supplychainplanningoperation 9.pptx supplychainplanningoperation 9.pptx

supplychainplanningoperation 9.pptx

1. Supply Chain Planning & Operations Part 9

2. 2 Modern Supply Chain Management and Future Trends The impact of globalization on supply chain networks Globalization has had a profound impact on supply chain networks, fundamentally transforming how goods are produced, distributed, and consumed worldwide. Here’s an analysis of the key effects globalization has had on supply chain networks: 1. Expanded Market Access Increased Reach : Globalization has enabled companies to access markets beyond their domestic borders, expanding their customer base and increasing sales opportunities. Diversified Markets : Companies can diversify their markets, reducing dependence on any single region and mitigating the risks associated with local economic downturns. 2. Complex Supply Chain Structures Multi-Tier Supply Chains : Globalization has led to the development of multi-tier supply chains, where raw materials, components, and finished goods are sourced and manufactured across multiple countries. Increased Complexity : With suppliers, manufacturers, and customers spread across different regions, supply chains have become more complex, requiring sophisticated coordination and management.

3. 3 Modern Supply Chain Management and Future Trends 3. Cost Reduction and Efficiency Cost Optimization : Companies leverage globalization to reduce costs by outsourcing production to regions with lower labor and production costs. This includes offshoring manufacturing to countries with competitive advantages in specific industries. Economies of Scale : Globalization allows companies to achieve economies of scale by producing large quantities of goods for a global market, reducing per-unit costs. 4. Diverse Sourcing and Procurement Global Sourcing : Companies can source raw materials and components from the most competitive suppliers worldwide, improving the quality and cost-effectiveness of their products. Supplier Diversification : Globalization encourages supplier diversification, reducing reliance on a single source and enhancing supply chain resilience. 5. Technological Advancements Information Technology : Globalization has accelerated the adoption of information technology in supply chain management, enabling better communication, coordination, and data sharing among global partners. Logistics and Transportation : Advances in logistics and transportation technology have facilitated the movement of goods across long distances quickly and efficiently, supporting global trade.

4. 4 Modern Supply Chain Management and Future Trends 6. Increased Competition Competitive Pressure : Globalization has increased competition as companies from different regions compete in the same markets, driving innovation, quality improvements, and cost reductions. Pressure on Margins : With more players in the market, companies face pressure to maintain competitive pricing, impacting profit margins. 7. Regulatory and Compliance Challenges Diverse Regulations : Operating in multiple countries exposes companies to diverse regulatory environments, including trade policies, tariffs, and compliance requirements. Risk Management : Companies must navigate geopolitical risks, such as trade disputes, political instability, and currency fluctuations, which can impact supply chain operations. 8. Sustainability and Ethical Considerations Environmental Impact : Global supply chains increase the environmental footprint of production and transportation, raising concerns about sustainability and prompting companies to adopt greener practices. Ethical Sourcing : Globalization has heightened awareness of ethical issues, such as labor practices and human rights, driving companies to ensure responsible sourcing and manufacturing.

5. 5 Modern Supply Chain Management and Future Trends Enhanced Collaboration and Innovation Cross-Border Collaboration : Globalization fosters collaboration among companies, suppliers, and research institutions worldwide, leading to innovation and knowledge sharing. Supply Chain Partnerships : Strategic partnerships and alliances across borders enable companies to leverage each other’s strengths and capabilities. 10. Challenges in Supply Chain Resilience Vulnerability to Disruptions : Global supply chains are more vulnerable to disruptions such as natural disasters, pandemics, and geopolitical tensions, highlighting the need for robust risk management and contingency planning. Demand for Agility : Companies must build agile supply chains that can quickly adapt to changing market conditions and disruptions.

6. 6 Modern Supply Chain Management and Future Trends Globalization has fundamentally transformed supply chain networks by expanding market access, increasing complexity, and driving cost efficiency. While it has created numerous opportunities for growth and innovation, it has also introduced challenges such as increased competition, regulatory compliance, and supply chain resilience. To succeed in a globalized world, companies must strategically manage their supply chains, leveraging technology, collaboration, and sustainability to navigate the complexities and capitalize on the opportunities presented by globalization.

7. 7 Modern Supply Chain Management and Future Trends The rise of e-commerce and digital supply chains in the 1990s and 2000s marked a transformative period in retail and supply chain management, fundamentally altering how businesses operate and interact with customers. This shift was driven by advancements in technology and changes in consumer behavior, leading to new opportunities and challenges in the supply chain landscape. Here's an overview of how e-commerce and digital supply chains emerged and evolved during this period:

8. 8 Modern Supply Chain Management and Future Trends Growth of E-commerce A. Technological Advancements Internet Accessibility : The widespread adoption of the internet in the 1990s provided the foundation for e-commerce by enabling businesses and consumers to connect digitally. Secure Online Transactions : The development of secure protocols for online transactions, such as SSL (Secure Socket Layer), encouraged consumers to shop online by ensuring the security of their financial information. Web Development : Improvements in web technologies made it easier for businesses to create user-friendly e-commerce platforms, enhancing the online shopping experience. B. Emergence of Online Retailers Pioneering Companies : Companies like Amazon and eBay, founded in the mid-1990s, were among the first to capitalize on the e-commerce trend by offering a wide range of products online. Direct-to-Consumer (DTC) Model : E-commerce enabled businesses to bypass traditional retail channels and sell directly to consumers, reducing costs and increasing margins. C. Changing Consumer Behavior Convenience and Choice : Consumers were drawn to the convenience of shopping from home and the wide selection of products available online. Price Comparison : E-commerce platforms allowed consumers to easily compare prices and find the best deals, increasing price transparency and competition. C. Changing Consumer Behavior Convenience and Choice : Consumers were drawn to the convenience of shopping from home and the wide selection of products available online. Price Comparison : E-commerce platforms allowed consumers to easily compare prices and find the best deals, increasing price transparency and competition.

9. 9 Modern Supply Chain Management and Future Trends Evolution of Digital Supply Chains A. Integration of Technology Enterprise Resource Planning (ERP) Systems : ERP systems integrated various business functions, such as inventory management, order processing, and customer relationship management, into a single platform, enhancing efficiency and coordination. Supply Chain Management (SCM) Software : Advanced SCM software provided tools for managing complex supply chain networks, optimizing inventory levels, and improving demand forecasting. B. Real-Time Data and Analytics Data-Driven Decision Making : Digital supply chains leveraged data analytics to gain insights into consumer behavior, optimize operations, and make informed decisions. Predictive Analytics : Companies used predictive analytics to forecast demand, anticipate market trends, and respond proactively to changes in consumer preferences. C. Enhanced Collaboration Supplier Collaboration : Digital supply chains facilitated better communication and collaboration with suppliers through integrated platforms and shared data. Cross-Functional Teams : Organizations formed cross-functional teams to manage digital supply chains, integrating expertise from logistics, IT, marketing, and customer service.

10. 10 Modern Supply Chain Management and Future Trends Impact on Logistics and Fulfillment A. Distribution and Warehousing Fulfillment Centers : E-commerce growth led to the establishment of large fulfillment centers strategically located to enable fast delivery to customers. Automation : Advances in automation technology improved the efficiency of warehousing operations, including picking, packing, and shipping processes. B. Last-Mile Delivery Delivery Speed : Companies focused on optimizing last-mile delivery to meet consumer expectations for fast shipping, leading to innovations such as same-day and next-day delivery services. Third-Party Logistics (3PL) : Many e-commerce businesses partnered with 3PL providers to manage logistics and distribution, allowing them to scale operations without significant capital investment.

11. 11 Modern Supply Chain Management and Future Trends Challenges and Opportunities A. Challenges Inventory Management : Managing inventory across multiple channels and locations became more complex, requiring advanced inventory management systems. Customer Expectations : Rising customer expectations for fast and reliable delivery put pressure on supply chains to optimize operations and reduce lead times. Cybersecurity : As e-commerce transactions increased, so did the risk of cyber threats, necessitating robust security measures to protect customer data. B. Opportunities Global Reach : E-commerce allowed businesses to reach international markets, expanding their customer base and driving growth. Personalization : Digital supply chains enabled personalized shopping experiences through targeted marketing and customized product recommendations. Innovation : The competitive e-commerce landscape spurred innovation in logistics, payment solutions, and customer service.

12. 12 Modern Supply Chain Management and Future Trends The rise of e-commerce and digital supply chains in the 1990s and 2000s transformed the retail landscape and supply chain management practices. Advances in technology, changing consumer behavior, and increased competition drove the development of efficient, data-driven digital supply chains that could support the demands of online shopping. As a result, businesses were able to reach new markets, enhance customer experiences, and optimize their operations, setting the stage for continued growth and innovation in the digital economy.

13. 13 Modern Supply Chain Management and Future Trends The internet and technology have dramatically transformed supply chain operations, enhancing efficiency, visibility, and connectivity across global networks. This transformation has allowed businesses to operate more effectively in a highly competitive and dynamic environment. Here’s a detailed discussion of how the internet and technology have reshaped supply chain operations:

14. 14 Modern Supply Chain Management and Future Trends Enhanced Connectivity and Communication A. Real-Time Information Sharing Cloud-Based Platforms : The internet has enabled cloud-based platforms that allow real-time data sharing among supply chain partners, improving coordination and decision-making. Collaborative Networks : Technology facilitates collaborative networks where suppliers, manufacturers, distributors, and retailers can share information seamlessly, reducing delays and inefficiencies. B. Improved Communication Instant Messaging and Video Conferencing : Tools like email, instant messaging, and video conferencing have streamlined communication across geographically dispersed teams, enhancing collaboration and problem-solving. Integrated Communication Systems : Technology integrates communication systems within supply chains, ensuring that all stakeholders have access to critical information.

