Supply Chain Management

Course Overview and Introductions

April, 2018
Dr. Oznur Yurt Yasar
Izmir University of Economics
Executive MBA
Introductions
 Welcome

• The reason we’re here today

• Benefits to you

• Benefits to your current/ future company

 Who am I?
• Bachelor’s degree in Business Administration from Başkent University in 2001
• 2001-2003: worked at Akbank Ankara/Turkey as a management trainee
• 2003: started to work in Izmir University of Economics as a research assistant at the
Department of Logistics Management
• 2004: MBA in Ankara University with a specialization in marketing
• 2005: Masters Degree in Logistics in Izmir University of Economics
• 2007: PhD degree, with a dissertation on “Service supply chain orientation’s impact on
industrial service quality” in IUE
• 2009: Post doctoral research at The Supply Chain Research Center at Cranfield
University in UK
• 2011-2015: Associate professor at IUE, Department of Logistics
• 2014-2016:Online faculty member at University of Liverpool-Laureate International
Universities
• 2016: PhD degree, with a dissertation on “Food supply chain” in University of
Miskolc/Miskolc-Hungary
• 2016-Present: Senior Lecturer, University of Roehampton, Roehampton Business
School, London
• Visiting Faculty Member in Normandy Business School (Oxford and Le Havre
Campuses), Izmir University of Economics…
 My research interests include;
• Industrial marketing,
• Service supply chain management,
• Food supply chains,
• Distribution channels management,
• Buyer-supplier relations,
• Purchasing management,
• Value chains,
• Green supply chains…
Oznur Yurt Yasar, PhD
– Senior Lecturer in Marketing and Supply Chain
Management
[email protected]
[email protected]

University of Roehampton, Roehampton Business

School
Expectations
 Course Objectives
After this course , you will be able to
demonstrate your understanding of
• the supply chain management concept in
general,
• supply chain relations,
• supply chain flows and processes,
• supply chain analysis, tools and techniques…
 Ground Rules
• Ask questions as they arise
• Make comments and join the discussions
• Honour time limits
• Put away distractions, e.g. mobile phones
• Participate by sharing your opinions & experiences
• Be willing to experiment with ideas & techniques presented
• Open communication
• Listen & consider the opinions of others
• No blaming, just solutions
• Take responsibility for your own learning
• Other?
 Agenda
Day 1-Monday Day 3-Sunday
• Module Content • Our roles in our team and/or company
• What do we mean by SCM? during SCM and SRM
• From distribution channels and business-to- • Role play and short cases
business relations to SCM • Project progress feedback
• Case Analysis: Kellogs
• Overview of project topic and content Lunch break

Day 2-Wednesday • Student project presentations: ”If you

were a director of a supply chain
• How are sourcing and supplier relationship management department…”
management (SRM) activities are relevant to
SCM?
• Case Analysis: Mattel
• Project progress feedback
 Agenda of the First Lecture

• Defining supply chain management

• Achieving the integrated supply chain
• The advantages of collaboration across the chain
Your Expectations?

12
 Evaluation

Participation + Case Studies+ Role Play : 60%

Final Project : 40 %

13
 Project Guidelines

• Answer the questions below. Your comments have to be based on your

takeaways from the lectures, discussions and other activities of this
module

• Be ready to present your answers to your classmates, preferably support

your presentation with ppt slides. You will have 15 minutes for
presentation and 5 minutes for questions and answers

• Please be ready to make comments and ask questions to other

presenters who will present their work before or after your group

• Send you presentation file to [email protected] before starting your

presentation.

14
 Project Evaluation

• Content and Analysis : 50%

• Presentation : 35%
• Questions and Answers : 15%

15
The supply chain is simply another way of
saying
“the whole process of business”
 Today the real competition is not
company against company but rather
supply chain against supply chain

Christopher s. 16,38
Why do some firms succeed while
others fail?

