DISTRIBUTION MANAGEMENT

Supply Chain Management or SCM (Abille and Abo)

- is the centralized management of the flow of goods and services to and from a
company and includes all of the processes involved in transforming raw materials
and components into final products.
- A supply chain manager is tasked with controlling and reducing costs and
avoiding supply shortages.

5 Phases of Supply Chain Management (SCM)

1. Planning

- To get the best results from SCM, the process usually begins with planning to
match supply with customer and manufacturing demands.

- Companies must try to predict what their future needs will be and act accordingly.
That means taking into account the raw materials or components needed during
each stage of manufacturing, equipment capacity and limitations, and staffing needs.

2. Sourcing

- Effective SCM processes rely very heavily on strong relationships with suppliers.
Sourcing entails working with vendors to supply the materials needed throughout the
manufacturing process. Different industries will have different sourcing
requirements. In general, SCM sourcing involves ensuring that:

● The raw materials or components meet the manufacturing specifications

needed for the production of the goods.
● The vendor has the flexibility to deliver emergency materials due to
unforeseen events.
● The vendor has a proven record of delivering goods on time and of good
quality.
● SCM is especially critical when manufacturers are working with perishable
goods.
● When sourcing goods, companies should be mindful of lead times and
how well equipped a supplier is to meet their needs.
3. Manufacturing

- Using machinery and labor to transform the raw materials or components the
company has received from its suppliers into something new is the heart of the
supply chain management process.

- The manufacturing process may be further divided into sub-tasks such as

assembly, testing, inspection, and packaging. During the manufacturing process,
companies must be mindful of waste or other factors that may cause deviations from
their original plans.

4. Delivery

- Once products are made and sales are finalized, a company must get those
products into the hands of its customers. A company with effective SCM will have
robust logistic capabilities and delivery channels to ensure timely, safe, and
inexpensive delivery of its products.

5. Returns

- The return process is often called reverse logistics, and the company must ensure
it has the capabilities to receive returned products and correctly assign refunds for
them. When a customer is simply not satisfied with the product, the transaction with
the customer must be remedied.

- Returns can also be a valuable form of feedback, helping the company to identify
defective or poorly designed products and to make whatever changes are necessary.
Without addressing the underlying cause of a customer return, the SCM process will
have failed, and returns will likely persist into the future.

The Importance of Supply Chain Management (Amargo & Artajo)

Supply chain management (SCM) plays a critical role in ensuring the smooth flow
of goods, services, and information across the different stages of business operations. It
helps companies reduce costs, improve efficiency, and deliver products to customers on
time. By effectively managing the supply chain, businesses can enhance customer
satisfaction, minimize risks, and maintain a competitive edge in the market. And, SCM
supports sustainable practices by optimizing resource use and reducing waste

1. Operational Efficiency and Cost Reduction – SCM improves

operational processes by identifying inefficiencies and implementing
solutions that reduce costs. This includes maintaining equipment to
prevent delays and managing inventory effectively to avoid excess costs
 or shortages.

2. Customer Satisfaction and Quality Assurance – A well managed

supply chain ensures that customer demands are met with high-quality
products delivered on time. Consistent quality control across all stages of
production builds customer trust and loyalty.

3. Risk Management and Business Resilience – SCM plays a critical role

in anticipating and mitigating risks such as supply shortages, natural
disasters, and market disruptions. Proactive planning and backup sourcing
strategies help businesses maintain stability during unexpected events.

4. Sustainability and Transparency – Modern supply chain practices

emphasize environmental responsibility and transparency. By adopting
sustainable initiatives and real-time monitoring, companies can reduce
waste, track their carbon footprint, and comply with ethical standards,
improving their reputation and long-term success.

Current Trends in Supply Chain Management (Bacsal & Asinas)

In the current trends in supply chain management, there are 7 key processes or
changes that help improve operations and the resilience of a business.

1. Digital Technology
● Businesses use AI, blockchain, and IoT for faster product tracking.
For example, Shopee and Lazada provide real-time tracking so
customers know where their orders are.
2. Sustainability
● Many companies now use eco-friendly materials and reduce waste.
For instance, Unilever uses recyclable packaging to cut down on
plastic waste.
3. Resilience
● Due to crises like the pandemic, companies seek multiple suppliers
to avoid disruptions. Fast-food chains, for example, started
sourcing locally when imported ingredients became unavailable.