15. 15 Modern Supply Chain Management and Future Trends Data-Driven Decision Making A. Advanced Analytics Big Data Analytics : The ability to collect and analyze vast amounts of data allows companies to gain insights into customer behavior, market trends, and supply chain performance. Predictive Analytics : Predictive analytics tools use historical data to forecast demand, optimize inventory levels, and anticipate potential disruptions. B. Performance Monitoring Key Performance Indicators (KPIs) : Technology enables the tracking of KPIs across the supply chain, allowing companies to monitor performance, identify inefficiencies, and implement improvements. Dashboards and Reporting : Real-time dashboards and reporting tools provide visibility into supply chain operations, supporting strategic planning and decision-making.

16. 16 Modern Supply Chain Management and Future Trends Automation and Process Optimization A. Automated Systems Robotics and Automation : Robotics and automation technologies streamline warehousing and manufacturing processes, reducing labor costs and increasing productivity. Automated Inventory Management : Automated systems track inventory levels, reorder products, and manage stock movements, improving accuracy and reducing manual effort. B. Process Optimization Lean and Agile Practices : Technology supports lean and agile supply chain practices by optimizing processes, reducing waste, and increasing flexibility. Supply Chain Optimization Software : Advanced software solutions optimize routing, scheduling, and resource allocation, enhancing operational efficiency.

17. 17 Modern Supply Chain Management and Future Trends Increased Visibility and Transparency A. Supply Chain Visibility Track and Trace : Internet-enabled technologies like RFID and GPS provide real-time tracking of goods throughout the supply chain, improving visibility and traceability. Transparency Tools : Technology offers tools for monitoring supply chain activities, ensuring transparency, and building trust with customers and partners. B. Risk Management Proactive Risk Mitigation : Real-time data and analytics enable companies to identify and mitigate risks proactively, reducing the impact of disruptions on supply chain operations. Scenario Planning : Technology supports scenario planning and simulation, helping companies prepare for potential challenges and develop contingency plans.

18. 18 Modern Supply Chain Management and Future Trends Enhanced Customer Experience A. Personalization Customer Insights : Data analytics provide insights into customer preferences and behavior, enabling companies to offer personalized products and services. Targeted Marketing : Technology supports targeted marketing strategies, enhancing customer engagement and satisfaction. B. Improved Service Levels Faster Delivery : Technology enables faster order processing and delivery, meeting customer expectations for quick and reliable service. Omni-Channel Integration : Integrated systems allow customers to interact with brands across multiple channels, providing a seamless shopping experience.

19. 19 Modern Supply Chain Management and Future Trends Global Expansion and Scalability A. Global Reach E-commerce Platforms : The internet has enabled businesses to reach global markets through e-commerce platforms, expanding their customer base and driving growth. Cross-Border Trade : Technology facilitates cross-border trade by streamlining customs processes, reducing barriers, and improving logistics. B. Scalability Flexible Infrastructure : Cloud-based solutions offer scalable infrastructure that allows businesses to grow and adapt to changing market demands without significant capital investment. Supply Chain Flexibility : Technology enables supply chains to be more flexible and responsive to changes in demand, market conditions, and disruptions.

20. 20 Modern Supply Chain Management and Future Trends Recent Innovations and Trends Automation, robotics, and artificial intelligence (AI) are playing increasingly pivotal roles in modern supply chain management, transforming how businesses operate by enhancing efficiency, accuracy, and agility. These technologies have enabled companies to streamline processes, reduce costs, and improve decision-making. Here’s a detailed exploration of their roles in supply chain management:

21. 21 Modern Supply Chain Management and Future Trends Automation in Supply Chain Management A. Process Automation Automated Order Processing : Automation tools streamline order processing by reducing manual intervention, increasing speed, and minimizing errors. This leads to faster order fulfillment and improved customer satisfaction. Inventory Management : Automated systems manage inventory levels in real-time, triggering reorder processes and ensuring optimal stock levels. This reduces the risk of stockouts and overstocking. Shipping and Receiving : Automation streamlines shipping and receiving processes by automating tasks such as labeling, sorting, and tracking shipments, improving operational efficiency. B. Warehousing Automation Automated Storage and Retrieval Systems (AS/RS) : These systems automate the storage and retrieval of goods in warehouses, improving space utilization and reducing labor costs. Conveyor Systems : Automated conveyor systems transport goods within warehouses, enhancing the speed and efficiency of material handling. C. Process Optimization Workflow Automation : Automation tools optimize workflows by automating routine tasks and processes, freeing up human resources for more strategic activities. Robotic Process Automation (RPA) : RPA automates repetitive and rule-based tasks across various supply chain functions, increasing accuracy and efficiency.

22. 22 Modern Supply Chain Management and Future Trends Robotics in Supply Chain Management A. Warehouse Robotics Picking and Packing Robots : Robots equipped with advanced sensors and AI capabilities can pick and pack items with high precision and speed, reducing labor costs and improving accuracy. Autonomous Mobile Robots (AMRs) : AMRs navigate warehouses autonomously, transporting goods between different locations and optimizing material flow. B. Manufacturing Robotics Robotic Arms : In manufacturing, robotic arms perform tasks such as assembly, welding, and painting with high precision and consistency, increasing productivity and reducing errors. Collaborative Robots ( Cobots ) : Cobots work alongside humans in manufacturing and warehousing environments, performing tasks that enhance productivity and safety. C. Logistics and Transportation Automated Guided Vehicles (AGVs) : AGVs are used for material handling and transportation within warehouses and distribution centers, improving efficiency and reducing manual labor. Drones : Drones are used for inventory monitoring and last-mile delivery, especially in remote or hard-to-reach areas, providing faster and more flexible delivery options.

23. 23 Modern Supply Chain Management and Future Trends Artificial Intelligence in Supply Chain Management A. Demand Forecasting and Planning Predictive Analytics : AI algorithms analyze historical data to forecast demand accurately, allowing companies to plan inventory levels and production schedules effectively. Machine Learning Models : These models continuously learn from new data, improving the accuracy of demand forecasts and helping companies respond to changing market conditions. B. Supply Chain Optimization Route Optimization : AI optimizes transportation routes by analyzing factors such as traffic patterns, weather conditions, and delivery windows, reducing costs and improving delivery times. Inventory Optimization : AI-driven insights help optimize inventory levels by predicting demand fluctuations and ensuring the right products are available at the right time. C. Enhanced Decision-Making Data-Driven Insights : AI analyzes large volumes of data from various sources, providing actionable insights that support strategic decision-making and improve supply chain performance. Scenario Analysis : AI tools simulate different scenarios and outcomes, helping companies assess risks and make informed decisions. D. Risk Management Proactive Risk Identification : AI identifies potential risks and disruptions in the supply chain, allowing companies to mitigate them proactively. Real-Time Monitoring : AI systems provide real-time monitoring of supply chain activities, alerting managers to issues and enabling swift corrective action.

24. 24 Modern Supply Chain Management and Future Trends Benefits and Challenges Benefits Increased Efficiency : Automation, robotics, and AI enhance operational efficiency by reducing manual tasks, minimizing errors, and speeding up processes. Cost Reduction : These technologies reduce labor and operational costs by automating routine tasks and optimizing resource utilization. Improved Accuracy : AI and robotics provide high levels of precision and accuracy in tasks such as inventory management, order processing, and demand forecasting. Enhanced Agility : Companies can respond more quickly to market changes and customer demands, increasing their competitive advantage. Challenges Implementation Costs : The initial investment in automation, robotics, and AI can be significant, posing a challenge for small and medium-sized enterprises. Integration Complexity : Integrating these technologies with existing systems and processes can be complex and require significant changes to workflows and infrastructure. Workforce Adaptation : The adoption of automation and AI may require reskilling and upskilling of the workforce to manage and work alongside new technologies.

25. 25 Modern Supply Chain Management and Future Trends Automation, robotics, and AI have revolutionized supply chain management by enhancing efficiency, accuracy, and agility. These technologies enable companies to streamline operations, reduce costs, and make data-driven decisions. While challenges exist in implementing and integrating these technologies, the benefits they offer in terms of improved performance and competitiveness make them essential components of modern supply chain management. As technology continues to evolve, the role of automation, robotics, and AI in supply chain management will likely expand, driving further innovation and transformation in the industry.

26. 26 Modern Supply Chain Management and Future Trends Sustainability and green supply chain practices are becoming increasingly important as businesses strive to minimize their environmental impact and address the growing concerns of consumers, regulators, and stakeholders. These practices aim to create a more sustainable and environmentally responsible supply chain by reducing waste, conserving resources, and promoting ethical and eco-friendly operations. Here's a comprehensive overview of sustainability and green supply chain practices:

27. 27 Modern Supply Chain Management and Future Trends Sustainable Sourcing and Procurement A. Ethical Sourcing Fair Trade and Ethical Practices : Companies prioritize sourcing from suppliers who adhere to fair trade practices, ensuring fair wages and safe working conditions for workers. Supplier Audits : Regular audits and assessments help ensure that suppliers comply with ethical and environmental standards. B. Eco-Friendly Materials Sustainable Materials : Businesses use materials that have a lower environmental impact, such as recycled, biodegradable, or renewable resources. Supplier Collaboration : Companies work with suppliers to develop and source sustainable materials and components.

