Supply Chain Management Lecture Notes

Introduction to Supply Chain Management

• Many students may not have a clear understanding of Supply Chain Management (SCM).
• Importance of thinking like a business executive or entrepreneur rather than just a consumer.

Example: Bottle of Water

• Consumer Misconception: Product cost is not equal to material cost.
• Price Breakdown:
  • Retail price of a bottle of water: ~$1.50
  • Estimated production cost: < $0.50
  • Misconception: Expecting $1 profit per bottle.

Components of Supply Chain for Water Bottling

• Procurement: Negotiating purchase of empty bottles, caps, and labels.
• Transportation:
  • Bottles packed in boxes for transport.
  • Use of forklifts and trucks (drivers, fuel, insurance required).
• Production:
  • Bottling plant costs (employees, machines, utilities).
  • Purification and bottling processes.
• Distribution:
  • Moving products to distribution centers and retail stores.
  • Requires additional labor and resources.
• Retail:
  • Employees to stock and sell products.
  • Costs involved with store operations (security, insurance).

Challenges in Supply Chain Management

• Companies face various challenges when managing:
  • Purchasing
  • Manufacturing
  • Transportation
  • Sales
  • Service and maintenance
• Need for sustainable materials and methods.

Role of Supply Chain Managers

• Ensure delivery of the right product at the right time, quantity, and price while making a profit.
• Requires world-class skills and knowledge in SCM.

Understanding Supply Chain Management

• Definition Rephrased: Management of the chain of supplies.
• Examples of products and their supply chains:
  • Hamburgers
  • Sweaters
  • Coffee tables
  • Cars
  • Airplanes

Service Economy Perspective

• Service Supply Chains:
  • Example: Hotel industry manufactures lodging and dining experiences.
• Components involved:
  • Purchasing: Beds, furniture, food, toiletries.
  • Manufacturing Services: Housekeeping, meals, events.
  • Transportation: Clean towels, food, guests.
  • Sales: In-room services, event tickets.
  • Service Provision: Reservations, event organization.

Conclusion

• Skills learned in SCM apply to both product manufacturing and service experiences.
• Encouragement for students to engage in SCM and contribute to effective and efficient supply chains.