Supply Chain Management

Brooklyn Business School

Dr. Mohie Ahmed
DBA,MBA,CIPS,PMP,CICCM,TOT

1
 Outlines
Supply chain definition, objectives, Inventory management
networks, advantages

Manufacturing Environments Logistics

(transportation / warehouse)

Demand, forecasting planning

Supply chain risk

Procurement and suppliers management

Sustainability and
Technology in operation &
Negotiation & contract management supply chain management
2
 SCM Definition

Supply Chain Components

SCM Process Flow

SCM Implementation Steps

Advantages
Introduction
3
 INFORMATION INFORMATION

It is the management of flow of

FINANCE products and services, which begins
from the origin of products and ends
at the product’s consumption

Supplier Manufacturer Distributor Retailer Shopper It also Included movement and

storage of raw materials that are
involved in work in progress, inventory
and fully furnished goods

GOODS

To monitor and relate This can be done by companies It uses different strategies
production, distribution, with a very good and tight hold and approaches to view the
and shipment of products over internal inventories, entire chain and work efficiently
and services production, distribution, at each and every step involved
internal productions and sales in the chain
4
This slide demonstrates the
flow of Material, Information
& Money across the value
chain and showcases all MATERIAL FLOW
the important steps in the
SCM process Sourcing Operation Consumer Distribution

Vendor Inbound Storage/ Outbound Storage/ Consumer

Transport Data Transport Data

INFORMATION FLOW
MONEY FLOW

MATERIAL FLOW INFORMATION FLOW MONEY FLOW

› Material flow through various warehouses › It comprises the request for quotation, › On the basis of the invoice raised by
among distributors, dealers and retailers. purchase order, monthly schedules, the producer, the clients examine the
› Main challenge is in ensuring that the engineering change requests, quality order for correctness. If the claims are
material flows as inventory quickly without complaints and reports on supplier correct, money flows from the clients
any stoppage through different points in the performance from customer side to the supplier to the respective producer
chain
5
Components Of The Supply Chain
SUPPLY CHAIN MANAGEMENT

Supply Manufacturing Distribution Retail Consumer

& Warehousing

6
Components Of The Supply Chain
SCM Advantages

Develops better customer relationship and service

Creates better delivery mechanisms for products and services in

demand with minimum delay

Improve productivity and business functions

Minimizes warehouse and transportation costs

Minimizes direct and indirect costs

Assists in achieving shipping of right products to the right

place at the right time

Enhances inventory management,

8
 SCM key Objectives
To leverage inventory as a shared resource
and utilize the distributed order management

Protection against fluctuations in demand and

supply
To maximize resource productivity, construct
standardized processes, remove duplicate
efforts and minimize inventory levels

Minimization of supply chain Increased Satisfaction of clients for higher product

expenses is very essential variety, customized goods, off-season availability of
inventory and rapid fulfillment should be matched

9
“Manufacturing Environments”

10
Introduction Growth Maturity Decline
 Producer strategies))
push economy VS pull economy) )
■ Make to Stock (MTS) Push Strategy.
■ Make to Order (MTO) Pull Strategy.
■ Assemble to Order (ATO) Push/Pull Strategy.
■ Engineer to Order (ETO) Pull Strategy.
 Make To Stock (MTS) Push
■ Immediate delivery of goods
■ Based on a predictable demand pattern (is not based on customer orders) Ex :
“seasonally” like air conditions.
■ Production is based on market forecast and historical data.
■ The shortest lead time in all manufacturing environment types.
■ Design & Engineering change are in supplier side
■ Supplier invests in FG, RM stock and Storage area.
Make To Stock (MTS) Customer
Order

Stock as
Design Procure Assemble Pack and ship
Inventory

Customer
Lead Time
 Make To Order (MTO) Pull
■ Production starts after receiving customer order.
❑ Product specifications based on customer specifications.
❑ Customer is willing to wait. Long lead time

❑ Product maybe expensive to make and store.

❑ Specs of product maybe changes from order to order.

❑ Product is often branded by the Customer logo.