28. 28 Modern Supply Chain Management and Future Trends Green Manufacturing A. Energy Efficiency Energy Management : Implementing energy-efficient technologies and practices in manufacturing processes reduces energy consumption and greenhouse gas emissions. Renewable Energy : Companies invest in renewable energy sources, such as solar or wind power, to power their manufacturing facilities. B. Waste Reduction Lean Manufacturing : Adopting lean manufacturing principles helps reduce waste and improve efficiency by optimizing production processes. Recycling and Reuse : Implementing recycling programs and reusing materials within the production process minimizes waste and conserves resources.

29. 29 Modern Supply Chain Management and Future Trends Sustainable Logistics and Transportation A. Efficient Transportation Route Optimization : Using technology to optimize transportation routes reduces fuel consumption and emissions by minimizing travel distances and avoiding congestion. Eco-Friendly Vehicles : Transitioning to electric or hybrid vehicles and investing in alternative fuels reduces the carbon footprint of transportation. B. Packaging Innovations Sustainable Packaging : Companies use packaging made from recycled or biodegradable materials to reduce waste and environmental impact. Packaging Reduction : Optimizing packaging design to use less material and reduce weight decreases shipping costs and waste.

30. 30 Modern Supply Chain Management and Future Trends Green Supply Chain Design A. Network Optimization Supply Chain Design : Designing supply chain networks to minimize transportation distances and optimize logistics reduces emissions and energy use. Decentralized Warehousing : Establishing strategically located warehouses closer to customers reduces transportation needs and improves delivery speed. B. Circular Economy Practices Closed-Loop Systems : Implementing closed-loop supply chains where products are designed for reuse, refurbishment, or recycling reduces waste and conserves resources. Product Take-Back Programs : Encouraging customers to return used products for recycling or refurbishment supports a circular economy and reduces environmental impact.

31. 31 Modern Supply Chain Management and Future Trends Corporate Social Responsibility (CSR) and Reporting A. CSR Initiatives Sustainability Goals : Setting and publicly committing to sustainability goals demonstrates a company’s commitment to environmental responsibility. Community Engagement : Engaging with local communities to support environmental and social initiatives enhances a company’s sustainability efforts. B. Sustainability Reporting Transparency and Accountability : Regularly reporting on sustainability efforts and progress through sustainability reports or ESG (Environmental, Social, and Governance) disclosures increases transparency and accountability. Benchmarking and Standards : Adhering to international sustainability standards and frameworks, such as ISO 14001, ensures consistent and credible reporting.

32. 32 Modern Supply Chain Management and Future Trends Benefits of Green Supply Chain Practices A. Environmental Impact Reduced Carbon Footprint : Sustainable practices lower greenhouse gas emissions and reduce the overall environmental impact of supply chain operations. Conservation of Resources : Efficient use of resources and waste reduction conserve natural resources and promote sustainability. B. Economic Advantages Cost Savings : Reducing waste, optimizing processes, and improving efficiency lead to cost savings and increased profitability. Competitive Advantage : Companies with strong sustainability credentials often enjoy a competitive advantage by appealing to environmentally conscious consumers. C. Social and Ethical Impact Improved Reputation : Businesses that prioritize sustainability enhance their reputation and brand image, building trust with customers and stakeholders. Social Responsibility : Sustainable practices contribute to social responsibility by promoting fair labor practices and supporting local communities.

33. 33 Modern Supply Chain Management and Future Trends Sustainability and green supply chain practices are essential for businesses seeking to reduce their environmental impact and meet the expectations of consumers and stakeholders. By adopting sustainable sourcing, manufacturing, logistics, and inventory management practices, companies can create a more eco-friendly and efficient supply chain. These efforts not only benefit the environment but also provide economic and social advantages, positioning companies for long-term success in a rapidly changing global landscape. As sustainability continues to gain importance, businesses must prioritize green supply chain practices to remain competitive and responsible in the modern world.

34. 34 Modern Supply Chain Management and Future Trends The importance of supply chain resilience and risk management has been underscored by global disruptions like the COVID-19 pandemic. These disruptions have exposed vulnerabilities in supply chains worldwide, highlighting the need for robust strategies to anticipate, respond to, and recover from unforeseen events. Here’s an exploration of why supply chain resilience and risk management are crucial and how they can be effectively implemented:

35. 35 Modern Supply Chain Management and Future Trends Understanding Supply Chain Resilience and Risk Management A. Supply Chain Resilience Definition : Supply chain resilience refers to the ability of a supply chain to anticipate, adapt, and recover from disruptions while maintaining continuity of operations and meeting customer demands. Key Attributes : Resilient supply chains are characterized by flexibility, adaptability, responsiveness, and the capacity to absorb shocks and maintain functionality. B. Risk Management Definition : Risk management involves identifying, assessing, and mitigating risks that could potentially disrupt supply chain operations. Components : Effective risk management encompasses risk identification, assessment, prioritization, and the implementation of strategies to minimize the impact of risks.

36. 36 Modern Supply Chain Management and Future Trends Importance of Supply Chain Resilience and Risk Management A. Mitigating Disruptions Unpredictable Events : Global disruptions, such as the COVID-19 pandemic, natural disasters, geopolitical tensions, and cyberattacks, can severely impact supply chains, leading to delays, shortages, and increased costs. Continuous Operations : Resilient supply chains ensure the continuity of operations, allowing businesses to deliver products and services to customers even during disruptions. B. Enhancing Agility and Adaptability Rapid Response : Resilient supply chains can quickly adapt to changing conditions, enabling businesses to respond rapidly to market fluctuations, supply shortages, and shifts in demand. Flexibility : Flexibility in sourcing, production, and logistics allows companies to pivot and adjust operations as needed, reducing the impact of disruptions. C. Protecting Financial Performance Cost Management : Effective risk management helps control costs by minimizing the financial impact of disruptions, such as increased shipping costs, production delays, and inventory shortages. Revenue Stability : By ensuring the continuous flow of goods and services, resilient supply chains help maintain revenue streams and protect financial performance. D. Strengthening Customer Relationships Reliability and Trust : Companies that can reliably deliver products and services during disruptions build trust and strengthen relationships with customers and partners. Customer Satisfaction : Maintaining high service levels during disruptions enhances customer satisfaction and loyalty, providing a competitive advantage.

37. 37 Modern Supply Chain Management and Future Trends Strategies for Building Supply Chain Resilience and Risk Management A. Diversification and Redundancy Supplier Diversification : Engaging multiple suppliers for critical components reduces dependency on a single source and mitigates risks associated with supplier disruptions. Geographical Diversification : Distributing manufacturing and distribution facilities across different regions reduces the impact of localized disruptions. B. Digitalization and Visibility Real-Time Data : Implementing digital technologies and IoT devices enhances visibility across the supply chain, enabling real-time monitoring and data-driven decision-making. Predictive Analytics : Utilizing predictive analytics tools helps anticipate potential disruptions and optimize supply chain operations proactively. C. Collaboration and Communication Partner Collaboration : Building strong relationships with suppliers, logistics providers, and other partners enhances communication and coordination during disruptions. Information Sharing : Sharing information and insights with supply chain partners improves transparency and fosters collaborative problem-solving. D. Inventory Management and Flexibility Strategic Inventory : Maintaining strategic inventory reserves and safety stock ensures the availability of critical products during supply disruptions. Dynamic Replenishment : Implementing flexible inventory replenishment strategies allows companies to adjust inventory levels based on real-time demand and supply conditions.

38. 38 Modern Supply Chain Management and Future Trends Strategies for Building Supply Chain Resilience and Risk Management E. Scenario Planning and Risk Assessment Scenario Analysis : Conducting scenario planning exercises helps companies prepare for various disruption scenarios and develop contingency plans. Risk Assessment : Regularly assessing and prioritizing risks enables companies to focus resources on mitigating the most critical threats. F. Investment in Technology Automation and AI : Investing in automation and AI technologies enhances efficiency, reduces reliance on manual processes, and improves the ability to respond to disruptions. Blockchain : Utilizing blockchain technology can increase transparency and traceability across the supply chain, reducing the risk of fraud and improving trust.

39. 39 Modern Supply Chain Management and Future Trends Lessons Learned from the COVID-19 Pandemic A. Importance of Flexibility The pandemic highlighted the need for flexible supply chain strategies that can quickly adapt to changing conditions and customer demands. B. Value of Digital Transformation Companies that had invested in digital technologies and data analytics before the pandemic were better equipped to navigate disruptions and maintain operations. C. Need for Collaboration Collaboration and information sharing among supply chain partners proved essential for addressing challenges and finding solutions during the pandemic. D. Emphasis on Local Sourcing The pandemic emphasized the importance of local sourcing and regional supply chains to reduce dependency on global networks and enhance resilience.

40. 40 Modern Supply Chain Management and Future Trends Supply chain resilience and risk management are critical for navigating global disruptions and ensuring business continuity. By implementing strategies such as diversification, digitalization, collaboration, and scenario planning, companies can build resilient supply chains that can withstand unforeseen challenges. The lessons learned from the COVID-19 pandemic underscore the importance of flexibility, digital transformation, and collaboration in building robust and agile supply chains. As businesses continue to operate in an increasingly uncertain and interconnected world, prioritizing resilience and risk management will be key to achieving long-term success and sustainability.

