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Global Logistics Management
Shihyu Chou
National Taiwan Normal University
Unless noted, the course materials are licensed under Creative Commons Attribution-NonCommercial-ShareAlike 3.0 Taiwan (CC BY-NC-SA 3.0)
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Learning objectives
Highlight the role of logistics and supply chain strategy in the context of firm strategy, and see how logistics and supply chain strategy can actually sometimes drive firm strategy
Outline the evolution of manufacturing, from which various logistics and supply chain strategies have emerged
Look at both lean and agile logistics strategies, and the role of mass customization in the latter
Develop a taxonomy of supply chain strategies
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Outline
Definitions of logistics and SCM Strategy The evolution of manufacturing Lean production Agile supply chains and mass customization Combined logistics strategies Critical factors to consider in supply chain
planning
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Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p35)
What is logistics?
Logistics involves getting, in the right way, the right product, in the right quantity and right quality, in the right place at the right time, for the right customer at the right cost (8Rs)
It’s not just ‘trucks and sheds’
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What is supply chain management?
The supply chain is the network of organizations that are involved, through upstream and downstream linkages, in the different processes and activities that produce value in the form of products and services in the hands of the ultimate consumer
Supply chain management (SCM) is the management across a network of upstream and downstream organizations of material, information and resource flows that lead to the creation of value in the form of products and / or services
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Strategy– It is about planning and configuring the organization
for the future according to certain stakeholder expectations.
– A particular long term plan for success
An organization without a strategy is like a ship without a compass
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Corporate strategy
Business unit strategy
Functional strategy
Top-down view
Firm level
SBU level
departmental level(marketing, production, logistics,…)
9National Taiwan Normal University Shihyu Chou(reference: Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p36))
Corporate Strategy
SBU A’s Strategy
SBU B’s strategy
Strategy: Function A1
Strategy: Function A2
Strategy: Function A3
Strategy: Function B1
Strategy: Function B2
Strategy: Function B3
Logistics & SCM Strategy
A holistic view of logistics and SCM strategy formulation 10
National Taiwan Normal University Shihyu Chou(reference: Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p37))
SCM is an activity that is truly cross-functional and not limited to one functional area.
Companies need to evolve their strategies to meet the challenges of the dynamic, ever changing business environment.
Integration is a key feature of effective SCM Formulating a strategy for logistics and SCM
should not be restricted to the logistics function; instead it should involve taking a cross-functional, process based perspective.
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Output variety
Output volume
Craft productionMass production
Lean production
Mass production
The evolution of production strategy
13National Taiwan Normal University Shihyu Chou(reference: Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p39))
Toyota Production System (TPS) is the origin of lean production and lean logistics. (Kiichiro Toyota, Taiichi Ohno, and others)
They improved the Ford can production model and also included the thinking of quality.
TPS: – The emphasis is not on the efficiency of individual
machines, but on the flows through the system.
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Lean production:– Quick machine turnover, elimination of waste, even
production flows, low levels of inventory, faster total process time, achieving total quality
– Pulled system (JIT) rather than push system
Eliminating waste in a pull based value stream of activities with level production (i.e. even production runs with neither idle time nor surges in demand) and just-in-time inventory management
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Typical wastes:– Overproduction, waiting, transportation, inappropriate
processing, unnecessary inventory, unnecessary motion, defects
A key aspect of lean is ensuring that value is added at each stage of the process and steps in the process that do not add value are eliminated
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Lean can also be applied in the service context. Lean consumption, the principles:
– Solve the customer’s problem completely– Don’t waste the customer’s time– Provide exactly what the customer wants– Provide what’s wanted exactly where it’s wanted– Provide what’s wanted where it’s wanted exactly when
it’s wanted– Continually aggregate solutions to reduce the
customer’s time and hassle.
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Agile supply chains
The agile supply chain is a demand-pull chain designed to cope with volatile demand. – Structured so as to allow maximum flexibility
Enabled by mass customization– Often incorporates postponed production
Mass customization involves customization into various different finished products of what are largely mass produced product.
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Mass customization
Customers usually concentrate on the dissimilar features among the similar products.
Different product configurations contain a majority of shared components and features to accommodate volume and variety
Enabled by postponement – the reconfiguration of product and process design so as to allow
postponement of final product customization as far downstream as possible
– Not only applied to manufacturing – E.g. Packaging postponement is merely delaying final packaging
of products until customer orders are received
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Before standardization After standardization
The principle of postponement22
National Taiwan Normal University Shihyu Chou(reference: Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p43))
Toyota AYGO Citroen C1 Peugeot 107
• All three are produced in the new, purpose-built joint TPCA factory in the Czech Republic
• All three share 92% of the same components
23
Flickr Arrr! Flickr Andy_BB Flickr Tim van Rooyen
A taxonomy for selecting global supply chain strategies
Supply demand characteristics Resulting pipelines
Short lead time + predictable demand Lean, continuous replenishment
Short lead time + unpredictable demand Agile, quick response
Long lead time + predictable demand Lean, planning and execution
Long lead time + unpredictable demand Leagile production/logistics postponement
LeanPlan and Execute
LeagilePostponement
LeanContinuous
replenishment
AgileQuick Response
Long lead time
Short lead time
Unpredictable demandPredictable demand
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National Taiwan Normal University Shihyu Chou(reference: Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p46))
National Taiwan Normal University Shihyu Chou(reference: Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p46))
Manufacture of base product
Final MarketsAgileLean
Decoupling point
The leagile supply chain
(the base product can be manufactured at a remote location and shipped to locations nearer the final market) 26
National Taiwan Normal University Shihyu Chou(reference: Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p48)
Critical factors to consider in supply chain planning (I)
Living supply chains– Companies use a process of dynamic alignment to
match changing customer needs and desires with different supply strategies.
