SUPPLY CHAIN MANAGEMENT
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Transcript of SUPPLY CHAIN MANAGEMENT
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11Supply-Chain Management
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Managing the Supply Chain
Mutual agreement on goals
TrustCompatible
organizational cultures
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Issues in an Integrated Supply Chain
Local optimizationLocal optimization - focusing on local profit or cost minimization based on limited knowledge
Incentives (sales incentives, quantity Incentives (sales incentives, quantity discounts, quotas, and promotions)discounts, quotas, and promotions) - push merchandise prior to sale
Large lotsLarge lots - low unit cost but do not reflect sales
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Bullwhip effect - the increasing fluctuation in orders that occurs as orders move through the supply chain
Issues that complicate development of an Integrated
Supply Chain
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Opportunities in an Integrated Supply Chain
Accurate “pull” data Lot size reduction Single stage control of
replenishment Vendor managed inventory (VMI)\ Collaborative planning, forecasting,
and replenishment (CPFR) Blanket orders
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Opportunities in an Integrated Supply Chain
Standardization Postponement Drop shipping and special
packaging Pass-through facility Channel assembly
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E-Procurement
Uses the internet to facilitate purchasing
Electronic ordering and funds transfer Electronic data interchange (EDI) Advanced shipping notice
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Online catalogs1. Catalogs provided by vendors2. Catalogs published by
intermediaries3. Exchanges provided by buyers
E-Procurement
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E-Procurement Auctions
Maintained by buyers, sellers, or intermediaries
Low barriers to entry Increase in the potential number of
buyers RFQs
Can make requests for quotes (RFQs) less costly
Improves supplier selection Real-time inventory tracking
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Vendor Selection Vendor evaluation
Critical decision Find potential vendors Determine the likelihood of them
becoming good suppliers Vendor Development
(supply chain as competitive unit)
Training Engineering and production help Establish policies and procedures
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Vendor Selection Negotiations
Cost-Based Price ModelCost-Based Price Model - supplier opens books to purchaser
Market-Based Price ModelMarket-Based Price Model - price based on published, auction, or indexed price
Competitive BiddingCompetitive Bidding - used for infrequent purchases but may make establishing long-term relationships difficult
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Logistics Management
Objective is to obtain efficient operations through the integration of all material acquisition, movement, and storage activities
Is a frequent candidate for outsourcing
Allows competitive advantage to be gained through reduced costs and improved customer service
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Distribution Systems TruckingTrucking
Moves the vast majority of Moves the vast majority of manufactured goodsmanufactured goods
Chief advantage is flexibilityChief advantage is flexibility RailroadsRailroads
Capable of carrying large loadsCapable of carrying large loads Little flexibility though Little flexibility though
containers and piggybacking containers and piggybacking have helped with thishave helped with this
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Distribution Systems Airfreight
Fast and flexible for light loads May be expensive
Waterways Typically used for bulky, low-value cargo Used when shipping cost is more
important than speed Pipelines
Used for transporting oil, gas, and other chemical products
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Third-Party Logistics
Outsourcing logistics can reduce costs and improve delivery reliability and speed
Coordinate supplier inventory with delivery servicesMay provide
warehousing, assembly, testing, shipping, customs
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Cost of Shipping Alternatives
Product in transit is a form of inventory and has a carrying cost
Faster shipping is generally more expensive than slower shipping
We can evaluate the two costs to better understand the trade-off
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Cost of Shipping Alternatives
Value of connectors = $1,750.00Holding cost = 40% per yearSecond carrier is 1 day faster and $20 more expensive
Daily cost of holding product = x /365
Annual holding
costProduct
value
= (.40 x $1,750)/ 365 = $1.92
Since it costs less to hold the product one day longer than it does for the faster shipping ($1.92 < $20), we should use the cheaper, slower shipper
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Security and JIT Monitoring and controlling stock moving
through supply chains is more important than ever
New technologies are being developed to allow close monitoring of location, storage conditions, and movement
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THANK YOU!JOY AMOR M. MANO
MBA-1PHILIPPINE WOMENS UNIVERSITY
S.Y 2014