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LOGISTICS & SUPPLY CHAIN
MANAGEMENT
Introduction & Course Outline
I Nyoman Pujawan, Ph.D, CSCP
Professor of Supply Chain Engineering
Department of Industrial Engineering
ITS SURABAYA
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Text Books
The following text books are recommended, but not required:
• Chopra, S., and Meindl, P. (2007). Supply chain
management: Strategy, planning, and operations .3rd Ed. New Jersey - Prentice-Hall.
• Pujawan, I N. & Mahendrawathi Er. (2010). Supply
Chain Management. 2nd Edition, Guna Widya
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Pujawan, N. & Mahendrawathi (2010). Supply Chain Management. Edisi Kedua, Guna Widya.
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EVALUATION
• Exam 1 35%
• Exam 2 35%
• Tugas2 dll 30%
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Agenda
• Introduction to Logistics & SCM
• Supply Chain Strategy
• Demand Management, Inventory Control, Information
Distortion
• Supply Management
• Network design
• Transportation and distribution
• Warehousing
• Supply Chain Process & Performance
• Technology in Supply Chain
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Lecture 1
Introduction to Logistics & SupplyChain Management
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1940s, 1950s
Unit load
(Pallet)
Intermodal
container
1960s
Rail to truck ,
joint decision
[transport, MH,
storage]
“PhysicalDistribution”
1963: National
Council of
Physical
Distribution
1974
SOLE wasformed
1982
First time
use of term
“Supply
Chain”
1985
Council name
changed to:
Council of
Logistics
Management
to reflect
integration
spirit
Early use of
term “Third
party
logistics”
1990s
ERP and IT
fueled
further
Logistics
Widespreaduse of the
term
“Supply Chain
Management”
1999
Council name:Council of
Supply Chain
Management
Professionals
ISCM -
Surabaya
2005
Supply Chain
Management:program is
everywhere
2002
Nyoman Pujawan, 2014: dari berbagai sumber
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Top Supply Chain Players 2012 (Gartner)
10,1 – 4.4% – 37.7%
74,1 – 20.2% – 51.5%
142,4 – 16.0% – 7.2%
5,5 – 9.2% – 2.5%
35,6 – 6.8% – 2.7% 5,8 – 13.0% – 19.7%
TOR–
ROA–
Revenue Growth
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The objective of a
supply chain is to
deliver value to
customers in a cost
effective way
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Supply Chain Should Have A Strategy for Delivering
Value to Customers
Company Customer Value Proposition SC Strategy
High fashion content at areasonable price
Speed to market
Everyday low pricing Cost efficiency
Market responsiveness Responsiveness throughadjusting supply to demandon hourly basis
Product innovation Efficiency through
outsourced manufacturingand logistics
Customer experience Responsiveness throughconfigure-to-order
Adapted from Simchi-Levi, 2011
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Supply Chain Management
What are
happening
before you can
drink a cup ofcoffee?
Who did the
processes?
And where
they took
place?
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http://www.slideshare.net/cfsc/leveraging-institutional-dollars-for-a-just-and-healthy-food-system-coffee-supply-chain
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Apparel Supply Chain
http://www.supplychain247.com/article/global_supply_chains_deciding_the_way_forward
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A product flows through a very long process before
consumed by the customers
How can these customers
obtain products with high
quality, competitive price,
and quick response?
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What is SC?
• A series (or network) of companies who workcollectively to make and deliver products andservices to the end customers. This span from theraw materials extractors (at the upstream end) to the
retailers / shops (at the downstream end).
• In a SC there are three flows: materials, information,
and cash / funds.
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SIMPLE SC STRUCTURE
SUPPLIER MANUFACTURER RETAILERDISTRIBUTOR WHOLESALER ENDCUSTOMER
UPSTREAMDOWNSTREAM
physical flow
information flow
Cash, invoice, pricing, credit terms flow
Payments flow
Capacity, delivery schedule, orders, point of sale
Materials/products, returns
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What is a Supply Chain?
