Summary: Supply Chain Management, 3rd Year of SME Management (KdG)
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Course
Supply Chain Management
Institution
Karel De Grote-Hogeschool (KdG)
This is a complete and clear summary of the Supply Chain Management course. It contains all the lecture slides, supplemented with your own notes. Course taught in the 3rd year of SME management by Peter Hoedemackers at Karel de Grote University. I achieved a score of 13/20 in January (first chance)
SUPPLY CHAIN MANAGEMENT
INTRODUCTION OF ME2
- Lithium Ion batteries have the future
- Quick charge without memory effect
▪ Memory effect = If you don't let the battery go to 0% or to 100%, then the battery
forgets that it can utilize 100%. -> you charge a battery and if you charge it
completely and you can use it the fullest. But if you charge your battery at 50%, it
will forget that you can use all the battery and will not work the fullest anymore
- Appliances increase: gettoblaster, radio, lamps or torches, battery packs for cell phone to
elektrical car
- Natural growth of the market thanks to new appliances and – not to forget – replacement
industry
- Packaging in blisters and packs.
▪ Blister = a product is placed in a plastic packaging
▪ Pack = a cheaper packaging for the same product, a different sales price (cheaper)
▪ Packaging is a promotional item
- Batteries of ME2
Tis batteries we will use to package
- Only B2B: as a producer we will sell these to another producer (business)
ME² is an OEM producer for private brands - ECOSUPER and BLAST
- Blast has only one type.
- EcoSuper + Blast is a private brands, they use their own name
- ME2 is only allowed to sell these products to these companies. It’s forbidden to sell the
products of Ecosuper and Blast to another company or customer.
- In supermarkets they don’t want to use their own name, because they want to use low
prices.
OEM: Original Equipment Manufacturer
- OEM produces according to own standards.
- The name on the porduct/packaging, are the brand name and the responsible editor, are the
OEM-company.
- An OEM delivers to a private brand / private label (directly or via intermediates/agents).
- An OEM uses its own name as household brand. It uses its own distribution channels to sell to
the consumer. An OEM may have multiple household brands. (cf. LEO en OLE)
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,Private brand or private label:
- The brand name (and responsible editor) is a different legal entity than the OEM. Usually the
private label is a customer of an OEM. (cf. white products in a supermarket)
- A private brand did not produce the product itself, but sells and markets it (only a
distribution channel).
➢ Is it allowed for an OEM to sell a private brand directly to another party than the private brand or
even a consumer?
No, it is not allowed. They should only sell to the brand name itself.
SUPPLY CHAIN MANAGEMENT OR LOGISTICS
- Farmer orders seeds: How many? When?
- Factory sorts, packs and ensures quality: Seasonal stock! Works without knowing real sales to
consumers and hardly meets any consumer!
- Transaction: from one step in the chain to the next;
- Shipping company ships, but has no contact with factory or consumer!
- Who buyes and does not resell anymore? What is the role of the consumer?
- As efficienly as possible, because
consumer wants to pay as little as possible.
For every ingredient you use, you have a different supply chain
In reality there are more companies involved
- Consumer: You and I ! Everyone!
- We buy chocolate !
- And that is not only cacao/cocoa. You also need other ingredients.
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,Supply Chain Management
- Who pays ultimately and finally?
▪ Consumer
- So, it is the consumer who determines where, what, how much and when ... what is bought?
▪ How much cacao will farmer Xavier of Costa Rica make next year?
▪ Under what conditions will the product be shipped from Costa Rica to Antwerp?
▪ So tell your shop/supermarket that you will buy some chocolate bars in 3 months
time?
→ It takes months to have the products in the supermarkets
- Consumer does not know what he/she wants, and still we expect all products to be available
when we want them.
▪ Deliver or supply.
▪ Preferably not just once, but each time we need it
▪ Resupply, Restock, Replenish via Supply Chain
▪ WE ARE IN THE REPLENISHMENT BUSINESS !!
- What exactly do we expect?
- Companies know what consumers want, by asking the consumer (order).
- And what the consumer is incapable of telling, companies must suppose or predict the
remainder (forecast).
- It is the combination of these two, that determine the market demand:
▪ Order + Forecast = INDEPENDENT DEMAND
▪ Ultimately this will be consumed (hopefully). We hope that the whole stock will be
selled
▪ It renders income to companies.
▪ And pleasure to people!
Forecast = the company is pushing the stock
Order: The customer has ordered something (in advanced). The customers pulls stock out of the
supply chain
--> Companies would prefer order because an order is like a contract, it contains 100% certainty
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, Is this PUSH or PULL?
- You enter a bakery and order a loaf of bread. The attendant hands you the bread and you
pay.
▪ PUSH: bakery makes bread based on a forecast not based on what customers order
(in advance).
- Rolls Royce makes its cars completely to the desires and wishes of its customers.
▪ PULL: Rolls Royce starts production only when the customer has confirmed all of this
in the order. After the order, the customer will have to wait on the production of the
car. There are standard components (e.g. chassis, engine, gears, …) and yet also
many desired and specific components (e.g. leather or wooden interior, …).
- Birthday pie for an 80-year old
▪ PULL
- Bag of Lays salted chips
▪ PUSH
- What else needs to be done?
- We take the independent demand for granted: now we merely need to … fill this in or
replenish it. That’s all. = basic
- Stated differently, once we have fixed the quantity/timing of the expectations of the
customer, we just have to make it happen.
- Exactly that is what Supply Chain does, to foresee and realise the future expectations.
- This is also the content of this course on Supply Chain Management
Dependent demand = It is dependent on the independent demand
PLC = Product life cicle
DRP = Disaster recovery plan
3PL = third party logistics
ROI = Return on investment
Sometimes: old wine in new bags -> That we use a lot of terminology, we change it and we use a new
name, not the same name with a change but really another name
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