41. 41 Modern Supply Chain Management and Future Trends Recent trends in supply chain operations, driven by technological advancements, changing consumer expectations, sustainability considerations, and the need for resilience, will shape the future of supply chain management. By embracing digital transformation, prioritizing sustainability, and enhancing resilience and agility, businesses can position themselves for success in an increasingly complex and dynamic global market. The future of supply chain operations will be characterized by increased efficiency, customer-centricity, and sustainability, as companies adapt to the evolving landscape and leverage emerging technologies to drive growth and innovation.

42. 42 Modern Supply Chain Management and Future Trends Recent case studies provide valuable insights into supply chain and operations management, highlighting lessons learned from various industries and companies. These lessons underscore the importance of resilience, agility, digital transformation, and sustainability in managing complex supply chain networks. Here are some notable case studies and the key lessons they offer:

43. 43 Modern Supply Chain Management and Future Trends The COVID-19 Pandemic and Global Supply Chains Case Study: Medical Supply Chains Background : During the COVID-19 pandemic, global supply chains faced unprecedented disruptions, particularly in the medical supply sector, where shortages of personal protective equipment (PPE) and ventilators were common. Key Lessons : Diversification and Flexibility : Companies must diversify their supplier base to reduce dependency on specific regions and increase flexibility to respond to sudden changes in demand. Local Manufacturing : Investing in local or regional manufacturing capabilities can mitigate the risks associated with global supply chain disruptions. Inventory Management : Maintaining strategic stockpiles of critical supplies ensures readiness for future disruptions.

44. 44 Modern Supply Chain Management and Future Trends Case Study: Automotive Industry Background : The automotive industry experienced significant supply chain disruptions due to lockdowns and component shortages, particularly semiconductors. Key Lessons : Risk Assessment and Scenario Planning : Conducting regular risk assessments and scenario planning helps companies anticipate potential disruptions and develop contingency plans. Agility and Adaptability : Building agile supply chains that can quickly adapt to changes in demand and supply conditions is crucial for maintaining operations. Collaboration and Communication : Strong collaboration and communication with suppliers and partners are essential for addressing challenges and finding solutions during disruptions.

45. 45 Modern Supply Chain Management and Future Trends Digital Transformation in Supply Chains Case Study: Amazon Background : Amazon has consistently leveraged digital technologies to optimize its supply chain, focusing on efficiency, speed, and customer satisfaction. Key Lessons : Automation and Robotics : Investing in automation and robotics enhances operational efficiency, reduces human error, and speeds up order fulfillment. Data-Driven Decision-Making : Utilizing data analytics to drive decision-making allows companies to optimize inventory levels, forecast demand accurately, and improve overall supply chain performance. Customer-Centric Approach : Prioritizing customer experience through seamless order processing and delivery increases customer satisfaction and loyalty.

46. 46 Modern Supply Chain Management and Future Trends Digital Transformation in Supply Chains Case Study: Walmart Background : Walmart has implemented blockchain technology to improve traceability and transparency in its food supply chain, enhancing food safety and quality. Key Lessons : Blockchain for Transparency : Implementing blockchain technology can increase transparency and traceability, reducing the risk of fraud and improving trust among stakeholders. Real-Time Visibility : Real-time visibility into supply chain operations allows for faster identification and resolution of issues, improving efficiency and safety. Collaboration with Partners : Collaborating with suppliers and partners to implement digital solutions ensures successful adoption and integration across the supply chain.

47. 47 Modern Supply Chain Management and Future Trends Sustainability and Green Supply Chains Case Study: Unilever Background : Unilever has prioritized sustainability in its supply chain, focusing on reducing environmental impact and promoting ethical practices. Key Lessons : Sustainable Sourcing : Committing to sustainable sourcing practices, such as using renewable and recycled materials, reduces environmental impact and enhances brand reputation. Circular Economy Models : Implementing circular economy models, where products are designed for reuse and recycling, minimizes waste and conserves resources. Transparency and Reporting : Regular sustainability reporting and transparency about environmental goals build trust with consumers and stakeholders.

48. 48 Modern Supply Chain Management and Future Trends Sustainability and Green Supply Chains Case Study: Patagonia Background : Patagonia, an outdoor clothing brand, is renowned for its commitment to sustainability and ethical supply chain practices. Key Lessons : Ethical Practices : Prioritizing ethical labor practices and fair trade ensures responsible sourcing and manufacturing, enhancing brand reputation. Customer Engagement : Engaging customers in sustainability initiatives, such as repair and recycling programs, fosters brand loyalty and environmental awareness. Long-Term Vision : Adopting a long-term vision for sustainability and integrating it into the core business strategy ensures consistent progress and impact.

49. 49 Modern Supply Chain Management and Future Trends Resilience and Risk Management Case Study: Procter & Gamble (P&G) Background : P&G has developed a resilient supply chain capable of withstanding various disruptions, from natural disasters to market fluctuations. Key Lessons : Supplier Collaboration : Building strong relationships with suppliers enhances collaboration and improves the ability to manage risks and disruptions. Scenario Planning : Engaging in scenario planning exercises helps identify potential risks and develop strategies to mitigate their impact. Flexibility and Adaptability : Creating flexible supply chain networks allows for quick adjustments to changes in demand and supply conditions.

50. 50 Modern Supply Chain Management and Future Trends Resilience and Risk Management Case Study: Cisco Systems Background : Cisco has implemented advanced risk management strategies to navigate supply chain disruptions and maintain operations. Key Lessons : Risk Monitoring and Assessment : Continuously monitoring and assessing risks helps companies proactively address potential threats and vulnerabilities. Resilient Infrastructure : Investing in resilient supply chain infrastructure, including redundant suppliers and flexible logistics networks, reduces the impact of disruptions. Innovation and Technology : Leveraging technology and innovation to enhance supply chain resilience and agility ensures long-term success and competitiveness.

51. 51 Modern Supply Chain Management and Future Trends Recent case studies in supply chain and operations management highlight the importance of resilience, digital transformation, sustainability, and risk management in navigating complex and dynamic environments. By learning from these examples, companies can develop strategies to enhance their supply chain operations, adapt to emerging trends, and achieve long-term success. Prioritizing these key areas will enable businesses to build robust supply chains capable of withstanding future challenges and seizing new opportunities.

52. The Business Strategies Behind Trader Joe’s, Primark, Chipotle and More

53. Order Winners and Order Qualifiers Source: Adapted from Nigel Slack, Stuart Chambers, Robert Johnston, and Alan Betts, Operations and Process Management , Prentice Hall, 2006, p. 47 1- 53

54. Positioning the Firm Cost Speed Quality Flexibility 1- 54

55. Positioning the Firm: Cost Waste elimination relentlessly pursuing the removal of all waste Examination of cost structure looking at the entire cost structure for reduction potential Lean production providing low costs through disciplined operations 1- 55

56. Positioning the Firm: Speed fast moves, fast adaptations, tight linkages Internet conditioned customers to expect immediate responses Service organizations always competed on speed (McDonald’s, LensCrafters, and Federal Express) Manufacturers time- based competition: build- to-order production and efficient supply chains Fashion industry two- week design- to-rack lead time of Spanish retailer, Zara 1- 56

57. Positioning the Firm: Quality Minimizing defect rates or conforming to design specifications; please the customer Ritz- Carlton - one customer at a time Service system is designed to “move heaven and earth” to satisfy customer Every employee is empowered to satisfy a guest’s wish Teams at all levels set objectives and devise quality action plans Each hotel has a quality leader 1- 57

58. Positioning the Firm: Flexibility ability to adjust to changes in product mix, production volume, or design National Bicycle Industrial Company offers 11,231,862 variations delivers within two weeks at costs only 10% above standard models mass customization : the mass production of customized parts 1- 58

59. Policy Deployment Policy deployment translates corporate strategy into measurable objectives Hoshins action plans generated from the policy deployment process 1- 59

60. Policy Deployment Derivation of an Action Plan Using Policy Deployment 1- 60

61. Balanced Scorecard Balanced scorecard measuring more than financial performance finances customers processes learning and growing Key performance indicators a set of measures that help managers evaluate performance in critical areas 1- 61

62. Balanced Scorecard Copyright 2009 John Wiley & Sons, Inc. 1- 62

63. Balanced Scorecard 1- 63 Dashboard

64. Operations Strategy S S e e r r v v i i c c e e s s P P r r o o c c e e s s s s a a n n d d P P r r o o d d u u c c t t s s T T e e c c h h n n o o l l o o g g y y Capacity Human Resources Quality Facilities Sourcing Operating Systems 1- 64

65. Learning Objectives of this Course Gain an appreciation of strategic importance of operations and supply chain management in a global business environment Understand how operations relates to other business functions Develop a working knowledge of concepts and methods related to designing and managing operations and supply chains Develop a skill set for quality and process improvement 1- 65

66. 66 Learning Objectives To understand the escalating importance of logistics and supply-chain management as crucial tools for competitiveness. To learn about materials management and physical distribution. To learn why international logistics is more complex than domestic logistics. To see how the transportation infrastructure in host countries often dictates the options open to the manager. To learn why international inventory management is crucial for success.

67. 67 International Logistics International logistics is the design and management of a system that controls the forward and reverse flow of materials, services, and information into, through, and out of the international corporation.