❑ Investment in RM)row material), FG(finished good) and stores

slightly small
Ex: Commercial fridges ‫الثالجات التجارية‬, Advertising ways like
ID cards.
 Customer Order
Make To Order (MTO)

Stock
standard Final Pack and
Design Procure Assemble
parts as Assemble ship
inventory

<----------------------- Customer Lead Time ------------------

>
 Assemble To Order (ATO)Push-Pull
(mix between make to order & make to stock)
■ Produce and stock standard/common components.
■ Independent units which integrate as a whole “sub-assembly or
semi-finished product of common parts”
■ Master Production Schedule (MPS) for common components
❑ Based on forecast
■ Final Assembly Scheduling (FAS) for finished goods
❑ Based on customer order
Ex: PC “computers ,
 Stock standard
Design Procure Assemble components as Final assemble Pack and ship
inventory

<--- Customer Lead Time --->

Assemble To Order (ATO)

 Engineer To Order (ETO)
Pull
■ Customer’s specifications unique.
■ Designs & changes are in the supplier side
according to customer needs.
■ The longest lead time at all.
■ Other characteristics common to MTO.
 Engineer To Order (ETO)
Customer Order

Final
Design Procure Assemble Pack and ship
Assemble

<---------------------------- Customer Lead Time ------------------------->

Production Planning Scenarios
Order Engineer to Order，ETO Delivery

Make to Order，MTO
Order
Assemble to Order，ATO
Order
Make to Stock，MTS
Order

Final Pack and

Design Procure Assemble
Assemble ship
 Production Planning Scenarios
■ Now, You know what type of planning that you will
follow, if you are working in :-

■ MTS : You’ve to use history & prediction skills.

■ ATO : You’ve to use history, prediction skills &
customer order.
■ ETO & MTO : You’ve to put your plan according to
customer order.
 Planning Management Strategy
Understanding Industry Specifications

■ Complexity of production process (CKD, SKD, CBU).

■ Type of product “functional/Innovative”
■ Type of customers, “Loyal, Discount, Impulse,….”
■ Complexity of supply chain (eg: lead times).
■ Complexity of demand function (eg: seasonality).

These determine the strategies that are suitable.

“Demand, Forecasting Planning”

27
 Planning
Is an organizational/Personal activity indicates the road map
of developing the aimed image of the future to achieve a
desired set of goals.
 Planning and Control System Questions
■ What are we going to make, and when?
Produce a product / Provide service in a certain time.
■ What does it take to make it?
Materials/Resources
■ What do we already have?
Current information (RM,FG current stock and others available resources)
■ What must we get, and when?
Outsourcing
 Demand Planning

There’re two types of demand:-

■Dependent demand: It is the demand of raw
materials according to BOM(bill of material) of the
final product plan or forecast, and it should be
calculated.
■Independent demand: It is the demand of the product
according to the market vision, and it should be
forecasted not calculated.
 Sources Of Demand

• Forecasts
• Customer orders
• Replenishment orders from distribution centers
• Interplant transfers “movement of inventory from company location to
other” ) stock in one warehouse and demand in another warehouse) .
• Other sources of demand “info. about competitors, market conditions,
laws,……..”
 Demand Patterns
■ Trend Demand Pattern:
❑ Liner relationship between demand Qty. & Time.
❑ Fluctuations up “ Increasing trend "and down “Decreasing trend” around a
certain flat level.
 Demand Patterns Cont.
■ Seasonal Demand Pattern:
❑ Repetitive “Periodic” demand Qty. through the time.
❑ Increasing/decreasing in a certain time segments.
 Demand Patterns Cont.

■ Random Demand Pattern:

❑ Random relation between demand Qty & time.
❑ So difficult to predict.
 Stable & Dynamic Demand Pattern
■ Stable Pattern “Flat” :
❑ we can have demand shape that retains same in a longer period of time, and it
is called stable demand. This is the situation where there are not changes in
the demand over time.

■ Dynamic Pattern “Random and Seasonal”:

❑ When demand patterns for some products or services are changed over time,
then we have dynamic demand.
"Forecasting”
 Principles of Forecasting

– Are rarely 100 percent accurate over time.

– Should include an estimate of error.

