SCM Handout 1 PDF

SOUTHWESTERN INSTITUTE OF BUSINESS AND TECHNOLOGY, INC. DISCIPLINE…ACCOUNTABILITY…PROFESSIONALISM…HUMILITY NAUTICAL HIGHWAY, PANGGULAYAN, PINAMALAYAN, ORIENTAL MINDORO Contact Nos.: +63917-127-8500 | +...

SOUTHWESTERN INSTITUTE OF BUSINESS AND TECHNOLOGY, INC. DISCIPLINE…ACCOUNTABILITY…PROFESSIONALISM…HUMILITY NAUTICAL HIGHWAY, PANGGULAYAN, PINAMALAYAN, ORIENTAL MINDORO Contact Nos.: +63917-127-8500 | +63912-448-6518 --------------------------------------------------------------------------------------------------------------------------------------------------- SCM 1 HANDOUT 1 INTRODUCTION TO SUPPLY CHAIN MANAGEMENT Name: Year and Section: Prepared by: Claerlyn G. Vitto, LCB 1 Introduction This lesson explains you the Logistics and Supply Chain Management and its relation to Customs Administration. Learning Objectives:  Define Logistics and Supply Chain Mgt. and its relation to Customs Administration.  Present the history and evolution of Logistics and SCM  Illustrate the key differences between Logistics and SCM “Supply chains are everywhere. From the biggest company in the world to running your household. We all have supply chain experience even if we don’t know it. - EverythingSupplyChain.com Supply Chain is a network between company and its suppliers to produce and distribute a specific product to the final buyer; it includes different activities, people entities, information and resources. Supply Chain Management is the integration of all activities associated with the flow and transformation of goods from raw materials through to end user, as well as information flows, through improved supply chain relationships, to achieve a sustainable competitive advantage. BASIC ENTITIES OF SUPPLY CHAIN 1. SUPPLIER - is a party in the supply chain that makes goods and services available to companies or consumers‖ -Suppliers are also called vendors and the two words can be used interchangeably. Vendors can be both sellers of finished products and a manufacturer of goods. 2. PRODUCERS - Producers (manufacturers or service providers) are organizations that make products or services. This includes companies that are producers of raw materials and companies that are producers of finished goods. Producers of raw materials are organizations that mine for minerals, drill for oil and gas, and cut timber. It also includes organizations that farm the land, raise animals, or catch seafood. Producers of finished goods use the raw materials and sub-assemblies made by other producers to create their products. 2  2. CUSTOMERS - Customers (or consumers) are individuals or organizations that purchase and use a product or service. A customer may be an organization (a producer or distributor) that purchases a product in order to incorporate it into another product that they in turn sell to their customers (ultimate customers). Customers - depend on producers, distributors, and retailers to meet their needs for products and services. Why Is Supply Chain Management Important? Supply chain management is important because it can help achieve several business objectives. For instance, controlling manufacturing processes can improve product quality, reducing the risk of recalls and lawsuits while helping to build a strong consumer brand. At the same time, control over shipping procedures can improve customer service by avoiding costly shortages or periods of inventory oversupply. Overall, supply chain management provides multiple opportunities for companies to improve their profit margins and is especially important for businesses with large and international operations. Key Words… SUPPLY CHAIN  Logistics MANAGEMENT  Inbound Logistics  Outbound Logistics  Network S LOGISTICS  Supply Chain Management 3  Defining Logistics & Supply Chain Management In the world of business, logistics and supply chain are common terms that have been used interchangeably. Obviously, 0it appears that is become confusing for people to indicate whether one is participating logistical management or supply chain management. Such mix-up may be addressed by understanding the basics of both subjects. Supply chain involves multiple facets such as operations and procurement that a company running smoothly. It is a sequence of events intended to satisfy a customer. Logistics, on the other hand, is just one component of a supply chain. It has to do with the coordination and movement of goods. Logistic Management is a small portion of Supply Chain Management that deal with the management of goods in an efficiency way. 4 Logistics is the process of planning, implementing, and controlling the efficient, cost- effective flow and storage of raw materials, in-process inventory, finished goods, and related information from the point of origin to the point of consumption for the purpose of confirming to customer requirements. Logistics Two Broad Categories:  Inbound Logistics - The activities which are concerned with procurement of material, handling, storage and transportation.  Outbound Logistics - The activities which are concerned with the collection, maintenance, and distribution or delivery to the final consumer. Network / Supply Chain Network the primary purpose of a supply chain network design is to assess company policies and programs and to meet targets to accomplish long‐term strategic objectives, and most business units or functional areas within a company are impacted by a network design project. It is important to recognize that a company’s network determines its supply chain efficiency and customer satisfaction. What Is Supply Chain Management vs. Business Logistics Management? Terms supply chain management (SCM) and business logistics management—or simply, logistics—are often used interchangeably. However, logistics is really one link in the supply chain. Logistics deals with the planning and control of the movement and storage of goods and services from their point of origin to their final destination. 5  The Logistics/Supply Mission: Rs Getting the Right goods and/or services to the right place/customer at the right time and in the right/desired condition at the right/lowest possible cost and right/highest return on investment History and Evolution of Logistics & Supply Chain Logistics – this word which came from the Greek adjective ―logistikos‖ has military roots and has evolved through time and assumed critical roles. Details of its history and evolution are as follows:  The birth of logistics can be traced back to the Greek and Roman empires, it was a time when specific military officers where designated as “Logistikas” and tasked to provide services related to supply and distribution of resources. This was done to enable soldiers to move from their base position to a forward position efficiently that could be crucial to the outcome of the war.  