Transcript Ch.1 Enterprise Resource Planning and Supply Chain Managment

Lecture 5
Ch.8 Supply Chain Process
Management
1
Agenda
(to p3)
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1. Supply Chain Process Management
(to p12)
2. Guidelines for Horizontal Implementation
(to p16)
3. Flowcharting the SC Execution Process
(to p21)
4. High Level SC Planning Processes
(to p25)
5. Key Performance Indicators
(to p29)
6. Making a successful SCM
(to p32)
7. Questions to Ponder
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1. Supply Chain Process Management
(SCPM)
• Prior studying what is SCPM, we first gain
understanding on what are:
(to p4)
– Processes
– supply chain processes
(to p6)
(to p9)
• The purpose of SCPM is ….
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Defining Process
As noted by Harrington [1991], a process
can be defined as “any activity or group
of activities that takes an input, adds
value to it, and provides an output to an
internal or external customer.”
Traditional view (two different processes):
1. Production Process – deal with tangible goods (products)
(to p5)
2. Business Process – deal with intangible goods (services)
Harrington, H.J., Business Process Improvement, McGraw-Hill, NY, NY, 1991
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Traditional Views on Processes
• Production process transforms raw
materials into tangible goods through
physical contact with the production
system.
• Business process consists of all service
processes that support production
processes. [Harrington, 1991]
(to p3)
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Supply Chain Processes
Supply chain processes can be classified
into two major groups:
1. Planning
(to p7)
(to p8)
2. Execution
(to p3)
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SC Planning Process
• SC planning process deals with strategic
aspects of cross-enterprise supply chain
processes.
• Examples of planning processes include
recycling, product and process
development, and concurrent production
and distribution.
(to p6)
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SC Execution Process
• SC execution process involves more
operational dimensions of supply chain
processes.
• SC execution processes generally
comprise fulfillment, production,
procurement, quality control, customer
service, and business support processes.
(to p6)
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SCPM
• The aim of SCPM is to deal with process
workflow, visibility, collaboration, reengineering,
event management, and continuous
improvement along the supply chain.
• To achieve the above, our focus is on linking
everyone in the process chain and aligning
process objectives across all of the firms in the
supply chain.
(to p10)
• SCPM attempts to make processes that …….
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SCMP Objectives
Making processes (major lists):
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Effective – doing the right things
Efficient – doing things right
Adaptable – enable to adopt changes of environment
Customer friendly – service delivery with courtesy
Supplier friendly – synchronization & integration of data
Environmentally friendly – green environment (a new trend!)
Mistake-proof – preventing errors from happening
(to p11)
Way to achieve them in SCM practice ….
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Supply Chain Management – The SAP
(Process) View
Employees
Business
Partners
Suppliers
Order to Cash
Procure to Pay
Idea to Project
Hire to Retire
Customers
SAP R/3
Processes that handle/execute by SAP software
(to p2)
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2. Guidelines for Horizontal
Implementation
The lack of proper guidelines for a
supply chain process management
implementation will result in suboptimization and inefficiencies.
Solution to the problem …
(to p13)
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Guidelines for Horizontal
Implementation
Our next slide illustrates how such
guidelines could be developed to align
processes across multiple
organizations, assist management
with better synchronization plans, and
(to p14)
sustain a competitive advantage.
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Guidelines for Horizontal Implementation
Processes
Long-Term
Vision/Competitive
Strategy
Processes
Documentation
(Planning and
Execution)
SC Initiatives
(e.g. Benchmarking)
Yes
Performance
Measurement
Control
Process
Assessment
Control/
/Improvement?
Improvement
Plan
No
Reengineering
Yes
Reengineering?
Next Planning/
Execution Period
Plan
Note:
(to p15)
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Guidelines for Horizontal
Implementation
Specifically, the entire supply chain needs to
utilize a flow chart approach to ensure the
visibility of workflows, and make use of
performance indicators to ensure that
process optimization efforts are in
alignment with supply chain’s competitive
position.
(to p2)
(to p16)
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3. Flowcharting the SC Execution Process
Flowcharting is an invaluable tool for
reviewing and examining the overall
sequence of supply chain processes at the
operational level.
(to p17)
How flow chart works?
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Flow Chart
• In the most basic form, rectangle boxes are
normally used to represent activities, and arrows
are used to show the connections between
activities (see next two slides).
• The objective of a flow chart is to show how
different activities fit together, so that knowledge
about the process can be developed.
(to p18)
• Example 1: Fulfillment process
(to p19)
• Example 2: Quality control process
(to p20)
• Optional exercise
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Book Publishing - A Fulfillment Process (Happy Day
Scenario)
Bookstore
Bookstores
order items
Orders
arrived
Orders
approved
Get items
from the
stock room
Update
inventory
information
Deliver items
to bookstores
Update
inventory
information
Yes
Yes
Available?