– Are more accurate for product groups and families.

– Are more accurate for nearer periods of time.

How Forecasting Supports Planning
Demand Forecast Plan Processes
 Forecast Processes

Prepare & Update Historical Data:

■Record data in terms needed for the forecast.

■Record circumstances relating to the data.
■Record demand separately for different customer
groups.
Forecast Technique
 Qualitative Forecast Techniques

• Are based on intuition and informed opinion.

• Depends on human skills & experience.
• Tend to be personal “subjective”.
• Are used for business planning and forecasting for new products.
• Are used for medium-term to long-term forecasting.
 Quantitative Techniques Based on Math. :
Extrinsic “Causal”

■ Is based on correlation and causality

■ Relies on external indicators
■ Is useful in forecasting total company demand or
demand for families of products.
■ Has two types of leading indicators
– Economic « price, facilities, exchange rate,…. »
– Demographic “ market place, public density,….
 Quantitative Techniques Based on
Math. : Intrinsic “Time Series”
• Intrinsic is based on several assumptions:
– The past helps you understand the future.
– Time series are available.
– The past pattern of demand predicts the future pattern of demand.

• Examples:
– Moving averages
– Exponential smoothing
 Moving Averages: Principles
■ Moving averages are used when demand is stable,
little trend and small demand variations (slightly
random).
Example in Moving Average Forecast
Three-month moving average
Solution:
Six-Month Moving average forecast
Forecast For Seasonal Demand (
Weighted Average)
 Tracking The Forecast
• Forecasts are rarely 100 percent correct over time.

• Why track the forecast?

– To understand why demand differs from the forecast.
– To plan around error in the future.
– To improve forecasting methods.
 Forecast Error Data

Forecast Error percentage = 22/500 = ± 4.4%

“Procurement and Supplier management”

59
 Procurement Definition

Procurement is the act of obtaining something, whether it is, a

product or a service.

Procurement describes the entire process from identifying the

need, to the delivery of the goods or services.

Procurement has a long-term focus, which includes the

shorter-term activities that contribute towards creating value
in the long term.

Effective procurement is about obtaining goods or services for the

best value for money.
 Purchasing Definition

• The processes concerned with acquiring goods and services, including

payment or invoices -it is part of procurement process .
• Purchasing is about the operational and tactical aspects that are needed
to buy materials and services and it is part of the procurement process.

• Procurement and purchasing are not the same !

 The five rights of procurement :

Remember
In the Right Quantity
In the Right Quality
At the Right Time
At the Right Place
At the Right Price
 Role of Procurement in SCM :
Responding to the needs of customers and fulfilling those needs

Supplier evaluation and selection

Negotiation of effective terms and conditions ( contract terms )

Managing supplier relationships

Ensuring sustainability within the supply chain

Achieving good value for money

Keeping spend within budget by monitoring it and taking any remedial action
(variance = Actual spend – Budget)
 Key Principle of Procurement management:

1. Accountability ‫المسئولية‬
Effective mechanisms must be in place in order to enable Chief Officers and Chief Executive Officers to discharge
their personal responsibility on issues of procurement risk and expenditure.
2. Competitive Supply ‫العرض التنافسي‬
procurement must be carried out by competitive process unless specifically justified in accordance with this Law or
Government policy.
3. Consistency ‫اإلتساق‬
Procurement policy shall be similar and consistent .
4. Effectiveness ‫الفاعلية‬
Entities should maximize the contribution to the goals in a balanced manner appropriate to the procurement requirement.
5. Value for Money ‫قيمة المال‬
The procurement processes should be carried out to achieve the most advantageous combination of cost, quality and
sustainability over the life cycle of the product.
6. Fair-dealing ‫التعامل العادل‬
Suppliers should be treated fairly and without unfair discrimination, including protection of commercial confidentiality where
required. public sector entities should not impose unnecessary burdens or constraints on suppliers or potential suppliers.
 Key Principle of Procurement management:
7. Integration ‫التكامل‬
Procurement policy should pay due regard to its impact on the organization policies.
8. Integrity ‫النزاهة‬
There shall be no corruption or collusion with suppliers or other persons involved in a procurement project.
9. Informed decision-making ‫صنع القرار المستنير‬
Entities are required to base decisions on accurate information and are required to monitor obligations to ensure
that they are being met.
10. Legality ‫القانونية‬
Entities shall conform to legal requirements.
11. Responsiveness ‫اإلستجابة‬
Entities should endeavor to meet the aspirations, expectations and needs of the community served by the
procurement.
12. Transparency ‫الشفافية‬
Entities should ensure that there is openness and clarity in the conduct of the procurement policy including in the
carrying out of all actions and decisions.
Procurement management process/cycle :
RFQ , RFI , RFP :
 Supplier Relationship Management (SRM) :

