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S C M ACTIVITYS C M ACTIVITY

Several models have been proposed forSeveral models have been proposed forunderstanding the activities required tounderstanding the activities required tomanage material movements acrossmanage material movements acrossorganizational and functional boundaries.organizational and functional boundaries.

SCOR is a supply chain managementSCOR is a supply chain managementmodel promoted by the Supply Chainmodel promoted by the Supply ChainManagement Council.Management Council.

Another model is the SCM Model proposedAnother model is the SCM Model proposed

by the Global Supply Chain Forum (GSCF).by the Global Supply Chain Forum (GSCF). Supply chain activities can be grouped intoSupply chain activities can be grouped intostrategic, tactical, and operational levelsstrategic, tactical, and operational levelsof activities.of activities.

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S C M ACTIVITY-S C M ACTIVITY-

STRTAGEICSTRTAGEIC Strategic network optimization, includingStrategic network optimization, including

the number, location, and size ofthe number, location, and size of

warehouses, distribution centers andwarehouses, distribution centers and

facilities.facilities. Strategic partnership with suppliers,Strategic partnership with suppliers,

distributors, and customers, creatingdistributors, and customers, creating

communication channels for criticalcommunication channels for critical

information and operational improvementsinformation and operational improvements

such as cross docking, direct shipping, andsuch as cross docking, direct shipping, and

third-party logistics.third-party logistics.

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STRTAGEICSTRTAGEIC Cross-dockingCross-docking is a practice in logistics of unloadingis a practice in logistics of unloading

materials from an incoming semi-trailer truck or rail car andmaterials from an incoming semi-trailer truck or rail car andloading these materials in outbound trailers or rail cars,loading these materials in outbound trailers or rail cars,with little or no storage in between. This may be done towith little or no storage in between. This may be done tochange type of conveyance, or to sort material intended forchange type of conveyance, or to sort material intended fordifferent destinations, or to combine material from differentdifferent destinations, or to combine material from different

origins.origins.1.1. In purest form this is done directly, with minimal or noIn purest form this is done directly, with minimal or no

warehousing. In practice many "cross-docking" operationswarehousing. In practice many "cross-docking" operationsrequire large staging areas where inbound materials arerequire large staging areas where inbound materials aresorted, consolidated, and stored until the outboundsorted, consolidated, and stored until the outboundshipment is complete and ready to ship.shipment is complete and ready to ship.

2.2. If the staging takes hours or a day the operation is usuallyIf the staging takes hours or a day the operation is usuallyreferred to as a "cross-dock" distribution center. If it takesreferred to as a "cross-dock" distribution center. If it takesseveral days or even weeks the operation is usuallyseveral days or even weeks the operation is usuallyconsidered a warehouse.considered a warehouse.

3.3. Crossdocking is used to decrease inventory storage byCrossdocking is used to decrease inventory storage bystreamlining the flow between the supplier and thestreamlining the flow between the supplier and the

manufacturermanufacturer

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STRTAGEICSTRTAGEIC Product design coordination, so that newProduct design coordination, so that new

and existing products can be optimallyand existing products can be optimally

integrated into the supply chain, loadintegrated into the supply chain, load

managementmanagement Information Technology infrastructure, toInformation Technology infrastructure, to

support supply chain operations.support supply chain operations.

Where-to-make and what-to-make-or-buyWhere-to-make and what-to-make-or-buy

decisionsdecisions

Aligning overall organizational strategyAligning overall organizational strategy

with supply strategywith supply strategy

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S C M tacticalS C M tactical

Sourcing contracts and other purchasing decisions.Sourcing contracts and other purchasing decisions.

Production decisions, including contracting,Production decisions, including contracting,locations, scheduling, and planning processlocations, scheduling, and planning processdefinition.definition.

Inventory decisions, including quantity, location,Inventory decisions, including quantity, location,and quality of inventory.and quality of inventory.