These beginning led to the development of a system that can be related to current day system of logistics management.  During the World War 2, logistics evolved rapidly. The army logistics of US and its allies proved to be more that what the German can handle.  Logistics gave birth to so many techniques and has now evolved to a kind of relief to many organizations that formerly looked at this activity as a burden. 6  History and Evolution of Logistics & Supply Chain SCM – over the last 100 years it has evolved from an initial focus of improving relatively simple, but very labor-intensive processes to present day system. Six Evolutions in Supply Chain Management: Creation Era: The term was coined by in 1982. It includes the need for large-scale change, re-engineering, downsizing driven cost reduction programs and widespread attention given to Japanese management system. Integration Era: Development of electronic data interchange (EDI) system in 1960. The introduction of the enterprise resource planning (ERP) system also added. Continued to develop with the expansion of internet-based system and vertical integration with upstream suppliers and downstream customers. Globalization Era: Characterized by the attention given to global system o supplier relationships and expansion of SCM beyond national boundaries and into other continents. Phase 1 Specialization Era: In the 1990s, companies focused on core competencies and specialization. Created manufacturing and distribution networks composed of several individual supply chain producers, suppliers, and customers that work together to design, manufacture, distribute, market, sell and service a product. Phase 2 Specialization Era: Began the inception of transportation brokerages, warehouse management, and non-asset-based carriers. This has graduated beyond transportation and logistics into supply planning, collaboration, execution and performance management. SCM 2.0: Building on globalization and specialization, the term SCM 2.0 has been coined to describe changes within supply chains themselves as well as evolution of processes, methods and tools to manage this new era. 7  Key Differences between Logistics and Supply Chain Management Basis of Logistics Supply Chain Management Comparison The flow and storage of The movement and integration of Meaning goods inside and outside the supply chain activities firm Objective Customer satisfaction Competitive Advantage Evolution & Traditional Modern Development Organizations Involved Single Multiple Relationship with one With SCM Incorporate Logistics another Relationship with Minimal Significant interactions another department AREAS OF SUPPLY CHAIN MANGEMENT While supply chain is a very broad career field, it has 7 primary functional areas: Purchasing, Manufacturing, Inventory Management, Demand Planning, Warehousing, Transportation, and Customer Service. These areas may appear to be independent functions, but in an efficient supply chain, they must interact to a great degree and are very dependent upon one another Purchasing: The activity of acquiring goods or services to accomplish the goals of an organization. Manufacturing: is the term refer to production of merchandise for use or sale using labor and machines, tools, chemical and biological processing, or formulation. The term may refer to a range of human activity, from handicraft to high tech, but is most applied to industrial production, in which raw materials are transformed into finished goods on a large scale 8 Inventory Management: Activities employed in maintaining the optimum number or amount of each inventory item. The objective of inventory management is to provide uninterrupted production, sales, and/or customer-service levels at the minimum cost. Since for many companies’ inventory is the largest item in the current assets category, inventory problems can and do contribute to losses or even business failures. Business Dictionary.com Demand Planning: is the process of forecasting customer demand to drive execution of such demand by corporate supply chain and business management. Demand forecasting involves techniques including both informal methods, such as educated guesses, and quantitative methods, such as the use of historical sales data and statistical techniques or current data from test markets. Warehousing: Performance of administrative and physical functions associated with storage of goods and materials. The importance of these facilities has grown as it’s the final ―stop‖ before moving to the customer. Proper handling, storage and management of the products within these facilities must occur so that customer orders can be fulfilled with the right product at the right time. Transportation: The transportation function is critical to the supply chain because it is where the rubber literally meets the road. A company can have the right product at the right warehouse at the right time, but without transportation if won’t make it to the customer at the right time. In today’s global economy, this function is even more critical as it’s no longer as easy as putting a product on a truck and having it delivered. Now it might be shipped via container ship, airplane, train, truck or even uber car before arriving at the customer Customer Service: The process of ensuring customer satisfaction with a product or service. Often, customer service takes place while performing a transaction for the customer, such as making a sale or returning an item. Customer service can take the form of an in-person interaction, a phone call, self-service systems, or by other means. 9 Name: Year and Section: ACTIVITY 1...... By using the picture above, explain how logistics act as an integral component of Supply Chain Management. 10 Name: Year and Section: ACTIVITY 2 Suppose you are a Customs Officer, how important it is to know the concept of Supply Chain Management? 11 Name: Year and Section: ACTIVITY 3 The aim of every business is to be able to supply their respective goods and services to their intended customers, therefore which do you think is most important features that a business must have. LIMIT YOUR ANSWER TO 4-5 SENTENCES. 12