Definition :
a process in business by which an organization systematizes its
interactions with individuals or organizes the delivery of raw goods and
services.
Supplier Relationship Management (SRM) :
 # Five Ways to Improve Supplier Performance:
1. Listen to Your Suppliers
a two-way conversation with your suppliers where you really listen to them about their issues and the
support they need to do a better job for you .
2. Establish a Service Level Agreement
Service Level Agreements often do not specify a minimum purchase quantity, nor do they usually provide
the supplier with exclusive rights to your business. However, they clearly signal to your supplier your
intention to deal with them over the life of the agreement. This then enables the supplier to plan their
business and resources to meet your needs.
3. Measure Your Supplier Performance
By establishing some simple and agreed metrics you and your supplier can have a much more constructive
discussion about their performance.
4. Ensure Your Supplier Data is Accurate
it is important that the assumptions and data built into these replenishment systems are accurate to have
correct assumptions about your suppliers.
5. Establish Routines and Be Predictable
A high-level monthly forecast can also help your supplier plan for your needs. Once your supplier
understands your demand patterns they can plan their materials and production to ensure that they are
ready for your orders when they come
# Contract :
# Contract :
# Contract :
# Contract :
# Contract :
 # Contract Management :
#Contract management is :
The process of managing contract creation, execution, and analysis to maximize operational and
financial performance at an organization, all while reducing financial risk.

#When a contract management strategy is successfully implemented, organizations can expect

to see:
1-The expected business benefits and financial returns are being realized.
2-The supplier is cooperative and responsive to the organization’s needs.
3-The organization encounters no contract disputes or surprises.
4-The delivery of services is satisfactory to both parties.
 # Contract Management :

Remember !

Contract management requires a level of flexibility for both parties involved and a
willingness to adapt contract terms to reflect any changing circumstances.
Problems are inevitable, which means organizations must be prepared for the
unexpected and be able to adjust contract terms when needed.
 # Negotiation :

Definition :
Negotiation is a conversation to reach an agreement. Procurement negotiation is a process by
which professionals engage with each other to create agreeable terms for a contract.

# Both parties typically discuss pricing, payment, delivery date, and timeline. Ideally, the
negotiations should consider the best options for both parties to build strong relationships that
lead to long-term business.

#Ultimately, this creates a win-win result for both parties.

In reality, procurement negotiations don’t always work out so easily or successfully. Those who
enter into the negotiation often might not think about what’s best for everybody. Instead, they
may be thinking about what’s best for themselves.
 # Styles of Negotiation :
the negotiation has two elements: the relationship and the outcome. And the styles of negotiation are based on
which element the negotiator values more. These are the 5 negotiation styles:

Competition: Negotiators who use a competition style value the negotiation outcome more than the
relationship between the two parties. Negotiators who use this style are looking to win the negotiation and want
the other party to lose. Usually, negotiators who favor this style will do anything to get the win.
Collaboration: Collaborators value outcome and relationship equally because they believe both are important.
They want a win-win outcome and a long-term relationship. And they'll work hard to achieve both.
Compromise: While compromisers value outcome and relationship, they are willing to sacrifice a little of each
to reach an agreement. They believe in winning some of what they want while losing a little bit of it.
Accommodation: Accommodators value the relationship more than the outcome and are willing to lose the
negotiation. The result is a “you win, and I lose” style. This is the opposite of the competitive style.
Avoidance: With this style, the negotiator doesn't value the outcome or the relationship. It can simply be
considered a “lose-lose” model with the party withdrawing from the negotiation.
 # Stages of Negotiation :
Preparation: Thorough preparation is extremely important. This is when you acknowledge your negotiation style
first. Then, you decide on the relationship and outcome you expect to achieve with the other party. You should also
research the other party and, if possible, learn what negotiation style they typically use.
Opening: During the opening, the parties state the goals of the negotiation. This is when you can discover if the
relationship and outcome expectations match.
Testing: As the name implies, both parties are “testing” each other to understand each party's values. Good
communication and listening skills are key to this step. Paying attention during this stage can help you find
opportunities.
Proposing: Both parties propose what they expect to achieve at this stage. It’s also a time when you and your
team may want to think about modifications to your strategy based on the proposal from the other party.
Bargaining: Based on what has been said, both parties should offer compromises if needed. Ideally, any
compromises should be equal and agreeable to both parties. For example, look for opportunities to cut
procurement costs on both sides. This way, everyone's paying the optimal price for the good or service.
Agreement: Once compromises are reached, the parties can make an agreement. When both parties accept the
agreement and sign, the procurement contract becomes a legally binding document.
Closure: Both parties receive documentation and contracts from the previous stages for their records. After this
stage, the negotiation is complete.
 # Negotiation :

# Main points to remember :

1- Acknowledge your goals regarding the outcomes and relationships you expect
to achieve with the other party.
2- Know your negotiation style and, if possible, the other party's style.
3- Understand the 7 stages of procurement negotiation to plan properly for a
smooth and successful process.
“Inventory management”

83
 Inventory Definition

Raw materials, work-in-process and completely finished

goods that are considered to be a portion of a business's
assets that are ready or will be ready for sale.

Inventory: is related to raw materials, spare parts, finish

goods, machines, equipment, stationeries,… all existed
items in the enterprise.
 Why we build Inventory?
■ To create a buffer against uncertainties in supply & demand.
■ To take advantage of lower purchasing and transportation cost
associated with high volume .
■ To build up seasonal demand for promotional sales .
■ To cover product flowing from one location to another (work in
process or in transit)
■ To exploit opportunities for buying and selling articles and other
products .
 Inventory
■ Where do we hold inventory?
❑ Suppliers and manufacturers
❑ Warehouses and distribution centers
❑ Retailers

■ Types of Stock
❑ WIP.
❑ Raw materials.
❑ Finished goods.
Inventory
 Stock Control
■ Purchased materials maybe classified as stock
items which are taken into store and held until
required, or as direct deliveries to the point of
consumption.

The control of those materials is known as stock

control !

■ The
function of stock control is to obtain the
maximum stock turnover.
 Stock Value Constrains
Stock value/quantity is constrained by :
■ The availability of capital for the provisions of stocks (‫)توافر رأس المال‬.

■ The available storage space.

■ The cost of storage “Stock holding/carrying cost”.

• Risk of loss due to fall in prices, deterioration ‫التلف‬, obsolescence ‫التقادم‬,

theft ‫ السرقة‬etc.
■ Economic order quantities “EOQ” application.

■ Risk of delivery delays.

 Costs Related To Inventory

■ Item Cost: Cost per item plus any other direct costs
associated with getting the item to the plant.

■ Holding Costs: Capital )‫األصول(ورأس المال‬, Rent, insurance,

labor, Shrinkage )‫االنكماش(الواقع اقل من السيستم‬, Spoilage ‫التلف‬,
Obsolescence ‫ التقادم‬and risk cost.

#It is stated as a % of the unit value, e.g. 15-25%

 Inventory Costs
■ Ordering Cost: These are costs associated with the ordering
process that are independent of the size of the order.
Invoice processing, check writing, e-mails, phone calls, accounting
etc.
❑ Labor
❑ Communication
❑ Some transportation
■ Shortage Costs: Loss of customer goodwill, back order handling
“Extra cost”, and lost sales.
 Bad Impacts of wrong inventory on SC
Overstock

■ Overstocking: Amount available exceeds demand,

■ Less liquidation, Obsolescence, Holding cost.

