Supply Chain Management:
The Science of
Better, Faster, and Cheaper
Bin Zhou
Rutgers University
zhou@rbs.rutgers.edu
1
Outline

What is Supply Chain Management

Why Supply Chain Management is Important

Research and Practice in SCM

Career in Supply Chain Management

What You Can Learn in Supply Chain Management
2
What is Supply Chain Management?

A Supply Chain
is the sequence of organizations involved in the
transformation of raw materials into finished goods and
the delivery of those goods to the customer

Supply Chain Management
is the coordination and integration of the activities:



Procure services and materials
Transform them into intermediate and final products
Deliver them to the customer
3
The Supply Chain Network
Material
Cash
Information
4
What is Supply Chain Management?

Supply Chain Management is also a process management
involves

Cross-functional

Inter-organizational
5
What is Supply Chain Management?

Objective of Supply Chain Management

Maximize value & lower waste/cost

Create and sustain competitive advantage (based on the
delivery of basic and value-added services)

Achieve “win-win”, global optimal not local optimal

Competition is between supply chains, not single companies
6
Components of Supply Chain Management

Production
focus on which suppliers to use; how much to produce; when to
produce; where to produce…(insource vs. outsource; quantities;
time; locations…)

Inventory
decide where to store their products and how much to
store…(make-to-order vs. make-to-stock; consolidated vs. break
bulk; locations…)

Distribution/Logistics
address issues about how the products should be moved and
stored…(logistic methods; own fleet vs. 3PL…)

Payments
look for the best ways to pay suppliers and get paid by
customers…(pricing policies; promotion and discounts…)
7
Why Supply Chain Management is Important

Huge financial impacts
nearly $800 billion on supply chain activities in US and
more than $1.4 trillion globally, and it continues to grow

Critical importance to human survival
supply chain system provides the continuous availability of food,
water, medicine, and other key materials people need to survive

Greatly impacts the quality of life
provide employment, cost-effective means of sourcing and
distributing goods locally and globally

Affects the success in a wide variety of endeavors
other than the flow of industrial and consumer products, such as
Red Cross provides support in life-threatening situations (flood,
hurricanes…), military or UN humanitarian activities, Olympic
Games…
8
Why Supply Chain Management is Important

Supply Chain Opportunities
Typical Benefits From Integrating Supply Chain
70%
55%
60%
52%
50%
40%
40%
25%
30%
20%
17%
15%
13%
10%
0%
D
e
n
ity
m
ce
i
io
cy
v
t
n
i
T
t
a
c
a
u
ur
le
m
uc
d
r
c
c
d
e
y
R
ro
rfo
Ac
C
e
t
P
y
t
r
s
P
ll
en
to
ca
ra
ry
n
m
e
e
l
e
r
l
v
ve
iv
lfi
O
Fo
In
u
el
F
ll
Fi
R
es
at
C
ity
c
a
ap
R
n
tio
a
l iz
a
e
9
Source: Pittiglio Rabin Todd & McGrath
Why Supply Chain Management is Important

Advances in information technology (IT) and the expanding IT
infrastructure are introducing new possibilities to improve
service and efficiencies

RFID generated cost savings at Wal-Mart
Wal-Mart's CEO Lee Scott said: "We expect RFID to drive down
inventory and improve stock turnover, as it helps through the supply
chain..."
10
Source: EAN
Research and Practice in SCM

Production and Inventory Control

Widely used EOQ and (s, S) policies in business practice


Minimum Order Quantity (MOQ)


Single product, multiple product, multiple period
Free Shipping Option (FSO)


Production/inventory policies, single, multiple products
Single product, multiple product, multiple period
Revenue Management and Pricing





Hotel, airline, retail industries
Finite and infinite sales horizons
Fixed inventory or capacity
Pricing policies and timing of price adjustment
Resource allocation
11
Research and Practice in SCM

Supply Chain Contracts




Two-party supply chain
Price and order quantities
Global and local optimization
Supply Chain Optimization and Consolidation





Integrated Production/Inventory/Distribution
Multiple modes supply chain
Decisions on production, storage, and logistics/routing
Global optimization or sub-optimal solutions
Consulting projects: General Chemical, Benjamin Moore
12
Career in Supply Chain Management

A Variety of Industries to Choose

Different Roles and Levels
13
Career in Supply Chain Management

Many Functional Areas
14
Career in Supply Chain Management

Market Outlook
15
Career in Supply Chain Management

Compensation
16
Career in Supply Chain Management

Education is critical to success
A Recent study by Council of Supply Chain Management Professionals
(CSCMP) revealed that “…majority of supply chain managers
surveyed hold at least a 4-year degree and an increasing number
have graduate degrees. …effective planning is needed. The time for
career planning is NOT after college graduation!”
17
What You Can Learn

Supply Chain Management builds on several
business areas:


Accounting, Finance, General Management, Marketing,
and MIS, etc.
Supply Chain Management Cores:



Principles/Strategies of Supply Chain Management
Supply Chain Logistics and Operations Analysis
Supply Chain Information Systems and Enterprise
Resource Planning
18
Supply Chain Management Cores

3 Perspectives
Supply Chain Management
Strategies
(Qualitative)
Principles and concepts in supply chain
management including: strategy, sourcing,
distribution, performance metrics, international
management, and technology management
Supply Chain and Logistics
Analysis
(Quantitative)
Application of quantitative models in the
analysis and design of supply chain systems
and in manufacturing, service, and operations
environments
Supply Chain IT and
Enterprise Resource
Planning
(Technology)
Enterprise wide process of decreasing
operating costs, improving management
control, and decreasing cycle time by
implementing ERP based solutions and IT
systems
19
What You Can Learn
Functional Electives:

Global Sourcing and
Procurement

Quality Management
and Control

E-Commerce/Marketing

Project Management

Database Management
for Info Systems

Service Operations
Management

Human Resource
Management

And many more…
20
What You Can Learn

Provide a better understanding of SCM

Both educational and professional/practical point of view
 Student club/organization
 Professional societies: APICS, CSCMP, INFORMS Chapters…

“End-to-End” Supply Chain Management training:
sourcing and procurement, logistics, operations, strategy,
information technology, and organizational alignment

A balanced blend of strategic, tactical, and operational topics

Many choices of functional areas
21
What You Can Learn

Opportunities with Corporations




144/500 US biggest companies in NJ/NY
US busiest sea port: Port Newark-Elizabeth, I/E
Top 5 pharmaceutical companies in US
Assist to pave career path in the Supply Chain Industry


Implementation oriented
Development of academic/professional plan
22