18
 Competitive Advantage
• Firms achieve strategic competitiveness and
earn above-average returns when their core
competencies are effectively managed,
sustained and supported...
• Core competencies, in combination with
product-market positions, are the firm’s most
important sources of competitive advantage
• Over time, the benefits of any value-creating
strategy can be duplicated by competitors
3–19
 Creating Value & Gaining Competitive Advantage

“A business is profitable if the value it creates exceeds the cost of performing the
value activities. To gain competitive advantage over its rivals, a company must
either perform these activities at a lower cost or perform them in a way that
leads to differentiation and a premium price (more value).”

Professor Michael Porter

Harvard Business School
What is
value?
 What is value?
• the importance
• worth
• usefulness
• monetary worth
• benefit…
 Value-Value Chain-Supply Chain
VideoLink:
http://www.youtube.com/watch?v=L3Kt8tztlI0

Primary driver of Unilever’s value chain

according to this video?
The concept of Value Chain Analysis is described by Michael Porter
who notes that:

“Every firm is a collection of activities that are

performed to design, produce, market, deliver
and support its products or services. All these
activities can be represented using a value
chain. Value chains can only be understood in
the context of the business unit”.

23
 VALUE CHAIN
 Value chain
 Shows how a product moves from raw-material stage to the final
customer
 To be a source of competitive advantage, a resource or capability must
allow the firm:
 To perform an activity in a manner that is superior to the way
competitors perform it, or (perform better)
 To perform a value-creating activity that competitors cannot
complete (perform unique)

24
 Identifying the Value Chain
Value
What buyers
are willing to
pay
Activities
Support

Primary Activities
 The External Value Chain-Industry Value
Chain

Supplie r
Raw mate rials
Capita l goods Local dis tr ib utio n
channels

The busin ess unit

Agencie s and MARKET A
dis tr ibuto rs MARKET B
MARKET C
Dir ect suppliers End Customers
Components
Labour
Servic es Competito rs
Expect
dis tr ibutio n
channels

Value and demand info rmatio n

Cost and supply in fo rmation
The External value chain
26
 Value Chain & Value System
• The value chain of the business unit is only
one part of a larger set of value-adding
activities in an industry- ‘the industry value
chain’ or ‘value system’ or ‘external value
chain'
• The value chain of any firm needs to be
understood as part of the larger ‘system’ of
related value chains/external value chains

27
 SC of Coca Cola

https://www.youtube.com/watch?v=
UBSOiHUctrY

28
 Some questions

• Definition of a supply chain?

• Objectives of supply chain management?
 The Goal of Supply Chain Management

“To manage upstream and downstream relationships

with suppliers and customers in order to create
enhanced value in the final market place at less cost to
the supply chain as a whole.”
 Systems Approach/Integration
• Logistics is, in itself, a system; it is a network of
related activities with the purpose of managing
the orderly flow of materials and personnel with
the logistics channel
• The systems approach simply states that all
functions or activities need to be understood in
terms of how they affect, and are affected by,
other elements and activities with which they
interact

31
Systems must be viewed as a whole

Supply Chain Management Approach

32
 SCM (CSCMP Definition)

• Supply Chain Management encompasses the planning and

management of all activities involved in sourcing and
procurement, conversion, and all logistics management
activities.

• It also includes coordination and collaboration with

channel partners, which can be suppliers, intermediaries,
third-party service providers, and customers.

• In essence, Supply Chain Management integrates supply

and demand management within and across companies.

33
 SCM

• The design and management of seamless,

value-added processes across organizational
boundaries to meet the real needs of the end
customer
• The development and integration of people
and technological resources are critical to
successful supply chain integration

34
35
CRITICAL FLOWS ALONG THE SUPPLY
CHAIN

• MATERIALS
• SERVICES
• INFORMATION
• (CASH)

36
 Logistics Management
Logistics management is the process of
 planning,
 implementing and
 controlling
 the efficient, cost-effective forward and reverse flow and
 storage of raw materials, in-process inventory, finished
goods, services, and related information from point of
origin to point of consumption
for the purpose of conforming to customer requirements.
Council of Logistics Management