❑ Higher inventory is good to avoid stock-out and to absorb

uncertainties, but is bad in high cost of inventory.
 Bad Impacts of wrong inventory on SC
Under stock
■ Under-stocking: Demand exceeds amount available,

❑ Lost future sales.

❑ Production interruptions & stoppage.
Lower inventory is good in saving money, but is bad in increased risk of stock-out,
customer dissatisfaction, and process interruption.

■ Goal: Matching supply and demand !

 ABC Inventory Classification

■ ABC classification is a method for determining level of

control and frequency of review of inventory items
■ A Pareto analysis can be done to segment items into
value categories depending on annual dollar volume
■ A Items – typically 20% of the items accounting for 80%
of the inventory value.
■ B Items – typically an additional 30% of the items
accounting for 15% of the inventory value.
■ C Items – Typically the remaining 50% of the items
accounting for only 5% of the inventory value.
 Inventory Record Accuracy
■ Two methods are available for checking record accuracy
❑ Periodic counting-physical inventory ‫الجرد الدوري‬
❑ Cycle counting-daily of pre-specified items.‫الجرد اليومي‬
■ Inaccurate inventory records can cause:
❑ Lost sales.
❑ Interrupted & unstable operations.
❑ Poor customer service.
❑ Lower productivity.
❑ Planning errors.
 Types of Inventory Strategies
Determining the most effective type of inventory strategy is an
essential element for the success of a business. Without an
effective inventory strategy, the company may lose money
because of shortages to inventory or an excess of inventory
caused from ordering too many goods. A business owner must
be educated on the different types of inventory strategies to
help determine which system will be most advantageous to his
unique business situation.

96
Types of Inventory Strategies

97
 Types of Inventory Strategies
1- Just-in-Time Inventory Management (JIT)
Many managers have come to realize that keeping a large
inventory on hand can be costly. With a Just-in-Time inventory
strategy, orders are placed only as needed to fill customer
orders. Money is saved by reducing inventory holding costs.
Small quantities of inventory are ordered as needed to produce
products. A close eye must be kept on inventory levels at all
times to avoid inventory shortages which would result in an
inability to fill customer orders.
98
 Types of Inventory Strategies
2- Economic Order Quantity (EOQ)
The Economic Order Quantity inventory strategy assumes that
demand for a product will remain at a constant or near
constant level. The goal is to minimize costs, including holding
and ordering costs. This strategy also assumes that lead time
for the receipt of orders will remain constant. No shortages are
allowed with economic order quantity. They key to EOQ is
selecting an order quantity that minimizes average inventory
management cost and time, thus avoiding shortages or
overages of inventory.
99
 Types of Inventory Strategies
Economic Order Quantity:
This formula was developed in 1913 by Ford W. Harris which
results in an order quantity that minimizes the total holding costs
and ordering costs.
The formula is the following:
Q= (2DS/H)0,5
where:
Q = Quantity to be ordered
D = Demand in units (typically on an annual basis)
S = Order cost (per purchase order)
H = Holding costs (per unit, per year)
100
 Types of Inventory Strategies
3- Material Requirements Planning (MRP)
Material Requirements Planning inventory strategy uses computer
inventory systems to keep adequate inventory levels to ensure required
materials are available when needed. This system can be helpful for
companies with multiple product lines with a large raw materials
inventory list. The major components of an MRP system are inventory
status records, master production schedule and product structure
records. MRP looks at the master production schedule(MPS) and
product structure records to determine inventory requirements while
maintaining the lowest possible level of inventory.

101
Types of Inventory Strategies

102
 Types of Inventory Strategies
4- Days Sales of Inventory (DSI):
The days sales of inventory (DSI) is a financial ratio that indicates the
average time in days that a company takes to turn its inventory,
including goods that are a work in progress, into sales.
DSI is also known as the average age of inventory, days inventory
outstanding (DIO), days in inventory (DII), days sales in inventory, or days
inventory and is interpreted in multiple ways. Indicating the liquidity of
the inventory, the figure represents how many days a company’s current
stock of inventory will last. Generally, a lower DSI is preferred as it
indicates a shorter duration to clear off the inventory, though the
average DSI varies from one industry to another
103
 Types of Inventory Strategies

Days Sales of Inventory (DSI) Formula and Calculation :

104
“LOGISTICS”

105
 Logistics Definition
Is the part of the supply chain process that plans,
implements, and controls the efficient, effective forward and
reverse flow and storage of goods, services, and related
information between the point of origin and the point of
consumption in order to meet customers’ requirements at
the lowest possible cost.

