Download - UTPAL's PPT on Supply Chain Management
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14-1 Supply Chain Management14-1 Supply Chain Management
NSHM Knowledge Campus, Durgapur
Supply Chain ManagementSupply Chain Management
ROLL NO:- 09301456
PGPRM(RAI) + MBA(PTU)
BATCH- 002: 2ND Semester
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Supply Chain ManagementSupply Chain Management
Supply Chain: the sequence oforganizations - their facilities, functions,
and activities - that are involved in
producing and delivering a product orservice.
Sometimes referred to asSometimes referred to as value chainsvalue chains
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FacilitiesFacilities
Warehouses Factories
Processing centers
Distribution centers
Retail outlets
Offices
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14-4 Supply Chain Management14-4 Supply Chain Management
Functions and ActivitiesFunctions and Activities
Forecasting Purchasing
Inventory management
Information management Quality assurance
Scheduling
Production and delivery Customer service
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14-5 Supply Chain Management14-5 Supply Chain Management
Typical Supply ChainsTypical Supply Chains
PurchasingReceiving Storage Operations Storage
Production Distribution
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14-6 Supply Chain Management14-6 Supply Chain Management
Typical Supply Chain for a ManufacturerTypical Supply Chain for a Manufacturer
Supplier
Supplier
Supplier
Storage
}Mfg. Storage Dist. Retailer Customer
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Supplier
Supplier}Storage Service Customer
Typical Supply Chain for a ServiceTypical Supply Chain for a Service
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Need for Supply Chain ManagementNeed for Supply Chain Management
1. Improve operations2. 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
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Bullwhip EffectBullwhip Effect
Tier 2Suppliers
Tier 1Suppliers
ProducerDistributorRetailerFinalFinal
CustomerCustomer
Amount ofAmount of
inventoryinventory=
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Benefits of Supply Chain ManagementBenefits 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
PRACTICLE EXAMPLES :
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Benefits of Supply Chain ManagementBenefits of Supply Chain Management
Lower inventories Higher productivity
Greater agility
Shorter lead times Higher profits
Greater customer loyalty
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Elements of Supply Chain ManagementElements of Supply Chain Management
Deciding how to best move and store materialsLogistics
Determining location of facilitiesLocation
Monitoring supplier quality, delivery, and relationsSuppliers
Evaluating suppliers and supporting operationsPurchasing
Meeting demand while managing inventory costsInventory
Controlling quality, scheduling workProcessingIncorporating customer wants, mfg., and timeDesign
Predicting quantity and timing of demandForecasting
Determining what customers wantCustomers
Typical IssuesElement
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14-13 Supply Chain Management14-13 Supply Chain Management
LogisticsLogistics
Logistics Refers to the movement of materials and
information within a facility and to incoming
and outgoing shipments of goods andmaterials in a supply chain
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14-14 Supply Chain Management14-14 Supply Chain Management
LogisticsLogistics
Movement within the facility
Incoming and outgoing shipments
Bar coding EDI
Distribution
JIT Deliveries
0
214800 232087768
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14-15 Supply Chain Management14-15 Supply Chain Management
Electronic Data InterchangeElectronic Data Interchange
EDI the direct transmission ofinterorganizational transactions, computer-to-
computer, including purchase orders,
shipping notices, and debit or credit memos.
