Welcome to Supply Chain Management

Introduction to Supply Chain Management (SCM)

• Common consumer misconception: Product cost ≠ Material cost
• Business perspective: Understand components beyond material costs

Example: Bottled Water

• Costs Involved
  • Material costs (water, plastic bottle, cap, label)
  • Additional costs: transportation, packaging, labor, energy, etc.
• Processes Required
  1. Negotiation for bottles and caps
  2. Packaging: boxes, shrink-wrap, pallets, forklift
  3. Transportation: trucks, drivers, fuel, insurance
  4. Label design, printing, shipping
  5. Bottling plant operations: machines, employees, utilities
  6. Distribution to retail stores
  7. Retail store operations: stocking, energy, insurance
  8. Customer service: call centers
• Key Takeaway: Many hidden costs reduce profit margins

Roles and Responsibilities of Supply Chain Managers

• Oversee acquisition, production, distribution, sale, and servicing of products
• Minimize costs and ensure efficiency
• Maintain sustainability in materials, energy, and methods
• Deliver products to customers on time and at a competitive price

Concept Simplified

• Management of the chain of supplies
• Applies to both products and services

Service Economy Example: Hotel Industry

• Products and Services
  • Lodging, dining, spa, and overall vacation experiences
  • Goods: beds, furniture, TVs, food, soaps, towels
  • Services: housekeeping, meals, massages, events
  • Logistics: clean towels, food, guest transport
  • Sales: in-room movies, internet, event tickets
  • Customer services: reservations, event organization, wake-up calls, laundry
• SCM in Services: Similar principles as in manufacturing

Conclusion

• SCM skills are crucial for both goods and service industries
• Fundamental for effective and efficient operations in business

Welcome to the world of supply chain management where your understanding of the intricacies can make or break a business!