Supply Chain Management And E-Business. I NTRODUCTION Materials - any commodities used directly or...
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Transcript of Supply Chain Management And E-Business. I NTRODUCTION Materials - any commodities used directly or...
Supply Chain ManagementAnd E-Business
INTRODUCTION Materials - any commodities used directly or
indirectly in producing a product or service. Raw materials, component parts, assemblies,
finished goods, and supplies Supply chain - the way materials flow
through different organizations from the raw material supplier to the finished goods consumer.
SUPPLY CHAINFOR STEEL IN AN AUTOMOBILE DOOR
MININGMININGCOMPANYCOMPANY
Mines iron oreMines iron ore
STEELSTEELMILLMILL
Forms steel ingotForms steel ingot
STEELSTEELCOMPANYCOMPANY
Forms sheet metalForms sheet metal
IronIronoreore
SteelSteelingotsingots
AUTOMOTIVEAUTOMOTIVESUPPLIERSUPPLIER
Makes doorMakes door
AUTOMOBILEAUTOMOBILEMANUFACTURERMANUFACTURER
Makes automobileMakes automobile
CARCARDEALERSHIPDEALERSHIP
Does preparationDoes preparation
CarCardoordoor
CarCar
FINALFINALCONSUMERCONSUMER
Drives automobileDrives automobile
PreparedPreparedcarcar
SheetSheetmetalmetal
SUPPLY CHAIN MANAGEMENT Refers to all the management functions
related to the flow of materials from the company’s direct suppliers to its direct customers.
Includes purchasing, traffic, production control, inventory control, warehousing, and shipping.
Two alternative names: Materials management Logistics management
SUPPLY CHAIN MANAGEMENTIN A MANUFACTURING PLANT
ReceivingReceivingandand
InspectionInspection
RawRawMaterials,Materials,Parts, andParts, andIn-processIn-process
Ware-Ware-HousingHousing
ProductionProduction
FinishedFinishedGoodsGoodsWare-Ware-
housinghousing
Inspection,Inspection,Packaging,Packaging,
AndAndShippingShippingSu
pplie
rs
Cus
tom
ers
Materials Management
PurchasingPurchasing ProductionProductionControlControl
Warehousing andWarehousing andInventory ControlInventory Control
ShippingShippingand Trafficand Traffic
Physical materials flowPhysical materials flowInformation flowInformation flow
PURCHASINGFactors increasing the importance of purchasing
today: Tremendous impact of material costs on profit (60-
70% of each sales dollar is paid to material suppliers)
Popularity of just-in-time manufacturing (supply deliveries must be exact in timing, quantity, and quality)
Increasing global competition (growing competition for scarce resources, and a geographically “stretched-out” supply chain)
MISSION OF PURCHASING Develop purchasing plans for each major
product or service that are consistent with operations strategies: Low production costs Fast and on-time deliveries High quality products and services Flexibility
PURCHASING MANAGEMENT Maintain data base of available, qualified
suppliers Select suppliers to supply each material Negotiate contracts with suppliers Act as interface between company and
suppliers Provide training to suppliers on latest
technologies
ADVANTAGES OF CENTRALIZED PURCHASING Buying in large quantities - better prices More clout with suppliers - greater supply
continuity Larger purchasing department - buyer
specialization Combining small orders - less order cost
duplication Combining shipments - lower transportation
costs Better overall control
PURCHASING PROCESSMaterial RequisitionMaterial Requisition
Request for QuotationsRequest for Quotations
Select Best SupplierSelect Best Supplier
Purchase OrderPurchase Order
Receive and Inspect GoodsReceive and Inspect Goods
From purchasing, From purchasing, to potential suppliersto potential suppliers
From any department,From any department,to purchasingto purchasing
Based on quality, price, Based on quality, price, lead time, dependabilitylead time, dependability
From purchasing, From purchasing, to selected supplierto selected supplier
From supplier, to receiving,From supplier, to receiving,quality control, warehousequality control, warehouse
BUYERS’ DUTIES Know the market for their commodities Understand the laws.... tax, contract, patent..