Source: Council of Supply Chain Management Professionals

 Types of Logistics operations

❑ Outbound logistics – the warehousing and distribution

of finished goods.

❑ Inbound logistics – Receiving materials from suppliers

to warehousing and their distribution to manufacturing as
they are required.
Types of Logistics operations
 Logistics Management Objectives
■Total Logistics Cost :
Expenses associated with materials transportation,
handling and warehousing, stock issuing, order
processing, and return goods handling.

■ Customer service :-
The ability of logistics management to satisfy users
in terms of time, dependability, communication,
and convenience.
Supply chain managers balance total logistics cost
factors against customer service factors
 Third-Party Logistics Providers
■ Third-Party Logistics “ 3PL” :
Firms that perform most or all of the logistics functions
that manufacturers, suppliers, and distributors would
normally perform themselves.
■ The three parts :
❑ Supplier
❑ Customer
❑ Service Provider.
 Fourth Party Logistics

4PL means, make a fourth part to accomplish outsourcing

“ Local / Foreign “ from A to Z except freight :-

4PL four parts :-

1- Customer.
2- Supplier.
3- Shipper or service provider.
4- Outsourcer or 2nd service provider.
113
Transportation Medium
INCOTERMS !
“International commercial Choose the right
transportation medium
terms” by ICC
“international chamber of
as per your project Plane
requirements and highlight
commerce” the reason for choosing it
because it has a direct
impact on your freight
cost
Truck

Rail

Ship

Electronic
114
Advantages and disadvantages of modes of transportation
 What’s a Freight Forwarder and a Shipping Line? •

• A freight forwarder offers the services necessary to import and

export goods through co-operation with shipping lines, truck
companies, and so on. A shipping line is a company that operates
the cargo vessels that deliver from the load port to the destination
port. The freight forwarder doesn’t own these cargo ships; they
work with the shipping lines to transport their clients’ items.
 Incoterms (shipping terms) :
are a set of rules which define the (responsibilities &Risk & Cost)
of sellers and buyers for the delivery of goods under sales
contracts. They are published by the International Chamber of
Commerce (ICC) and are widely used in commercial transactions
• Example
• CIF — Cost, Insurance and Freight
• CIP — Carriage and Insurance Paid Тo
• CPT — Carriage Paid To
• DAP — Delivered at Place
• EXW — EX Works
• FCA — Free Carrier
Warehouse management
 Warehouse management
• Inventory Management is centered on efficiently and effectively ordering,
storing, moving, and picking the materials needed to make products or fulfill
orders.

• Warehouse Management is a broader term that includes other aspects of

warehouse operations, such as warehouse organization and design, labor,
order fulfillment, warehouse monitoring and reporting.
Warehouse management
 principles for warehouse management

1. Highest transparency through warehouse innovations .

2. Safety and validity of your warehouse data .
3. The right process optimization .
4. Trained and professional storage personnel .
5. The right equipment in the warehouse .
“Supply Chain Risk”

123
 Supply Chain Risk Management?

Supply chain risk management (SCRM) is the process of

identifying, assessing, and mitigating the risks of an
organization’s supply chain. Implementing global supply
chain risk management strategies can help an enterprise
operate more efficiently, reduce costs, and enhance
customer service.

124
 Supply Chain Risk Management?
Internal supply chain risks include risk events caused by:

1- Disruptions of internal operations;

2- Changes in management, key personnel, and business processes;
3- Not putting contingencies in place in case something goes wrong;
4- Not implementing proper cybersecurity policies and controls to protect
against cyber-attacks and data breaches;
5- Not complying with environmental regulations or labor laws;
6- Not having the goods to meet customers’ needs.

