Supply Chain ManagementCommon Learning Block I
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13-2
Supply Chain Basics
• People / Processes / Technology• Chain / Network• Levels of Supply Chain• First Tier – Factories to main operators• Second Tier – Suppliers to First Tier
LO1
13-3
Supply Chain
• Customers’ customers• Suppliers’ suppliers• Focal Firms – The Initiator• End Customer• Voice of Customers• Values and Expectations
LO1
13-4
Supply Chain Focus
• Products• Information• Funds Moving From:• Suppliers Distribution
• Retailers Customers• Reverse Logistics
LO2
13-5
Supply Chain Management
• Plan / Direct / Control Supply Chains• CSCMP – Council of Supply Chain
Management Professionals• It Encompasses The Following:• Procurement / Conversion / Management• Links Major Business Functions • High Performing Business Model
LO3
13-6
Supply Chain Activities
• Sourcing of Raw Materials and Parts• Manufacturing and Assembling• Warehousing and Controlling Inventory• Entering and Managing Orders• Finishing, Customizing and Packaging• Distributing Across All Channels• Delivering to Final Customers• Managing Relationships with Suppliers• Managing Relationships with Customers• Maintaining Infor. Systems for Monitoring
LO4
13-7
Supply Chain Strategy
• Corporate Strategy Determines Target Mkt• Compete on Price, Service, Quality,
Innovation, Flexibility or a Combination• The Business Plan • Demand & Supply Plan • Supply Chain (to fill customers orders)
LO5
13-8
Interdepartmental Work
• Functions contribute to goal of securing lowest transportation Costs • R&D• Procurement• Manufacturing
LO5
13-9
Supply Chain Financials
• Optimizing Supply Chain• Eliminate Company Vs. Company• Supply Chain Vs. Supply Chain• Services – Lower Supply Chain Costs• Manufacturing – Higher Supply Chain Costs
LO6
13-10
Profit Leverage
• Supply Chain Mgmt Corporate Success Profit Leverage• Profit Leverage = Decrease expenses through
Supply Chain Management• Flows from decreasing expenses and
increasing efficiencies• Profit Leverage Effect – Providing Industries
with greater options for increasing profits through expense reduction.
LO7
13-11
Today’s Supply Chain
• Global Era• U.S. Economic Recession of the 1980’s• Global Competition (China)
• Characteristics of The Era• Intense Competition in industries• New strategies to increase market share• Rapid increase in technology / shorter product life
cycle e.g. computers, mobile phones, fashion
LO7
13-12
Today’s Supply Chain
• Increased Importance of Supply Chain• Use of the internet• Use of International Data Networks
• 2000’s to the present• Relationships with suppliers• Cooperation replaced adversarial relationships
• New Strategies• Supplier Development / Design Involvement / Full
Service Suppliers / Strategic Cost Management
LO7
13-13
Supply Chain Management Principles
• Procurement – All activities required to purchase materials, products, and services.
• Operations – The planning and manufacturing (conversion) of goods.
• Logistics – The movement and storage of materials, products, and services
• Integration – The communication and visibility within companies and suppliers; customers and service providers.
LO8
13-14
Supply Chain
• Estimated to control up to 90% of the cost associated with delivering a final product or service
• ERP (Enterprise Resource Planning) – An integrated, real-time information sharing module to monitor and control the business
• Can help firms obtain economies of scale
LO8
13-15
Transportation
• Transportation Operations focuses on timely movement of materials and products within and between organizations
• Transportation Modes Depend on:• Costs / Values / Dimensions / Weights / Time-
Definite Delivery / Requirements / Hazardous / Refrigerated
• Third-party Logistics – • Forwarders & Brokers
LO8
13-16
Customer Service
• Delivery of Satisfaction – Typically assigned to logistics or sales
• Focus of Customer Service• Identifying Customers Needs, Wants, and
Expectations before, during, and after purchase• Customer Service Operations Interfaces with
Logistics, Transportation, Operations, Warehousing & Inventory to control costs
LO9
13-17
Customer Services
• Customer Service Operations is important to:• The Public Sector (Airports, Ports, & Terminals)• The Private Sector (Manufacturers, Wholesalers,
Retailers, Carriers, & Third-party logistics providers
• Due to Increased demand & competition, all industries are involved in Supply Chain e.g. distribution channels, e-commerce, brick and mortar stores, & reverse logistics.• Skills to handle customer complaints and
communicate consistently
13-18
ERP
• In ERP, Customer Service Operation is supported as follows:• Inventory Stock Status• Customer Contact Management• Sales Force Management• Customer Relationship Management (CRM)
13-19
Warehousing
• Warehousing is a function of logistics controls and involves:• Receiving / Storing / Retrieving / & Distribution
• Warehousing also provides the following services:• Picking / Packing / Final Assembly & Packaging /
Putting Multiple Products Together as kits / & Refurbishing
13-20
Warehousing
• Warehousing is Supported By:• WMS (Warehousing Management Systems) within
the ERP system.
• WMS is supported by Integrated Material Handling Systems such as:• Equipment to move, put away or retrieve
goods• Sophisticated flow of information and
communication to optimize efficiency
13-21
Demand Planning
• Demand planning – the process of planning materials from inbound to manufacturing• Forecasting – What is needed to have ready
for the customer• Demand planning focuses on what is
needed in order to meet customer inventory levels from forecasting
13-22
Inventory Management
• Inventory Management involves seeing/controlling & managing inventory levels to maximize efficiency and profitability• Interacts with:•Warehousing• Transportation• Demand Planning
13-23
Supply Chain Today
• Since the 1980’s -• Companies have decreased inventory levels
& carrying costs• Technology is used to a greater extent today
to meet customers needs with a high level of service and lower cost• ERP manages inventory at all levels and is
used to correct errors quickly
13-24
Operations Department
• Operations Department supports lean and efficient flow of supply management and procurement
• Global sourcing • Risk – Climate / Political / Social • Monitors – Availability / Pricing /Currency
Fluctuations• Protects Reputation – Socially responsible
practices
13-25
Operations Department
• Procurement – Ensures accurate product description, collaborates to determine specifications and quality
• Procurement balances lowest purchase costs with other impacts on the company including the time it takes to receive products
• Some suppliers are close to production facilities others are across continents making procurement a global function
13-26
Procurement – A Global Function
• Procurement must understand • International time zones• Approaches to mitigating interuptions such
as natural disasters, embargoes, strikes and military action