Supply Chain Management Information Systems.pptx

Supply Chain Management Information Systems.pptx

1. Supply Chain Management Management Information System 1 M IS

2. Management Information System 2 2

3. Management Information System 3 3

4. Management Information System 4 4

5. Management Information System 5 5

6. Management Information System 6 6

7. The Inventory Cycle Profile of Inventory Level Over Time Q R e c e i v e order Pl ace o r d er R e c e i v e order Pl ace o r d er R e c e i v e order Lead time Q u a n tity on hand R e o r d e r point De m a nd rate T i m e Management Information System 7 C o n sta nt Demand 7

8. Dynamics of Material Flow Pla M n an t agement I W nfo a rm re at h io o n u S s ys e tem Re t a i l e 8 r S up p l i e r L o gi s t i c s 8

9. Dynamics of Order Flow Plant Warehouse Re t a i l e 9 r S up p l i e r L o gi s t i c s 9

10. Management Information System 10 10

11. Management Information System 11 11

12. Management Information System 12 12

13. Some Definitions Management Information System 13 Supply Chain Management encompasses every effort involved in producing and delivering a final product or service, from the supplier’s supplier to the customer’s customer. Supply Chain Management includes managing supply and demand, sourcing raw materials and parts, manufacturing and assembly, warehousing and inventory tracking, order entry and order management, distribution across all channels, and delivery to the customer. The Supply Chain Council, U.S.A. 13

14. Management Information System 14 14

15. Management Information System 15 15

16. Management Information System 16 16

17. Supply c hain obje c t i ve Management Information System 17 Maximize overall value generated Value strongly correlated to supply chain profitability – the difference between the revenue generated from the customer and the overall cost across the supply chain Example : A customer purchasing a computer from Dell pays $ 700 (the revenue) Dell and other stages of the supply chain incur cost to convey information, produce the components, store them, transport them, transfer funds, etc. 17

18. Why is SCM Important? Management Information System 18 Strategic Advantage – It Can Drive Strategy Manufacturing is becoming more efficient SCM offers opportunity for differentiation (Dell) or cost reduction (Wal-Mart or Big Bazaar) Globalization – It Covers The World Requires greater coordination of production and distribution Increased risk of supply chain interruption Increases need for robust and flexible supply chains 18

19. Why is SCM Important? Management Information System 19 (continued) At the company level, supply chain management impacts COST – For many products, 20% to 40% of total product costs are controllable logistics costs. SERVICE – For many products, performance factors such as inventory availability and speed of delivery are critical to customer satisfaction. 19

20. Management Information System 20 20

21. Management Information System 21 21

22. Management Information System 22 22

23. Management Information System 23 23

24. Management Information System 24 24

25. What is Supply Chain Planning ? Supply Chain is a set of activities (e.g. purchasing, manufacturing, logistics, distribution, marketing) that perform the function of delivering value to end customer Traditionally, all the business units along a supply chain have their own objectives and these are often conflicting There is no single plan to carry out supply chain activities Management Information System 25 25

26. What is Supply Chain Planning ? There is need for a mechanism through which the execution of various business activities along a supply chain can be planned in an integrated fashion. The supply chain planning is an effort to achieve the primary goal of “ producing and distributing the merchandise at the right quantity, to the right locations, and at the right time with minimum system wide cost ” in the presence of conflicting goals of various business units Management Information System 26 26

27. Supply Chain Planning Processes Demand Planning Material Requirement Planning Demand Forecasting S u p pl i e r P la n t Warehouse L o gi s t i c s Re t a i l e r Prod u ct ion Plan Component Re q u i reme n t Order Management Management Information System 27 27

28. Uncertainty in Supply Chain Management Information System 28 Wrong Forecasts Late Deliveries Poor Quality Machine Breakdowns Canceled Orders Erroneous information 28

29. Managing Uncertainty Point forecasts are invariably wrong ↓ Plan for forecast range – use flexible contracts to go up/down. Aggregate forecasts are more accurate ↓ Aggregate the forecast – postponement/risk pooling 29

