Supply Chain Management.presentationnnanna

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1. Supply Chain Management 5/8/2023 1

2. Introduction Supply Chain – the core business processes in an organization that create and deliver a product or service, from concept through development and manufacturing or conversion, and into a market for consumption. Supply Chain Management – the methods, systems and leadership that continuously improve an organization’s integrated processes for product and service design, purchasing, inventory management, logistics, distribution and customer satisfaction. 5/8/2023 2

3. Definitions Supply Chain Management deals with the management of materials, information, and financial flows in a network consisting of suppliers, manufacturers, distributors and customers. 5/8/2023 3

4. Value vs. Supply Chain Value chain every step from raw materials to the eventual end user. ultimate goal is delivery of maximum value to the end user. Supply chain activities that get raw materials and subassemblies into manufacturing operation. Terms are used interchangeably 5/8/2023 4

5. Decision Phases in a Supply Chain Supply chain strategy or design. Supply chain planning. Supply chain operation. 5/8/2023 5

6. Process view of a supply chain Cycle view Push/pull view 5/8/2023 6

7. Cycle View of Supply Chains Customer Order Cycle Replenishment Cycle Manufacturing Cycle Procurement Cycle Customer Retailer Distributor Manufacturer Supplier 5/8/2023 7

8. Customer order cycle Customer arrival. Customer order entry. Customer order fulfillment. Customer order receiving. 5/8/2023 8

9. Replenishment cycle Retail order trigger. Retail order entry. Retail order fulfillment. Retail order receiving. 5/8/2023 9

10. Manufacturing cycle Order arrival from the distributor, retailer, or customer. Production scheduling. Manufacturing and shipping. Receiving at the distributor, retailer, or customer. 5/8/2023 10

11. Push/Pull View of Supply Chains Pull processes : execution is initiated in response to a customer order. Push processes : execution is initiated in anticipation of customer orders. 5/8/2023 11

12. Push/Pull View of Supply Chains Procurement, Manufacturing and Replenishment cycles Customer Order Cycle Customer Order Arrives PUSH PROCESSES PULL PROCESSES 5/8/2023 12

13. Supply Chain Management (SCM) Managing flow of information through supply chain in order to attain the level of synchronization that will make it more responsive to customer needs while lowering costs. Keys to effective SCM information communication cooperation trust 5/8/2023 13

14. Why is SCM Important? 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. 5/8/2023 14

15. Examples of Supply Chains Dell / Compaq Toyota / Ford Milk Distribution System Dabbawalas of Mumbai 5/8/2023 15

16. Supply Chain Uncertainty Inaccurate demand forecasting. Long variable lead times. Late deliveries. Incomplete shipments. Product changes batch ordering. Price fluctuations and discounts. Inflated orders. 5/8/2023 16

17. Contd …….. One goal in SCM: respond to uncertainty in customer demand without creating costly excess inventory. Negative effects of uncertainty lateness incomplete orders Inventory insurance against supply chain uncertainty. 5/8/2023 17

18. Information Technology: A Supply Chain Enabler Information links all aspects of supply chain. E-business replacement of physical business processes with electronic ones. Electronic data interchange (EDI) a computer-to-computer exchange of business documents. 5/8/2023 18

19. Bar code and point-of-sale data creates a computer record of a sale. Radio frequency identification (RFID) technology can send product data from an item to a reader via radio waves. Internet allows companies to communicate with suppliers, customers, shippers and other businesses around the world. 5/8/2023 19

20. Collaborative Planning, Forecasting, and Replenishment Process for two or more companies in a supply chain to synchronize their demand forecasts into a single plan to meet customer demand. Parties electronically exchange past sales trends point-of-sale data on-hand inventory scheduled promotions forecasts 5/8/2023 20

21. Suppliers Procurement purchase of goods and services from suppliers. On-demand (direct response) delivery requires supplier to deliver goods when demanded by customer. Continuous replenishment supplying orders in a short period of time according to a predetermined schedule. Cross-enterprise teams coordinate processes between company and supplier. 5/8/2023 21

22. Outsourcing Sourcing selection of suppliers. Outsourcing purchase of goods and services from an outside supplier. Core competencies what a company does best. Single sourcing a company purchases goods and services from only a few (or one) suppliers. 5/8/2023 22

