1 - Introduction Global Supply Chain Management

Intro

1. ( Smart ) Logistics and Supply Chain Systems Industrial Engineering Lifia Citra Ramadhanti , S.T., M.Eng. & (a bit of) Dr. (Cand.) Chandra Restu Pakarti , M.Eng.

2. About the course We focus on core principles of Logistics and Supply Chain Management while discussing recent technologies making Supply Chain smart Some of the topics are: Inventory control Green logistics Smart transportation, smart logistics Information systems Revenue Management Etc.

3. Book “ Designing and Managing the Supply Chain: Concepts, Strategies and Case Studies ”. Simchi- Levi, Kaminsky, Simchi- Levi. 3 rd Ed. McGraw- Hill I’ll do my best to include all the info within the slides so that you won’t need to buy it. However, if you are interested in the case studies or want to deepen your understanding of certain topics, you should consider at least renting it.

4. RULES We’ll start with a lecture (~1hr), then put stuff into practice Please bring your laptop There might be some last minute updates

5. Software requirements

6. Course Assessment Attendance: 15% Assignment: 15% Midterm Exam: 30% Final Exam: 40%

7. What makes a supply chain smart? Glasses?

8. What makes a supply chain smart? Glasses? Nope Is not just one thing. Is a collection of technologies and policies

9. Internet of Things (IoT) The market of robots and cobots (collaborative robots) is poised to accelerate very fast in warehousing, logistics and fulfilment and picking context In the Spring of 2017, DHL Supply Chain, not the smallest contract logistics firms around, announced that its starting a pilot with the LocusBots™ cobots. The company is conducting the pilot within the life sciences sector at a facility in Tennessee. “LocusBots™ work collaboratively with your workers, helping them deliver higher throughput and improved accuracy. They move autonomously to where the workers are, minimizing worker walking and removing drudge work. LocusBots automatically learn the most efficient travel routes through your warehouse, to dramatically improve worker efficiency and productivity 2x to 3x over traditional cart picking. Our zone- based system allows for hands- free picking, while virtually eliminating errors.”

10. Internet of Things (IoT) Home and retail smart products are revolutionising the supply chain Smart assistant can buy the groceries for you A washing machine can contact maintenance independently if it sense that there is an issue Smart shelves can be used to track inventory and to implement dynamic- personalised pricing

11. RFID

12. Big (or not big) data analytics Forecasting demand Building customer choice models Predicting routes Forecasting weather and disruptions

13. Information Systems Mobile app and cloud based information systems are replacing the old unreliable pen-and- paper approach, allowing the Supply Chain to exploit new forms of logistics (e.g. crowd shipping) Enterprise Resource Planner (ERP) systems are getting more sophisticated

14. Revenue Management Revenue management is the application of disciplined analytics that predict consumer behaviour at the micro- market levels and optimize product availability and price to maximize revenue growth.

15. Sustainable Supply Chain

16. Disruption & Risk Management Terrorism, Natural events, economical instability etc. These factors are serious threats for the supply chain and must be accounted for by any decisions Climate crisis : “ The potential future effects of global climate change include more frequent wildfires, longer periods of drought in some regions and an increase in the number, duration and intensity of tropical storms”

17. What Is a Supply Chain? Flow of products and services from: Raw materials manufacturers Intermediate products manufacturers End product manufacturers Wholesalers and distributors and Retailers Connected by transportation and storage activities Integrated through information, planning, and integration activities Cost and service levels

18. The SCM Network

19. Nutella supply chain

20. What Is Supply Chain Management? Supply chain management is a set of approaches utilized to efficiently integrate suppliers, manufacturers, warehouses, and stores, so that merchandise is produced and distributed at the right quantities , to the right locations , and at the right time , in order to minimize system wide costs while satisfying service level requirements. So, why do we need to “manage” ?

21. Key Observations Efficiency and cost- effectiveness throughout the system is required System level approach

22. Key Observations Every facility that impacts costs need to be carefully considered Suppliers must be taken into account Sometimes even the suppliers of the suppliers

23. Key Observations Multiple levels of activities Strategic Tactical Operational Supply Chain Network Design Route Planning Live Route Planning Timescale: years Timescale: weeks, days Timescale: hours

24. Why Supply Chain Management is challenging Decisions intertwines . Strategies cannot be selected in isolation. They are directly affected by the development chain. System costs and service levels are conflicting objectives Different activities also have conflicting objectives Uncertainty and risks are involved at every stage of the chain

25. Set of activities and processes associated with new product introduction. Includes: product design phase associated capabilities and knowledge sourcing decisions production plans The development chain defines what is made in- house and what is bought from third parties (make or buy decisions) The Development Chain

26. Global Optimization At least 3 continents LG, Samsung, Sony among the suppliers In 2007, Steve Jobs decided to adopt glass screen for iphones a few weeks before launch. US factories said it was impossible. Chinese factories said “no problem!”

27. Global Optimization Geographically dispersed complex network Conflicting objectives of different facilities Dynamic system Variations over time Matching demand- supply difficult Different levels of inventory and backorders Recent developments have increased risks Lean production/Off- shoring/Outsourcing

28. Uncertainty and Risk Factors Matching Supply and Demand a Major Challenge REASONS EXAMPLES Raw material shortages Internal and supplier parts shortages Productivity inefficiencies Boeing Aircraft’s inventory write- down of $2.6 billion Sales and earnings shortfall Larger than anticipated inventories Sales at U.S. Surgical Corporation declined 25 percent, resulting in a loss of $22 million Stiff competition General slowdown in the PC market Intel reported a 38 percent decline in quarterly profit Higher than expected orders for new products over existing products EMC Corp. missed its revenue guidance of $2.66 billion for the second quarter of 2006 by around $100 million

29. Uncertainty and Risk Factors Fluctuations of Inventory and Backorders throughout the Supply Chain

30. Forecasting is not a solution Demand is not the only source of uncertainty Recent trends make things more uncertain Lean manufacturing Outsourcing Off- shoring Uncertainty and Risk Factors

31. August 2005 – Hurricane Katrina P&G coffee supplies from sites around New Orleans Six month impact 2002 West Coast port strike Losses of $1B/day Store stock- outs, factory shutdowns 1999 Taiwan earthquake Supply interruptions of HP, Dell 2001 India (Gujarat state) earthquake Supply interruptions for apparel manufacturers Also, terrorism is targeting supply chains! Uncertainty and Risk Factors

32. Evolution of Supply Chain Management 1950s 1960s 1970s 1980s 1990s 2000s Today Traditional Mass Manufacturing Inventory Management/Cost Optimization JIT, TQM, BPR, Alliances SCM Formation/ Extensions Further Refinement of SCM Capabilities Knowledge Driven Data Oriented