37
LOGISTICS ACTIVITIES INCLUDE;

• transportation,
• warehousing,
• material handling,
• protective packaging,
• inventory control,
• order processing,
• forecasting,
• customer service....
 Logistics Adds Value by Creating
Utility
• FORM UTILITY is the process of creating the good and
service, or putting it in the proper form for the
customer to use (from raw materials to finished
goods)
• POSSESSION UTILITY is the value added to a product
or service because the customer is able to take actual
possession (by credit a arrangements, loans...)
• TIME UTILITY is the value added by having an item
when it is needed
• PLACE UTILITY means having the item or service
available where it is needed
 Definition of marketing

• Marketing is the activity, set of institutions,

and processes for creating, communicating,
delivering, and exchanging offerings that have
value for customers, clients, partners, and
society at large (AMA, 2013)
 How is marketing mix related to logistics?

• Product design and packaging

• Differentiating products by size, color and size
• Quantity discounts in pricing
• Promotional campaigns
• Influence a firm’s stockouts

Source: Tek (2013) 41

14 Marketing / Logistics
Management Concept
Customer
satisfaction
• Suppliers
• Intermediate
customers
• Final customers

Integrated Company
effort/Marketing mix profit
• Product • Maximize long-term
• Price profitability
• Lowest total costs
• Promotion
given an acceptable
• Place (distribution) level of customer
service
Marketing-Logistics Concepts

• Time and place utility –customer service

level –customer satisfaction

• Customer service is an output of the

logistics system
12 Components of
Logistics Management
Management actions
Inputs into Planning Implementation Control
logistics Outputs of
Natural logistics
resources
(land, facilities, Competitive
and equipment) advantage
Logistics management Time
Human and place
resources Suppliers Raw In-process Finished Customers
materials inventory goods utility
Efficient
Financial movement
resources to customer

Information Proprietary
resources Logistics activities asset
• Customer service • Plant and warehouse site
• Demand forecasting selection
• Distribution • Procurement
communications • Packaging
• Inventory control • Reverse logistics
• Material handling • Traffic and transportation
• Order processing • Warehousing and storage
• Parts and service support
 Supply Chain Management
SCM is the integration of key business
processes from end user through original
suppliers that provides products, services, and
information that add value for customers and
other stakeholders.

Lambert, Cooper and Pagh

 Supply Chain Management
SCM 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.
Handfield and Nichols
 Logistics? SC?
• Supply chain management is an expanded
version of logistics process
• SCM Coordination between firms
– Product flow
– Information flow
– Service flow, and
– Capital flow
• Logistics Management a part of SCM
 SCM vs Logistics

• SCM is the integration of key business processes from end

user through original suppliers, that provides products,
services, and information that add value for customers and
other stakeholders.

• Logistics is a part of supply chain process that plans,

implements and controls the efficient, cost-effective flow
and storage of goods, services, and related information
from point of origin to point of consumption in order to
meet customers’ requirements.
Typical Logistics Network
 Evolution of Supply Chain

Activity fragmentation to 1960 Activity Integration 1960 to 2000 2000+

Demand forecasting

Purchasing

Requirements planning
Purchasing/
Production planning Materials
Management
Manufacturing inventory

Warehousing
Logistics
Material handling

Packaging

Finished goods inventory Supply Chain

Physical Supply Chain
Management
Distribution Management
Distribution planning

Order processing

Transportation

Customer service

Strategic planning

Information services

Marketing/sales

Finance
 SUPPLY CHAIN MANAGEMENT
Integrating and Managing Processes Across the Supply Chain
Information Flow

Manufacturer
Tier 2 Tier 1
Consumer/
Supplier Supplier Logistics Customer
End-user
Purchasing Marketing & Sales
PRODUCT FLOW
Production Finance
R&D

CUSTOMER RELATIONSHIP MANAGEMENT

Supply Chain Business Processes

CUSTOMER SERVICE MANAGEMENT

DEMAND MANAGEMENT

ORDER FULFILLMENT

MANUFACTURING FLOW MANAGEMENT

PROCUREMENT

PRODUCT DEVELOPMENT AND COMMERCIALIZATION

RETURNS

Source: Douglas M. Lambert, Martha C. Cooper, Janus D. Pagh, “Supply Chain Management: Implementation Issues and Research Opportunities”, The International Journal
of Logistics Management, Vol. 9, No. 2, 1998, p. 2.
 The SCM Framework
Elements and Key Decisions

2. What processes should be linked

with each of these key
supply chain members?

