Class PPT - LO 1- Key SCM Concepts.powerpoint presentation

Scm concept

1. LO1 Key Supply Chain Concepts MGMT - 605 1

2. Learning Outline Upon successful completion of this Learning Objective, students will be able to understand: Definition of Supply Chain Management Importance of Supply Chain Management The Origin of Supply Chain Management The Foundation Elements of Supply Chain Management Latest Trends in Supply Chain Management 2

3. Core Activities of Most Businesses Note: “Service Organizations may not have all the core activities which is there for Manufacturers, for Eg : Return”

4. What is a Supply Chain? In its simplest form, a supply chain is the network of activities required to deliver goods or services to the consumer. A supply chain focuses on the core activities within your organisation to convert raw materials or component parts into finished products or services. – CIPS The system of people and things that are involved in getting a product from the place where it is made to the person who buys it. – Cambridge 4

5. The supply chain is the interconnected journey that raw materials, components, and goods take before their assembly and sale to customers – Mckinsey A supply chain is defined as the entire process of making and selling commercial goods, including every stage from the supply of materials and the manufacture of the goods through to their distribution and sale. – Supply Chain Digital 5

6. Simplified Supply Chain “Basic Supply Chain can be viewed as a detailed framework that consists of the core Business activities of an Organization”

7. Basic Supply Chain 7

8. Food Supply Chain 8

9. Water Supply Chain 9

10. Electricity Supply Chain 10

11. Generic Supply Chain (In Manufacturing) 11

12. Chain of Activities in Retail Supply Chain ( Eg : Walmart/Costco)

13. The Important Flows in Supply Chain Materials 13 Information Financial Resources

14. Internal Vs External Supply Chain

15. Supply Chain Management - Definition The planning and management of all activities involved in sourcing and procurement , conversion , and all logistics management activities … it also includes coordination with channel partners, which can be suppliers, intermediaries, third party service providers, and customers. - Council of Supply Chain Management Professionals The design and management of seamless, value-added processes across organizational boundaries to meet the real needs of the end customer - Institute for Supply Management 15

16. 16 Supply Chain Management

17. The design, planning, execution, control and monitoring of supply chain activities with the objective of creating net value , building a competitive infrastructure, leveraging worldwide logistics, synchronizing supply with demand, and measuring performance globally - Association for Operations Management 17

18. Key Takeaways from all Definitions Coordination / Integration of activities Utility Creation / Value Addition Form, Place, Time, Quantity Efficiency & Effectiveness Customer Focus 18

19. Traditional Vs Modern View of SCM Traditional Organizational Culture E mphasized short-term, company focused performance, often can conflict with the objectives of supply chain management Modern Supply Chain Culture High levels of trust, cooperation, collaboration, and honest, accurate communications All participants in the supply chain benefits Boundaries are dynamic and extend from “the firm’s suppliers’ suppliers to its customers’ customers (i.e., second tier suppliers and customers).” 19

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21. Changing Shape of Supply Chain 21

22. Importance of Supply Chain Management

23. 23 Lower Purchasing Costs Better Product Quality New Product Development Higher Customer Service Avoids erratic Purchasing Patterns Increase Sales Better Profits Increased Customer Retention Eliminates the “BULLWHIP Effect”

24. 24 Bull Whip Effect (Safety Stock)

25. The Foundation Elements of Supply Chain Management

26. 26 Core Activities in Supply Chain Management Demand Planning & Forecasting The process of combining statistical forecasting techniques and judgment to construct demand estimates for products or services across the supply chain from the suppliers’ raw materials to the consumer’s needs. Sourcing / Procurement The process of identifying a supplier / manufacturer that provides a needed material, good or service, and ordering them. Operations management The planning, scheduling and control of the activities that transform inputs into finished goods and services.

27. 27 Inventory Management The branch of business management concerned with planning and controlling inventory (finished, semi-finished, raw materials) Warehousing The activities related to receiving, storing, and shipping materials to and from production or distribution locations. Logistics & Distribution The subset of supply chain management that controls the forward and reverse movement, handling, and storage of goods between origin and destination points.