Availability Checking Point
Ending Inv.
Level <
Reorder Point
No
Publisher’s
Head
Quarter
Inform the
bookstore
when items
are ready
Day 1
No
Acceptable?
No
HQ places
orders
Reject the
Shipment
Day 2
Orders
arrived
Confirm
with HQ on
quantity,
due date,..
Day 3
Update
inventory
information
No
Un-fulfill
Orders?
Yes
Yes
Order
Reviewing
Sub-process
Suppliers
Organize
items in the
stock room
Deliver
items to the
HQ
Go Back to
Availability
Checking
Point
Wait for
next orders
Return
items to
suppliers
Day 4
(to p17)
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Book Publishing - A Quality Control Process
Bookstore
Bookstores
order items
Orders
arrived
Orders
approved
Get items
from the
stock room
Update
inventory
information
Deliver items
to bookstores
Update
inventory
information
Yes
Yes
Available?
Availability Checking Point
Ending Inv.
Level <
Reorder Point
No
Publisher’s
Head
Quarter
Inform the
bookstore
when items
are ready
Suppliers
Downstream Failure:
Bookstores call at all
times for immediate
delivery
Organize
items in the
stock room
Yes
No
Acceptable?
No
Reject the
Shipment
Yes
HQ places
orders
Order
Reviewing
Sub-process
Orders
arrived
Confirm
with HQ on
quantity,
due date,..
Update
inventory
information
No
Un-fulfill
Orders?
Deliver
items to the
HQ
Enterprise Failure: Inventory lists Enterprise Failure: Inventory items
don’t match the inventory items
are not labeled and organized
on the shelves
appropriately
Go Back to
Availability
Checking
Point
Wait for
next orders
Return
items to
suppliers
Upstream Failure: Suppliers
did not handle packages
properly
(to p17)
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A Quality Control Process
•
Optional Internet Assignment: Visit and
explore the Internet site for Poka-Yoke
applications. Explain how Poka-Yoke
might help companies to enhance their
process quality.
(to p2)
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4. High Level SC Planning Processes
•
Through the development of planning
processes, supply networks can accomplish
three critical tasks:
1. Understand the interdependent relationships
between trading partners
2. Evaluate strategic, high-level cross-enterprises
processes
3. Direct every effort toward the common aims
(to p22)
Examples
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Typical Examples
• Product and process development
(to p24)
• Recycling
(to p23)
(to p2)
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Planning for Product-and-Process- Development Process
Suppliers
Vendor
Development
Concurrent
Production
Distribution
(Focal Firm) Product and SC Process
Development
Marketplace
SC
Process
Design
Product
Design
Product
Market
Concept
SC
Network
Product
Attributes
Consumption
(to p22)
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Planning for Recycling Process
Product/Packaging
Materials
Inbound
Logistics
Product/Process
Development
Green Product/
Process Design
Production
Production Process
Outbound
Logistics
Order Delivery
Marketplace
Secondary
Materials
Industries
Waste and
Disposal
Consumption
Collection
Processing for
recyclable
(to p22)
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5. Key Performance Indicators
• From Table 8.1, Key Performance
Indicators Used in the Process Chain (in
our text), it is observed that the initiation of
supply chain excellence programs should
be both strategic and operational in scope.
• The benefits of such programs should also
be tangible as well as intangible.
(to p26)
• Our thesis …
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Key Performance Indicators
Upon reviewing those performance
indicators (in Table 8.1) and our theses
presented in previous sections, we
suggest that supply chain excellence
should be built around issues such as
business results, social impact (or social
cost), and supply chain quality and
productivity.
(to p27)
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Supply Chain Excellence and Performance Indicators
SC Excellence
Business
Results
Note …
Social Cost
Supply
Chain
Quality
Supply
Chain
Productivity
(to p28)
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Key Performance Indicators
Since performance measures are not all
equally important, the relative importance
of each performance indicator presented
in Table 8.1 must be identified first before
devoting any resource to the program.
(to p2)
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6. Making a successful SCM
Process management alone could not
increase efficiency and effectiveness.
Rather, the integration with strategic,
tactical, operational, and IT (information
technology) elements such as ERP can
help a supply chain realize the potential
gains of process management.
(to p30)
 A Holistic View
(to p31)
 A Strategic Approach
(to p2)
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A Holistic View
A complete supply chain system as a result
is an aggregation of a variety of processes
and critical elements.
Managers of a single organization in the
supply chain need to extend their view to
embrace the new reality.
(to p29)
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A Strategic Approach
Every supply chain manager must be aware
of the relationships and interactions
between processes and critical elements,
and subsequently develop a plan for
systemic implementation.
(to p29)
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7. Questions to Ponder
• What is supply chain process
management?
• What is its significance to any
organization?
• What does it involve?
(to p2)
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