copyright © 2013 mcgraw-hill ryerson limited slides by sam lampropoulos, george brown college...

Copyright © 2013 McGraw-Hill Ryerson LimitedSlides by Sam Lampropoulos, George Brown College

CHAPTER 13 Global Sourcing and Procurement

Copyright © 2013 McGraw-Hill Ryerson Limited

Operations and SCM in Practice

12-1

CANADIAN TIRE’S SUPPLY CHAIN AND SUSTAINABILITY

• All of their 400+ retail stores are supplied from hub distribution centres (DC) in Calgary, two in Toronto, and Montreal, which are managed by Genco, a third party logistics provider.

• Canadian Tire has further improved their supply chain performance by deploying collaborative planning, forecasting, and replenishment (CPFR) with approximately 100 of their largest suppliers, based on Manugistics’ NetWorks Collaborate solution.

Learning Objectives


1. Recognize how important sourcing decisions go beyond simple material purchasing decisions.2. Demonstrate the bullwhip effect and know why it is important to synchronize the flow of material between supply chain partners.3. Recognize how characteristics of supply and demand have an impact on structuring supply chains.4. Identify the reasons that can justify outsourcing. 5. Illustrate what “green sourcing” is and understand the total cost of ownership.6. Be able to measure supply chain performance.7. Identify the basic building blocks for an effective mass customization program.8. List the steps involved in conducting collaborative planning, forecasting, and replenishment (CPFR).9.Recognize what a reverse supply chain is.

12-2

Supply Chain Management

• Supply chain management involves optimizing the entire supply chain operations for the product by taking a systems approach to managing the flow of information, materials, and services from raw materials suppliers through factories and warehouses to the end costumer.

LO1

Copyright © 2013 McGraw-Hill Ryerson Limited 12-3

Supply Chain ManagementLO1


Strategic Sourcing

• Strategic Sourcing is the development and management of supplier relationships to acquire goods and services in a way that aids in achieving the immediate needs of the business.

LO1


Strategic SourcingLO1


Bullwhip Effect

• Bullwhip effect refers to the variability in demand is magnified as we move from the customer to the product in the supply chain.

LO2


Bullwhip EffectLO2


Functional and Innovative Products

• Functional products refers to staples that people buy in a wide range of retail outlets, such as grocery stores and gas stations.

• Innovative products refers to products such as fashionable clothes and personal computers that typically have a life cycle of just a few months.

LO3


Functional and Innovative ProductsLO3


Hau Lee’s Concepts of Supply Management

LO3


• Hau Lee’s approach to supply chain (SC) is one of aligning SC’s with the uncertainties revolving around the supply process side of the SC

• A stable supply process has mature technologies and an evolving supply process has rapidly changing technologies

• Types of SC’s– Efficient SC’s– Risk-Hedging SC’s– Responsive SC’s– Agile SC’s

LO3


Hau Lee’s Concepts of Supply Management

12-12

Logistics

• Logistics is a term that refers to the management functions that support the complete cycle of material flow: from the purchase and internal control of production materials; to the planning and control of work-in-process; to the purchasing, shipping, and distribution of the finished product.

LO4


Vertical Integration and Outsourcing

• Vertical Integration refers to the proportion of the supply chain that the company owns.

• Outsourcing is defined as the act of moving a firm’s internal activities and decision responsibility to outside providers.


LO4

12-18

Reasons for Outsourcing


LO4

12-19

LO5


Greensourcing

Greensourcing Benefits:

• Many firms are looking to their supply chains to deliver “green” results.

• A significant area of focus relates to how a firm works with suppliers where the opportunity to save money and benefit the environment might not be a strict trade-off proposition.

• Financial results can often be improved through both cost reductions and boosting revenues.

12-13

LO5


Greensourcing

12-14

LO5


Total Cost of Ownership (TCO)

Total Cost of Ownership Components:

• Transportation• Installation• Inventory management• Administration• Order processing• Training employees• Data acquisition and evaluation• Operating and maintenance• Disposal.

12-15

LO5


Total Cost of Ownership (TCO)

12-16

Measuring Supply Chain PerformanceLO6


Inventory Turnover CalculationLO6


Mass Customization

• Mass customization refers to the ability of a company to deliver highly customized products and services to different customers around the world.

LO7


Process Postponement

• The key to mass customization is effectively postponing the tasks of differentiating a product for a specific customer until the latest possible point in the supply-chain network


LO7

12-23

Mass Customization

• Principle 1: A product should be designed so it consists of independent modules that can be assembled into different forms of the product easily and inexpensively.


LO7

12-24

Mass Customization

• Principle 2: Manufacturing and service processes should be designed so that they consist of independent modules that can be moved or rearranged easily to support different distribution network designs.


LO7

12-25

Mass Customization

• Principle 3: The supply network should be designed to provide two capabilities.– First, the supply network should supply the basic

product to the facilities performing the customization in an cost-effective manner.

– Second, the supply network must have the flexibility and the responsiveness to take individual customers’ orders and deliver the finished, customized good quickly.


LO7

12-26

Collaborative Planning, Forecasting, and Replenishment (CPFR)

• Collaborative Planning, Forecasting, and Replenishment (CPFR) is a technique used to coordinate demand forecasting, production and purchase planning, and inventory replenishment between supply chain trading partners.


LO8

12-27



LO8

• Step 1. Creation of a front-end partnership agreement.

• Step 2. Joint business planning. • Step 3. Development of demand forecasts. • Step 4. Sharing forecasts. • Step 5. Inventory replenishment.

12-28



LO8

12-29

Reverse Supply Chain

• Reverse supply chain refers to a series of activities required to retrieve a used product or return from a customer and either dispose of it or reuse it.

LO9



• Five Components:– Product acquisition– Reverse logistics– Inspection and disposition– Reconditioning– Distribution and sales


LO9

12-31



LO9

12-32

The Successful Supply Chain

• Supply chains should be customized.• Partnerships are important.• Information should be shared.• Holistic internal supply chain

management.


LO9

12-33


Learning Objectives Review1. What are some important sourcing considerations beyond simple material purchasing?2. What are some of the contributing factors that cause the bullwhip effect in supply chains?3. How can supply and demand characteristics influence how supply chains should be structured?4. What are some reasons that can justify outsourcing?5. What is meant by “green sourcing” and what should be included in a total cost of ownership analysis?6. What are some metrics to measure supply chain performance?7. What are the basic building blocks required for an effective mass customization program?8. What are the five steps involved in collaborative planning, forecasting, and replenishment (CPFR)?9. What is a reverse supply chain?

12-35

Summary


• Managing your supply chain effectively is a prerequisite for business success today.

• Supply chain design should include sourcing, inventory management, logistics, level of vertical integration, performance measurement, product design, and the design of the reverse supply chain.

• Outsourcing is an important way to reduce cost, while improving the strategic focus of the firm.

12-34

End of Chapter 13


copyright © 2013 mcgraw-hill ryerson limited slides by sam lampropoulos, george brown college...

Documents