4. E-commerce Growth
 ● With more online shoppers, businesses must speed up deliveries
and improve inventory tracking. Amazon, for example, uses
automated warehouses for faster order processing.

5. Automation
● AI and robots are used in warehouses to speed up processes and
reduce costs. Tesla, for example, uses robots on its assembly lines.

6. Transparency
● Blockchain helps track products to ensure ethical sourcing. In the
food industry, it helps identify if a product is sustainably produced.

7. Circular Economy
● More companies are recycling products. H&M, for example, has a
program where customers can return old clothes for reuse.

SUPPLY CHAIN ANALYTICS (BALLOLA & BUNAGAN)

Supply chain analytics

- Supply chain analytics refers to the use of advanced data analysis techniques
and technologies to gain insights and optimize various aspects of the supply
chain.

Common applications of supply chain analytics

● Demand forecasting: Predicting future demand patterns based on historical

data, market trends and other relevant factors.
● Inventory optimization: Analyzing inventory data to determine optimal stocking
levels, reorder points and lead times.
● Supplier performance analysis: Evaluating the performance of suppliers based
on various metrics, such as on-time delivery, quality and cost.
● Transportation and logistics optimization: Analyzing transportation data to
optimize routes, modes of transportation and shipment consolidation. It improves
delivery times, reduces transportation costs and enhances overall logistics
efficiency.
● Risk management: Identifying and assessing potential risks and disruptions in
the supply a chain, such as natural disasters, geopolitical issues or supplier
failures. Analytics can help develop contingency plans and mitigate the impact of
such events.
● Sustainability and environmental impact: Analyzing data related to energy
consumption, emissions, waste generation and other environmental factors to
identify opportunities for sustainable practices and reduce the carbon footprint of
the supply chain.
Supply Issues in Supply Chain Management

(Catalan & Chavenia)

This highlights key supply-related issues in supply chain management, focusing on

procurement, production, inventory, and distribution. It aims to provide insights into common
challenges and their impact on business operations.

1. Procurement Challenges:

● Supplier Reliability - Delays and inconsistencies in deliveries can disrupt production

schedules.
● Price Volatility - Fluctuations in raw material costs affect budget planning and
profitability.
● Quality Issues - Substandard materials can compromise product quality and lead to
recalls.

2. Production Disruptions:

● Equipment Failures - Breakdowns in machinery can halt production.

● Workforce Shortages - Skilled labor shortages can slow down operations.
● Supply Shortfalls - Insufficient raw materials can lead to production delays.

3. Inventory Management Problems:

● Overstocking - Excess inventory increases storage costs and risk of obsolescence.

● Stockouts - Insufficient inventory results in lost sales and customer dissatisfaction.
● Inaccurate Demand Forecasting - Poor demand predictions can lead to mismatched
supply levels.

4. Distribution and Logistics Issues:

● Transportation Delays - Congestion, fuel price increases, and weather conditions can
delay deliveries.
● Regulatory Compliance - Customs and trade regulations can create bottlenecks.
● Warehousing Constraints - Limited storage space can lead to inefficient inventory
handling.

Purchasing Management (Corpuz & Deguzman)

Purchasing Management
- is a strategic function that helps organizations obtain essential supplies while
managing costs effectively. It plays a critical role in supply chain management by
ensuring smooth operations and preventing disruptions.
The first step in purchasing management is choosing the right supplier.
This involves:

● Evaluating potential suppliers based on quality, reliability, and pricing.

● Requesting quotes and proposals to compare options.
● Reviewing past performance or third-party evaluations to ensure trustworthiness.

By selecting the right suppliers, businesses can avoid delays and maintain product quality.

After selecting a supplier, the next step is negotiating contracts.

This involves:

● Setting fair and cost-effective pricing.

● Defining delivery schedules to prevent production halts.
● Establishing payment terms that suit both parties.
● Ensuring clear quality standards.
● Agreeing on penalties for delays and rewards for outstanding service.

A well-structured contract helps prevent disputes and ensures both parties uphold their
commitments.

Once the contract is finalized, the purchasing team processes the orders.
This includes:

● Placing purchase orders with correct item details and agreed prices.
● Ensuring timely ordering to prevent shortages.
● Keeping records for financial tracking and audits.

