PROFESSOR: AMPARO CÓROVA

International Supply
Chain Management
International Supply Chain Management
ISSUE 1: Supply Chain Management: Concepts, Process, Flows
 Supply Chain
Management Definition
Supply chain management (SCM) is the process
by which an enterprise manages the sourcing of
raw materials to create a product or service and
deliver that product or service to customers.
• https://www.cio.com/article/272353/what-is-
supply-chain-management-mastering-
logistics-end-to-end.html
 Concepts
• Customers: User of the products from an assembly plan or any service enterprise.
• Retailers: A person or business that sells goods to the public
• Wholesalers/distributors: A person or business that buying and selling goods in large
quantities and therefore at cheaper prices, usually to retailers or shopkeepers.
• Manufacturers: A person or business which makes goods in large quantities to sell.
• Suppliers: An entity that provides goods and services to another organization
• Raw Material: Purchased items or extracted materials that are converted via the
manufacturing process into components and products.
• Component/raw material suppliers: A person or business that provides component/raw
material.

Muñoz, Ruben y otros. Diccionario de logística Internacionaly negocios Interenacionales. 2009

DECISION PHASES AT SUPPLY CHAIN

Design: For next years. Configuration, Planning: For next 3 months or year. The
how resources will be allocated, and surplus or profit according planning and
which processer will be developed at design. The demand, and the restriction
each stage. If it is going to be outsourced detected at the design. Defining prices and
a part of the Supply Chain, the location costs according to the market, and the
and production capacity, storage markets that will be supplied. Define
facilities, modes of transport, type of inventory policies, promotions, incorporate
information. flexibility in the supply chain, operating
policies in the short term.
DECISION PHASES AT
SUPPLY CHAIN

• Operations: Week or day. Decisions

about individual clients, the supply
chain is considered fixed, best handle
orders, delivery deadline per order,
form if delivery and means of
transportation.
• The design, planning and operations
of the supply chain have a high
impact in overall profitability and
success.
The 3 macro processes of supply chain and their associated
processes

SUPPLIERS BUSINESS CUSTOMER

SRM ISCM CRM

Supplier Relationship Internal Supply Chain Customer Relationship
Management Management Mangement

Source Strategic Planning Market

Negotiate Demand Planning Price
Buy Supply Planning Sell
Design collaboration Fulfillment Call Center
Supply collaboration Field Service Order Management

Source: Chopra, Sunil y otros, Administración de la Cadena de Suministro, Pearson, 2013

3 MACRO PROCESSES OF SUPPLY
CHAIN MANAGEMENT
• Customer relationship management (CRM). Processes that focus on
downstream interactions between the enterprise and its customers.
• Internal supply chain management (ISCM). Processes that focus on
internal operations within the enterprise. Note that the software
industry commonly calls this supply chain management (without the
word internal), even though the focus is entirely within the
enterprise. In our definition, supply chain management includes all
three macro processes—CRM, ISCM, and SRM.
• Supplier relationship management (SRM). Processes that focus on
upstream interactionsbetween the enterprise and its suppliers.

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Customer Relationship Management
• The CRM macro process consists of processes that take place
between an enterprise and its customers downstream in the supply
chain. The goal of the CRM macro process is to generate customer
demand and facilitate transmission and tracking of orders. Weakness
in this process results in demand being lost and a poor customer
experience because orders are not processed and executed
effectively. The key processes under CRM are as follows:

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Customer Relationship Management
• Marketing. Marketing processes involve decisions regarding which customers to target,
how to target customers, what products to offer, how to price products, and how to
manage the actual campaigns that target customers. Good IT systems in the marketing area
within CRM provide analytics that improve the marketing decisions on pricing, product
profitability, and customer profitability, among other functions.
• Sell. The sell process focuses on making an actual sale to a customer (compared to
marketing, in which processes are more focused on planning whom to sell to and what to
sell). The sell process includes providing the sales force with the information it needs to
make a sale and then execute the actual sale. Executing the sale may require the
salesperson (or the customer) to build and configure orders by choosing among a variety of
options and features. The sell process also requires such functionality as the ability to quote
due dates and access information related to a customer order. Good IT systems support
sales force automation, configuration, and personalization to improve the sell process.

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Customer Relationship Management
• Order management. The process of managing customer orders as they flow
through an enterprise is important for the customer to track an order and for the
enterprise to plan and execute order fulfillment. This process ties together
demand from the customer with supply from the enterprise. Good IT systems
enable visibility of orders across the various stages that an order flows through
before reaching the customer.
• Call/service center. A call/service center is often the primary point of contact
between a company and its customers. A call/service center helps customers place
orders, suggests products, solves problems, and provides information on order
status. Good IT systems have helped improve call/service center operations by
facilitating and reducing work done by customer service representatives and by
routing customers to representatives who are best suited to service their request.

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Internal Supply Chain Management ISCM
• ISCM is focused on operations internal to the enterprise. ISCM
includes all processes involved in planning for and fulfilling a customer
order. The various processes included in ISCM are as follows:

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Internal Supply Chain Management ISCM
• Strategic planning. This process focuses on the network design of the
supply chain. Key decisions include location and capacity planning of
facilities.
• Demand planning. Demand planning consists of forecasting demand and
analyzing the impact on demand of demand management tools such as
pricing and promotions.
• Supply planning. The supply planning process takes as an input the
demand forecasts produced by demand planning and the resources made
available by strategic planning, and then produces an optimal plan to
meet this demand. Factory planning and inventory planning capabilities
are typically provided by supply planning software.