28. 28 Risk Management The identification, assessment and prioritization of risks & hazards followed by coordinated and economical application of resources to minimize, monitor and control the impact of unfortunate events

29. Foundation Elements of Supply Chain Management Supply Elements Supply Management Strategic Approach to Purchasing Important Tools: Spend Analysis & Category Management Supplier Management Improve performance through Supplier Relationship Management (SRM) Supplier Evaluation (determining supplier capabilities) Supply Base Reduction/ Optimization (Selection and Filtering) Supplier Alliances (Long Term Partnerships) Supplier Certification (third party or internal certification to assure product quality and service requirements) 29

30. Ethics and Sustainability Recognizing suppliers’ environmental responsibility, social and ethical practices Supplier Risk Management Identifying, assessing, mitigating, and monitoring risks associated with an organization’s suppliers Global Sourcing Goods and services from international markets across geopolitical boundaries (outsourcing) Save cost by using cheaper raw materials or low-cost skilled labor 30

31. 31 Global Sourcing BOEING

32. Operations Elements Forecasting Production Planning (Determining weekly/monthly production) Capacity Planning (Scheduling, Back Order, Increase / Decrease decisions, Economies of Scale) MRP – Materials Requirement Planning ERP Systems – Real time Data to Supply Chain Partners All Technology – Equipment, Systems (Software, Hardware), MEP (Infrastructure).. etc Quality & Production – TQM, Lean, 6 Sigma Operational Risk Management – Day-to-day business activities (Risks) 32

33. Logistics Elements Logistics Management - Right Time, Right Place, Right Quantity, Right Price Trade Offs – Logistics Cost Vs Customer Service Level Warehousing – Proximity to Markets, Construction Costs, Handling & Storage Modes of Transportation – Availability, Speed, Flexibility, Reliability Logistics Partnerships – Flexibility, 3PL / 4PL, 5PL, Own Distribution, Performance, Cost Control 33

34. Logistics = + Transportation, Handling, Storage Chain of Activities in a Retail Supply Chain ( Eg : Walmart/Costco)

35. Logistics It is all about planning and coordinating the physical flow of materials, final goods, and related information from the points of origin (suppliers) to manufacturers and then to the points of consumption (customers) Points of Origin Points of Consumption

36. Perspective Definition Source: Adapted from Stephen H. Russell, “A General Theory of Logistics Practices”, Air Force Journal of Logistics 24, no 4 (2000): 15 Logistics - Definitions

37. Logistics Management P lanning, I mplementing, and C ontrolling the physical flow of materials, finished goods, and related information from points of origin to points of consumption to meet customer expectations

38. Types of Logistics

39. 39 Integrated Logistics Management

40. Integration Elements Supply Chain Process Integration - when supply chain participants work for common goals. Requires Intra-firm functional integration & External integration ( Internal & External Supply chains) Efforts to change attitudes and adversarial relationships, foster collaboration Supply Chain Performance Management - Crucial for firms to know if procedures are working as expected Process related Metrics / KPIs used to monitor core Supply chain activities High level supply chain performance occurs when strategies at each firm fit well with overall supply chain strategies 40

41. Key Supply Chain Partners 41

42. 42 7 Principles of Supply Chain Management

43. Origin of Supply Chain Management

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45. Pre-1900s: Local Supply Chains  Prior to the first industrial revolution, supply chains were typically local and restricted to regions. As the use of railroads increased so did the distance that goods could be distributed. 1900-1950s: Supply Chains Continue to Grow  Global supply chains started to take shape, organisations such as UPS opened their doors. Industry leaders began to look at improving manual processes, researching the use of mechanisation, and demonstrating the benefits of analytics in military logistics following World War II.  45

46. 1950s - 1960s U.S. manufacturers focused on mass production techniques as their principal cost reduction and productivity improvement strategies 1960s - 1970s Introduction of new computer technologies lead to development of Materials Requirements Planning (MRP) and Manufacturing Resource Planning (MRPII) to coordinate inventory management and improve internal communication DHL along with FedEx emerged in the 1970s Freight transportation ad-hoc basis transitioned to trucks, which led to the concept of ‘physical distribution’. 46

