supply chain management-ch1

8/13/2019 Supply Chain Management-Ch1

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Contents

Supply Chain Management

Management of Business Logistics

Demand Management & Customer Service

Procurement and Supply Chain

PPRA Rules

Managing Inventories

Warehouse Management

Transportation Management

Network Design & Facility Location Use of Information Technology for Managing Supply Chain

SCOR Model


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Reference Book

The Management of Business Logistics: A

Supply Chain Perspective

By Coyle, Bardi & Langley


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Learning Objectives

Familiarization with concept & Techniques of SC

Strengthen knowledge of SC

Knowledge that can be used in Work Environment

Knowledge which provide basis for further study leadingto National/ International Certifications

i.e. Certified in Production & Inventory Management

(CPIM) by The Association for Operations Management

(APICS)


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What is Supply Chain

Integration of Activities/PROCESS

Starts from Suppliers.Supplier

To Customers..Customer

Always focus on Customer


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Its Management of network of

interconnected businesses involved in

supply of Product or Service.

It starts from Procurementof Raw

Material, Work in Progress Inventoryand

Transportationof Finished Goods from

point of origin to point of consumption.


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APICS Definition of Supply Chain

Design, planning, execution, control, and

monitoring of supply chain activities with

the objective of creating net value, building

a competitive infrastructure, leveragingworldwide logistics, synchronizing supply

with demand and measuring performance

globally."


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An EffectiveSC ensures high level of

Customer Service at optimum level of

working capital & cost.

An Efficient SC that ensures products are on

the shelf, available for sale

..when shopper come to buy.


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THE BASIC SUPPLY CHAINManufacturing Plan & Control

Material RequirementPlan (MRP)

Production Activity Control (PAC)Purchase

BUSINESS PLAN

SALES & OPERATIONS PLAN

MASTER PRODUCTION SCHEDULE (MPS)

Product Flow

Cash FlowInformation

Physical Supply

Material Mgt

Up-Stream

Customer

Inbound Logistics

Physical Distribution

Down-Stream Customer

Outbound Logistics


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Tech Terms

Business Plan: Org goals of sale, reasons to attain and planE.g. Unilever

Sales & Operations Plan: Individual goals/targets for individualproducts/SBU. E.g. Milk, yog, butter etc.

Master Production Schedule: What we have & what we wantto do based on order/demand.

Material Requirement Plan (MRP): What ingredients/components we require for production.

Production Activity Control (PAC): Individual productionpriority/order


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Supply Chain Management:

Introduction

Supply chain management now part of

the business vocabulary.

Impact of global marketplace drastically

changed the landscape of business.

Change was rapid and continuous in the1990s.

Doing business in the comfort zone was

no longer synonymous with success.


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The Changing Business Landscape:

Five Driving Forces

The Empowered

Consumer

Power Shift in the Supply

Chain

Deregulation

Globalization

Technology


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Five Driving Forces

The Empowered Consumer

Impact on logistics is more direct.

Informed consumers have low tolerance for

poor quality in products and services.

Changing demographics commands 24/7

service. Increased customer service increases the

importance of logistics and supply chains.


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Five Driving Forces

Power Shift in the Supply Chain

Large retailers more demanding and

commanding.

Focus upon distribution costs and their

impact on everyday low prices.

Changing logistics and supply chainstrategies resulted from shifts in the

balance of economic power.


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Five Driving Forces

Deregulation

Changing economic controls empowered creativity

and competition. Changes in transportationfewer or no economiccontrols over rates and services.

Change in financial institutions blurred traditionaldifferences and increased competition.

Change in the communications industry also resultedin more competition.

Changes in the utility industry allows morecompetition.


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Five Driving Forces

Globalization

Global marketplace concept

Global network sourcing, manufacturing,marketing and distribution

Global alternatives have blossomed

No geography --- access available to the world

Supply chain challenges

Mcdonalds challenges


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Five Driving Forces

Technology

Information Age provides new andunrestricted access to the place aspect of

business.

My time, my place

Warehouse technology has changeddramatically with computer devices in use

from the office space to the forklifts.


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The Supply Chain Concept

Development of the Concept

Business Case for Supply ChainManagement

Characteristics of Supply Chain

Management


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Development of the Concept

Total systems cost - remains an important elementof logistics analysis.

Outbound logistics - was the initial focus withhigher value finished goods.

Inbound logisticsderegulation allowed newfocus on coordination of inbound and outboundmovements.

Value chain analysis integrated logistics activities. Terminology growing as supply chain concept

matures.


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Figure 1-1

A View of Business Logistics in a Firm


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Figure 1-2

Integrated Logistics Management


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Figure 1-3

Generic Value Chain


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Figure 1-4

Logistics Supply Chain


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Business Case for Supply Chain Management: Why somuch attention on supply chain management?

ECR and Best-in-class studies (see next two slides)

Complexity of the supply chain Extended enterprise concept

Two-way flow of:

Products

Information Cash

Inventory visibility


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Figure 1-5: Comparison of Average Throughput

Time of Dry Grocery Chain before and after ECR

Implementation


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Figure 1-6: Total Supply Chain

Management Cost--- All Sectors

0

2

4

6

8

10

12

14

1996 1997

Best-in-class

Median

Revenue%


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Figure 1-7:

Integrated Supply Chain


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Characteristics of Supply Chain Management

Inventory

Visibility Pull systems

Landed Cost

Companies must realize that their strategies

may affect the landed cost.

Coordination of supply chain activities may

lower the landed cost.


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Characteristics of Supply ChainManagement

Real-time two way information flows Customer service

levels must be tailored to each customer

not all customers require the same service

Supply chain relationships Collaborative planning

Share risks and rewards

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