Transcript Document

Supply Chain
1
Creation and delivery of Products
and Services
Supply Chain
Operations is about the creation of a product or service which
adds value to the consumer. (Chapter 1)
Creation of value extends beyond our facility to include suppliers
and distributors.
Supply Chain is the set of entities and relationship that
cumulatively define material and information flows both up
stream (towards suppliers) and downstream (towards customer).
Suppliers
Inputs
Returns, Recycles, demand
Distribution
Product/Srvc
Returns, Recycles, demand
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SCOR is structured around five distinct
management processes
Supply Chain
Plan
Deliver
Return
Source
Make
Return
Suppliers’
Supplier
Deliver
Source
Return
Make
Return
Deliver
Return
Source
Return
Your Company
Supplier
Make
Deliver
Source
Return
Return
Customer
Internal or
External
Customer’s
Customer
Internal or
External
SCOR Model
Supply
Transformation
Distribution
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Supply Chain Management
Supply Chain
Def: The design and management of seamless, value-added processes across
organizational boundaries to meet the real needs of the end customer. *
Objectives:
Supply chain integration seeks optimization within the supply chain by
minimizing the total cost at all levels.
•
Production quantities, product availability, service levels, lead times,
production quantities, and technical and product support.
Multiple companies to function efficiently as a single company with full
information visibility and accountability.
Focus:
Reduce uncertainty across the entire supply chain
Who does supply chain management?
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Supply Chain Functions
Supply Chain
Supply chain transforms a group of ad hoc and often fragmented
processes into a cohesive system capable of delivering value to the
customer.
Functions include:
•Forecasting
•Purchasing
•Inventory management
•Information management
•Quality assurance
•Scheduling
•Production
•Distribution
•Delivery
•Customer Service
* ISM
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Vision of the Virtual Corporation
Supply Chain
Marketing
Logistics
Production
Engineering
MIS/ Finance
Vertically Integrated
Corporation
Customer
Wholesaler
Supplier
Distribution
Marketing
Logistics
Production
Engineering
MIS/ Finance
Supply Chain Integrator
Source: Gartner Group 02/1998
Retaining core competences inhouse, outsourcing other functions
Distribution
Close cooperation with partners in critical
functions (e.g. sub-systems)
Relationships to business partners based
on independence
implies a switch from vertical integration to increased partnerships in
purchasing/production/trading communities...
(Plan, Source, Make, Deliver,Return)
Processes crossing boundaries
between legal entities
(not equal virtual enterprise)
to be integrated by e-enablers
Supplier
Distribution
Marketing
Engineering
MIS/Finance
Logistics
Production
Business Community Integration/
Virtual Corporation
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Supply Chain Decisions
Supply Chain
The development of a successful supply chain
integrates and balances
Purchasing,
Operations,
Logistics
SCM Example
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Purchasing Elements
Supply Chain
Traditional buyer relationship
vs
Supply Chain Management relationship
Supplier Management
• Supplier evaluation
• Initial v Ongoing
• Supplier certification
Make or Buy
• Outsourcing
• Build in-house
Strategic Partnerships
• Supplier involvement
Sourcing strategy
• Global
• Local
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Operations Elements
Supply Chain
Demand management
• matching demand to available capacity
• what products/features
• distribution
• promotion
Inventory Control
- placement & amount depends
on product
JIT/Lean Mfg
- focus on cost and
flexibility
Total Quality Management
- focus on quality
Focus is on Operations throughout supply chain
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Logistics Elements
Supply Chain
Transportation Management
• Modes of transportation is a trade off between cost and delivery timing
• Logistics (LTL, Overnight, 2 –day)
Packaging & Material Handling
• Packaging to prevent damage, plus marketing
• Handling for shelf life and minimize damage
Location & Storage
• Direct/distributor
• inventory
• Bull Whip Effect
• Warehouse location
Third Party Logistics (3PL)
• warehousing
• shipping
Successful service delivery depends on service location,
service capacity and service capability.
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Mapping Material Flow
Supply Chain
(S1, D1)
(SR1,DR1,DR3)
Manufacturing
Warehouse
(S1, S2, M1, D1)
(SR1,SR3,DR3)
Customer
European Supplier
Customer
(S1)
(SR1,SR3)
(D2)
(DR1)
Warehouse
(S1)
(SR1,SR3)
Warehouse
(S1, D1)
(SR1,DR1,DR3)
(S1, D1)
(SR1,DR1,DR3)
Latin American
Suppliers
Other Suppliers
(D1)
(D1)
Customer
Warehouse
(S1, D1)
(SR1,DR1,DR3)
Customer
(S1)
(SR1,SR3)
(S1)
(SR1,SR3)
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Measuring Supply Chain Performance
Supply Chain
Delivery: On time; Fill rate;
Lead Time
Quality: Performance; Conformance; Satisfaction
Flexibility: Volume; Mix
Time: Throughput; Cash-to-Cash cycle time
Cost: Unit Cost; Distribution; Carrying Cost;
Accounts Receivable.
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Improving Supply Chains
Supply Chain
Structural Improvement
•
•
•
•
•
Engaging in forward and backward integration
Pursuing major process simplification
Changing configuration of factories, warehouses or retail locations.
Pursue major product redesign
Working with third party logistics
Infrastructure Improvement
• Cross-functional teams
• Partnerships
• Setup time reduction
• Information systems
• Cross-docking
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Technology and Supply Chain
Supply Chain
Coordination of material, information and financial flows
between and among all the participating enterprises in a business
transaction.
E- Procurement
Order Placement (B2B, B2C)
Order Fulfillment
Payment methods
Reverse Auctions
Demand Management
Access to supplier production schedules for anticipated delivery dates
Access to retailer’s inventory to determine quantity and time needs
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Need For Supply Chain
Supply Chain
1. Improve Operations
2. Increasing Levels of Outsourcing
3. Increasing Transportation Costs
4. Competitive Pressures
5. Increasing Globalization
6. Increasing Importance of e-commerce
7. Complexity of supply chains (Virtual Corporation)
8. Need to manage Inventories
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Supply Chain
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Dealing with Trade-Offs in Creating
Supply Chains Supply Chain
1.
Lot Size to Inventory
• Bullwhip effect: progressively larger inventories as you
move back through the supply chain
2.
Inventory to Transportation Cost
• Cross docking
3.
Lead Time to Transportation Cost
4.
Product Variety to Inventory
• Delayed differentiation (Postponement)
5.
6.
Cost to Customer Service
• Disintermediation: reducing one or more steps out of the
supply chain.
Certainty to Uncertainty of data in decision making
7.
Control to Potential lower unit cost
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Information Flow
Supply Chain
Relationship management
Materials/service, cash, information and knowledge flows
Supplier
network
Own Integrated
corporation
Distribution
network
Sourcing
Supply/
logistics
Production/
operation
End customer
Raw materials
Planning
Core competences, skills, capacities
Working capital and human resources
Source: SC Faculty Michigan State
University
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Competitive Advantage & Supply Chain Strategy
Supply Chain
The Supply Chain Strategy should support the
competitive advantage of the product or service.
Types of products: Imitators & Innovators
Strategy
Imitators
Innovators
Objective
Low cost
Quick response to
demand
Manufacturing
Hi volume
Inventory & quick
throughput
Inventory
Low, hi turnover
Inventory throughout
Suppliers
Cost & quality
Speed, flex, quality
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