supply chain management & new trends

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Introduction to

Supply Chain Management (SCM)

Presentation by: Seyed Hamid Hashemi Petrudi

PhD student of POM at University of Tehran

[email protected] - [email protected]

Contents

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What is a supply chain?

House of supply chain management?

SCM strategies

Supply chain performance measurement

New trends in supply chain management


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Information Flow

Raw Materials

RETAILERFACTORY DC RDCSUPPLIER

Finished Goods

RETAILERFACTORY DCSUPPLIER

Cash flow3 key flows


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the supply chain of Natural Gas in Iran


A supply chain consists of all parties involved, directly or indirectly, infulfilling a customer request. The supply chain includes not only themanufacturer and suppliers, but also transporters, warehouses,retailers, and even customers themselves (Chopra and Meindl, 2007).

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Categorization of SCM definitions

Ahi and Searcy (2013) reviewed supply chain definitions by focusing on different concepts as follows:

Flow

Coordination

Stakeholders

Relationship

Value

Efficiency

Performance

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Representative of SCM definitions

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Process views of a SC

Cycle View: The processes in a supply chain are divided into a series ofcycles, each performed at the interface between two successive stages ofa supply chain.

Customer order cycle

Replenishment cycle

Manufacturing cycle

Procurement cycle

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Number of orders

high

Lowhigh

Low

Size of orders

Process views of a SC (cont.)

Push/Pull View: The processes in a supply chain are divided into twocategories depending on whether they are executed in response to acustomer order or in anticipation of customer orders.

Pull processes: response to the customers’ order

Push processes: response to the anticipation of demands

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Supply chain macro processes

Customer Relationship Management (CRM): All processes that focuson the interface between the firm and its customers.

Internal supply chain management (ISCM): All processes that areinternal to the firm.

Supplier Relationship Management (SRM): All processes that focus onthe interface between the firm and its suppliers.

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Contents

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SCM strategies



2 key functions in SCM

The objective governing all endeavors within a supply chain is seen asincreasing competitiveness. Competition has shifted from singlecompanies to supply chains.

There are two broad means for improving the competitiveness of asupply chain:

Integration or cooperation of organizations involved in satisfyingcustomers’ needs.

Coordinating of material, information and financial flows across thesupply chain.

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House of SCM: a tool for analyzing SC

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Integration

A supply chain in the broad sense consists of several legally separatedfirms collaborating in the generation of a product or service with theaim of improving the competitiveness of a supply chain as a whole.Integration refers to the special building blocks that cause these firmsto collaborate in the long term.

Choice of suitable partners

First of all the decision of make or buy

Issue of core competency

Selection criteria

Inter-organizational collaboration

Leadership

Focal company or steering committee

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A good paper of integration

Coordination

Utilization of information and communication technology Advances in information technology (IT) made it possible to process

information at different locations in the supply chain and thus enablethe application of advanced planning.

Process orientation

aims at coordinating all the activities involved in customer orderfulfillment in the most efficient way.

Advanced planning

incorporates long-term, mid-term and short-term planning levels.

the focus of ERP systems has been a single firm, while APS have beendesigned also for inter-organizational supply chains.

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Bullwhip effect

Occurs when slight demand variability is magnified as information moves back upstream.

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Counteraction bullwhip effects

Lee et al. (1997) divided recommendations to counteract the bullwhip effect into four categories:

Avoid multiple demand forecast updates

Break order batches

Using 3pl providers

Stabilize prices and

Eliminate gaming in shortage situations

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AA clue for writing a research paper

Contents

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SCM strategies



Supply chain Strategy

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Supply chain decision making framework

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Decision phases in a SC

Chopra (2007) categorized supply chain decision phases based on the frequency withwhich they are made and the time frame they take into account:

1. Supply Chain Strategy or Design

Structuring the supply chain

Supply chain configuration

Supply chain network design

2. Supply Chain Planning

Subcontracting manufacturing

the timing and size of marketing and price promotions

Based on constrains of supply chain strategy

3. Supply Chain Operation

Handling individual orders

Setting schedules of trucks

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uncertainty

high

Low

Supply chain planning matrix (SCP matrix)

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Contents

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SCM strategies




The Supply Chain Operations Reference (SCOR) model:

is a tool for representing, analyzing and configuring supply chains.

The SCOR-model is a reference model. It does not provide any optimizationmethods, but aims at providing a standardized terminology for thedescription of supply chains. This standardization allows benchmarking ofprocesses and the extraction of best practices for certain processes.

The standard processes are divided into four hierarchical levels:

process types

process categories

process elements

Implementation (not included in SCOR model)

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Level 1 – Process Types

five elementary process types: plan, source, make, deliver and return Plan:

balance resource capacities with demand requirements measurement of the supply chain performance and management of

inventories, assets and transportation among others Source:

Identification and selection of suppliers management of the supplier network and contracts

Make: schedule production activities, produce and test, packaging

management of in-process products (WIP), equipment and facilities Deliver:

order reception, reservation of inventories, generating quotations,consolidation of orders, load building and generation of shippingdocuments and invoicing

Return: authorization of returns, scheduling of returns, receiving and disposition

of returned products.25

Level 2- Process Categories

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Process categories

The five process types of level 1 are decomposed into 26 processcategories, including five enable process categories, one for eachprocess type.

Each process category is assigned to either planning, execution orenable.

