Supply Chain Management a.

Cycle Inventory – amount of inventory need

to satisfy the demand for the product.
Materials – all things that an organization moves to b. Safety Inventory – held as buffer against
create its products or services. Tangible – raw uncertainty. Weigh the cost of carrying extra
materials inventory.
Intangible – information c. Seasonal Inventory – built-up anticipation of
predictable demand increases that occur at certain
Logistics or Loger – in French means (storage, times of the year.
lodging)
3. Location – where should facilities for
Supply Chain Management – a series of production and inventory storage are located.
interconnected activities related to the Possible paths available for the product.
transformation and movement of goods till it
reaches to the end user. 4. Transportation – how should the inventory
moved from one supply chain to another.
Importance of SCM a. Ship/Vessel – cost efficient but slowest mode of
• Boost customer service transport.
• Reduce operating cost b. Rail – Cost efficient but restricted to use
betweenlocationthat are served with rail lines.
Societal Roles of SCM c. Trucks – relativity quick and very flexible
• SCM helps sustain human life d. Pipelines – very efficient but restricted to
• SCM improves human health commodities that are liquids or gases such as
• SCM protects human from climate extremes water, oil or gas.
e. Airplanes/Aircraft – very fast mode of transport
Logistics Management – is one part of the SCM. It and very responsive. Most expensive mode.
is also the function responsible for the flow of f. Electric Transport – fastest mode of transport,
materials from suppliers into an organization. very flexible and cost efficient.

Five Areas of SCM 5. Information – timely accurate information.

1. Production – activity includes the creation of Holds the promise of better coordination and
master production schedules that take into account decision-making.
plant capacities, workload balancing, quality
control, and equipment maintenance. 2 Purpose in SCM
a. Product Focus – performs the range of different a. Coordinating daily activities – functioning of
operations. the other four supply chain drivers; Production,
b. Functional Focus – performing just few Inventory, Location, and Transportation.
operations b. Forecasting and Planning – to anticipate and
c. Stock Keeping Unit Storage (SKU) – product is meet future demand.
stored together
d. Job Lot Storage – particular job are stored Participants in the Supply Chain
together. – composed of company and the suppliers and
e. Cross Docking – product is not warehoused in the costumers of that company. This is a basic group of
facility. participants who create a simple supply chain.

2. Inventory – the primary purpose of the inventory 3 additional Types of Participants

is to act as a buffer against uncertainty in the supply 1. Supplier's Supplier/Ultimate Supplier
chain. 2. Customer's Customer/Ultimate
3. Customer Whole category of companies whoa re Supply Chain Council (SSC) – is a non-profit
service is to provide; association established in2010 to provide quality
– Logistics and professional supply chain services to
– Finance organizations across the globe.
– Marketing
– Information Technology Supply Chain Operation Reference (SCOR)
Four Major Components;
Participants in the Supply Chain - Performance
1. Producers/Manufacturers - an - Processes
organization that make a product. Companies that - Practices
are producers of raw materials and companies that - People
are producers of finished goods. Producers can
create products that are intangible items such as A management tool used to address, improve, and
music, entertainment, software or designs. communicate Supply Chain Management decisions
within a company and with suppliers and customers
2. Distributors – are companies that take of a company. The model describes the business
inventory in bulk from producers and deliver a processes required to satisfy a customer's demands.
bundle of related product lines to customers. SCOR model was developed by the Supply Chain
Distributors are also known as wholesaler. Sell Council (SSC) with assistance of 70 of the world's
products in larger quantities that an individual leading manufacturing companies. It has been
consumer would usually buy. Distributor buffer the described as the “most promising model for supply
producers from fluctuations in product demand by chain strategic decision-making”.
stocking inventory and doing much of the sales
work find and service customers. Distributors fulfill Orchestrated Supply Chain – describes that
“time and place”. activities associated with integration and
enablement of supply chain strategies. Includes the
3. Retailers – stock inventory and sell in creation of and management of business rules,
smaller quantities to the general public. It also performance management through continuous
tracks the preferences and demands of the customers improvement, managing data, information, and
that sells to. It advertises to its customers and often supply chain technology, human resources
uses some combination of price, product, and management, contracts and agreements
location. management, risk management, environment, social,
and governance (ESG) management. Enterprise
4. Customers/Consumers – any organization business planning segmentation creation and
that purchases and produce products in order to management, and circular supply chain
incorporate it to another product that they in turn management.
sell to other costumer.
5. Service Providers – organization that Useful Models of SC Operations;
provide services to producers, distributors, retailers, Plan – refers to all operations needed to plan and
and customers. organize the operations in the other three (3)
categories.
Supply Chain and Business Strategy - an integral Source – operations in this category include the
part of its approach to market it serves. activities necessary to acquire the inputs to create
- Business strategy employ starts with the needs of products or services.
the customers that the company serves or will serve. Make – operations required to develop and build the
products and services that a supply chain provides.
Deliver – operations encompasses the activities that
are part of receiving customer orders and delivering – predefined commercial terms used in
products to customers. international trade, transactions, or
Return – companies must be prepared to handle the procurement.
return of containers, packaging, or defective – composed 11 incoterms
products. – 9th version of incoterms

Other Aspects Terminologies

Order – describes the activities associated with 1. Seller – refers to the party which value the
customer purchase of products and services, goods available for sale.
including attributes such as locations, payment 2. Buyer – refers to the party who purchases
methods, pricing, fulfillment status and any other the goods in question in exchange for
order data. money.
Transform – describes the activities associated with 3. Country of Origin – refers to the country at
the scheduling and creation of products. which the goods where bought.
Fulfill – describes the activities associated in 4. Country of Destination – the country at
fulfilling customers orders or services, including which the goods shall be transferred to.
scheduling order delivery, picking, packing, 5. Freight – compensation paid for the
shipping, installing, commissioning, and invoicing. international transfer of goods.
6. Insurance- coverage by contract that
Demand Forecasting and Planning – supply chain guarantees the protected and safe transfer of
management decisions are based on forecasts that goods.
define which products will be required, what 7. Carrier – refers to international transport
amount of these products will be called for, and operators (airlines, shipping lines, freight
when they will be needed. The demand forecast forwarders, non-vessel operating
become the basis for companies to plan their 8. common
internal operations and to cooperate among each carrier, etc.)
other to meet market demand.
The 11 International Commercial Terms 2020
Four Major Variables 1. EXW Ex-Works (Multimodal)
1. Supply – determined by the number of 2. FCA Free Carrier (Multimodal)
products of a product and by the lead of 3. CPT Carriage Paid To (Multimodal)
times that associated with a product. 4. CIP Carriage Insurance Paid to (Multimodal)
2. Demand – refers to the overall market 5. DAP Delivered At Place (Multimodal)
demand for a groups or related products or 6. DPU Delivered at Place Unloaded
services. (Multimodal)
3. Product Characteristics – are attributes of the 7. DDP Delivered Duty Paid (Multimodal)
product itself that need to be controlled. 8. FAS Free Alongside Ship (Via Vessel)
(e.g.) size, shape, weight, color, quality, 9. FOB Free on Board (Via Vessel)
hardness, etc. 10. CFR Cost and Freight (via Vessel)
4. Competitive Environment – is the dynamic 11. CIF Cost, Insurance and Freight (Via
external system in which business competes Vessel)
and functions.

What is Incoterms 2020?

– refers to the international commercial terms
published by the International Chamber of
Commerce (ICC).