NMEDD Presentation Final
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Transcript NMEDD Presentation Final
BUENOS DIAS
AGENDA
Overview
Supply Chain Management
Definition
Network
Cycles
AGENDA
Logistics
Definition
Components
Costs
Measures
AGENDA
Inventory
Introduction
Rationale
Costs
Types
Models
AGENDA
Ex/Im
Basic Transaction
Costing
Summary and Conclusions
OVERVIEW: INSTRUCTOR
Kevin Boberg
Positions
Associate Dean
Professor
Background
OVERVIEW: ALL YOU NEED
[email protected]
http://cbae.nmsu.edu/~kboberg
http://cbae.nmsu.edu/~kboberg/ctw
OVERVIEW: AUDIENCE
Name
Background
Interests
General
Topic
Goal: What do you want to learn?
AGENDA
Supply Chain Management
Definition
Network
Cycles
DEFINITION
Supply Chain Management
Integration
Business Processes
End User
Original Suppliers
Products, Services, Information
Add Value
SUPPLY CHAIN NETWORK
Tier 2 Tier 1
Tier 1
1
1
1
1
2
n
n
1
1
2
n
Tier 3
2
2
2
n
End Customers
2
Tier 2
Tier 3 to n Customers
Tier 3 to n Suppliers
Initial Suppliers
Tier 3
SUPPLY CHAIN CYCLES
Customer Order Cycle
Replenishment Cycle
Manufacturing Cycle
Procurement Cycle
SUPPLY CHAIN CYCLES
Customer
Customer Order Cycle
Retailer
Replenishment Cycle
Distributor
Manufacturing Cycle
Manufacturer
Procurement Cycle
Supplier
SUPPLY CHAIN CYCLES
Customer Order Cycle
Customer
Customer
Customer
Customer
Arrival
Order Entry
Order Fulfillment
Order Receiving
SUPPLY CHAIN CYCLES
Customer Order Cycle
Customer Arrival
Customer
Order Receiving
Customer
Order Entry
Customer
Order Fulfillment
SUPPLY CHAIN CYCLES
Replenishment Cycle
Retail
Retail
Retail
Retail
Order
Order
Order
Order
Trigger
Entry
Fulfillment
Receiving
SUPPLY CHAIN CYCLES
Replenishment Cycle
Retail Order Trigger
Retail Order
Receiving
Retail Order Entry
Retail Order
Fulfillment
SUPPLY CHAIN CYCLES
Manufacturing Cycle
Order Arrival From Customer
Production Scheduling
Manufacturing and Shipping
Receiving by Customer
SUPPLY CHAIN CYCLES
Manufacturing Cycle
Order Arrival
Receiving
Production
Scheduling
Manufacturing and
Shipping
SUPPLY CHAIN CYCLES
Procurement Cycle
Order Arrival From Manufacturer
Supplier Production Scheduling
Component Manufacturing & Shipping
Receiving at Manufacturer
SUPPLY CHAIN CYCLES
Procurement Cycle
Order Arrival
Receiving at
Manufacturer
Supplier Production
Scheduling
Component Mfr. and
Shipping
SUPPLY CHAIN CYCLES
Customer Order Cycle Push/Pull View
Push
Anticipate
Customer
Replenishment Cycle
Pull
React
Customer
Manufacturing Cycle
Procurement Cycle
SUPPLY CHAIN CYCLES
Customer
Order
Cycle
Order Arrives
Customer Order Cycle
Pull
Processes
Replenishment Cycle
Replenishment,
Mfr.,
Procurement
Cycle
Manufacturing Cycle
Procurement Cycle
Push
Processes
SUPPLY CHAIN CYCLES
Customer Order Cycle
Customer
Order,
Replenishment,
Mfr. Cycle
Replenishment Cycle
Pull
Processes
Manufacturing Cycle
Order Arrives
Procurement
Cycle
Procurement Cycle
Push
Processes
AGENDA
Logistics
Definition
Components
Costs
Measures
DEFINITION
Logistics
Part of the Supply Chain
Plans, Implements, Controls
Flow and Storage
Goods, Services, Information
Origin, Consumption, Disposal
Adding Value
COMPONENTS OF LOGISTICS
Inputs
Plan
Mgmt. Actions
Implement
Control
Outputs
MKTG
Natural
Human
Logistics Management
Financial Suppliers
RM
WIP
FG
Utility
Cust.
Physical
Info.
Efficient
Proprietary
Asset.
CS
Logistics Activities
Inventory
Location
O/P
Forecasting
WH
Pkg.