Focus on processes and flows– A supply chain approach in that it allows a full end-to-
end perspective rather than focus on separate functional areas
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Critical factors to consider in supply chain planning (II)
Focus on high level objectives– The best supply chains are agile, adaptable and have
aligned interests among the firms in the supply chain. This is a ‘Triple A Supply Chain. (Hau Lee from Stanford)
The importance of people – It’s people who drive the supply chain, both inside and
outside a firm, not hard assets or technology. You can’t do anything without the right people.
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Critical factors to consider in supply chain planning (III)
Its supply chains that compete– Increasingly it is supply chains that compete more so
than individual firms and products– A company can have the best and most sophisticated
product in the world, but if it doesn’t have a good supply chain behind it, then it will likely not be able to compete, especially in terms of cost and speed, and indeed many other attributes also.
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Page Work Licensing Author/Source
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Highlight the role of logistics… chain strategy can actuallysometimes drive firm strategy
Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p35)
3Outline the evolution of manufacturing,… chain strategies have emerged
Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p35)
3
Look at both lean and agile logistics strategies…of mass customization in the latter
Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p35)
3Develop a taxonomy of supply chain strategies Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics
and Supply Chain Management, John Wiley & Sons, Ltd.(p35)
4
StrategyThe evolution of …consider in supply chain planning
Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p35)
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Page Work Licensing Author/Source
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Logistics involves getting, …right customer at the right cost (8Rs)
Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p9)
6The supply chain is the network of …in the hands of the ultimate consumer
Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p10)
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Supply chain management (SCM) is …products and / or services
Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p11)
8It is about planning and …according to certain stakeholder expectations.
Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p36)
8 A particular long term plan for success
Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p36)
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Page Work Licensing Author/Source
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National Taiwan Normal University Shihyu Chou(reference: Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p36))
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National Taiwan Normal University Shihyu Chou(reference: Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p37))
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SCM is an activity that is …not limited to one functional area.
Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p37)
11
Companies need to evolve …the dynamic, ever changing business environment.
Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p37)
11 Integration is a key feature of effective SCM
Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p37)
Copyright Declaration
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Page Work Licensing Author/Source
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Formulating a strategy for logistics …taking a cross-functional, process based perspective.
Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p38)
13
National Taiwan Normal University Shihyu Chou(reference: Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p39))
14 The emphasis is not… but on the flows through the system.
Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p39)
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Quick machine turnover…faster total process time, achieving total quality
Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p39)
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Eliminating waste in a pull based value …and just-in-time inventory management.
Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p42)
Copyright Declaration
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Page Work Licensing Author/Source
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A key aspect of lean is ensuring …the process that do not add value are eliminated
Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p41)
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Solve the customer’s problem completely…. solutions to reduce the customer’s time and hassle.
Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p41)
20Mass customization involves …products of what are largely mass produced product.
Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p42)
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Customers usually concentrate on the dissimilar features among the similar products.
Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p42)
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the reconfiguration of product and …customization as far downstream as possible
Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p43)
Copyright Declaration
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Page Work Licensing Author/Source
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Packaging postponement is …products until customer orders are received
Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p43)
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National Taiwan Normal University Shihyu Chou(reference: Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p43))
23 Flickr Arrr!http://www.flickr.com/photos/gasheadsteve/157345234/sizes/m/in/photostream/2012/09/24 visited
23Flickr Andy_BBhttp://www.flickr.com/photos/andyboohh/5421789547/2012/10/15 visited
23Flickr Tim van Rooyenhttp://www.flickr.com/photos/timmee/282614963/2012/10/15 vistied
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Page Work Licensing Author/Source
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All three are produced in the new, purpose-built joint TPCA factory in the Czech Republic
Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p44)
23 All three share 92% of the same components
Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p44)
25
National Taiwan Normal University Shihyu Chou(reference: Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p46))
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National Taiwan Normal University Shihyu Chou(reference: Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p46))
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National Taiwan Normal University Shihyu Chou(reference: Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p48)
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Companies use a process of …needs and desires with different supply strategies.
Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p48)
Copyright Declaration
37
Page Work Licensing Author/Source
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The best supply chains are agile…This is a ‘Triple A Supply Chain. (Hau Lee from Stanford)
Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p49)
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It’s people who drive the supply chain, …You can’t do anything without the right people.
Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p49)
Copyright Declaration
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