SUPPLY CHAIN
MANAGEMENT
CHAPTER 6
HISTORY
 "Supply chain management is essentially the optimization of
material flows and associated information flows involved with
an organization’s operations” (p. 331)
 70s: Manual data entry and primarily custom programming – no
common platform
 80s: Common platforms occurred with mini -PCs. Still with
custom codes
 90s: Common platforms and common codes based on Windows
 End of 90s: Companies replaced o ld systems when the
corruption was too high
 Start of 00s: Internet took over as the transaction medium
SOLUTIONS
 The history shows that applying information systems,
companies can enhance or radically improve many aspects of
the supply chain. Such as:
 Reduction in paperwork, inventory holdings and time
 Lower SCM system purchase
 Management costs through use of online services
 Sharing of demand as a part of ECR
 Supplier becomes responsible for item availability
 Human error reduced
UPSTREAM/DOWNSTREAM
 Upstream
 Buy-side e-commerce
 Downstream
 Sell-side e-commerce
 Supply chain network
 More accurate reflection
LOGISTICS
 The time-related positioning of ressource, or the strategic
management of the total supply chain
 Inbound: Management of ressources entering on the buyerside
 Outbound: Management of ressources entering on the
seller-side
PUSH AND PULL
 Push supply chain model: A company creates a product and pushes it to
the costumers . ”This is a great product, now who shall we sell it to ?”
 Modern company using push SC model  Apple
 Pull supply chain model: A company researches the costumers needs
and creates a product upon that.
 Modern company using pull SC model  custom computers (AlienWare )
VALUE CHAIN
 A model that considers how supply chain activities can add
value to products and services delivered to the customer.
 Benefits for the customer are created by reducing cost and
adding value to customers:
 within each element of the value chain such as procurement,
manufacture, sales and distribution;
 at the interface between elements of the value chain such as
between sales and distribution.
 In equation form this is : Value = (Benefit of each VC activity
– Its cost) + (Benefit of each interface between VC activities
– Its cost)
VALUE CHAIN MODEL
VALUE STREAM
 The set of all the specific actions required to bring a specific
product through the three critical management tasks of any
business:
 1 the problem-solving task [the processes of new product
development and production launch]
 2 the information management task [the processes of order taking,
scheduling to delivery]
 3 the physical transformation task [the processes of transforming
raw materials to finished product delivered to customers]
VALUE NETWORK
 Deise et al. (2000) describe value network management
as:
 “the process of effectively deciding what to outsource in a constraint based, real-time environment based on fluctuation”
 I.E. when a computer company outsources their information
systems to the delivery company (Post Danmark)
VIRTUAL ORGANIZATION
 An organization which uses information and communications
technology to allow it to operate without clearly defined
physical boundaries between different functions
 It provides customized services by outsourcing production
and other functions to third parties.