Transcript decision analysis

Lecture
6
BSB 370
Supply Chain Management
Chapter 11
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Supply Chain Management

Supply Chain: the sequence of
organizations - their facilities, functions,
and activities - that are involved in
producing and delivering a product or
service.
Sometimes referred to as value chains
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Facilities

Warehouses
 Factories
 Processing centers
 Distribution centers
 Retail outlets
 Offices
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Functions and Activities

Forecasting
 Purchasing
 Inventory management
 Information management
 Quality assurance
 Scheduling
 Production and delivery
 Customer service
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Typical Supply Chains
Production
Distribution
Purchasing Receiving Storage Operations Storage
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Typical Supply Chain for a Manufacturer
Figure 11.1a
Supplier
Supplier
}
Storage
Mfg.
Storage
Dist.
Retailer
Customer
Supplier
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Typical Supply Chain for a Service
Figure 11.1b
Supplier
}
Storage
Service
Customer
Supplier
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Need for Supply Chain Management
1.
2.
3.
4.
5.
6.
7.
8.
Improve operations
Increasing levels of outsourcing
Increasing transportation costs
Competitive pressures
Increasing globalization
Increasing importance of e-commerce
Complexity of supply chains
Manage inventories
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Bullwhip Effect
Figure 11.3
Demand
Initial
Supplier
Final Customer
Inventory oscillations become progressively
larger looking backward through the supply chain
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Benefits of Supply Chain Management
Organization
Benefit
Campbell Soup
Doubled inventory turnover rate
Hewlett-Packard
Cut supply costs 75%
Sport Obermeyer
Doubled profits and increased sales 60%
National Bicycle
Increased market share from 5% to 29%
Wal-Mart
Largest and most profitable retailer in the world
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Benefits of Supply Chain Management

Lower inventories
 Higher productivity
 Greater agility
 Shorter lead times
 Higher profits
 Greater customer loyalty
 Integrates separate organizations into a
cohesive operating system
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Global Supply Chains

Increasing more complex

Language
 Culture
 Currency fluctuations
 Political
 Transportation costs
 Local capabilities
 Finance and economics
 Environmental
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Elements of Supply Chain Management
Table 11.1
Element
Typical Issues
Customers
Determining what customers want
Forecasting
Predicting quantity and timing of demand
Design
Incorporating customer wants, mfg., and time
Processing
Controlling quality, scheduling work
Inventory
Meeting demand while managing inventory costs
Purchasing
Evaluating suppliers and supporting operations
Suppliers
Monitoring supplier quality, delivery, and relations
Location
Determining location of facilities
Logistics
Deciding how to best move and store materials
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Strategic or Operational

Two types of decisions in supply chain
management
Strategic – design and policy
 Operational – day-today activities


Major decisions areas

Location
 Production
 Inventory
 Distribution
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Supply Chain Issues
Strategic
Issues
Design of the
supply chain,
partnering
Tactical Issues
Inventory policies
Purchasing policies
Production policies
Transportation
policies
Quality policies
Operating Issues
Quality control
Production planning and
control
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Supply Chain Benefits and Drawbacks
Table 11.5
Problem
Potential
Improvement
Benefits
Possible
Drawbacks
Large
inventories
Smaller, more frequent
deliveries
Reduced holding
costs
Traffic congestion
Increased costs
Long lead
times
Delayed differentiation
Disintermediation
Quick response
Large number
of parts
Modular
Fewer parts
Simpler ordering
May not be feasible
May need absorb
functions
Less variety
Cost
Quality
Outsourcing
Reduced cost,
higher quality
Loss of control
Variability
Shorter lead times,
better forecasts
Able to match
supply and demand
Less variety
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Logistics

Logistics

Refers to the movement of materials and
information within a facility and to incoming
and outgoing shipments of goods and
materials in a supply chain
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Logistics
• Movement within the facility
• Incoming and outgoing shipments
• Bar coding
• EDI
• Distribution
• JIT Deliveries
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