Accurate order processing is crucial to maintaining efficiency in procurement.

Managing inventory effectively is vital to avoid excessive storage costs and stock
shortages. This process includes:

● Monitoring stock levels and usage patterns.

● Forecasting demand to plan future purchases.
● Setting reorder points to ensure materials arrive before stock runs out.

With good inventory management, companies can reduce waste and optimize cash flow.

The final component is supplier relationship management, which focuses on:

 ● Building trust and strong communication with suppliers.
● Negotiating better pricing and discounts over time.
● Ensuring priority treatment and flexible payment options during high-demand
periods.

Good relationships with suppliers create long-term business success.

● Quality Control- Ensuring the purchased goods meet the required quality
standards is a core responsibility. Purchasing management often involves
working with quality control teams to inspect incoming goods for quality.
● Cost control- Purchasing management is responsible for ensuring that
procurement activities are cost effective. This involves comparing multiple
suppliers to find the best value for money.
● Compliance and Ethical Sourcing- Purchasing management activities follow
legal and ethical standards that include adhering to relevant laws and regulations
(environmental laws,import/export rules).
● Performance monitoring- After goods or services are delivered,purchasing
management evaluates the performance of suppliers and tracking metrics such
as Delivery times and quality goods.

Creating and Managing Supplier Relations (Delancey & Enerio)

Creating and managing supplier relations involves building and maintaining positive,
effective partnerships with suppliers to ensure smooth operations and the delivery of quality
products or services.
Key aspects include:

1. Communication: Open and regular communication helps build trust and keeps
everyone informed about expectations, changes, and issues.
2. Negotiation: It's important to negotiate terms that are beneficial for both parties,
addressing pricing, delivery schedules, and quality requirements.
3. Collaboration: Working together on problem-solving, innovation, and efficiency
improvements fosters a stronger relationship.
4. Performance Monitoring: Regularly evaluating supplier performance based on
quality, delivery time, and service helps maintain standards.
5. Feedback: Providing constructive feedback helps suppliers understand your needs
better and make necessary adjustments.
6. Conflict Resolution: Addressing issues promptly and collaboratively can prevent
misunderstandings and strengthen the relationship.
7. Strategic Partnerships: Establishing long-term partnerships with key suppliers can
lead to joint ventures, innovations, and better pricing.

Effective supplier management can lead to cost savings, improved quality, and
enhanced reliability in the supply chain.

Ethical and Sustainable Sourcing

(Espinoza & Famulagan)
Ethical and sustainable sourcing refers to the practices and policies that companies use
to ensure that their products are sourced in ways that are both responsible and
environmentally friendly. It focuses on ensuring that raw materials and goods are
obtained in a manner that respects human rights, protects the environment, and
promotes fair labor practices.
1. Fair Labor Practices:
Companies ensure that their suppliers provide fair wages, work in safe
conditions, and do not engage in child labor or forced labor.
2. Environmental Responsibility:
Companies may prioritize renewable, recyclable, or biodegradable materials, and
partner with suppliers who practice sustainable agriculture.
3. Traceability:
Companies are encouraged to trace the origin of their products and materials to ensure
that ethical and sustainable practices are being followed throughout the supply chain.
4. Fair Trade:
Promote equitable relationships between producers in developing countries and
companies in wealthier nations. It ensures that producers are paid a fair price for their
goods and that local communities benefit from their trade.
5. Supplier Auditing and Collaboration:
Companies often audit suppliers to ensure they are adhering to ethical and sustainable
standards. Auditing may involve checking labor practices, environmental impact, and
compliance with fair trade or sustainability certifications. Collaboration with suppliers to
improve practices and educate them about sustainability is an essential part of this
approach.
6. Sustainable Packaging:
The sourcing of packaging materials is another aspect of sustainability. Companies are
moving towards biodegradable, recyclable, or reusable materials, and are reducing
excess packaging to limit waste.