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Internal Supply Chain Management ISCM
• Fulfillment. Once a plan is in place to supply the demand, it must be
executed. The fulfillment process links each order to a specific supply
source and means of transportation. The software applications that
typically fall into the fulfillment segment are transportation and
warehousing management applications.
• Field service. Finally, after the product has been delivered to the
customer, it eventually must be serviced. Service processes focus on
setting inventory levels for spare parts as well as scheduling service
calls. Some of the scheduling issues here are handled in a similar
manner to aggregate planning, and the inventory issues are the typical
inventory management problems.

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Supplier Relationship Management SRM
• SRM includes those processes focused on the interaction between the
enterprise and suppliers that are upstream in the supply chain. There
is a natural fit between SRM processes and the ISCM processes, as
integrating supplier constraints is crucial when creating internal plans.
The major SRM processes are as follows:

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Supplier Relationship Management SRM
• Design collaboration. This software aims to improve the design of
products through collaboration between manufacturers and suppliers.
The software facilitates the joint selection (with suppliers) of
components that have positive supply chain characteristics such as
ease of manufacturability or commonality across several end
products. Other design collaboration activities include the sharing of
engineering change orders between a manufacturer and its suppliers.
This eliminates the costly delays that occur when several suppliers are
designing components for the manufacturer’s product concurrently.

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Supplier Relationship Management SRM
• Source. Sourcing software assists in the qualification of suppliers and
helps in supplier selection, contract management, and supplier
evaluation. An important objective is to analyze the amount that an
enterprise spends with each supplier, often revealing valuable trends
or areas for improvement. Suppliers are evaluated along several key
criteria, including lead time, reliability, quality, and price. This
evaluation helps improve supplier performance and aids in supplier
selection. Contract management is also an important part of sourcing,
as many supplier contracts have complex details that must be tracked
(such as volume-related price reductions). Successful software in this
area helps analyze supplier performance and manage contracts.

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Supplier Relationship Management SRM
• Negotiate. Negotiations with suppliers involve many steps, starting
with a request for quote (RFQ). The negotiation process may also
include the design and execution of auctions. The goal of this process
is to negotiate an effective contract that specifies price and delivery
parameters for a supplier in a way that best matches the enterprise’s
needs. Successful software automates the RFQ process and the
execution of auctions.

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Supplier Relationship Management SRM
• Buy. “Buy” software executes the actual procurement of material
from suppliers. This includes the creation, management, and approval
of purchase orders. Successful software in this area automates the
procurement process and helps decrease processing cost and time.
• Supply collaboration. Once an agreement for supply is established
between the enterprise and a supplier, supply chain performance can
be improved by collaborating on forecasts, production plans, and
inventory levels. The goal of collaboration is to ensure a common plan
across the supply chain. Good software in this area should be able to
facilitate collaborative forecasting and planning in a supply chain.

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 The 3 flows of supply chain

SUPPLIERS BUSINESS CUSTOMER

SRM ISCM CRM

Supplier Relationship Internal Supply Chain Customer Relationship
Management Management Mangement

MATERIAL

INFORMATION

FINANCIAL
MATERIAL / PRODUCT FLOW
This is the flow of the physical product from supplier all the way
down to the customer. This flow is usually uni-directional, that is, it
only flows one direction from supplier to customer; however, in certain
instances, when the customer returns the product, the flow occasionally
goes in the other direction. A typical flow of materials usually begins
with the raw materials suppliers to manufacturers to warehouses
and distribution to the final customer.

https://kpakpakpa.com/the-three-flows-of-supply-chain/
INFORMATION FLOW
Information flow is the flow of information from supplier to
customer and from customer back to supplier. This flow is bi-
directional, that is, it goes both direction in the supply chain. The type
of information that flows between customers and suppliers include
quotations, purchase orders, delivery status, invoices, customer
complaints and so on. For supply chain to be successful there has to be
constant interaction between supplier and Customer.  In many cases,
other partners like distributors, dealers, retailers, logistic service
providers are involved in the information network.

https://kpakpakpa.com/the-three-flows-of-supply-chain/
FINACIAL FLOW
• Financial flow involves the movement of money from the customer
to the supplier. Usually, when the customer receives the product and
verifies it, the customer pays and the money travels back to the
supplier. Sometimes the finances flow the other direction (from
supplier to customer) in form of debit.
• For an efficient and effective supply chain, it is important that all three
flows are managed properly with minimal effort. By understanding
your supply chain and how products, information and money flows
through it, you will be in a good position to find several inefficiencies
and figure out how to significantly improve your business.

https://kpakpakpa.com/the-three-flows-of-supply-chain/
 SCM links
The typical supply chain process includes the following links:

Raw material Manufacturer/ Wholesaler /

Retailer Customer
supplier processor Distributor

This process moves in one direction -known as downstream-. Raw materials flow
through the supply chain and become a final product that the consumer purchases.
VALUE AND RISK FLOWS INCLUDED
VALUE FLOW
VALUE FLOW
RISK FLOW
UNIT 1

• https://www.loreal.com/en/videos/group/industry-4-0/
• https://www.loreal.com/en/videos/beauty-science-and-technology/k
arlsruhe-plant/
• https://www.loreal.com/en/articles/operations/supply-chain-transfor
mation/
BIBLIOGRAPHY
Managing Project Supply Chains, Basu, Ron, 2011, GOWER e-BOOK   
https://puce.elogim.com/auth-meta/login.php?url=https://ebsco.puce.
elogim.com/login.aspx?direct=true&db=e000xww&AN=394222&lang=
es&site=eds-live&ebv=EB&ppid=pp_Cover
Chopra, Sunil y otros, Administración de la Cadena de Suministro,
Pearson, 2013