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Electronic Data InterchangeElectronic Data Interchange
Increased productivity
Reduction of paperwork
Lead time and inventory reduction Facilitation of just-in-time systems
Electronic transfer of funds
Improved control of operations
Reduction in clerical labor
Increased accuracy
ADVANTAGES :
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Efficient Consumer ResponseEfficient Consumer Response
Efficient consumer response (ECR) is asupply chain management initiative specific
to the food industry
Reflects companies efforts to achieve quickresponse using EDI and bar codes
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14-18 Supply Chain Management14-18 Supply Chain Management
E-CommerceE-Commerce
E-Commerce: the use of electronictechnology to facilitate business transactions
Applications include
Internet buying and selling E-mail
Order and shipment tracking
Electronic data interchange
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14-19 Supply Chain Management14-19 Supply Chain Management
Advantages of E-CommerceAdvantages of E-Commerce
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
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Disadvantages of E-CommerceDisadvantages of E-Commerce
Customer expectations Order quickly -> fast delivery
Order fulfillment
Order rate often exceeds ability to fulfill it
Inventory holding
Outsourcing loss of control
Internal holding costs
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14-21 Supply Chain Management14-21 Supply Chain Management
Supply Chain Performance DriversSupply Chain Performance Drivers
1. Quality
2. Cost
3. Flexibility
4. Velocity
5. Customer service
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VelocityVelocity
Inventory velocity The rate at which inventory(material) goes
through the supply chain (STR ratio)
Information velocity
The rate at which information is
communicated in a supply chain
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ChallengesChallenges
Barriers to integration of organizations Getting top management on board
Dealing with trade-offs
Small businesses
Variability and uncertainty
Long lead times
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Trade-offsTrade-offs
1. Lot-size-inventory Bullwhip effect
1. Inventory-transportation costs
Cross-docking1. Lead time-transportation costs
2. Product variety-inventory
Delayed differentiation1. Cost-customer service
Disintermediation
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Trade-offsTrade-offs
Bullwhip effect Inventories are progressively larger moving
backward through the supply chain
Cross-docking
Goods arriving at a warehouse from a supplier
are unloaded from the suppliers truck and
loaded onto outbound trucks
Avoids warehouse storage
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Trade-offsTrade-offs
Delayed differentiation Production of standard components and
subassemblies, which are held until late in the
process to add differentiating features Disintermediation
Reducing one or more steps in a supply chain
by cutting out one or more intermediaries
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Supply Chain IssuesSupply Chain Issues
Quality control
Production planning and
control
Inventory policies
Purchasing policies
Production policiesTransportation
policies
Quality policies
Design of the
supply chain,
partnering
Operating IssuesTactical IssuesStrategicIssues
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Supply Chain Benefits and DrawbacksSupply Chain Benefits and Drawbacks
Problem PotentialImprovement
Benefits PossibleDrawbacks
Largeinventories
Smaller, more frequentdeliveries
Reduced holdingcosts
Traffic congestionIncreased costs
Long lead times Delayed differentiationDisintermediation
Quick response May not be feasibleMay need absorbfunctions
Large number ofparts
Modular Fewer partsSimpler ordering
Less variety
CostQuality
Outsourcing Reduced cost, higher quality
Loss of control
Variability Shorter lead times, betterforecasts
Able to match supplyand demand
Less variety
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PurchasingPurchasing
Purchasingis responsible for obtaining the
materials, parts, and supplies and services
needed to produce a product or provide a
service.Goal of PurchasingGoal of Purchasing
Develop and implement purchasing plans for
products and services that support operations
strategies
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Duties of PurchasingDuties of Purchasing
Identifying sources of supplyNegotiating contracts
Maintaining a database of suppliers
Obtaining goods and services
Managing supplies
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Purchasing InterfacesPurchasing Interfaces
Purchasing
Legal
AccountingOperations
Data
processing
Design
ReceivingSuppliers
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Purchasing CyclePurchasing Cycle
1. Requisition received
2. Supplier selected
3. Order is placed
4. Monitor orders
5. Receive orders
PurchasingPurchasing
LegalLegal
AccountingAccountingOperationsOperations
DataData
process-process-inging
DesignDesign
ReceivingReceiving
SuppliersSuppliers
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Centralized vs Decentralized PurchasingCentralized vs Decentralized Purchasing
Centralized purchasing Purchasing is handled by one special
department
Decentralized purchasing
Individual departments or separate locations
handle their own purchasing requirements
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SuppliersSuppliers
Choosing suppliers Evaluating sources of supply
Supplier audits
Supplier certification
Supplier relationships
Supplier partnerships
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Factors in Choosing a SupplierFactors in Choosing a Supplier
Quality and quality assurance Flexibility
Location
Price Product or service changes
Reputation and financial stability
Lead times and on-time delivery Other accounts
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Evaluating Sources of SupplyEvaluating Sources of Supply
Vendor analysis: Evaluating the sources ofsupply in terms of price, quality, reputation,
and service
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Evaluating Sources of SupplyEvaluating Sources of Supply
Vendor analysis - evaluating the sources ofsupply in terms of Price Quality Services Location Inventory policy Flexibility
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Supplier as a PartnerSupplier as a Partner
Aspect Adversary Partner Number of suppliers Many One or a few
Length of relationship May be brief Long-term
Low price Major consideration Moderately important
Reliability May not be high High
Openness Low High
Quality May be unreliable; buyer inspects
At the source; vendorcertified
Volume of business May be low High
Flexibility Relatively low Relatively high
Location Widely dispersed Nearness is important
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Supplier PartnershipsSupplier Partnerships
Ideas from suppliers could lead to improvedcompetitiveness
1. Reduce cost of making the purchase
2. Reduce transportation costs
3. Reduce production costs4. Improve product quality
5. Improve product design
6. Reduce time to market
7. Improve customer satisfaction
8. Reduce inventory costs
9. Introduce new products or services
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Thank You for beingThank You for beingvery PATIENTvery PATIENT
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