68. 68 International Logistics (cont.) Through the implementation of international logistics, the firm can implement cost-saving programs such as just-in-time (JIT), electronic data interchange (EDI), and early supplier involvement (ESI). The two phases of the movement of materials include: materials management, or the timely movement of materials, parts, and supplies. physical distribution, or the movement of the firm’s physical product to its customers.

69. 69 Three Concepts of Business Logistics Total Cost Concept Trade-off Concept Systems Concept

70. 70 Supply-Chain Management Supply-chain management is the integration of business processes from end user through original suppliers, that provide products, services, and information that add value for customers. Supply-chain management connects a company’s supply side with its demand side. It opens up supplier relationships for companies outside of the buyer’s domestic market.

71. Any organization, anywhere in the world, offering a product or a service has a supply chain. Products and Services are created from materials , using equipment , labor , time , money , and other resources . Producing and delivering products and services requires Suppliers , Manufacturers , and Customers ; all of which make up the links in a supply chain. Supply chains exist in organizations that are: Large or Small (i.e., a multinational corporation or a “mom & pop shop” on the local corner) Public or Private (i.e., a publically traded company or a privately held company) For-Profit or Not-for-Profit (i.e., a commercial business, government or a charitable institution) What is a Supply Chain? 71

72. Suppliers Customers Finished Material Suppliers (Tier 1) Intermediate Suppliers (Tier 2) Raw Material Suppliers (Tier 3) Wholesaler & Distributor Customers (Tier 1) Retail Customers (Tier 2) Consumers (Tier 3) Manufacturer (Your Company) Finished Product Manufacturer Internal Internal Internal External External External What is a Supply Chain? (continued) From SUPPLIERS : Raw Material, Intermediate, and/or Finished Material Suppliers To MANUFACTURERS : Finished Product Manufacturers (Internal and/or External) To CUSTOMERS : Wholesalers, Distributors, Retailers and/or Consumers Each of these are “Links” in the supply chain Inbound Transportation Outbound Transportation Air Truck Rail Water Pipeline Facilitated through the use of Logistics Warehousing A supply chain consists of the flow of materials and products . . .

73. Think about typical products that you buy Automobiles Books Candy Bars Cell phones Clothes / Shoes Fast food Laptop computers Soft Drinks What is your favorite Candy Bar? 73 Do you know what goes into making it?

74. Candy Bar Supply Chain (Simplified) 74 Suppliers Customers Manufacturer Chocolate Sugar Packaging Soy Lecithin Milk Milk Fat Lactose Cocoa Butter Sugarcane Paper Cocoa Beans Consumers Candy Bar Manufacturer Wholesalers and Distributors Retailers (Stores)

75. 75 Chocolate Sugar Packaging Soy Lecithin Milk Milk Fat Lactose Cocoa Butter Sugarcane Paper Cocoa Beans Supply Disruption Consumers Candy Bar Manufacturer Wholesalers and Distributors Retailers (Stores) Supply Chain Disruption 1 What happens if there is a shortage of Cocoa Beans ??? Suppliers Customers Manufacturer

76. 76 Chocolate Sugar Packaging Soy Lecithin Milk Milk Fat Lactose Cocoa Butter Sugarcane Paper Cocoa Beans Supply Disruption Consumers Candy Bar Manufacturer Wholesalers and Distributors Retailers (Stores) Supply Chain Disruption 2 Suddenly, you cannot get the Chocolate and Cocoa Butter that you need to make your Candy Bars Meanwhile . . . your other suppliers will continue to ship their products to you Suppliers Customers Manufacturer

77. 77 Consumers Candy Bar Manufacturer Chocolate Sugar Packaging Soy Lecithin Milk Milk Fat Lactose Cocoa Butter Sugarcane Paper Cocoa Beans Wholesalers and Distributors Retailers (Stores) Supply Disruption Supply Chain Disruption 3 Candy Bar production will be forced to stop Your customers still have inventory of candy bars that they previously purchased from you which they can continue to sell and your inventory of the other materials will start to build up Suppliers Customers Manufacturer

78. 78 Consumers Candy Bar Manufacturer Chocolate Sugar Packaging Soy Lecithin Milk Milk Fat Lactose Cocoa Butter Sugarcane Paper Cocoa Beans Wholesalers and Distributors Retailers (Stores) Supply Disruption Supply Chain Disruption 4 The disruption impacts all suppliers You are forced to cancel your orders for materials from all your suppliers until Cocoa Beans are available again Suppliers Customers Manufacturer

79. 79 Consumers Candy Bar Manufacturer Chocolate Sugar Packaging Soy Lecithin Milk Milk Fat Lactose Cocoa Butter Sugarcane Paper Cocoa Beans Wholesalers and Distributors Retailers (Stores) Supply Disruption Supply Chain Disruption 5 The disruption impacts all customers Your customers sell out all remaining inventory of candy bars which creates a TOTAL MARKET STOCKOUT Suppliers Customers Manufacturer

80. Candy Bar Supply Chain (Simplified) 80 Chocolate Sugar Packaging Soy Lecithin Milk Milk Fat Lactose Cocoa Butter Sugarcane Paper Cocoa Beans Consumers Candy Bar Manufacturer Wholesalers and Distributors Retailers (Stores) All supply chain links are interconnected and a disruption with one will likely impact all The supply chain is only as strong as its weakest link Suppliers Customers Manufacturer

81. Service firms offer intangible products , meaning products that cannot be physically touched. Supply Chains in the Service Industry It is not just products . . . services have a supply chain as well. 81 Many services require the use of Facilitating Goods which are tangible elements that are used along with the service provided. These items need to be purchased , transported , received , and warehoused in order to provide the service activity, and each has a supply chain.

82. 82 It is the coordination of a network of otherwise independent trading partners creating a desired product or service , and moving it from suppliers , through manufacturing , and out to customers when and where they want it. Supply Chain Management is the way business gets done. It is the execution process of any business. What is a Supply Chain Management?

83. Supply Chain Management accounts for $1.4 trillion (≈8%) of the total U.S. economy ---> annually . Companies have been expanding globally and speeding up every link in the supply chain to stay competitive. This has created a significant and growing shortage of supply chain talent --- which translates to JOBS !!! Current trends will continue to raise the bar in supply chain management, and by extension, the skills required: Continued and accelerated pace of globalization Expansion of e-Commerce Heightened focus on supply chain risk Widespread adoption of new technologies and innovations Talent Shortage in Supply Chain Management

84. Supply Chain Management is a skilled profession with cutting edge technologies and major innovations happening at an accelerated pace. Just a few examples: Technology and Innovation

85. Logistics: Warehousing, Transportation, and Distribution Finished Material Suppliers (Tier 1) Wholesaler & Distributor Customers (Tier 1) Finished Product Manufacturer Intermediate Suppliers (Tier 2) Raw Material Suppliers (Tier 3) Retail Customers (Tier 2) Consumers (Tier 3) Purchasing Strategic Sourcing Ethical and Sustainable Sourcing Supplier Relationship Management Customer Service Forecasting and Demand Planning Distribution Channel Management Customer Relationship Management Planning & Scheduling Operations Management Quality Assurance International Trade Risk Management Project Management Typical Supply Chain Career Areas Suppliers Customers Manufacturer Inbound Transportation Warehousing Outbound Transportation Distribution Inventory Management Material Handling Abundant job opportunities across all of these functional areas

86. Careers in Supply Chain Management Top 10 things you can expect from a career in Supply Chain Management Job Availability (entry level and advanced) Accelerated Growth and Advancement opportunities Job Security Excellent Income and Compensation packages Career Contentment Supply chain jobs available in every Industry and Worldwide Work Location choices. Your supply chain skills are portable! Travel and Relocation opportunities Opportunities to Specialize in supply chain Disciplines & Sectors Innovation and cutting edge Technologies Recent survey = 79% content with their career

87. 87 Transportation Infrastructure A firm’s logistics platform is determined by a location’s ease and convenience of market reach under favorable cost circumstances. The public sector’s investment priorities, safety regulations, tax incentives, and transport policies can have major effects on the logistics decisions of firms. The logistics manager must learn about existing and planned infrastructures abroad and at home and factor them into the firm’s strategy.

88. 88 Vessels Used in Ocean Shipping Liner Service Bulk Service Tramp Service

89. 89 Airfreight Airfreight is available to and from most countries, including the developing world. Forty percent of the world’s manufactured travel by air. Items that are high-value or high in density tend to travel by air.

90. 90 Considerations for Selecting a Mode of Transport Predictability Transit Time Cost Non-economic Factors

91. 91 Export Documentation A bill of lading is a contract between the exporter and the carrier indicating that the carrier has accepted responsibility for the goods and will provide transportation in return for payment. A commercial invoice is a bill for the goods stating basic information about the transaction, including a description of the merchandise, total cost of the goods sold, addresses of the shipper and seller, and delivery and payment terms. A freight forwarder specializes in handling export documentation.

92. 92 International Inventory Issues Inventories tie up a major portion of corporate funds, therefore proper inventory policies should be a major concern to the international logistician. Just-in-time inventory policies minimize the volume of inventory by making it available only when needed. The purpose of establishing inventory systems are: to maintain product movement in the delivery pipeline to have a cushion to absorb demand fluctuations

93. 93 Three Factors that Decide the Level of Inventory Order Cycle Time Desired Customer Service Levels Use of Inventories as a Strategic Tool

94. 94 International Packaging Issues Packaging is instrumental in getting the merchandise to the destination in a safe, presentable condition. Because of the added stress of international shipping, packaging that is adequate for domestic shipping may be inadequate for international shipping. Packaging considerations that should be taken into account are environmental conditions and weight. One solution to the packaging problem has been the development of inter-modal containers. Cost attention must be paid to international packaging.

