Supply Chain

National Taiwan Ocean University Department of Transportation and Navigation Science

Introduction to Supply Chain Management

Instructor: Eric Ting

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What Is A Supply Chain?

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The system of suppliers, manufacturers, transportation, distributors, and vendors that exists to transform raw materials to final products and supply those products to customers. That portion of the supply chain which comes after the manufacturing process is sometimes known as the distribution network.

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The Logistics Network

Warehouses and Suppliers Manufacturers Distribution Centers Customers

Transportation Costs

Transportation Costs

Material Costs

Manufacturing Costs

Inventory Costs

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What Is the Goal of Supply Chain Management?

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Supply chain management is concerned with the efficient integration of suppliers, factories, warehouses and stores so that merchandise is produced and distributed: •In the right quantities •To the right locations •At the right time In order to •Minimize total system cost •Satisfy customer service requirements

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Sequential Optimization vs. Global Optimization

Sequential Optimization

Procurement Planning Manufacturing Planning Distribution Planning Demand Planning

Global Optimization

Supply Contracts/Collaboration/Information Systems and DSS

Procurement Planning

Manufacturing Planning

Distribution Planning

Demand Planning

Why is Global Optimization Hard?

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The supply chain is complex. Different facilities have conflicting objectives. The supply chain is a dynamic system. The system varies over time.

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Conflicting Objectives in the Supply Chain

1. Purchasing • Stable volume requirements • Flexible delivery time • Little variation in mix • Large quantities 2. Manufacturing • Long run production • High quality • High productivity • Low production cost

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Conflicting Objectives in the Supply Chain

3. Warehousing • Low inventory • Reduced...