• All stages involved, directly or indirectly, in fulfilling acustomer request
• Includes manufacturers, suppliers, transporters, warehouses,
retailers, customers
• Within each company, the supply chain includes all functions
involved in fulfilling a customer request (product
development, marketing, operations, distribution, finance,
customer service)
• All stages may not be present in all supply chains
(e.g., no retailer or distributor for Dell)
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What is Supply Chain
Management
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SUPPLY CHAIN MANAGEMENT DEFINITION
• A process orientation, integrated approach to procuring, producing, and
delivering products and services to customers (MIT)
• A collaborative-based strategy to link cross enterprise business operations to
achieve a shared vision of market opportunity (D.J. Bowersox, Michigan
State)
• The delivery of enhanced customer and economic value through
synchronized management of the flow of physical goods and associated
information from sourcing to consumption (LaLonde, Ohio State)
• The process of strategically managing the procurement, movement and
storage of materials, parts, and finished inventory (and the related
information flows) through the organization and its marketing channels in
such a way that current and future profitability are maximized through the
cost-effective fulfillment of orders (Martin Christopher, Cranfield University)
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Supply Chain Processes
Distribution
Management
Demand
forecast
Event
Management
Customer
service
Product
development
Production
Planning
Inventory
Control
Resource
Planning
PLC
Management
Supplier
selection
Sourcing
Performance
monitoring
Supplier
development
Supplier involvement in
product developmentSales & Operations Planning
Collaborative Planning, Forecasting
& ReplenishmentVendor Managed Inventory
Subcontracting
Warehouse
Management
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SUPPLY CHAIN MANAGEMENT FUNCTIONS
Two basic functions:
Physically converting raw materials and components intoproducts and delivering them to the end customers.
Make sure that products/services delivered satisfy customer’saspiration.
Related to physical costs
Related to market mediation costs
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Supply Chain Processes
• Physical
– Pengadaan
– Produksi
– Transportasi – Pergudangan
– Penanganan retur
• Market Mediation
– Promosi
– Perancangan produk
– Survey pasar – Diskon harga
(markdown)
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EVOLUTION OF INTEGRATION(Adapted from Christopher, 1998)
Purchasing Material Ctrl Production Sales Distribution
Materials Mgmt Mfg. Mgmt Distribution
Suppliers Internal SC Customers
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Maturity Model of SCM
Multipledysfunction
Semifunctional enterprise
Integratedenterprise
Extendedenterprise
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Dell’s Model
DELL (Texas)
SONY
(Mexico)
CUSTOMER
Assembly point
Customer order
monitor
computer assembly
Airbone takes monitor & computer assembly
and send them to the customers
The best computer company is the one that does not make it!
(Jarillo, 2002)
A survey of SCM
Progress by Computer
Sciences Corp. and
Supply Chain
Management Review
Survey (2003): Wal-Mart& Dell far and away
received the most
number of mentions for
‘best in class’ SC.
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Supply Chain is Going Global
E i f l b l l h i
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https://operationsroom.wordpress.com/2013/05/09/will-the-bangladeshi-factory-collapse-change-global-apparel-supply-chains/
Economic reasons for a global supply chain
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Supply Chain is Going Global
http://gifsgallery.com/supply+chain+gif
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Tugas 1
• Amati supply chain sebuah produk /
perusahaan
• Gambar strukturnya
• Gambar aliran produk dan informasi
• Identifikasi persoalan
•Buat beberapa rekomendasi perbaikan
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Supply Chain Strategy
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Diskusi
Bandingkan antara air dalam kemasan dengan
HP dari sisi:
• Ketidakpastian pasar yang dihadapi
• Value proposition (competitiveness factor)
• Pricing strategy
•Capacity strategy
• Transportation strategy
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SUPPLY CHAIN MANAGEMENT FUNCTIONS
Two basic functions:
Physically converting raw materials and components intoproducts and delivering them to the end customers.
Make sure that products/services delivered satisfy customer’saspiration.
Related to physical costs
Related to market mediation costs
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Supply Chain Processes
• Physical
– Pengadaan
– Produksi
– Transportasi – Pergudangan
– Penanganan retur
• Market Mediation
– Promosi
– Perancangan produk
– Survey pasar – Diskon harga
(markdown)
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material produksi transport simpan marketg markdown margin
material produksi transport simpan marketg markdown margin
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Different Focus of Supply Chains
Efficient supply chain
Market responsive supply chain
Emphasis on physical activities
Emphasis market mediation activities
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Different Product Characteristics
INN
O
V
A
TIV
E
F
U
N
C
TI
O
N
A
L
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Product Types (Reflect Market Requirements)
Aspek Fungsional Inovatif
Siklus hidup
Panjang, bisa lebih dari 2tahun
Pendek, antara 3 bulansampai 1 tahun
Variasi per ketegori Sedikit, 10 – 20 variasi Banyak, bisa mencapai
ribuan
Volume per SKU tinggi rendah
Peramalan permintaan
Relatif mudah, akurasitinggi
Sangat sulit, kesalahanramalan tinggi
Tingkat kekurangan
produk (stockout rate)
Hanya 1% - 2% Bisa sampai 10% - 40%
Kelebihan persediaan di
akhir musim jual
Jarang karena musim jual
sangat panjang
Sering terjadi
Biaya penurunan harga
jual (markdown)
Mendekati 0%
10 – 25%
Marjin keuntungan per
unit yang terjual
dengan harga normal
rendah tinggi
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Elements of SC Strategy
SC Strategy
Facility
location
Production
systemInventory Transport
Product
develop
ment
Supply
T Di i i SC S i
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Two Distinctive SC Strategies (reflect resource consolidation)
Keputusan taktis
Efisien
Responsif
Lokasi fasilitas
Tempatkan pabrik di negarayang ongkos tenaga
kerjanya murah.