… Process purchase requisitions and quotation
requests Make supplier selections Negotiate prices and conditions of sale Place and follow-up on purchase orders Maintain ethical behavior
MAKE-OR-BUY ANALYSISConsiderations in make-or-buy decisions: Lower cost - purchasing or production? Better quality - supplier or in-house? More-reliable deliveries - supplier or in-
house? What degree of vertical integration is
desirable? Should distinctive competencies be
outsourced?
LOGISTICS Logistics usually refers to management of:
the movement of materials within the factory the shipment of incoming materials from
suppliers the shipment of outgoing products to customers
MOVEMENT OF MATERIALS WITHIN FACTORIES
Incoming Incoming VehiclesVehicles
ReceivingReceivingDockDock
QualityQualityControlControl WarehouseWarehouse
Work Work CenterCenter
Other Work Other Work CentersCenters PackagingPackaging FinishedFinished
GoodsGoods
ShippingShipping ShippingShippingDockDock
OutgoingOutgoingVehiclesVehicles
The typical locations from/to which material is moved:The typical locations from/to which material is moved:
SHIPMENTS TO AND FROM FACTORIES Traffic
Traffic departments routinely examine shipping schedules and select: shipping methods time tables ways of expediting deliveries
Traffic management is a specialized field requiring technical training in Department of Transportation (DOT) and Interstate Commerce Commission (ICC) regulations and rates.
SHIPMENTS TO AND FROM FACTORIES Distribution
Distribution, or physical distribution, is the shipment of finished goods through the distribution system to customers.
A distribution system is the network of shipping and receiving points starting with the factory and ending with the customers.
SHIPMENTS TO AND FROM FACTORIES Distribution Requirements Planning
DRP is the planning for the replenishment of regional warehouse inventories.
DRP uses MRP-type logic to translate regional warehouse requirements into central distribution-center requirements, which are then translated into gross requirements in the MPS at the factory.
SHIPMENTS TO AND FROM FACTORIES Distribution Requirements Planning
Scheduled receipts are previously-placed orders that are expected to arrive in a given week
Planned receipt of shipments are orders planned, but not yet placed, for the future
Projected ending inventory is computed as: Previous week’s projected ending inventory + Planned receipt of shipments in current week + Scheduled receipt of shipments in current week -- Forecasted demand in current week
Shipments To and From FactoriesShipments To and From Factories
Distribution Resource PlanningDistribution Resource Planning Distribution resource planningDistribution resource planning extends DRP so extends DRP so
that the key resources of warehouse space, that the key resources of warehouse space, workers, cash, and vehicles are provided in the workers, cash, and vehicles are provided in the correct quantities at the correct times.correct quantities at the correct times.
ANALYZING SHIPPING DECISIONS The “Transportation Problem”
Problem involves shipping a product from several sources (ex. factories) with limited supply to several destinations (ex. warehouses) with demand to be satisfied
Per-unit cost of shipping from each source to each destination is specified
Optimal solution minimizes total shipping cost and specifies the quantity of product to be shipped from each source to each destination
INNOVATIONS IN LOGISTICS New developments affecting logistics
include: All-freight airports Inter-modal shipping In-transit rates Consolidated shipments Air-freight and trucking deregulation Advanced logistics software
WAREHOUSING Warehousing is the management of materials
while they are in storage. Warehousing activities include:
Storing Dispersing Ordering Accounting
WAREHOUSING Record keeping within warehousing requires
a stock record for each item that is carried in inventories.
The individual item is called a stock-keeping unit (SKU).
Stock records are running accounts that show: On-hand balance Receipts and expected receipts Disbursements, promises, and allocations
INVENTORY ACCOUNTING In the past, inventory accounting was based on:
periodic inventory accounting systems -- periodic (end-of-day) updating of inventory records
physical inventory counts -- periodic (end-of-year) physical counting of all SKUs at one time
Today, more and more firms are using: perpetual inventory accounting systems -- real-time
updating of records as transactions occur cycle counting -- ongoing (daily or weekly) physical
counting of different SKUs
MEASURING THE PERFORMANCE MATERIALS MANAGERS Level and value of in-house inventories Percentage of orders delivered on time Number of stockouts Annual cost of materials Annual cost of transportation Annual cost of warehouse Number of customer complaints Other factors