Download - 11/16 1 Inventory Management
11/16 1 Inventory Management & Supply Chain
Supply Chain Management
Chapter 119th Edition
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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 Sometimes referred to as value chainsvalue chains
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Warehouses Factories Processing centers Distribution centers Retail outlets Offices
Facilities
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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 Chain
MANUFACTURING
Supplier
Supplier
Supplier
Storage} Mfg. Storage Dist. Retailer Customer
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Supplier
Supplier
} Storage Service Customer
Typical Supply Chain Service
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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
8. Manage inventories
Need for Supply Chain Management
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Bullwhip Effect
Final CustomerInitialSupplier
Demand
Inventory oscillations become progressivelylarger 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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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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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
Logistics
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Materials MovementFigure 11.4
RE
CE
IVIN
G
Storage
Workcenter
Work centerWork center
Storage
Workcenter
Storage
Shipping
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Management uses DRP (Distribution requirements planning) to plan and coordinate: Transportation Warehousing Workers Equipment Financial flows
Uses of DRP
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E-Business: the use of electronic technology to facilitate business transactions
Applications include Internet buying and selling E-mail Order and shipment tracking Electronic data interchange
E-Business
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Companies can: Have a global presence Improve competitiveness and quality Analyze customer interests Collect detailed information Shorten supply chain response times Realize substantial cost savings Create virtual companies Level the playing field for small
companies
Advantages E-Business
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Reverse Logistics
Reverse logistics – the backward flow of goods returned to the supply chain
Processing returned goods Sorting, examining/testing, restocking,
repairing Reconditioning, recycling, disposing
Gatekeeping – screening goods to prevent incorrect acceptance of goods
Avoidance – finding ways to minimize the number of items that are returned
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Effective Supply Chain
Requires linking the market, distribution channels processes, and suppliers
Supply chain should enable members to: Share forecasts Determine the status of orders in real time Access inventory data of partners
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Successful Supply Chain
Trust among trading partners
Effective communications
Supply chain visibility
Event-management capability
The ability to detect and respond to unplanned events
Performance metrics
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RFID Technology
Used to track goods in supply chain RFID tag attached to object Similar to bar codes but uses radio
frequency to transmit product information to receiver
RFID eliminates need for manual counting and bar code scanning
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1. Develop strategic objectives and tactics
2. Integrate and coordinate activities in the internal supply chain
3. Coordinate activities with suppliers with customers
4. Coordinate planning and execution across the supply chain
5. Form strategic partnerships
Creating an Effective Supply Chain
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Supply Chain Performance Drivers
1. Quality
2. Cost
3. Flexibility
4. Velocity
5. Customer service
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Velocity
Inventory velocity
The rate at which inventory(material) goes through the supply chain
Information velocity
The rate at which information is communicated in a supply chain
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Purchasing is responsible for obtaining the materials, parts, and supplies and services needed to produce a product or provide a service.
Purchasing cycle: Series of steps that begin with a request for purchase and end with notification of shipment received in satisfactory condition.
Purchasing
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Identifying sources of supply
Negotiating contracts
Maintaining a database of suppliers
Obtaining goods and services
Managing supplies
Duties of Purchasing
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Purchasing Cycle
1. Requisition received
2. Supplier selected
3. Order is placed
4. Monitor orders
5. Receive orders
PurchasingPurchasing
LegalLegal
AccountingAccountingOperationsOperations
DataDataprocess-process-inging
DesignDesign
ReceivingReceiving
SuppliersSuppliers
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Quality and quality assurance Flexibility Location Price Product or service changes Reputation and financial stability Lead times and on-time delivery Other accounts
Factors in Choosing a Supplier