23. E-Procurement Direct purchase from suppliers over the Internet. E-marketplaces web sites where companies and suppliers conduct business-to-business activities. Reverse auction a company posts orders on the Internet for suppliers to bid on. 5/8/2023 23

24. Distribution Encompasses all channels, processes, and functions, including warehousing and transportation, that a product passes on its way to final customer. Often called logistics. Logistics transportation and distribution of goods and services. 5/8/2023 24

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26. Warehouse Management Systems Highly automated system that runs day-to-day operations of a DC. Controls item putaway, picking, packing, and shipping. Features transportation management order management yard management labor management warehouse optimization 5/8/2023 26

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28. Vendor-Managed Inventory Manufacturers generate orders, not distributors or retailers. Stocking information is accessed using EDI. A first step towards supply chain collaboration. Increased speed, reduced errors, and improved service. 5/8/2023 28

29. Transportation Rail low-value, high-density, bulk products, raw materials, intermodal containers. not as economical for small loads, slower, less flexible than trucking. 5/8/2023 29

30. Trucking main mode of freight transport in U.S. small loads, point-to-point service, flexible. More reliable, less damage than rails; more expensive than rails for long distance. 5/8/2023 30

31. Air most expensive and fast. lightweight, small packages. high-value, perishable and critical goods. less theft. 5/8/2023 31

32. Package Delivery small packages. fast and reliable. increased with e-Business. primary shipping mode for Internet companies. 5/8/2023 32

33. Water low-cost shipping mode. primary means of international shipping. slowest shipping mode. 5/8/2023 33

34. Intermodal combines several modes of shipping-truck, water and rail. key component is containers. 5/8/2023 34

35. Pipeline transport oil and products in liquid form. high capital cost, economical use. long life and low operating cost. 5/8/2023 35

36. Internet Transportation Exchanges Bring together shippers and carriers. Initial contact, negotiations, auctions. Examples www.nte.com www.freightquote.com 5/8/2023 36

37. SCM Software Enterprise Resource Planning (ERP) software that integrates components of a company by sharing and organizing information and data. SAP was first ERP software. mySAP.com web enabled modules that allow collaboration between companies along the supply chain. 5/8/2023 37

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39. Measuring Supply Chain Performance Key performance indicators inventory turnover cost of annual sales per inventory unit. inventory days of supply total value of all items being held in inventory. fill rate fraction of orders filled by a distribution center within a specific time period. 5/8/2023 39

40. Contd …. 5/8/2023 40 Inventory turns = Average aggregate value of inventory Cost of goods sold Average aggregate value of inventory = (average inventory for item i ) X (unit value item i ) Days of supply = (Costs of goods sold)/(365 days) Average aggregate value of inventory

41. Other Measures of Supply Chain Performance Process Control used to monitor and control any process in supply chain. Supply Chain Operations Reference (SCOR) establish targets to achieve “best in class” performance. 5/8/2023 41

42. SCOR Model Processes 5/8/2023 42 Plan Develop a course of action that best meets sourcing, production and delivery requirements Source Procure goods and services to meet planned or actual demand Make Transform product to a finished state to meet planned or actual demand Deliver Provide products to meet demand, including order management, transportation and distribution Return Return products, post-delivery customer support

43. Global Supply Chain To compete globally requires an effective supply chain. Information technology is an “enabler” of global trade. Nations form trading groups. 5/8/2023 43

44. Obstacles to Global Chain Transactions Increased documentation for invoices, cargo insurance, letters of credit, ocean bills of lading or air waybills, and inspections. Ever changing regulations that vary from country to country that govern the import and export of goods. Trade groups, tariffs, duties, and landing costs. Limited shipping modes. Differences in communication technology and availability. 5/8/2023 44

45. Conflicting Objectives in the Supply Chain Purchasing • Stable volume requirements • Flexible delivery time • Little variation in mix • Large quantities Manufacturing • Long run production • High quality • High productivity • Low production cost 5/8/2023 45

46. Warehousing • Low inventory • Reduced transportation costs • Quick replenishment capability Customers • Short order lead time • High in stock • Enormous variety of products • Low prices 5/8/2023 46

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