The process types source, make and deliver are further decomposedwith respect to the nature of customer orders:

make-to-stock

make-to order

engineer-to-order

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Level 3-Process elements

The process categories are further decomposed into process elements. Detailed metrics and best practices for these elements are part of the SCOR-model at this level (Example of SCOR-model’s level 3).

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Metrics and Best Practices in SCOR model

The SCOR-model supports performance measurement on each level.Level 1 metrics provide an overview of the supply chain for theevaluation by management.

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A good subject for your dissertation: sustainable balance scorecard (SBSC) application in SCM.

How we can establish SCOR model for a specific supply chain?Please use a case study

Your practice

Deadline: December, 5th, 2013

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Contents

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SCM strategies



New trend in SCM

New concerns:

Service SCM

Green SCM

Sustainable SCM

Humanitarian SCM

New focused areas:

Health care

Air line

Hotels

Agriculture

Renewable energies

Projects supply chain

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Service supply chain

Baltacioglu et al. (2007) define the service supply chain as the network ofsuppliers, service providers, consumers and other supporting units thatperforms the functions of transaction of resources required to produceservices, transformation of these resources into supporting and coreservices, and the delivery of these services to customers.

The customer perceives all services s/he receives as one and as aiming toprovide her/him the ultimate benefit.

SSCs Like Hospitals, Hotels, Universities, MTN Irancell, assuranceagencies, etc.

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Service supply chain processes

Service supply chain processes have been defined by Baltacioglu et al. (2007):

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Service SC performance metrics

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Green SCM

Application of environmental management principles to the entire set ofactivities across the whole customer order cycle, including design,procurement, manufacturing and assembly, packaging, logistics, anddistribution (Handfield, 1997).

Integration of environment considerations into supply chain management,including product design, material sourcing and selection, manufacturingprocesses, delivery of the final product to the consumers, and end-of-lifemanagement of the greening products (Wee et al., 2011).

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Reverse logistics/Closed loop supply chain

Closing the loop need reverse logistics.

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Sustainable SCM

The management of material, information and capital flows as well ascooperation among companies along the supply chain while taking goals fromall three dimensions of sustainable development, i.e., economic,environmental and social, into account which are derived from customer andstakeholder requirements (Seuring, 2008).

An extension to the traditional concept of Supply Chain Management byadding environmental and social/ethical aspects (Wittstruck &Teuteberg,2011).

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Tools for assessing sustainability

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Sustainability metrics

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Economic value of sustainability (Mefford, 2011)

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Drivers of sustainable SCM

Different drivers for the implementation of SSCM practices have previouslybeen pointed out in the research literature.

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Extent of sustainability

Sustainability driversvolunteerismCompliance

Limited

Enhanced

Minimalist

Large,

medium

Value driven

Medium,

small

Reputation

seeking

Large,

medium

Excellence

seeking

Medium,

small

Category of drivers

Drivers can be classified in two categories: Internal/ External

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Internal drivers External drivers

Gaining competitive advantagePressures from stakeholders including customers

and environmental advocacy groups

Employee’s involvement and satisfactionCertification of suppliers’ environmental

management system

Reusing and recycling materials Green design

Involvement of top management Reverse logistics

Reducing energy consumption

Collaboration between product designers and

suppliers to reduce

and eliminate product environmental impacts

Financial benefits Environmental collaboration with suppliers

Personal satisfaction with profession Reduction of negative environmental impacts

self sufficiency Sustainability based criteria for supplier selection by

IGEDC

Reducing long-term sustainability related risks Compliance with overseas regulations

Government regulation and legislation

Humanitarian SCM

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Humanitarian SCM versus commercial ones

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Humanitarian SCM versus commercial ones

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Humanitarian efforts

Humanitarian efforts are organized along two broad lines:

Disaster relief

Continuous aid work

disaster relief deals with calamities, destructive actions, and plagues (Long1997). Continuous aid work is mainly required in the case of plagues andcrises.

Logistics is the most important element in any disaster relief effort, and it isthe one that makes the difference between a successful and a failedoperation.

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Disaster management cycle phases

The literature concurs on the existence of the following phases:

Pre disaster actions:

The mitigation phase refers to laws and mechanisms that reducesocial vulnerability.

Preparation incorporates the strategies put into place that allow the implementation of a successful operational response

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Disaster management cycle phases (cont.)

During the disaster:

The response phase refers to the various operations that are instantly implemented after a disaster occurs:

Immediate response by temporary network

restore in the shortest time possible the basic services

and delivery of goods to the highest possible number of beneficiaries

Post disaster:

reconstruction phase involves rehabilitation, and this phase aims to address the problem from a long-term perspective.

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Speed Cost reduction

Phase 1 Phase 4

Agility leanness

Role of companies in HSCM

In the humanitarian logistics, companies can play one or more of thefollowing roles:

Donors

As a donor, a company can support humanitarian logistics by givingfinancial contributions (in cash) to fund aid operations

Collector

As a collector, a company can gather financial means from itscustomers, its employees, and its suppliers in order to fund aidoperations

Providers

As a provider, a company can offer its goods and services for free (in-kind donation) or as a consequence of a selling action.

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New subjects for thesis

em

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Any question?

With the best wishes for you.

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Humility is the product of knowledgeImam Ali

supply chain management & new trends

Business

supply chain of natural

house of scm

push processes

sc cycle view

customer request

satisfying customers

process views

increasing competitiveness