125
 Supply Chain Risk Management?
External supply chain risks include risk events caused by:
1- Unpredictable or misunderstood customer demand;
2- Interruptions to the flow of products, including raw materials, parts,
and finished goods;
3- Social, governmental, and economic factors, including the threat of
terrorism;
4- Supplier risk management including concerns related to a supplier’s
physical facility and regulatory compliance;
5- Natural disasters, such as earthquakes, hurricanes, and tornadoes.

126
 Supply Chain Risk Management

Supply Chain Risk Examples

Supply chain risk includes a wide variety of problems such as:

Price Increases
Rising prices are caused by supply, demand, currency instability, and customs tariffs. Volatility in
prices can jeopardize financial projections and profitability of the business.
Shortages
These can arise from lacking a component, material, or part needed to produce a finished
product. Shortages may be short-term availability issues or long-term if the supplier has
discontinued the required items.
Supplier Relationships
If litigation or some other dispute ruptures your relationship with a supplier, the scenario will lead
you to replace the supplier.

127
 Supply Chain Risk Management?

Quality Failures
Quality failures occur when shipments of certain parts do not meet the
given specifications or perform as expected.
Delivery Failures
Carrier and logistical issues can result in late deliveries, damaged
packages, or lost shipments.
Supply Shocks
Sudden worldwide or industry-wide drop in supply due to events such as
a pandemic, natural disaster, labor dispute, or trade embargo.

128
 Supply Chain Risk Management Strategies:

1- Use a PPRR Risk Management Template :

PPRR stands for prevention, preparedness, response, and recovery. It is a globally recognized
supply chain risk management strategy employed by organizations. PPPR can especially help with
business continuity planning.

2- Enhance Your Supply Chain Risk Governance :

A- Set standards for supply chain compliance for all of your third-party suppliers;
B- Define roles for users and apply security controls to narrow down who can log in to your
system and what level of permissions they have, to prevent unauthorized meddling in your supply
chain operations;
C- Perform a thorough due diligence and risk assessment for all vendors and service providers
before entering into any contract;
D- Fully train all employees on cybersecurity protocols.
129
 Supply Chain Risk Management Strategies:
3- Systematically Monitor Risks
Investing in a scalable digital solution that automates the oversight of several
aspects of your supply chain is the simplest way to monitor your risk management
plans consistently. This will provide you with safety, reassurance, and precious
insight into how to streamline supply chain operations.
4- Centralize Data
Using too many solutions in your software ecosystem can get in the way of risk
management, especially if you keep business data in many separate disparate
systems.
To make it easier to harness data analytics, predictive insights, and data sharing,
invest in a comprehensive solution that maintains all of your data in a well-
organized, centralized, single warehouse
130
Supply Chain Risk Management :

131
“Sustainability and Technology in operation
&
supply chain management”

132
 Difference Between Supply Chain Management and
Operations Management
The major difference between supply chain
management and operations management is that
the supply chain is mainly concerned with what
happens outside the company – obtaining materials
and delivering products – while operations
management is concerned with what happens inside
the company.
Technology & Sustainability:

134
135
Technology & Sustainability:

136
137
Balance between technology ,process and
organization in SCM

138
 Technology & Sustainability:
Key takeaways:
1- A digital supply chain platform is essential for a sustainable supply chain.

2- A purpose-built digital supply chain platform provides the data, visibility, and
analysis needed for accountability all the way through the supply chain.

3- It provides the means to achieve the three pillars of sustainability: economic,

social, and environmental responsibility.

4- Supply chains need the functionality that only a digital supply chain platform can
provide – connecting planning and execution with strategic outcomes across the
entire enterprise.
 Technology & Sustainability:

Why SCM platform ?

1- Workflows are collaborative, with the ability to build networks of all of the
interconnected stakeholders throughout the supply chain.

2- Integrates data from multiple sources, including your ERP, and uses artificial
intelligence (AI) to analyze and make predictions from that data.

3- Digitizing your supply chain operations will transform your business operations. A
digital supply chain platform will provide enhanced communication, quicker
decision-making and issue resolution
 Thank
Address
# Cairo,

Contact Numbers:
01223153634
You
Email Address:
[email protected]