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Transcript of Suuply Chain Management
8/8/2019 Suuply Chain Management
http://slidepdf.com/reader/full/suuply-chain-management 1/39
Supply Chain
Management
Dr. Jayashree Dubey
IPE
8/8/2019 Suuply Chain Management
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Topics For Discussion:
Defining the SCM Objective of supply Chain Functions of supply Chain Supply Chain partners
Drivers Types
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What is SCM?
SCM is a set of approaches utilized to efficiently integrate suppliers,manufacturers, warehouses and stores, so that merchandise is producedand distributed at the right quantities, to the right locations, at the right time,in order to minimize system wide costs while satisfying service levelrequirements.
“Supply Chain management deals with the control of materials, information,and financial flows in a network consisting of suppliers, manufacturers,distributors, and customers”
The supply chain is a worldwide network of suppliers, factories, warehouses,distribution centers, and retailers through which raw materials are acquired,transformed, and delivered to customers.
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What is Supply Chain
Management?
Cooperation between producers,
processors, wholesalers, &/or retailers, to
guarantee high quality &/or minimize
costs
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Vertical Coordination includes:
Strategic Alliances
an agreement mutually entered into by two
independent firms to serve a common strategic
objective eg. Strategic alliance between pork processor and
pork producer to produce pigs via certain method at
certain quality (Niman Ranch)
formal written contracts
vertical integration
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Requirements for Effective SP
Advanced information systems
Top management commitment Information must be shared
Power and responsibility within an organization mightchange (for example, contact with customers switches
from sales and marketing to logistics)
Mutual trust Information sharing
Management of the entire supply chain
Initial loss of revenues
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Information, product, service, financial and knowledge flows
M a t er i al s
E n d C on s um er s
Capacity, information, core competencies, capital, and human resource constraints
Supplier Network
Market
DistributionProcurement
Manufacturing
Integrated Enterprise
Distribution Network
Relationship Management
Generalized Supply Chain Model
Material Flow
Information Flow
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Supply chain process
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What is a Supply Chain?
Customer wants
detergent and goes
to Jewel
Customer wants
detergent and goes
to Jewel
Jewel
Supermarket
Jewel
Supermarket
Jewel or third
party DC
Jewel or third
party DC
P&G or other
manufacturer
P&G or other
manufacturer
Plastic
Producer
Plastic
Producer
Chemical
manufacturer
(e.g. Oil Company)
Chemical
manufacturer
(e.g. Oil Company)
Tenneco
Packaging
Tenneco
Packaging
Paper
Manufacturer
Paper
Manufacturer
Timber
Industry
Timber
Industry
Chemical
manufacturer
(e.g. Oil Company)
Chemical
manufacturer
(e.g. Oil Company)
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Flows in Supply Chain
Flow of information, order, fund, material, ownership,
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Partners
Manufacturers,
Suppliers,
Customers,
Transporters,
Warehouses,
Retailers.
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Objective
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The Objective of a Supply Chain
Maximize overall value created
Supply chain value: difference between what
the final product is worth to the customer and
the effort the supply chain expends in filling thecustomer’s request
Value is correlated to supply chain profitability
(difference between revenue generated from
the customer and the overall cost across thesupply chain)
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Functions of supply Chain
Physical function: includes converting rawmaterials into products and transportation fromone point in the supply chain to the next; the
costs lie within production, transportation andinventory storage.
Market mediation function: to make sure thatthe products reaching the market place
matches consumer demand
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SC Decisions
SC Strategy
SC Planning
SC Operation
SC Profitability/ Surplus
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Strategic Decisions
Strategic network optimization, including the number,location, and size of warehouses, distribution centers and facilities.
Strategic partnership with suppliers, distributors, andcustomers, creating communication channels for critical information and operational improvementssuch as cross docking, direct shipping, and third-party
logistics. Product design coordination, so that new and existing
products can be optimally integrated into the supplychain, load management
Information Technology infrastructure, to support
supply chain operations. Where to make and what to make or buy decisions Align overall organizational strategy with supply
strategy
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Tactical Decisions
Sourcing contracts and other purchasing decisions.
Production decisions, including contracting, locations,
scheduling, and planning process definition.
Inventory decisions, including quantity, location, andquality of inventory.
Transportation strategy, including frequency, routes, and
contracting.
Benchmarking of all operations against competitors andimplementation of best practices throughout the
enterprise.
Milestone payments
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Operational Decisions Daily production and distribution planning, including all nodes in the
supply chain. Production scheduling for each manufacturing facility in the supply chain
(minute by minute).
Demand planning and forecasting, coordinating the demand forecast of all customers and sharing the forecast with all suppliers.
Sourcing planning, including current inventory and forecast demand, incollaboration with all suppliers.
Inbound operations, including transportation from suppliers and receivinginventory.
Production operations, including the consumption of materials and flow of finished goods.
