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8/8/2019 Supply CHain Management 27
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SUPPLY CHAINMANAGEMENT
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Lea der com pa ny in S upply Cha in
WHO will be the LEADER in the Supply
CH AIN?
One that has the largest financial power or
superior technological knowledge or is the
greatest share of values among all the
organizations that are in the supply chain
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BINDING FACTOR- SCM?
G ains in belonging to SCM are
Commitment, trust, reliability & security
Financial & Technical support tangible
gains
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MINDSET
The participating companies are to be chosen
The strategies & policies of the participating
companies have to be aligned
A culture of trust & cooperation has to be
initiated & sustained
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COORDINATION
flow of materials, information & finance
O bjective is to satisfy the ultimate customer
with efficiency.
This deals more with physical or tangible
aspects.
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SHARING OF INFORMATION
Information Technology plays an important roleSuccess of supply chain depends significantly onthe necessary communication & sharing the same.
Information includes:Short range requirements of material or services &production schedules;Unanticipated problems at any point in the supply chain;Long range production plans, changes in the design of the products in the supply chain, changes in product mix& demand of the product.
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SHARING OF RISKS & REWARDS
Supply chain should not have even a single
dissatisfied partner
Rewards should be shared equally among
the partners
Transparency makes them vulnerable;
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J OINT PRO BLEM SOLVING
All the relevant partners in the supply chain
participate jointly on issues like the final
product, the product design, the parts
design
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POM & SUPPLY CHAIN
Service O rientation
SystemO
rientation synergy is the maingain of Supply chain
Competitiveness & Efficiency
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O RIENTATI O N & IMPLEMENTATI O NO F SUPPLY C H AIN INTRA C O MPANY
Similar to inter-organizational principles
The coming together of constituent organizations does not
eliminate the traditional functions with in those
organizations.
the functions remain, the analytical considerations remain,
what would change radically would be the channel
relationship, the way the interfacing functions between
organizations on the Supply Chain would relate to each
other.
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ServicesTo theCustomer
Competitiveness &Efficiency
Alignmentb/w Partner
organizations
Coordinationb/w Partner
organizationsB ringing the partner
organizations to betogether & to worktogether
ProcessO rientation
Aligning theirstrategies & Policies
Sharing of Information,risks & rewards
O rienting their organizationcultures & values
Provide leadership ensuringcooperation, alignment & trust Joint Problem solving
With in Each Partner Organization:Orienting the functional areas towards the supply chain objectives
customer service, system rethinking, competitiveness & efficiencyThe functional Areas have immediate effect are:
Production, Material including purchasing, Inventory Control, Stores, Logistics,Marketing, H uman Resources, Finance.
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P u rchas ing F un ct io n & SCM
W indow to the external market
The strength of a Supply Chain depends onthe interfacing relationships
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Tra ditio na l Ro le of P u rchas ing
Locate & select the right suppliers
Communicate to the suppliers the requirements as sent by
the manufacturers
Negotiate the right price - based upon costs, analysis of the
supply market environment, price forecasting, future needs of the
buying company
Prepare contracts
Control the suppliers performance
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Ro le of P u rchas ing o n a S upply Cha in
A company belonging to a supply chain includes all the
traditional roles. H owever, there is a change on the following
parameters:a) inter-organizational relationships with other members of
the supply chain;
b) Intra organizational relationships & communications.
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C u stomer S uppli er Re lat io n sh ip
Relationships between buyers and supplyingcompanies need a radical transformation
Trust is an important factor
Traditional Organizations Partnership Organizations
P urchase Criteria Lowest Price Competency
D uration Short-Term as needed by the
customer
Long Term
Number of Suppliers
Several for each item Mostly one or few for any item ornumber of groups
Volume of Business for the supplier
Limited as several suppliersshare the business
Large; one supplier gets all the business
Type of Agreement Contractual W orking Relationship is the main formof agreement in addition to the contract
Type of Interaction Formal Less of formal + more of Informal
Quality Variable. Customer relies oninspection
Right Quality, cost of quality is low.
Cost/ P rice Price appears low initially,but high actually
Effectively low. Cost savings fromsupplier improvements shared with cust.
D elivery In large consignments,infrequent-> largeinventories
Small lot, point of use & frequent->savings in inventory cost for thecustomer.
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Co n tinu e d.. ROLE OF PURCHASING IN A
SUPPLY CHAIN
Purchase Manager:Effective Communication with in the
organization
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SINGLE SOURCE vs MULTIPLE
SOURCE
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MUL TISO UR CING SING L E SO UR CE
B asis Customer lacks trust Full Trust in the supplier
Volume of the B usinesssupplier
Intentionally kept low inorder to engendercompetition
Large volume
Economies of scale May not be realized, unless
several firms order the sameitem. Supplying companiesmay delay the deliveries insome cases.
Present
Special Attention Lacks focus, too manycustomers to attend to.
Can provide special attentionto the customer.
Quality Can not be expected toprovide improved quality onhis own initiative. Also,difficult to pinpoint thesource of defect when there
are multiple suppliers.
Supplier would be willing t oprovide specialized quality,
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Co n tinu e d
MUL TISO UR CING SING L E SO UR CE
Variability Variability increases withmultisourcing. It is additivein nature.
Variability is due to onesingle supplier. So, it could below & easier to control.
Control over the Supplier(s) Difficult Easier
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Tack ling p rob lems - s ingl e s uppli er
Since the buyer knows the supplier very well, they would
have anticipation of the strike.
Instead of one supplier, have two.
W hen a company has multiple plants making the same
product, each plant may have a single source for an item but
each plant could have a different supplier. W hen the supply
to one of the plants is suddenly cut off due to strike in its
suppliers plant, a suppler for another plant could fill in.
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Whe n Buy er Com pa ny is Sma ll &S uppli er is BIG
The ideal supply chain thinking would not entertain such
distinctions
Traditionalists worry about it
R emedy
1 . Choose a supplier who himself follows TQM or JIT in
production or is ISO
9000 certified.2. The small buyer company may cultivate a good
relationship with large suppliers.
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S upply Cha in In Serv ices
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