MH
Traffic
IS
MM
Support
COMPONENTS OF LOGISTICS
The Marketing Concept
Customer Satisfaction
•Suppliers
•Intermediate Customers
•Final Customers
Integrated Effort
•Product
•Price
•Promotion
•Place
Company Profit
•Max. Profits
•Lower Total Cost
•Proprietary Asset
PROD
PRICE
PROMO
Logistics
PLACE
ICC
TC
OC
WH
OP/IS
Marketing
LOGISTICS COSTS
LOGISTICS COSTS
Customer Service Level
•Customer Service
•Parts and Service Support
Inventory Carrying Cost
•Inventory Mgmt.
•Pkg.
•Reverse Logistics
Lot Quantity Costs
•MH
•Procurement
Transportation Cost
•Traffic and transport
OP and IS
•OP
•Forecast
•Communication
Warehousing
•Store and handle
•Location
LOGISTICS COSTS
Inventory Carrying
$332
Transportation
$548
Shipper Related
$
Administration
$ 35
Total
$920
5
LOGISTICS COSTS
Inventory Carrying
36.09%
Transportation
59.57%
Shipper Related
0.54%
Administration
3.80%
Total
100.00%
MEASURES: PROFIT MODEL
NP
NPM
/
Sales
ROI
=
Leverage
X
ROA
X
Sales
Asset T/O
/
Assets
MEASURES: ROA
ROA EARNINGS MARGIN X TURNOVER
MEASURES: ROA
NET INCOME
SALES
ROA
X
SALES
AVE. ASSETS
MEASURES: ROA
NET INCOME
SALES
ROA
X
SALES
CA PPE
WHERE
CA CASH AR INVEN OTHER
PPE PROPERTY, PLANT & EQPMT
OTHER FINANCIAL MEASURES
Cash Flow Conversion Cycle
Cash In
RM
Conversion
Conversion
Sales
Conversion
WIP
FG
Conversion
OTHER FINANCIAL MEASURES
Working Capital
WC CA CL
Where
WC Working Capital
CA Current Assets
CL Current Liabilitie s
OTHER FINANCIAL MEASURES
Current Ratio
CA
CR
CL
Where
CR Current Ratio
CA Current Assets
CL Current Liabilitie s
OTHER FINANCIAL MEASURES
Quick Ratio
CA INV
QR
CL
Where
CR Current Ratio
CA Current Assets
INV Inventory
CL Current Liabilitie s
OTHER FINANCIAL MEASURES
Average Age of Receivables
Days in Year
AAR
RTO
Where
AAR Average Age of Receivable s
RTO Receivable Turnover
Net Credit Sales
Ave. Trade Receivable s
OTHER FINANCIAL MEASURES
Average Age of Payables
ACCTPAY DIY
AAP
AP
Where
AAR Average Age of Payables
ACCTPAY Acounts Payable
DIY Days in Year
AP Accounts Payable
OTHER FINANCIAL MEASURES
Average Days Supply in Inventory
Days in Year
ADSI
ITO
Where
ADSI Average Days Supply Inventory
ITO Inventory Turnover
Cost of Goods Sold
Average Inventory
AGENDA
Inventory
Introduction
Rationale
Costs
Types
Models
INTRODUCTION
Investment
20%
of Total Assets for Mfr.
50% Of Total Assets for
Wholesalers
Retailers
INTRODUCTION
Manage
to Improve
ROA
Cash
Flow
Productivity
Customer Service
INTRODUCTION: TRENDS
Product
Proliferation
Market Dispersion
Service Expectations
Shrinking Plc
Time-based Competition
INTRODUCTION: SERVICE
Customers
Internal
External
Measures
Fill
rate
Timeliness
RATIONALE
Economies of Scale:
Unit Cost
Holding Cost
Balance
RATIONALE
Seasonality
Demand
Supply
Both
RATIONALE
Specialization
Plant
Level
Dc Level
Focused Factory
Assignment
RATIONALE
Uncertainty
Variability
Within
Logistics
Within Firm
Within Supply Chain
RATIONALE
Uncertainty
COSTS: TLC
Tradeoffs
Within
Logistics
Within Firm
Within Supply Chain
COSTS: TLC
PROD
PRICE
PROMO
PLACE
ICC
TC
OC
WH
OP/IS
COSTS: TYPES
Ordering Cost
ORDER COST
ORDER SIZE (Q)
COSTS: TYPES
Stock Out Cost
STOCK OUT COST
ORDER SIZE (Q)
COSTS: TYPES
Transport Cost
TRANSPORT COST
ORDER SIZE (Q)
COSTS: TYPES
Carrying Cost
CARRYING COST
ORDER SIZE (Q)
COSTS: TYPES
Carrying Cost
K
STORE
ICC%
SERVE
RISK
COSTS: TYPES
Carrying Cost
K
ICC%
WACC
COSTS: TYPES
Carrying Cost
PLANT
STORE
PRIVATE
ICC%
PUBLIC
LEASED
COSTS: TYPES
Carrying Cost
INSURANCE
ICC%
SERVE
TAXES
COSTS: TYPES
Carrying Cost
OBSOLESCENCE
SHRINKAGE
ICC%
DAMAGE
RISK
RELOCATION
COST AND SALES: BALANCE
TAC
COST
ICC$
OC
ORDER SIZE (Q)
TYPES
Cycle
Lot
Sizing
Many Methods
Sold or Used in
Production
Marketing
TYPES
Cycle
Conditions
of
Certainty
Mean
Performance
TYPES
Cycle
Basic
Math
TACCYCLE
1
Q V C
2
WHERE
Q CYCLE STOCK LOT SIZE
V VALUE PER UNIT
C CARRYING COST PERCENT
TYPES
Safety
Lead
Time
Demand
Other Factors
TYPES
Safety
Constant
Function
of
Variability
Customer
Service Level
TYPES
Safety
Basic
Math
TACSAFETY SSQ V C
WHERE
SSQ AVE. DAILY UNITS X MSR. OF VAR.