Outbound operations, including all fulfillment activities and transportationto customers.
Order promising, accounting for all constraints in the supply chain,including all suppliers, manufacturing facilities, distribution centers, andother customers.
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Decision Phases of a Supply Chain
Supply chain strategy or design
Supply chain planning
Supply chain operation
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Supply Chain Strategy or Design
Decisions about the structure of the supply chainand what processes each stage will perform
Strategic supply chain decisions
Locations and capacities of facilities Products to be made or stored at various locations Modes of transportation Information systems
Supply chain design must support strategicobjectives
Supply chain design decisions are long-term andexpensive to reverse – must take into account
market uncertainty
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Supply Chain Planning
Definition of a set of policies that govern
short-term operations
Fixed by the supply configuration from
previous phase Starts with a forecast of demand in the
coming year
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Supply Chain Planning
Planning decisions:
Which markets will be supplied from which
locations
Planned buildup of inventories Subcontracting, backup locations
Inventory policies
Timing and size of market promotions
Must consider in planning decisions demand
uncertainty, exchange rates, competition over
the time horizon
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Supply Chain Operation
Time horizon is weekly or daily Decisions regarding individual customer orders
Supply chain configuration is fixed and operatingpolicies are determined
Goal is to implement the operating policies aseffectively as possible
Allocate orders to inventory or production, set order
due dates, generate pick lists at a warehouse,allocate an order to a particular shipment, setdelivery schedules, place replenishment orders
Much less uncertainty (short time horizon)
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Process View of a Supply Chain
Cycle view: processes in a supply chain are
divided into a series of cycles, each
performed at the interfaces between two
successive supply chain stages Push/pull view: processes in a supply chain
are divided into two categories depending on
whether they are executed in response to a
customer order (pull) or in anticipation of acustomer order (push)
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Cycle View of Supply Chains
Customer Order Cycle
Replenishment Cycle
Manufacturing Cycle
Procurement Cycle
Customer
Retailer
Distributor
Manufacturer
Supplier
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Cycle View of a Supply Chain
Each cycle occurs at the interface between twosuccessive stages
Customer order cycle (customer-retailer)
Replenishment cycle (retailer-distributor)
Manufacturing cycle (distributor-manufacturer)
Procurement cycle (manufacturer-supplier)
Figure 1.3
Cycle view clearly defines processes involved andthe owners of each process. Specifies the roles and
responsibilities of each member and the desired
outcome of each process.
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Customer Order Cycle
Involves all processes directly involved in
receiving and filling the customer’s order
Customer arrival
Customer order entry Customer order fulfillment
Customer order receiving
Figure 1.4
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Replenishment Cycle
All processes involved in replenishing retailer
inventories (retailer is now the customer)
Retail order trigger
Retail order entry Retail order fulfillment
Retail order receiving
Figure 1.5
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Manufacturing Cycle
All processes involved in replenishing
distributor (or retailer) inventory
Order arrival from the distributor, retailer, or
customer Production scheduling
Manufacturing and shipping
Receiving at the distributor, retailer, or customer
Figure 1.6
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Procurement Cycle
All processes necessary to ensure that materialsare available for manufacturing to occur accordingto schedule
Manufacturer orders components from suppliersto replenish component inventories
However, component orders can be determinedprecisely from production schedules (different
from retailer/distributor orders that are based onuncertain customer demand)
Important that suppliers be linked to themanufacturer’s production schedule
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Push/Pull View of Supply Chains
Procurement,Manufacturing andReplenishment cycles
Customer Order
Cycle
Customer
Order Arrives
PUSH PROCESSES PULL PROCESSES
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Push/Pull View of
Supply Chain Processes Supply chain processes fall into one of two
categories depending on the timing of their
execution relative to customer demand
Pull: execution is initiated in response to acustomer order (reactive)
Push: execution is initiated in anticipation of
customer orders (speculative)
Push/pull boundary separates push
processes from pull processes
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Types
SCM Views: Cycle (customer, replenishment,
Manufacturing, procurement)
& Push-pull view
• Responsive & Efficient Supply Chain (wide
range of product variety & Quantity, shorter lead time, innovative product, high service
level)
• Push/ pull system: push executed in
anticipation of demand & pull in response to
customer order.
Tire 1, Tire II
• (Dell, 7 eleven, Wal-mart)
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Selecting Type
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Drivers
Inventory Transportation
Facilities
Information Sourcing
Pricing
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Designing Supply chain
Supply chain strategy determines the nature of procurement, transportation, manufacturing and
distribution to the customers:
Competitive strategy (Wal-mart (low price) &Mc.Master-Carr (variety) (Dell & Compaq).
Strategic fit between competitive and supply chain
strategy.
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Obstacles
Increasing Variety
Decreasing PLC
Increasingly demand customer
Fragmentation of supply chain ownership Globalization
Difficulty executing new strategy