1a--introduction to scm term iv.pptx

8/13/2019 1A--Introduction to SCM Term iv.pptx

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1---What is Supply Chain Management

Supply Chain Management is primarily concerned with

the efficient integration of suppliers, factories,

warehouses and stores so that merchandise is produced

and distributed in the right quantities, to the rightlocations and at the right time, and so as to minimize

total system cost subject to satisfying service

requirements.

Simchi-Levi


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SCM

The term supply chain

management was coined by Keith Oliver, a Booz

Allen Hamilton executive in 1982

(Information Week, 2003).


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Supply Chain: Manufacturing Example


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Supply Chain: Manufacturing Example


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Supply Chain: Service Example


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Supply Chain: Service Example


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Supply Chain Relationships

Types of Relationships

Vertical: Thetraditional linkages between firmsin the supply chain such as retailers, distributors,manufacturers, and raw materials suppliers

Horizontal: Business arrangements between

firms that occupy parallel positions in thesupply chain (e.g. two ocean carriers that shareship capacity)

Full Collaboration: Business arrangements

between firms that occupy both vertical andparallel positions in the supply chain (e.g.consortium of carriers and shippers working toreduce empty truck movement)


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Range of supply chain relationships

Transactional:Both parties are at arms length, with limitedcommitment

Collaborative:

Two or more business organizations cooperate todrive better long term combined results

Strategic:

Represents deep and long term commitments amongsupply chain partners. Firms willingly modify their

business objectives and practices to help achieveshared long-term goals and objectives


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Supply and Demand Network


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Order penetration point

The position of the of the order penetration point

(OPP) is an important strategic question. Basically theactions before the OPP are forecast driven and the actionsafter the OPP customer order Driven .

Shifting the OPP forward reduce the delivery lead time tocustomers and increase the manufacturing efficiency .

Advantages of shifting the OPP backwards are amongothers increase of the degree of product customisation , reduce of the reliance on forecasts and reduce or eliminate

of the WIP Buffers.


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A framework for managing the supply chain

Key issue

1What are the management

implications of integrating the

supply chain?


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1

Develop a supply

chain strategy

2

Gather supply chain

information

3

Develop effective

partnerships and

alliances

4

Pilot new supply chain

solutions

5

Organize for supply

chain performance

6

Develop measurement

system for supply chain

performance


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Develop a supply chain strategy

Customer service requirements

Plant and distribution center network design

Inventory management

Outsourcing and third-party logistics relationships

Business processes

Organizational design and training requirements Performance metrics and goals


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Pilot new supply chain solutions

Successful supply chain improvement including

Involvement of key stakeholders, suppliers, customers andemployees

Selection of scope and environment, focusing on avoiding

risk

Identification of the key questions that the pilot mustanswer


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Develop measurement systems for supply chain performance

On time in full, outbound

On time in full, inbound

Internal defect rates

New product introduction rate

Cost reduction

Stock turns

Order to delivery lead time

Fiscal flexibility


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Why so Difficult

to Match Supply and Demand?

Uncertainty in demand and/or supply

Changing customer requirements

Decreasing product life cycles

Fragmentation of supply chain ownership

Conflicting objectives in the supply chain Conflicting objectives even within a single firm

Marketing/Sales wants: more FGI inventory, fast delivery,many package types, special wishes/promotions

Production wants: bigger batch size, depots at factory,latest ship date, decrease changeovers, stable productionplan

Distribution wants: full truckload, low depot costs, lowdistribution costs, small # of SKUs, stable distribution plan


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The Bullwhip Effect

If information isnt shared, everyone has to guess what is

going on downstream.

Guessing wrong leads to too much or too little inventory:

If too much, firms hold off buying more until inventoriesfall (leading suppliers to think demand has fallen).

If too little, firms demand a rush order & order morethan usual to avoid being caught short in the future(leading suppliers to think demand has risen).

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The Bull whip effect


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The effect of lack of coordination onperformance

Manufacturing cost Inventory cost

Replenishment lead time

Transportation cost

Labor cost for shipping and receiving

Level of product availability

Relationships across the supply chain #@#*&@*!

Profitability

Remark: All of the above essentially result from the increased

variability experienced by certain parts of the supply chain, due

to information distortion and lack of coordination.


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Information Flow in Supply Chains


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Information Technology: A Supply Chain

Enabler

Information links all aspects ofsupply chain

E-business

replacement of physical businessprocesses with electronic ones

ERP Systems

Electronic data interchange (EDI)

a computer-to-computerexchange of business documents

Bar code and point-of-sale data creates an instantaneous

computer record of a sale

Radio frequency identification(RFID) technology can send product

data from an item to a reader viaradio waves

Internet

allows companies tocommunicate with suppliers,customers, shippers and otherbusinesses around the world,instantaneously


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Radio Frequency Tags

Radio Frequency Tags: Keeping the Shelves StockedSupply chains work smoothly when sales are steady, but often break down when confronted by a sudden surge in demand.Radio frequency ID (or RFID) tags can change that by providing real -time information about whats happening on storeshelves. Heres how the system works for Proctor & Gambles Pampers.


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SAP Advanced Planner and Optimizer(APO)

SAP APO has 5 key modules

- Demand Planning

- Supply Network Planning

- Core Interface(R3 to APO)

- Manufacturing Planning

- Global Available to promise


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1a--introduction to scm term iv.pptx

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