30. Managing Uncertainty (cont’d) 1. Longer term forecasts are less accurate ↓ Shorten forecasting horizons – multiple orders; early detection 4. In many cases, somebody else knows what is going to happen ↓ Collaborate 30

31. Complexities Involved in Supply Chain Management The supply chain is a complex network of facilities and organizations with different, conflicting objectives Matching supply and demand is a major challenge System variations over time are also an important consideration Many supply chain problems are new and there is no clear understanding of all the issues involved 31

32. Management Information System 34 Process View Retailer Distributor Manufacturer S up p li e r C us t o m e r Customer Order Cycle Re p l e n i s h m e nt Cycle M a n u f ac t u r i n g Cycle P r o cu r e m e n t Cycle P u ll P us h 32

33. Customer order cycle Customer arrival Customer order entry Customer order fulfillment Customer order receiving 33

34. Replenishment cycle Retail order trigger Retail order entry Retail order fulfillment Retail order receiving 34

35. Manufacturing cycle Order arrival from the distributor, retailer, or customer Production scheduling Manufacturing and shipping Receiving at the distributor, retailer, or customer 35

36. The Dynamics of the Supply Chain Order Size Time Source: Tom Mc Guffry, Electronic Commerce and Value Chain Management, 1998 C u s t o m er Demand Retailer Orders Distributor Orders Production Plan 36

37. D e c i s i ons in SCM Management Information System 37 Location Decisions Production Decisions Inventory Decisions Transportation Decisions 37

38. Modeling for SCM Management Information System 38 Forecasting Models These models allow prediction of demand based on past data or other parameters that are independently available. They enable better planning, given the lead-time necessary for response. Location Models These models identify the optimal location of facilities such as plants and warehouses, considering the inbound and outbound transportation costs as well as the fixed and variable costs of operation at the locations under consideration. These are usually formulated as Mixed Integer Programming Models. 38

39. Modeling for SCM (cont’d) Management Information System 39 Distribution Network Design Models These models are usually comprehensive in nature, deciding between two, three and even four stages of distribution network, location of warehouses and break-bulk points, and sometimes even the transportation. Allocation Models These models help in optimally allocating commodities from sources to destinations in a multi-source, multi- destination environment. The costs considered for optimisation are The constraints capacity, route production costs and warehousing costs. considered can be due to demand, restrictions, etc. 39

40. Modeling for SCM (cont’d) Management Information System 40 Inventory Models Inventory plays a major role in SCM. Inventory can be of various types such as: Batching and shipment inventories Buffer stocks to take care of uncertainties Pipeline inventory ( primary and secondary transportation ) These models minimize the total relevant cost, based on trade- offs among, inter alia, inventory carrying cost, ordering cost, stock-out cost, transportation cost, taxes & duties, etc. 40

41. Modeling for SCM (cont’d) Management Information System 41 Routing Models - These models allow optimal routing on a transportation network from a given source to a destination. The models used are the Shortest Path Problem, the Traveling Salesman Problem and the Vehicle Routing Problem. Decision Support Systems that interactively use the expertise of the decision maker by providing graphical support through a map (i.e., using a Geographical Information System ) are also very useful in such decisions. 41

42. Modeling for SCM (cont’d) Management Information System 42 Scheduling Models These models enable allocation of resources to particular activities. Depending on the criteria of interest and the number of resources, the models are of aid in evaluating appropriate rules for allocation. Alternative Analysis This model simply proposes the identification of alternatives, criteria for decision making and analysis of the alternatives across the criteria to arrive at the best choice. Formal approaches such as simulation and analytic hierarchy process could be used in assessing the implications of the criteria. 42

43. Evolution of SCM Stage 1: Vendor – Purchase – Production - Distribution – Retailer Stage 2: Materials Management - Logistics Management Stage 3: Supply Chain Management 43

44. M a n u f act u r i n g Planning D i s t r i b u t i o n Planning Demand P lan n i n g Sequential Optimization Supply Contracts/Collaboration/Information Systems and DSS P r o c u r e m e n t Planning M a n u fac t u r ing Planning D i s t r i bu t i o n Planning Demand P lan n i n g P r o c u r e m e n t Planning Global Optimization Sequential Optimization vs. Global Optimization 44