Supply Chain Management

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• What is a supply chain?• What is supply chain management?

• What questions need to be answered/ decisions need to be made when managing a supply chain?

• What information can help make those decisions?

• Where does it come from?

• What support can information systems provide to improve SCM?

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What is a supply chain?

• The supply chain refers to the flow of materials, information and services from raw material suppliers through factories and warehouses to the end customers.

• A supply chain also includes the organisations and processes that create and deliver these products, information and services to the end customers.

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DistributionCentres

Retailers

Customers

Manufacturer

Supplier

Supplier

Supplier

Upstream DownstreamInternal

The Supply Chain

Raw material

A simple view of the supply chain.

Parts of the Supply Chain• Upstream: – Your suppliers and their suppliers.

• Internal Supply chain: – All the processes involved in transforming the inputs of

suppliers to outputs, from the time materials enter an organisation to the time the product goes to distribution outside the organisation.

• Downstream: – Delivering the product to the final customers.

What happens then?

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What is Supply chain management?

• aims to plan, organise and coordinate the supply chain activities.

• enables companies to optimise the entire logistics, production and distribution process, from acquiring raw materials from suppliers to scheduling production and shipping products to customers.

• SCM involves the physical and informational flows between each stage of the supply chain.

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What activities are we managing ?

• Purchasing• Materials handling• Production planning and control• Warehousing inventory control, • Distribution and delivery.

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Components of Supply Chain Management

• Plan• Source• Make• Deliver• Return

Taken from: www.supply-chain.org

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Plan

• Create a strategy for managing all the resources that go toward meeting customer demand for your product or service.

• developing a set of metrics to monitor the supply chain so that it is efficient, costs less and delivers high quality and value to customers.

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Source• Choose the suppliers that will deliver the goods and

services you need to create your product or service. • Develop a set of pricing, delivery and payment

processes with suppliers and create metrics for monitoring and improving the relationships.

• Put together processes for managing the inventory of goods and services you receive from suppliers, including receiving shipments, verifying them, transferring them to your manufacturing facilities and authorizing supplier payments.

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Make

• Schedule the activities necessary for production, testing, packaging and preparation for delivery.

• Create metrics to measure quality levels, production output and worker productivity.

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Deliver

• This is the part that many insiders refer to as "logistics."

• Coordinate the receipt of orders from customers, develop a network of warehouses, pick carriers to get products to customers and set up an invoicing system to receive payments.

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Return

• Create a network for receiving defective and excess products back from customers and supporting customers who have problems with delivered products.

• Recycling(www.supply-chain.org)

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What Can Go Wrong?

• Items are needed but are not available.

• Items are available but are not needed.

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•Carrying inventory costs money.

•Not having materials available may mean a loss of custom or a loss of work time.

•Deliveries cost money

Why Do Problems Arise?

• Uncertainty in the demand forecast• Uncertainty in delivery times• Poor quality materials or goods.

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Management activities involve…• Establishing metrics – Use of mutually agreed

upon metrics to evaluate progress and measure the supply chain’s contribution.

• Manage exceptions – Create a vehicle for managing exceptions related to demand and inventory

• Communicate – Inform supply chain partners about time sensitive information

• Plan collaboratively – Perform collaborative planning with the supply chain partners

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Some SCM Goals ….• Reduce the inventory across the supply chain• Improve product quality• Enhance yield and asset usage• Identify top performing suppliers, measure performance over time,

negotiate performance based agreements• Measure and improve demand forecasting performance• Improve forecasting accuracy of items not meeting acceptable levels,

enable better• management of raw materials, inventory, production planning and

finished goods.• Measure accuracy of production plan for a given time period• Identify products that may affect customer service levels and alert sales

functions to proactively manage customer relationship• Measure delivery performance of customer orders• Reduction of decision cycle processes

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How do we avoid problems???

• What kind of decisions do people involved in supply chain management have to make?

• What kind of information do people involved in supply chain management need (or want)?– How can information systems help with the

decision making?– How can information systems help deliver the

information which is needed?

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Questions driving business decisions (IBM 2009)

• Which suppliers are the most reliable? Which have balances outstanding?

• How many days of inventory exist in each warehouse? Are we meeting demand?

• How close are material forecasts to actual results?• What lead times are required to fulfill an order?• Which plants have completed the highest number

of work orders on time?• Which plants are performing best against costs?

Has this changed over time?`21

Identify Metrics at different stages of the Chain

• What can we measure?

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List three decisions

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What information would help me make these?

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SCM Systems

• SCM systems are the combination of hardware, software, processes and people that manage the supply chain.

Information systems which manage the supply chain.

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Supply Chain Intelligence

• SCI requires the ability to analyze products, processes, components, and materials.

• This demands a data integration infrastructure, which provides capability to extract, transform and load data acquired from multiple enterprise sources like ….

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DATA Sources

• ERP source data• SCM source data• CRM source data• customer data• supplier data• product

manufacturing / testing data,

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•quality management data• shop floor manufacturing data sources•legacy system data sources•data from online industry trading exchanges•market places & auction, demographics •marketing data from third party data suppliers.

Benefits of Good Supply Chain Management

• Reduction in uncertainty and risks in the supply chain

• Positively affect– Inventory levels– Cycle time– Processes– Customer service

• Reduce costs and increase profitability

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Software used in the Supply Chain

• Each Individual segment of the Supply Chain can benefit from computer support.

• The big payoff comes with integrated systems.

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