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Supply Chain Management Cheatsheet

A comprehensive guide to Supply Chain Management, covering key concepts, processes, strategies, and technologies. This cheatsheet provides a quick reference for professionals and students in the field, offering insights into optimizing supply chain performance and efficiency.

Fundamentals of Supply Chain Management

Core Concepts

Supply Chain: The network of organizations, people, activities, information, and resources involved in moving a product or service from supplier to customer.

Supply Chain Management (SCM): The coordination and management of all activities within a supply chain to maximize efficiency, value, and customer satisfaction.

Key Objectives of SCM:

  • Reduce costs
  • Improve customer service
  • Enhance efficiency
  • Increase profitability

Upstream vs. Downstream: Upstream includes suppliers and their suppliers. Downstream includes distributors and customers.

Bullwhip Effect: Demand variability increases as you move up the supply chain from customer to suppliers.

Key SCM Processes

Planning:

Demand forecasting, capacity planning, and inventory management.

Sourcing:

Selecting suppliers, negotiating contracts, and managing supplier relationships.

Making:

Production scheduling, manufacturing operations, and quality control.

Delivering:

Order management, transportation, and distribution.

Returning:

Managing product returns, reverse logistics, and waste disposal.

Enabling:

Supporting processes such as finance, IT, and HR.

SCM Goals

  • Efficiency: Minimizing costs and waste across the supply chain.
  • Effectiveness: Meeting customer needs and delivering value.
  • Responsiveness: Adapting quickly to changes in demand and market conditions.
  • Resilience: Recovering quickly from disruptions and maintaining continuity.

Inventory Management

Inventory Control Techniques

ABC Analysis:

Categorizing inventory items into A, B, and C categories based on their value and consumption. A items require the most attention.

Economic Order Quantity (EOQ):

Determining the optimal order quantity to minimize total inventory costs, including ordering and holding costs. EOQ = sqrt((2DS)/H) where D = annual demand, S = ordering cost, H = holding cost.

Just-in-Time (JIT):

A system where materials arrive just as they are needed for production, minimizing inventory holding costs.

Vendor-Managed Inventory (VMI):

Suppliers manage the inventory levels at the customer’s location, ensuring optimal stock levels.

Safety Stock:

Extra inventory held to protect against unexpected demand fluctuations or supply disruptions.

Inventory Metrics

Inventory Turnover: Measures how many times inventory is sold and replaced over a period. Inventory Turnover = Cost of Goods Sold / Average Inventory

Days of Supply: Indicates how many days of demand can be met with current inventory. Days of Supply = Inventory / (Annual Demand / 365)

Fill Rate: Percentage of customer demand met from available inventory. A higher fill rate indicates better customer service.

Inventory Holding Cost: The costs associated with storing and maintaining inventory, including warehousing, insurance, and obsolescence.

Inventory Challenges

  • Excess Inventory: Leads to higher holding costs and potential obsolescence.
  • Stockouts: Results in lost sales and dissatisfied customers.
  • Inaccurate Forecasting: Causes imbalances in inventory levels.
  • Supply Chain Disruptions: Affects the availability of inventory.

Logistics and Transportation

Transportation Modes

Truck:

Flexible, widely used for short to medium distances. High accessibility.

Rail:

Cost-effective for long distances and large volumes. Limited accessibility.

Air:

Fastest mode, suitable for high-value, time-sensitive goods. Expensive.

Water:

Lowest cost per unit for large volumes and long distances. Slow and limited accessibility.

Pipeline:

Used for transporting liquids and gases. Continuous flow and low operating costs.

Logistics Activities

Warehousing: Storing and managing inventory in warehouses. Includes receiving, storing, and shipping goods.

Transportation Management: Planning, optimizing, and executing the movement of goods. Includes route planning, carrier selection, and shipment tracking.

Order Fulfillment: Processing and fulfilling customer orders. Includes order receipt, picking, packing, and shipping.

Reverse Logistics: Managing the flow of returned goods. Includes returns processing, repair, and disposal.

Transportation Strategies

Consolidation: Combining multiple small shipments into a larger shipment to reduce transportation costs.

Cross-Docking: Transferring goods directly from incoming trucks to outgoing trucks, minimizing warehousing time.

Third-Party Logistics (3PL): Outsourcing logistics activities to specialized providers. Offers expertise and economies of scale.

Intermodal Transportation: Using multiple modes of transportation to move goods. Combines the benefits of different modes.

Supply Chain Technologies

Key Technologies

Enterprise Resource Planning (ERP):

Integrated software systems that manage all aspects of a business, including supply chain, finance, and HR.

Supply Chain Management (SCM) Software:

Specialized software for planning, executing, and controlling supply chain activities. Includes demand planning, inventory management, and transportation management modules.

Warehouse Management System (WMS):

Software for managing warehouse operations. Includes receiving, put-away, picking, and shipping functionalities.

Transportation Management System (TMS):

Software for managing transportation activities. Includes route planning, carrier selection, and shipment tracking.

Blockchain:

A decentralized, secure, and transparent ledger for tracking and verifying transactions. Enhances supply chain visibility and traceability.

Advanced Technologies

Internet of Things (IoT): Connecting devices and sensors to collect and exchange data. Enables real-time monitoring of inventory, equipment, and shipments.

Artificial Intelligence (AI): Using algorithms to analyze data and make decisions. Improves demand forecasting, optimizes routes, and automates tasks.

Machine Learning (ML): A subset of AI that enables systems to learn from data without explicit programming. Enhances predictive capabilities and improves decision-making.

Robotics and Automation: Using robots and automated systems to perform tasks in warehouses and factories. Increases efficiency and reduces labor costs.

Benefits of Technology

  • Improved Visibility: Real-time tracking of inventory and shipments.
  • Increased Efficiency: Automation of tasks and optimization of processes.
  • Reduced Costs: Lower inventory holding costs and transportation expenses.
  • Enhanced Decision-Making: Data-driven insights for better planning and execution.
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