Supply chain
business
processes

Supply chain Supply chain

management network
components structure

3. What level of integration 1. Who are the key supply

and management should be chain members with whom
applied or each process link? to link processes?
Supply Chain Network Structure
• Members of SC
– Primary members: suppliers,
manufacturers, wholesalers,
retailers…
– Supporting members: banks…

– Distinction may not be obvious

 Supply Chain Network Structure
Tier 3 to Tier 3 to
Initial Tier 2 Tier 1 Tier 1 Tier 2 Consumers/
suppliers Suppliers Suppliers Customers Customers End-Customers

1 1

2 2

n 1 1 n
Tier 3 to n suppliers

Consumers / End-Customers
1
n 2 2
Initial Suppliers

1 n

Tier 3 to n customers
2 3
n 1
3
2

n n
n
1

Focal Company Members of the Focal Company’s Supply Chain

Supply Chain Network Structure

• Three structural dimensions

– Horizontal structure:number of firms in a
tier

– Vertical structure: number of tiers across

the SC
SC Integration Levels
 Traditional Logistics/SC Management
C E O

V P M a r k e t in g V P P r o d u c t io n V P F in a n c ia l

•Sales service •Manufacturing •Information systems

Responsibilities •Channels of •Purchasing/ •Budgeting
distribution procurement
•Product returns •Inventory
•Traffic
and warranties •Data processing
•Warehousing

Objectives
Large inventories Low inventories
Small and frequent Larger and infrequent
production runs production runs
Decentralized Centralized
Plant warehousing
warehousing warehousing
Large product Fewer products
assortment
 Traditional Logistics/SC Management cont’d..

C E O

V P M a r k e t in g V P P r o d u c t io n V P F in a n c ia l

•Sales service •Manufacturing •Information systems

Responsibilities •Channels of •Purchasing/ •Budgeting
distribution procurement
•Inventory
•Product returns •Traffic
and warranties •Data processing
•Warehousing

Rapid order Inexpensive order

Objectives processing processing
Generous returned More rigid returned
goods policies goods policies
Fast transportation Low cost transportation

Expedited shipments
 Organization Design for Logistics/SC
as a Function
P re s id e n t

E n g in e e rin g M a n u fa c tu rin g M a r k e tin g /S a le s F in a n c e /A c c o u n tin g

Human Resources Logistics

Organization Design for Logistics/SC
as a Program
President

Logistics

Human Marketing/ Finance/

Engineering Manufacturing
Resources Sales Accounting
12
5
Logistics in a Matrix
Organization
President

Horizontal flows of project authority

Finance and
Manufacturing Engineering Marketing Transportation accounting

Production Product Sales Traffic Information

scheduling design forecasting processing
Logistics
Procurement

Requirement Maintenance Customer Protective Management

determination service packaging science
Other
programs

Vertical flows of functional authority

Source: Adapted from Daniel W. DeHayes, Jr., and Robert L. Taylor, “Making
‘Logistics’ Work in a Firm,” Business Horizons 15, no. 3 (June 1972), p. 44.
 Hallow Organizations
• The hallow corporation(network), is a small organization of
managers and “idea” people who hire external companies
to perform all types of activities, including manufacturing,
logistics, distribution, billing, and even sales and marketing.
• The organizations should specialize and focus on what they
do best, and hire specialists to perform other activities.
• A variation of this concept is the “virtual corporation”,
where a number of companies come together to develop,
produce, and distribute or sell a product or service of
limited scope.
In Class Activity

Kellogg’s Case

63
 References

• Hines, Tony, (2006), "Supply Chain Strategies: Customer-Driven

and Customer-Focused", Elsevier, ISBN-13: 978-0-7506-5551-4

• Wheelsen, T.L. and Hunger, J.D., (2010), "Strategic

Management and Business Policy: Achieving Sustainability",
12th ed., Pearson Education, ISBN-13-978-0-13-702915-0