95. 95 Storage Facilities A stationary period is involved when merchandise becomes inventory stored in warehouses. The location decision addresses how many distribution centers to have and where to locate them. Storage facilities abroad can differ in availability and quality. The logistician should analyze international product sales and then rank order products according to warehousing needs.

96. 96 Special Trade Zones Foreign trade zones are areas where foreign goods may be held or processed and then re-exported without incurring duties. Trade zones can be useful as transshipment points to reduce logistics cost and redesign marketing approaches. Governments and firms benefit from foreign trade zones.

97. 97 Export Processing Zones and Economic Zones In export processing zones , special rules apply that are different in other regions of the country. These zones usually provide tax-free and duty-free treatment for production facilities whose output is destined abroad. The maquiladoras of Mexico are one example of a program that permits firms to take advantage of sharp differentials in labor costs. Through the creation of special economic zones , the Chinese government has attracted many foreign investors bringing in millions of dollars.

98. 98 Centralized Logistics Management In international logistics, the existence of a headquarters staff that retains decision-making power over logistics is important. To avoid internal problems, both headquarters staff and local management should report to one person. This individual can contribute an objective view when inevitable conflicts arise in international logistics coordination.

99. 99 Decentralized Logistics Management When a firm serves many diverse international markets, total centralization might leave the firm unresponsive to local adaptation needs. If each subsidiary is made a profit center in itself, each one carries the full responsibility for its performance. Once products are within a specific market, increased input from local logistics operations should be expected and encouraged.

100. 100 Outsourcing Logistics Services The systematic outsourcing of logistics capabilities is a third option. By collaborating with transportation firms, private warehouses, or other specialists, corporate resources can be concentrated on the firm’s core product. One-stop logistics allows shippers to buy all the transportation modes and functional services from a single carrier.

101. 101 The Supply Chain and the Internet Because of the internet, firms are able to conduct many more global comparisons among suppliers and select from a wider variety of choices. When customers have the ability to access a company through the internet, the company must be prepared for 24-hour order-taking and customer service. For all countries, but particularly in developing nations, the issue of universal access to the internet is crucial.

102. 102 Logistics and Security After the terrorist attacks of 2001, companies have to deal with the fact that the pace of international transactions has slowed down and that formerly routine steps will now take longer. Logistics systems and modern transportation systems are often the targets of attacks. The need to institute new safeguards for international shipments will affect the ability of firms to efficiently plan their international shipments.

103. 103 Logistics and the Environment Since environmental laws and regulations differ across the globe, the firm’s efforts need to be responsive to a wide variety of requirements. Reverse distribution systems are instrumental in ensuring that the firm not only delivers the product to the market, but also can retrieve it from the market for subsequent use, recycling, or disposal. Companies need to learn how to simultaneously achieve environmental and economic goals.

104. Why The EV Industry Has A Massive Supply Problem

105. Understanding Distribution in the Supply Chain: Role and Significance

106. Where Did the Process of Distribution in Supply Come From? ▶ The process of distribution in supply can be traced back to the early days of commerce. As trade between different regions and cultures began to increase, the need for a system to distribute goods and services became apparent

107. The Evolution of Distribution in Supply ▶ The growth of trade: As trade between different regions and cultures has increased, the need for a system to distribute goods and services has become more important. ▶ The development of new transportation technologies: The development of new transportation technologies, such as railroads and steamships, has made it possible to move goods more quickly and efficiently. ▶ The growth of cities: The growth of cities has created a demand for new distribution methods, as people begin to live farther from where their goods are produced. ▶ The rise of globalization: The rise of globalization has led to even more changes in distribution, as businesses need to find ways to distribute their products to a global market.

108. The Future of Distribution in Supply ▶ The continued growth of e- commerce: E- commerce is growing rapidly, and this is likely to have a significant impact on the way goods and services are distributed. ▶ The development of new technologies: The development of new technologies, such as drones and self- driving vehicles, is likely to revolutionize the way goods and services are distributed. ▶ The changing needs of customers: The needs of customers are constantly changing, and businesses need to be able to adapt their distribution strategies to meet these needs.

109. The Rise and Fall of Montgomery Ward ▶ Montgomery Ward was one of the first major retailers in the United States. The company was founded in 1872 by Aaron Montgomery Ward, and it quickly became a leader in the mail- order business. ▶ Ward's innovation was to offer a wide variety of products at discounted prices through a catalog that was distributed nationwide. ▶ Ward's business model was very successful, and the company grew rapidly during the Industrial Revolution. By the early 1900s, Montgomery Ward was one of the largest retailers in the United States.

110. What Montgomery Ward Did Well ▶ Offered a wide variety of products at discounted prices through its catalog ▶ Catalog was also very well- designed

111. What Montgomery Ward Did Not Do Well ▶ Failed to adapt to the changing retail landscape. ▶ Focused on low prices, which led to a decline in customer satisfaction and a loss of market share

112. Where Montgomery Ward Is Today ▶ The Montgomery Ward brand is now owned by Sears Holdings Corporation. Sears has been struggling financially in recent years, and it is unclear whether the Montgomery Ward brand will be revived.

113. Conclusion ▶ The process of distribution in supply has come a long way since its early days. Today, it is a complex and sophisticated field that is essential to the smooth functioning of the global economy. As businesses continue to grow and expand, the need for efficient and effective distribution systems will only become more important.

114. Definition of Distribution in the Supply Chain ▶ Warehousing: Goods are stored in warehouses until they are needed to be shipped to customers. ▶ Transportation: Goods are transported from the warehouse to the customer using a variety of methods, such as trucks, ships, and airplanes. ▶ Logistics: Logistics is the process of managing the flow of goods through the distribution system. This includes activities such as inventory management, order fulfillment, and transportation scheduling. ▶ Customer service: Customer service is the process of interacting with customers to ensure that they are satisfied with the distribution process. This includes activities such as answering questions, resolving problems, and providing feedback.

115. Role of Distribution in the Supply Chain ▶ Customer satisfaction: Customers expect to receive products when they need them. If products are not delivered on time, customers may become dissatisfied and switch to a competitor. ▶ Profitability: Efficient distribution can help to reduce costs and increase profits. This is because it can help to reduce inventory levels, improve transportation efficiency, and provide better customer service. ▶ Competitive advantage: Efficient distribution can give businesses a competitive advantage. This is because it can help businesses to deliver products more quickly and cheaply than their competitors.

116. Ensuring Smooth Flow of Products to Meet Customer Demands Efficiently ▶ The location of customers: Businesses need to ensure that they have warehouses and distribution centers located in close proximity to their customers. This will help to reduce transportation costs and improve delivery times. ▶ The type of product: The type of product being distributed will also affect the distribution strategy. For example, perishable goods will need to be distributed more quickly than non- perishable goods. ▶ The needs of customers: Businesses need to understand the needs of their customers in order to provide them with the best possible distribution experience. This includes factors such as delivery speed, delivery options, and customer service.

117. Conclusion ▶ Distribution is a critical part of the supply chain. It is responsible for getting goods and services from the producer to the consumer in a timely and efficient manner. By understanding the role of distribution and the factors that affect it, businesses can develop distribution strategies that ensure a smooth flow of products to meet customer demands efficiently.

118. Functions and Responsibilities of a Distributor ▶ Inventory management: Distributors are responsible for managing the inventory of products that they sell. This includes ordering the correct amount of product, storing it in a safe and secure location, and tracking inventory levels. ▶ Order fulfillment: Distributors are responsible for fulfilling orders from customers. This includes picking the products from the warehouse, packing them, and shipping them to the customer. ▶ Customer service: Distributors provide customer service to customers who have questions or problems with their orders. This includes answering questions, resolving problems, and providing feedback. ▶ Marketing and sales: Distributors may also be responsible for marketing and selling products to retailers or other businesses. This includes developing marketing plans, generating leads, and closing sales.

119. Importance of Distributors in Expanding Market Reach ▶ Distributors can play an important role in expanding the market reach of manufacturers. They can help to reach a broader customer base by providing products to retailers in different geographic areas. They can also help to expand market coverage by providing products to retailers in different channels, such as online or brick-and-mortar stores.

120. Understanding the Difference Between Distribution and Logistics ▶ Distribution refers to the process of moving products from the manufacturer to the customer. ▶ Logistics, on the other hand, refers to the overall management of the flow of goods and services. This includes activities such as transportation, warehousing, and inventory management.

121. Distribution's Focus on Product Delivery and Customer Satisfaction ▶ Distribution places emphasis on delivering products to customers and meeting customer demands efficiently. ▶ This includes activities such as order fulfillment, customer service, and inventory management. ▶ Distributors strive to ensure that customers receive the products they need when they need them. ▶ Distributors also strive to provide excellent customer service, such as answering questions and resolving problems quickly.

122. Conclusion ▶ Distributors play an important role in the supply chain by providing a link between producers and consumers. ▶ Distributors help to ensure that products are available when and where customers need them, and they can also provide valuable services such as inventory management and order fulfillment. ▶ By focusing on product delivery and customer satisfaction, distributors can help manufacturers to increase sales and improve their reputation.