Cari lokasi yang dekat pasar, punya akses tenaga terampil
dan teknologi yang memadai
Sistem produksi Tingkat utilitas sistem produksi
harus tinggi
Sistem produksi harus fleksibel
dan ada kapasitas ekstra
Persediaan
Perlu upaya meminimasi tingkat
persediaan
Diperlukan persediaan
pengaman yang cukup di
lokasi yang tepat
Transportasi Pengiriman TL / CL atau
subkontakkan ke pihak
ketiga
Diperlukan transportasi cepat.
Bila perlu tetapkan
kebijakan LTL / LCL
Pasokan
Pilih supplier dengan harga dankualitas sebagai kriteria
utama
Pilih supplier berdasarkankecepatan, fleksibilitas, dan
kualitas
Pengembangan
produk
Fokus ke minimasi ongkos Gunakan modular design dan
tunda differensiasi produk
sebisa mungkin
( postponement )
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Strategic Fit
efisien
responsif
fungsional inovatif
Tidak cocok
Tidak cocok
Strategic
Fit
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Differences In DP / OPP Strategies
MTS
ATO
MTO
ETO
perancangan
produk
fabrikasi perakitan pengiriman
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Moving DP / OPP Backward / Forward
• What would be the implications on:
–Inventory levels?
–Lead times?
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Postponement
• Manufacturing Postponement
manufacturing postponement is to retain the
product in a neutral and non-committed
status as long as possible in the manufacturingprocess. This means to postpone
differentiation of form and identity to the
latest possible point
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Why Manufacturing Postponement?
• To support mass customization• Large product variety with uncertain mix
• Many common components / sub-assemblies
• Relatively short lead time for final configuration(compared to waiting time tolerated by customers)
• Stages often postponed: final assembly, packing,
labeling, color mixing, etc.
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An Illustrative Case
• You manage a company producing toys. Assume youhave 2 basic forms and 10 different colors. Thecurrent process of producing the toys are:
– Buy standard A1 paper
– Color the paper
– Cut it into two different forms
• Draw the production process
• Do you see any problem in your production system?How would you improve it?
Th t f M f t i P t t
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The concept of Manufacturing Postponement
Customized
products
The concept of Manufacturing Postponement
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The concept of Manufacturing Postponement
Material
(white paper)
inventory
Customized
products
Coloring
process Paper
Cutting
process
WIP of colored
papers
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The Concept of manufacturing Postponement
• How if the mix of colors becoming more
uncertain?
• How if the number of color options grows to
100?
• How if the production process is arranged
differently?
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The concept of Manufacturing PostponementCustomized
products
The concept of Manufacturing Postponement
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The concept of Manufacturing Postponement
Standard
raw material
Standard
components
Customized
products
Stable volume, uncertain mix
Too risky to differentiate early!!!
Coloringprocess
Paper
Cutting
process
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An Illustration of Manufacturing Postponement
Standard items,
differs only in size
Customization process,
products have different colors
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UNITED COLORS OF BENETTON
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Benetton Postponement
• Why the change? – The change enables Benetton to start manufacturing before color
choices are made
•What does the change result in? – Delayed forecasts of specific colors
– Still use aggregate forecasts to start manufacturing early
– React to customer demand and suggestions
• Issues with postponement – Costs are 10% higher for manufacturing
– New processes had to be developed
– New equipment had to be purchased
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Modelling Postponement Impact
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Postponement Example
• Demand for Blue and Green t-shirts
– 50% probability 100
– 50% probability 200
• Production alternatives
Produce 150 of each color ahead of time
Produce 300 plain t-shirt which can be dyed after
demand is observed
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Postponement: Example
First Alternative – 25% probability -- short 50 of each
– 25% probability -- extra 50 of each
– 50% probability -- short 50 of one, extra 50 of theother
Second Alternative – 25% probability -- short 50 of each
– 25% probability -- extra 50 of each
– 50% probability -- no shortage or extra
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Perhitungan Expected Profit
• Each t-shirt has a cost of IDR 100,000,- and
sold at normal price of IDR 200,000,- but if not
sold at normal price it has to be discounted at
IDR 50,000,-
• What is the expected profit for the above two
alternatives?
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