Demand Forecasting (Finez, Gape)

Demand forecasting is a crucial element of supply chain management for both
manufacturers and distributors, enabling them to optimize resources, satisfy customers,
and maintain a competitive edge. It involves predicting future customer demand by
analyzing historical data, market trends, and other relevant factors. This allows
businesses to estimate the quantity and timing of future demand, and make informed
decisions.
Importance of Demand Forecasting:
1. Efficient Resource Allocation: Anticipating customer demands and market
trends allows for more efficient allocation of resources, which reduces waste and
lowers operational costs
2. Optimal Inventory Management: Accurate forecasting minimizes overstocking
and understocking, which reduces carrying costs and potential losses.
3. Customer Satisfaction: Reliable forecasting ensures product availability when
and where needed, boosting customer loyalty and repeat business.
4. Strategic Decision-Making: Demand data informs strategic decisions like
expansion plans, product launches, and market penetration strategies.
 5. Mitigating Supply Chain Risks: Effective demand planning helps in mitigating
supply chain risks.
6. Effective supplier management and procurement: Estimating future demand
helps manufacturers negotiate better contracts with suppliers, plan procurement
activities, and ensure a timely and sufficient supply of materials.

Resource Planning System (Garcia & Go)

What is Resource Planning?

Resource planning is the process of managing people, money, tools, and materials to
complete a task or project efficiently.

Why is Resource Planning Important?

• Helps use resources wisely

• Prevents waste and delays
• Ensures projects finish on time
• Saves money and effort

Types of Resources

1. Human Resources
2. Financial Resources
3. Material Resources
4. Time Resources

Steps in Resource Planning

Step 1: Identify Resources Needed
List everything required for the project
Step 2: Allocate Resources
Assign tasks and make sure resources are available when needed.
Step 3: Monitor & Adjust
Check progress, solve problems, and adjust as necessary.

5 Common Challenges & Solutions

 Challenges Solutions

Lack of Resources Plan ahead & prioritize

Delays in Delivery Keep backup options

Budget Issues Track expenses & adjust

Overworked teams Balance workloads & delegate

Tools for Resource Planning

Spreadsheets:

Easy to create and customize. (Excel, Google Sheet)

Project Management Software:

Trello, Asana, or Microsoft Project

Calendar Tools:

Google Calendar for scheduling tasks

Inventory Management (Guerrero,Jamisola)

Inventory management is directly linked to the operating goal of giving the best service
to customers.

Importance of Inventory Management

 1. Cost Efficiency: Proper inventory management helps in minimizing storage
costs and reducing the capital tied up in inventory.
2. Customer Satisfaction: Ensuring that products are available when customers
need them can significantly improve customer satisfaction and loyalty.
3. Operational Efficiency: Streamlining inventory processes leads to smoother
production cycles and better use of resources.
4. Inventory Management Techniques Just-In-Time (JIT): A strategy where
inventory is ordered and received just in time for production or sales, minimizing
holding costs.
5. ABC Analysis: Categorizes inventory into three groups (A, B, and C) based on
importance and value, allowing businesses to prioritize management efforts.
6. Economic Order Quantity (EOQ): Calculates the optimal order quantity that
minimizes total inventory costs, including ordering and holding costs.
7. Safety Stock: Maintaining extra inventory to safeguard against stockouts due to
demand variability or supply chain disruptions.

Benefits of Effective Inventory Management

1. Reduced Costs: Lower storage and handling costs, and reduced capital
investment in inventory.
2. Improved Cash Flow: Better inventory turnover rates lead to improved cash
flow. Enhanced Decision-Making: Accurate inventory data provides insights for
better business decisions.
3. Challenges in Inventory Management Demand Forecasting: Predicting
customer demand accurately can be challenging, leading to overstock or
stockouts.
4. Supply Chain Disruptions: External factors such as natural disasters, political
instability, or supplier issues can disrupt the supply chain.
5. Technological Integration:Implementing and integrating new inventory
management technologies can be complex and costly.

Lean Six Sigma in the Supply Chain (Laya & Lontoco)

 - refers to the application of Six Sigma principles to improve efficiency, reduce
errors, and optimize processes within a supply chain. It helps companies
- minimize defects, streamline logistics, and enhance overall performance.

1. Define: Identify critical areas for improvement

within the supply chain, such as order
fulfillment, inventory management, or supplier
relationships.

2. Measure: Collect data to establish baseline

performance and identify areas of variability or
defects.

3. Analyze: Use statistical tools to analyze the

data and pinpoint the root causes of problems.

4. Improve: Implement solutions to address the

root causes and improve process performance.

5. Control: Monitor the improved processes to

ensure sustained performance and prevent
regression.