123. Additional Information ▶ Marketing and sales support: Distributors may help manufacturers to develop marketing plans, generate leads, and close sales. ▶ Financial services: Distributors may offer financial services to manufacturers, such as credit, financing, and inventory management. ▶ Technical support: Distributors may provide technical support to manufacturers, such as product training and troubleshooting

124. Impact of Logistics' Emphasis on Transportation, Warehousing, and Inventory Management ▶ Logistics is the process of planning, organizing, and managing the flow of goods and services from the point of origin to the point of consumption. It encompasses a wide range of activities, including transportation, warehousing, inventory management, and customer service. ▶ Transportation is the movement of goods from one location to another. It is a critical part of logistics, as it determines how quickly and efficiently goods can be delivered to customers. There are a variety of transportation options available, each with its own advantages and disadvantages. ▶ Warehousing is the storage of goods in a secure facility. It is important for businesses to have enough warehouse space to store their products, as well as the right equipment to handle the loading and unloading of goods. ▶ Inventory management is the process of ensuring that the right amount of goods is available in the right place at the right time. This is important for businesses to avoid stockouts, which can lead to lost sales, and to avoid overstocking, which can lead to unnecessary costs.

125. Importance of Effective Distribution Management ▶ Supply chain performance: Effective distribution management can help to improve supply chain performance by reducing lead times, improving inventory turns, and increasing customer service levels. ▶ Cost control: Effective distribution management can help to control costs by optimizing transportation routes, negotiating favorable freight rates, and managing inventory levels. ▶ Customer satisfaction: Effective distribution management can help to improve customer satisfaction by ensuring that products are delivered on time, in good condition, and at the right price.

126. Impact on Supply Chain Performance and Customer Satisfaction ▶ Reduce lead times: By optimizing transportation routes and managing inventory levels, well-managed distribution can help to reduce lead times, which can improve customer satisfaction. ▶ Improve inventory turns: By managing inventory levels effectively, well- managed distribution can help to improve inventory turns, which can reduce costs. ▶ Increase customer service levels: By ensuring that products are delivered on time, in good condition, and at the right price, well- managed distribution can help to increase customer service levels.

127. Role of Distribution Management in Cost Control and Optimization ▶ Optimize transportation routes: By optimizing transportation routes, well- managed distribution can help to reduce transportation costs. ▶ Negotiate favorable freight rates: By negotiating favorable freight rates, well-managed distribution can help to reduce transportation costs. ▶ Manage inventory levels: By managing inventory levels effectively, well-managed distribution can help to reduce inventory carrying costs.

128. Conclusion ▶ Logistics is a complex and essential part of the supply chain. Effective distribution management can help to optimize supply chain performance, cost control, and customer satisfaction. By emphasizing transportation, warehousing, and inventory management, logistics can support the distribution process and help businesses achieve their goals.

129. Additional Information ▶ Increase market share: By providing superior customer service and meeting customer demand, well-managed distribution can help businesses to increase market share. ▶ Improve brand reputation: By delivering products on time and in good condition, well-managed distribution can help to improve brand reputation. ▶ Reduce risk: By managing inventory levels effectively, well- managed distribution can help to reduce risk.

130. Improved Inventory Control and Demand Forecasting ▶ By tracking inventory levels and sales data, distribution managers can identify trends and patterns that can be used to forecast future demand. This information can then be used to ensure that the right amount of inventory is on hand to meet customer demand. ▶ By using data analytics, distribution managers can identify and optimize distribution routes and schedules. This can help to reduce transportation costs and improve delivery times, which can lead to improved inventory turnover. ▶ By working closely with suppliers, distribution managers can ensure that there is a smooth flow of goods throughout the supply chain. This can help to reduce the risk of stockouts and ensure that customers receive their orders on time.

131. Better Coordination Between Suppliers, Manufacturers, and Retailers ▶ Distribution management can also foster better coordination among supply chain partners. This can be done by sharing information about inventory levels, sales data, and demand forecasts. By working together, supply chain partners can ensure that goods are delivered to the right place at the right time, which can lead to improved efficiency and profitability.

132. Enhanced Customer Service and Satisfaction ▶ By ensuring that products are delivered on time and in good condition, distribution managers can help to improve customer satisfaction. This can lead to repeat business and increased sales. ▶ By providing accurate information about product availability, distribution managers can help customers to make informed purchasing decisions. This can help to reduce customer frustration and improve the overall customer experience. ▶ By offering flexible delivery options, distribution managers can meet the needs of different customers. This can help to improve customer satisfaction and loyalty.

133. Optimal Use of Resources and Reduced Operating Costs ▶ Optimizing transportation routes and schedules. This can help to reduce transportation costs and improve delivery times. ▶ Managing inventory levels effectively. This can help to reduce inventory carrying costs and improve inventory turnover. ▶ Using data analytics to identify and optimize distribution processes. This can help to reduce waste and improve efficiency.

134. Conclusion ▶ Effective distribution management can play a vital role in improving inventory control, demand forecasting, coordination among supply chain partners, customer service, and satisfaction. By optimizing the flow of goods and services throughout the supply chain, distribution managers can help businesses to reduce costs, improve efficiency, and increase profitability.

135. Additional Information ▶ Increase market share: By providing superior customer service and meeting customer demand, well- managed distribution can help businesses to increase market share. ▶ Improve brand reputation: By delivering products on time and in good condition, well-managed distribution can help to improve brand reputation. ▶ Reduce risk: By managing inventory levels effectively, well-managed distribution can help to reduce risk.

136. Supply Chain Complexity and Global Operations ▶ Inventory management: Managing inventory in a global supply chain can be complex, as businesses must consider factors such as different product regulations, varying demand patterns, and longer lead times. ▶ Demand fluctuations: Demand for products can fluctuate rapidly in a global market, which can make it difficult to forecast demand and ensure that the right amount of inventory is on hand. ▶ Transportation and logistics: Transportation and logistics can be more challenging in a global supply chain, as businesses must often deal with multiple carriers and different shipping regulations. ▶ Maintaining service quality and consistency: Maintaining service quality and consistency can be difficult in a global supply chain, as businesses must often deal with different cultures and languages.

137. Inventory Management and Demand Fluctuations ▶ The challenges of inventory management and demand fluctuations are closely related. When demand for a product fluctuates, businesses must adjust their inventory levels accordingly.

138. Inventory Management and Demand Fluctuations ▶ Inventory management is the process of planning, organizing, and controlling the flow of goods and materials from the point of production to the point of consumption. Demand fluctuations refer to the changes in the demand for a product or service over time.

139. Impact of Inventory Management Challenges and Demand Fluctuations on Distribution Activities ▶ The impact of inventory management challenges and demand fluctuations on distribution activities can be significant. ▶ Demand fluctuations can also have a significant impact on distribution activities.

140. Strategies for Managing Inventory and Demand Fluctuations ▶ Demand forecasting: Businesses can use demand forecasting to predict future demand for their products. This information can then be used to adjust inventory levels accordingly. ▶ Just-in-time (JIT) inventory management: JIT inventory management is a system where businesses only order the amount of inventory they need to meet immediate demand. This can help businesses to reduce inventory costs and improve efficiency. ▶ Demand pooling: Demand pooling is a strategy where businesses pool their demand for a product or service. This can help businesses to get better pricing from suppliers and improve efficiency. ▶ Flexible manufacturing: Flexible manufacturing is a system where businesses can quickly and easily change the production of a product to meet changing demand. This can help businesses to adapt to demand fluctuations and avoid stockouts.

141. Inventory management and demand fluctuations are important challenges that businesses must face. By using the strategies outlined above, businesses can manage these challenges and ensure that they have the right amount of inventory to meet customer demand.

142. Transportation and Logistics Challenges ▶ Transportation and logistics can also be challenging in a global supply chain. Businesses must often deal with multiple carriers and different shipping regulations. This can make it difficult to track shipments and ensure that they arrive on time.

143. Maintaining Service Quality and Consistency ▶ Maintaining service quality and consistency is important for any business, but it can be especially challenging in a global supply chain.

144. Conclusion ▶ The challenges posed by supply chain complexity and global operations can make distribution management difficult. However, by carefully planning and managing the supply chain, businesses can overcome these challenges and deliver products to customers on time and in good condition.

145. The rise of Apple’s IPHONE

146. 146 Operations Management = OM Management of ANY activities/process that create goods and provide services Exemplary Activities: Forecasting, Scheduling, Quality management Why to study OM At a typical manufacturing company Profit 5% OM Cost 21% Marketing Cost 26% Manufacturing Cost 48%

147. 147 The management of systems or processes that create goods and/or provide services Organization Finance Operations Marketing The distinct –active- role of operations: Inputs become Outputs after some Transformation Operations Management = OM

148. MGT 236 148 Typical Organization Chart

149. 149 Operations example in Manufacturing: Food Processing INPUTS PROCESS OUTPUTS Raw vegetables Cleaning Clean vegetables Metal sheets Cutting/Rolling/Welding Cans Energy, Vegetables Cutting Cut vegetables Energy, Water, Vegetables Cooking Boiled vegetables Energy, Cans, Boiled vegetables Placing Can food

150. 150 Types of Operations Operation Examples Goods producing Farming, mining, construction Storage/transportation Warehousing, trucking, mail, taxis, buses, hotels, location Exchange Trade, retailing, wholesaling, renting, leasing, loans Entertainment Radio, movies, TV, concerts, recording Communication Newspapers, journals, magazines, radio, TV, telephones, satellite

151. 151 Why OM? Core of all business organizations Many areas interrelated with OM activities Management of operations is critical to create and maintain competitive advantages

152. 152 Organization of Businesses Three basic functions Operations/Production Goods oriented (manufacturing and assembly) Service oriented (health care, transportation and retailing) Value-added (the essence of the operations functions) Finance-Accounting Budgets (plan financial requirements) Economic analysis of investment proposals Provision of funds (the necessary funding of the operations)

153. 153 Organization of Businesses (Cont.) Marketing Selling Promoting Assessing customer wants and needs Communicating those needs to operations The need for working closely Operations Finance Marketing

154. 154 Operations Interfaces

155. 155 Systems (Holistic) Approach Emphasizes interrelations among subsystems. A systems approach is essential whenever something is being designed, redesign implemented, or improved. It is important to take into account the impact on all parts of the system. Example: A new feature is added to a product. Designer must take into account how customers will view the change, instruction for using new feature, the cost, training of workers, production schedule, quality standard, advertising must be informed about the new feature.

