retail terminal is part of this
o Demand Forecasting (cause you can't have some products ready
instantly)
 allows you to be more competitive in supplying things 'faster'
 customer demand triggers order movement up the supply
chain to the raw material supplier
o the trend has been away from Push based systems to Pull based
systems
• Execution Systems
o facilitate the physical movement of goods and services through the
supply chain
o focus on operational efficiency
 entails finding new ways to streamline day2day operations
 reduce costs
 improve productivity
o need for cross functional integration
o execution systems are basically the way you do things to make sure
everything done the right way !
• Performance Measurement Systems
o keeps track of how things are going well, or poorly
o necessary to evaluate good and bad results in a specific way so you
can make changes
o most often this means talking about some specific accounting or
financial software package that gives performance numbers
• Integrating Functions in a Supply Chain
o the key thing about integrating is getting all the key functions to work
together
o the key functions are
 Managing Information about demand
 Managing the flow of physical goods
 Managing the manufacturing process
 Managing the money
.

9. By Marc L. Songini
Computerworld, carried in www.crmbuyer.com which is part
of www.ecommercetimes.com
May 24th, 2005
"Supply Chains Hitting Obstacles Overseas"
Songini explains "Globalization is having a hefty impact on companies' supply chain
. management systems, requiring greater scalability of applications and better
integration with far-flung partners...with cheap manufacturing, distribution and
supplier resources available overseas -- particularly in the Far East -- even
companies with established supply chain backbones are finding that they need to
adapt to survive".
"These global companies, facing ever-thinner profit margins, see an increasing need
for centralized, accurate data, greater integration and the ability to respond nimbly to
changes in demand."
.
..
.
.
.
On this page there are several quotes from ecommercetimes.com. Permission was given by Richard Kern, Associate Publisher of
the E-Commerce Times, in an email to Prof. Richardson 2004 Dec 10th, a hard copy of the email is kep on file in Richardson's
permissions binder.
.
.
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