47. The Strategic Approach 47

48. 1980s - 1990s Intense global competition led world manufacturers to adopt: Just-In-Time (JIT) Total Quality Management (TQM) Business Process Reengineering (BPR) Customer Relationship Management (CRM) Revolution in personal computing, PCs & Laptops Supply chains had better access to planning capabilities, MIS Reports, including spreadsheets and map-based interfaces 48

49. Just in Time (JIT) Model 49

50. Total Quality Management (TQM) 50

51. 1990s - 2000s The Tech revolution, Internet of Things (IoT) begins and Globalization Enterprise Resource Planning (ERP) Commercialization of SAP, Oracle, Microsoft 365 Dynamics.. etc Advanced Demand Planning & Materials Forecasting Increase in global Imports and Exports 51

52. 2000s to 2010 Evolution along 2 parallel paths Supply Management emphasis from Industrial buyers Logistics & customer service emphasis from bulk wholesalers and mega-retailers Focus on improving supply chain capabilities with initiatives such as: Third-party Logistics/service providers (3PLs), even 4PLs Integrating Logistics to SCM Client / Server SCM software 52

53. Supply Chain At Present Emphasis is being placed on the environmental and social impacts of supply chains Sustainability & ESG - Ability to meet the needs of current supply chain members without hindering the ability to meet the needs of future generations, T aking care of people, planet and profits Industry 5.0 – Allows for smart manufacturing and the creation of intelligent factories. It aims to enhance productivity, efficiency, and flexibility AI, Data Analytics, Automation, Robotics & IoT - Exponential increase in adoption of the same 53

54. 7 Major Issues In Canada’s Supply Chain #1: Increasing Inflation in Canada #2: Increasing Fuel Prices #3: Labour Shortages Across Canada #4: Delay in Delivery Times #5: Raising Wages in Canada #6: Weather Unpredictability #7: The effects of Globalization in Canada 54

55. Challenges Global Supply Chain 2024 - KPMG Increased focus of Central Banks on Supply Chain Supply chains have become a potential source of inflation for the global economy. Federal Reserve, the European Central Bank and the Bank of England have begun to discuss supply chains and their role in driving inflation. Transportation flexibility Supply chain managers are emphasizing flexibility in their logistics, rather than in their sources of supply. Eg : Baltimore Collapse, Panama Canal issue 55

56. A new Operational norm for Maritime The Red Sea shipping crisis and the increase in shipping around the Cape of Good Hope have spurred companies to anticipate disruptions. Increased costs from disruptions are being baked into maritime shipping rates at a faster pace than in the past. Eg : Pandemic, 2021 Suez Canal Issue Global Trade Uncertainties One of the major challenges faced by supply chain managers is the cloud of uncertainty that hovers over global supply chains. In 2024, this volatility is rooted in traditional economic factors and further impaired by raw material shortages, unexpected delays, regulatory shifts and pandemic aftershocks. 56

57. Labor strikes, Farmer strikes, Geopolitics, Cyber-attacks and Climate change. Potential longshoremen strikes later this year in the US on the East Coast and Gulf ports, as well as ongoing farmers’ strikes in multiple regions have added to capacity issues. The conflict in the Middle East has led to the ongoing Red Sea shipping crisis. FBI’s Internet Crime Complaint Center rose to $12.5 billion in 2023, a 21% increase from 2022. Damages and disruptions from weather-related disasters remain at the forefront; ongoing disruptions continue from droughts, fires, flooding and La Niña. The 2024 hurricane season will likely be “one of the most active on record” with 25 named storms and 12 hurricanes forecasted. 57 More frequent disruptions: In 2024 it will still continue