156. 156 Systems Approach “ The whole is greater than the sum of the parts .” Suboptimization

157. 157 Value Added Value added: The difference between cost of inputs and price (??) of outputs. Is this definition right? Should value added include profit? Value added: The difference between the cost of inputs and the (market or fair) value or price of outputs .

158. Value-Added Inputs Land Labor Capital Transformation/ Conversion process Outputs Goods Services Control Feedback Feedback Feedback Value added

159. MGT 236 159 OM’s Transformation Role To add value Increase product value at each stage Value added is the net increase between output product value and input material value Provide an efficient transformation Efficiency – means performing activities well for least possible cost

160. 160 Degree of Standardization ! Standardized output Take advantage of standardized methods, less skilled workers, materials… Example: Iron, Wheat, most of commodities Customized output Each job is different Workers must be skilled Example: Hair cut

161. 161 Manufacturing (=Goods) vs. Service operations Production of goods (goods oriented) Tangible products Automobile Refrigerator Services (TV and auto repair, lawn care) Government Regulatory bodies, FAA, FDA Wholesale/retail Financial services Education

162. 162 Similarities for Service/Manufacturers Both use technology Both have quality, productivity, & response issues Both must forecast demand Both can have capacity, layout, and location issues Both have customers, suppliers, scheduling and staffing issues

163. 163 Goods vs. Service Operations ( Cont ) Differences Customer contact Uniformity of input Labor content of jobs Uniformity of output Measurement of productivity Production and delivery Quality assurance Amount of inventory

164. 164 Manufacturing vs. Service ! Characteristic Manufacturing Service Output Tangible Intangible Customer contact Low High Uniformity of output High Low Labor content Low High Uniformity of input High Low Measurement of productivity Easy Difficult Opportunity to correct quality problems Easy Difficult

165. 165 Steel production Automobile fabrication Home remodeling Retail sales Auto Repair Appliance repair Maid Service Manual car wash Teaching Lawn mowing High percentage goods Low percentage service Goods-service Continuum Low percentage goods High percentage service

166. 166 Manufacturing vs. Service Industries in US

167. 167 Growth of the Service Sector Service sector growing to 50-80% of non-farm jobs Global competitiveness Demands for higher quality Huge technology changes Time based competition Work force diversity

168. 168 Responsibilities of Operations Management Planning Capacity, utilization Location Choosing products or services Make or buy Layout Projects Scheduling Market share Plan for risk reduction, plan B? Forecasting

169. 169 OM Decisions All organizations make decisions and follow a similar path First decisions very broad – Strategic decisions Strategic Decisions – set the direction for the entire company; they are broad in scope and long-term in nature

170. 170 OM Decisions Following decisions focus on specifics - Tactical decision Tactical decisions: focus on specific day-to-day issues like resource needs, schedules, & quantities to produce are frequent Strategic decisions less frequent Tactical and Strategic decisions must align

171. 171 OM Decisions

172. 172 Operations Managers Controlling Inventory Quality Costs Organization Degree of standardization Subcontracting Process selection Staffing Hiring/lay off Use of overtime Incentive plans Job assignments

173. 173 Operations Management includes: Forecasting Capacity planning Scheduling Managing inventories Assuring quality Motivating employees Deciding where to locate facilities And more . . . Scope of Operations Management

174. 174 Help comes from Models A structure which has been built purposefully to exhibit features and characteristics of some other object. Do not use “thing” or “something” in a definition. For Improved understanding and communication Experimentation Standardization for analysis Abstraction vs. computability

175. 175 Modeling ! Use models Physical models (prototypes) Schematic models (Graphs, charts, pictures) Mathematical models, Statistical models Inventory models Linear programming Queuing techniques Project management models

176. 176 What type of models Simulation models : to test a proposed idea – Monte Carlo Simulation Optimization models : to create an optimal idea – Linear programming Pattern recognition models : to recognize a pattern – Statistics, Forecasting, data mining

177. 177 Decision Making Models Quantitative approaches Analysis of trade-offs Systems approach

178. 178 Models Are Beneficial Easy to use, less expensive Require users to organize Increase understanding of the problem Consistent tool Standardized format Specific objectives Systematic approach to problem solving Analysis of tradeoffs Enable “what if” questions Power of mathematics

179. 179 Pareto Phenomenon A few factors account for a high percentage of the occurrence of some event(s). 80/20 Rule - 80% of problems are caused by 20% of the activities. How do we identify the vital few?

180. 180 Historical Evolution of Operations Management Industrial revolution (1770’s) Scientific management (1911) Mass production Interchangeable parts Division of labor Human relations movement (1920-60) Unemployment insurance Pension plans Decision models (1915, 1960-70’s) Influence of Japanese manufacturers (1970-1990)

181. MGT 236 181 Historical Development con’t Reengineering 1990s Global competition 1980s Flexibility 1990s Time-Based Competition 1990s Supply chain Management 1990s Electronic Commerce 2000s Outsourcing & flattening of world 2000s For long-run success, companies must place much importance on their operations

182. 182 Trends in Business Major trends The Internet, e-commerce, e-business Management technology Globalization Management of supply chains Agility

183. 183 Recent Trends ! Worker involvement Environmental issues, emission reductions are popular after Central European floods Service economy in US, foreign production E-business – information technology Supply chain management Total Quality Management Globalization, emerging markets, NAFTA Lean Production – see the next page

184. 184 Production systems classified Craft Production : System in which highly skilled workers use simple, flexible tools to produce small quantities of customized goods. Carpenter Lean production : System that uses minimal amounts of resources to produce a high volume of high-quality goods with some variety. Dell Mass production: System in which lower-skilled workers use specialized machinery to produce high volumes of standardized goods. Ford

185. 185 Production systems classified Agile=Lean manufacturing It provides flexibility to switch quickly and economically from one product design to another with little disruption. This characteristic, in turn enables faster response to changes in customer demand. A sophisticated computerized inventory control system allows the plant to keep track of large number of parts. Keys to being an agile manufacturer are : Reduction in inventories, Reduction in turnaround times, Availability of automated flexible machinery, Rapid collection and processing of information

186. 186 Suppliers’ Suppliers Direct Suppliers Producer Distributor Final Consumer Simple Product Supply Chain Supply Chain : A sequence of activities and organizations involved in producing and delivering a good or service

187. 187 Stage of Production Value Added Value of Product Farmer produces and harvests wheat $0.15 $0.15 Wheat transported to mill $0.08 $0.23 Mill produces flour $0.15 $0.38 Flour transported to baker $0.08 $0.46 Baker produces bread $0.54 $1.00 Bread transported to grocery store $0.08 $1.08 Grocery store displays and sells bread $0.21 $1.29 Total Value-Added $1.29 A Supply Chain for Bread

188. 188 Other Important Trends Ethical behavior Operations strategy Working with fewer resources Cost control and productivity Quality and process improvement Increased regulation and product liability Lean production

189. MGT 236 189 Today’s OM Environment Customers demand better quality, greater speed, and lower costs Companies implementing lean system concepts – a total systems approach to efficient operations Recognized need to better manage information using ERP and CRM systems Increased cross-functional decision making

190. MGT 236 190 OM in Practice OM has the most diverse organizational function Manages the transformation process OM has many faces and names such as; V. P. operations, Director of supply chains, Manufacturing manager Plant manger, Quality specialists, etc. All business functions need information from OM in order to perform their tasks

191. 191 OM Across the Organization Most businesses are supported by the functions of operations, marketing, and finance The major functional areas must interact to achieve the organization goals

192. 192 OM Across the Organization – con’t Marketing is not fully able to meet customer needs if they do not understand what operations can produce Finance cannot judge the need for capital investments if they do not understand operations concepts and needs Information systems enables the information flow throughout the organization Human resources must understand job requirements and worker skills Accounting needs to consider inventory management, capacity information, and labor standards

193. 193 Highlights OM is the business function that is responsible for managing and coordinating the resources needed to produce a company’s products and services. The role of OM is to transform organizational inputs into company’s products or services outputs OM is responsible for a wide range of decisions, ranging from strategic to tactical. Organizations can be divided into manufacturing and service organizations, which differ in the tangibility of the product or service

194. 194 Highlights – con’t Many historical milestones have shaped OM. Some of these are the Industrial Revolution, scientific management, the human relations movement, management science, and the computer age OM is highly important function in today’s dynamic business environment. Among the trends with significant impact are just-in-time, TQM, reengineering, flexibility, time-based competition, SCM, global marketplace, and environmental issues OM works closely with all other business functions