V VALUE PER UNIT
C CARRYING COST PERCENT
TYPES
Transit
or Pipeline
En-route
Door-to-Door
How
Value
TYPES
Pipeline
Basic
Math
TACTRANSIT
D
t V C
365
WHERE
D ANNUAL DEMAND
t TRANSIT TIME DOOR TO DOOR
V VALUE PER UNIT
C CARRYING COST PERCENT
BASIC Q-MODEL
Certainty
Balance
Ordering
Cost
Inventory Carrying Cost
BASIC Q-MODEL
Determining Q (Cycle)
2 PD
Q
CV
WHERE
P ORDERING COST
D ANNUAL DEMAND
C CARRYING COST PERCENT
V VALUE PER UNIT
BASIC Q-MODEL
Determining
Q (Cycle)
TAC OC ICC$
WHERE
D
OC P
Q
1
ICC Q CV
2
BASIC Q-MODEL
Intensive Administrative
Perpetual Inventory
High Cost
“A-items”
BASIC P-MODEL
Fixed P
Variable Q
BASIC P-MODEL
Low
Administration
Key is P
“C” items
AGENDA
Ex/Im
Basic Transaction
Costing
BASIC TRANSACTION
Commercial Contract
Customs
Source
Bill
of
Lading
Customs
Port
D-t-P
Contract
Port
P-t-P
Contract
You
P-t-D
Contract
BASIC TRANSACTION
Bill of Lading
Evidence of Contract
Evidence of Receipt
Evidence of Title (order form)
Source
Bill
of
Lading
Port
Port
D-t-P
Contract
P-t-P
Contract
You
P-t-D
Contract
BASIC TRANSACTION
Bill of Lading
Whoever issues is the carrier
Watch who issues
varies by mode
varies by contract
Source
Bill
of
Lading
Port
Port
D-t-P
Contract
P-t-P
Contract
You
P-t-D
Contract
BASIC TRANSACTION
Commercial Contract
Source
Payment Terms
Sales Terms
You
BASIC TRANSACTION
Commercial Contract
Payment Terms
Cash
Open Account
Drafts and L/C
Forfeiting
Source
You
BASIC TRANSACTION
Commercial Contract
Sales Terms: INCO Terms
E Term(s)
C Terms
D Terms
F Terms
Source
You
BASIC TRANSACTION
•E Term
–Ex Works
•C Terms
–CFR: Cost and Freight
(named port of destination)
–CIF: Cost, Insurance, and
Freight, (named port of
destination)
BASIC TRANSACTION
•C Terms (continued)
–CPT: Carriage Paid To
(named place of
destination)
–CIP: Carriage and
Insurance Paid To (named
place of destination)
BASIC TRANSACTION
•D Terms
–DAF: Delivered At Frontier (named place)
–DES: Delivered Ex Ship (named port of
destination)
–DEQ: Delivered Ex Quay (named port of
destination)
–DDU: Delivered Duty Unpaid (named place
of destination)
–DDP: Delivered Duty Paid (named placed of
BASIC TRANSACTION
•F Terms
–FCA: Free Carrier (named
place)
–FAS: Free Alongside Ship
(named port of shipment)
–FOB: Free On Board (named
port of shipment)
BASIC TRANSACTION
Any Mode
• EXW
• FCA
• CPT
• CIP
• DAF
• DDU
• DDP
Marine Only (other than
RoRo)
• EXW
• FAS
• FOB
• CFR
• CIF
• DES
• DEQ
• DDU/DDP
BASIC TRANSACTION
Term
EXW
FAS
FOB
CFR
CIF
DES
DEQ
DDU
DDP
Total
Costs
Time
Variation
Party
Price
SUMMARY
AND
CONCLUSIONS