Introduction to

Supply Chain Management

Chapter Objectives
At the end of the chapter, the student must be able to:
1. Define Supply Chain Management;
2. Understand the importance of SCM;
3. Understand the overall goal of SCM;
4. Identify and explain the six components of SCM; and
5. Understand the supply chain management in the hospitality industry.

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What is Supply Chain Management

Supply Chain Management can be

defined as the management of flow
and products and services, which
begins from the origin of products
and ends at the product’s
consumption.

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 Supply Chain Management
▪ It also comprises movement and storage of raw materials that are involved in
work in progress, inventory and fully furnished goods.

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▪ The main objective of supply chain management is to monitor and relate
production, distribution, and shipment of products and services.

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 Importance of Supply Chain Management
▪ Avoiding expensive shortages or cycles of product oversupply, restrictions over
shipping procedures will enhance customer support.

▪ Overall, supply chain management offers businesses with several ways to

increase their profit margins, which is particularly relevant for large and
multinational businesses.

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 Importance of Supply Chain Management
Supply Chain Management is important since it can help meet many company goals.
Example:
- increase product quality by regulating production processes,
- minimizing the possibility of recalls,
- litigation while helping to create a strong customer brand.

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 Advanced Analytical Tools
▪ Identifying potential problems before they occur
▪ Optimizing price dynamically
▪ Improving the allocation of available to promise inventory

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 Advantages of Supply Chain Management - Key
Benefits
▪ Assists companies in adapting to the challenges of globalization,
economic upheaval, expanding consumer expectations, and related
differences.

▪ Assists companies in minimizing waste, driving out costs, and achieving

efficiencies throughout the supply chain process.

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 Advantages of Supply Chain Management
▪ Assists in achieving shipping of right products to the right place at the right time.
▪ Creates better delivery mechanisms for products and services in demand with
minimum delay.
▪ Develops better customer relationship and service.

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 Advantages of Supply Chain Management
▪ Enhances inventory management, supporting the successful execution of just-in-
time stock models.
▪ Improvises productivity and business functions.
▪ Minimizes direct and indirect costs.
▪ Minimizes warehouse and transportation costs.

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 The Overall Goal of Supply Chain Management
▪ Improving Efficiency
▪ Improving Quality
▪ Improving Stability

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 Six Components of Supply Chain Management
▪ Planning
▪ Sourcing
▪ Making
▪ Delivering
▪ Returning
▪ Enabling

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 Competitive and Supply Chain Strategies
▪ Competitive Srategy defines the set of customer needs a firm seeks to satisfy
through its products and services.
▪ Product development strategy specifies the portfolio of new products that the
company will try to develop.
▪ Marketing and sales strategy specifies how the market will be segmented and
product positioned, priced, and promoted.

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 Competitive and Supply Chain Strategies
▪ Supply chain strategy determines the nature of material procurement,
transportation of materials, manufacture of product or creation of service,
distribution of product.
▪ All functional strategies must support one another and the competitive strategy.

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▪ The creation of a supply chain leads to a better understanding of the whole chain
and thus implementation of common standards becomes easier. It is implied and
obvious that in coming era of hyper-competition the basis of competition in
many industries will revolve around supply chain development.

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