58. Global Port Congestion All around the world, big ships are stuck waiting at ports, creating traffic jams and leading to unexpected delays in container shipping. Strategic Sourcing Puzzles Strategic sourcing is about more than just finding the cheapest supplier. It’s a complex juggling act that weighs cost against rising risks, quality and reliability. Environmental and Sustainability Pressures The green wave washing over global consumer trends has put sustainability at the forefront. Supply chains must align with heightened environmental consciousness, not only as a corporate social responsibility but as a business imperative. 58

59. Resurgence of COVID-19 As businesses get back on their feet and countries ease up on restrictions, there’s still a chance COVID-19 could throw a spanner in the works. A new, tougher strain could mean more lockdowns, making it tough to get products to people. Rising Costs and Inflation Inflation looms over 2024, driving up the cost of raw materials and production. These increased costs are now sending ripples through the supply chain, challenging professionals to adapt their practices to maintain profitability. 59

60. Latest Trends in Supply Chain Management

61. Digitization of Supply Chains Businesses can improve their bottom line by creating digital manufacturing ecosystems Conversion of Traditional Supply Chains to e-SCM, or Electronic Supply Chain Management. Automation of Manual processes 61

62. Digital Twin in Supply Chain A digital twin is a digital replica of a physical object, person, system, or process, contextualized in a digital version of its environment. Digital twins can help many kinds of organizations simulate real situations and their outcomes, ultimately allowing them to make better decisions. 62

63. Focus on Innovation & Long Term Alliances Companies face barriers to new product development (NPD) due to economic uncertainty, inflation, and geopolitical instability This increase in demand for faster NPI means that companies must shift to higher-performing and more resilient supply chains to maintain rapid prototyping and innovation. 63

64. Big Data & Small Data Huge volumes of data generated in business organizations including retail, healthcare, manufacturing, and electronics Growth being pushed by the rise in computing capabilities and Big data, BDaaS , Small Data, Cloud Computing Eg : TensorFlow, Power BI, Looker, Presto, Apache, DataRobot , Hadoop, Kubernetes 64

65. Increasing Supply Chain Visibility (End to End) Knowing exactly where products are, at any point in the supply chain Inventory Visibility (Current Status) & Traceability (Root-Cause) is made easier by technology, Latest Generation ERPs (SAP, Oracle & Blockchain Technology) Sophisticated software applications for tracking orders, inventories, deliveries, returned goods, and even employee performance 65

66. 66 Concept of Control Tower in Supply Chain (Visibility)

67. Block Chain in Supply Chain (Traceability) 67

68. Refers to gaining insight and extracting value from the large amounts of data associated with procurement, processing, and distribution of goods. Supply chain analytics are important for companies to fully digitalize, build an autonomous supply chain and enable real-time decision making. Through connected data sources companies can quickly react to current and anticipated future disruptions. 68 Supply Chain Analytics

69. Descriptive Analytics - Answer the question of what is happening or has happened in the supply chain (through mining, pattern analysis, visualization). Diagnostic Analytics - clarify the “why” behind an event or an observation (through query, root-cause, what-if analysis). Predictive Analytics - Assist with identifying future scenarios (through causal forecasting, regression analysis, simulation). Prescriptive Analytics - Offer actionable recommendations or execute actions (through rule-based, heuristics, optimization). 69 Types of Supply Chain Analytics

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72. Industry 4.0: Also called the Fourth Industrial Revolution or 4IR —is the next phase in the digitization of the manufacturing sector, driven by disruptive trends including the rise of data and connectivity, analytics, human-machine interaction, and improvements in robotics . Industry 5.0 Also called the Fifth Industrial Revolution ,  reflects a shift in focus from an economic approach to a focus on social value and well-being . It is a new phase of industrialization in which humans work together with advanced technology and AI-driven robots to improve processes at work. 72 Industry 4.0 & Industry 5.0

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75. Artificial Intelligence and Automation 85% of worlds biggest brands and 95% of Fortune 500 companies have already adopted AI solutions AI and automation are valuable tools that can speed up your supply chain and help you remain competitive in your niche. Competitive forces will drive future streamlining of supply chain using AI & Automation 75

76. Internet of Things (IoT) Refers to a network of physical objects that are digitally connected and accessible from anywhere via a wireless network, 25.4 billion IoT devices are expected to be in operation by 2030. In addition to providing more oversight in operations and transportation, IoT can improve: Warehouses and warehouse management (Surveillance, Monitoring) Fleets and fleet tracking. (GPS) Inventory control (RFIDs & Scanners) Technological and Mechanical maintenance. 76

77. Robotics Autonomous robots are in a growing category of devices—including drone aircrafts (aerial robots)—that can be programmed to perform tasks with little to no human intervention or interaction. Improve speed and accuracy of routine operations, particularly in warehousing and manufacturing Add efficiency through side-by-side work with humans Reduce the risk of employee injury in dangerous environments 77

78. KIVA Bots by Amazon 78

79. Drone Delivery Amazon 79

80. Smart Warehouses Smart warehouses, also known as intelligent or automated storage house, use numerous technologies and automation systems to optimize operations and increase productivity. It uses hardware, software, and advanced technological solutions, including IoT, AI, robotics, and Data analytics, to automate manual processes. 80

81. The Circular Economy 81

82. Manufacturers reuse raw materials such as plastic, metal, cardboard, paper, steel, and glass. Refurbish and resell previously owned goods. 82 Circular Supply Chain WHY CIRCULAR? Total 1.3 B M.Tons – 36.1 M.Tons / Person/Year 673 Kg / Person Household, 29% recylced Landfill Sites – 10,000, Expiry 2030 !!!! Recycled What % - 60% or 40% ?? 9% Only rest all going to A Landfill

83. A state in which the demands placed on the environment can be met without reducing its capacity to allow all people to live well, now and in the future Development that meets the needs of the present without compromising the ability of future generations to meet their own needs Sustainability is the practice of using natural resources responsibly today , so they are available for future generations tomorrow . 83 Sustainability

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85. Sustainability helps to Enhance processes Reduce costs Increase productivity Uncover product innovation Achieve market differentiation Improve societal outcomes 85 Sustainability = Triple Bottom Line (TBL)

86. 86 17 Sustainability Goals – United Nations

87. 87 Sustainable Supply Chain NESTLE

88. 88 Cutting Carbon Footprint IKEA

89. 89 Why Environmental Sustainability in Supply Chain !!!

90. This practice involves managing the entire supply chain, from raw materials to final disposal, with sustainability in mind Reducing greenhouse gas emissions, eco-friendly practices Improving working conditions, Being profitable 90 Sustainable Performance How to Achieve? Assigning Sustainability KPI Targets for all Supply Chain Processes Performance Measurement Systems

91. CO2 emissions reduction in tons Energy consumption in kWh Water usage in metric tons Plastic reduction in metric tons Noise pollution in decibels Number of suppliers audited against environmental standards 91 Sustainability KPIs - Environment

92. Work-life balance, working hours People development, learning hours Community engagement, volunteering hours Share of diverse suppliers in the supply base Diversity, equity, and inclusion (DEI) survey result 92 Sustainability KPIs - Social

93. Profitability Revenue growth Business Growth Market Share Return on Investment Ratios 93 Sustainability KPIs - Economy

94. 94 Modern Supply Chain

95. 95 Amazon Supply Chain (Refer to Handouts and Videos On AMAZON) Amazon Value Chain https://youtu.be/_s16uuQEB8I   How Amazon Supply Chain Works https://profitwhales.com/archives/articles/amazon-supply-chain-strategy Youtube : How Amazon Supply Chain Management Strategy Works How Amazon's Supply Chain Management Strategy Works ? Challenges with Solutions | SCM Case Study

96. 96   How AMAZON Skirted Around SC Issues https://youtu.be/HxXJ8Q2GCs4 AWS New Software (Cloud Computing) https://techcrunch.com/2022/11/29/amazon-introduces-aws-supply-chain-to-help-bring-order-to-supply-chain-chaos/   Suggested Reading Review Handout TOP 100 Supply Chain https://www.supplychaincanada.com/media/files/salary-survey-canada.pdf

97. Questions & Answers… End of LO 1