Transportation strategy, including frequency,Transportation strategy, including frequency,routes, and contracting.routes, and contracting.

Benchmarking of all operations againstBenchmarking of all operations againstcompetitors and implementation of best practicescompetitors and implementation of best practicesthroughout the enterprisethroughout the enterprise

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S C M operationalS C M operational

Daily production and distribution planning,Daily production and distribution planning,including all nodes in the supply chain.including all nodes in the supply chain.

Production scheduling for eachProduction scheduling for each

manufacturing facility in the supply chainmanufacturing facility in the supply chain(minute by minute).(minute by minute).

Demand planning and forecasting,Demand planning and forecasting,coordinating the demand forecast of allcoordinating the demand forecast of all

customers and sharing the forecast withcustomers and sharing the forecast withall suppliers.all suppliers.

Sourcing planning, including currentSourcing planning, including currentinventory and forecast demand, ininventory and forecast demand, in

collaboration with all suppliers.collaboration with all suppliers.

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S C M operationalS C M operational

Inbound operations, includingInbound operations, includingtransportation from suppliers andtransportation from suppliers andreceiving inventory.receiving inventory.

Production operations, including theProduction operations, including the

consumption of materials and flow ofconsumption of materials and flow offinished goods.finished goods.

Outbound operations, including allOutbound operations, including allfulfillment activities and transportation tofulfillment activities and transportation to

customers.customers. Order promising, accounting for allOrder promising, accounting for allconstraints in the supply chain, includingconstraints in the supply chain, includingall suppliers, manufacturing facilities,all suppliers, manufacturing facilities,distribution centers, and other customersdistribution centers, and other customers

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S c m process viewS c m process view

Cycle viewCycle view

Pull viewPull view

Push process viewPush process view

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Cycle viewCycle view

Customer order cycleCustomer order cycle

Replenishment cycleReplenishment cycle

Manufacturing cycleManufacturing cycle Procurement cycleProcurement cycle

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Customer order cycleCustomer order cycle

Customer arrivalCustomer arrival

Customer orderCustomer order

Customer order deliveryCustomer order delivery Customer order receivingCustomer order receiving

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Replenishment cycleReplenishment cycle

TriggerTrigger

Order entryOrder entry

Order fulfillmentOrder fulfillment Order receiptOrder receipt

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Other cyclesOther cycles

Manufacturing + procurement cycleManufacturing + procurement cycle

Applicable as beforeApplicable as before

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Competitive strategiesCompetitive strategies

Set of customer needs a companySet of customer needs a company

seeks to satisfy through its productseeks to satisfy through its product

and servicesand services

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Value chainValue chain

Complete product cycle ;Complete product cycle ;

Design, specs, demand creation,Design, specs, demand creation,review, re launch ..review, re launch ..

Finance, accounting, it, hrd supportFinance, accounting, it, hrd supportand facilitate the functioning of valueand facilitate the functioning of value

chainchain

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Achieving a strategic fitAchieving a strategic fit

The competitive and supply chainThe competitive and supply chain

strategies have the same goalstrategies have the same goal

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Strategic fit achievementStrategic fit achievement

U.standing the customerU.standing the customer

U.standing the supply chainU.standing the supply chain

Achieving strategic fitAchieving strategic fit

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S c m driversS c m drivers

InventoryInventory

TransportationTransportation

FacilitiesFacilities informationinformation

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Obstacles to strategic fitObstacles to strategic fit

Increasing variety of productsIncreasing variety of products

Decreasing product life cyclesDecreasing product life cycles

Increasingly demanding customersIncreasingly demanding customers Fragmentation of supply chainFragmentation of supply chain

ownershipownership

GlobalisationGlobalisation Executing strategies??Executing strategies??

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S C M INTEGRATIONS C M INTEGRATION

Successful SCM requires a change fromSuccessful SCM requires a change frommanaging individual functions tomanaging individual functions tointegrating activities into key supply chainintegrating activities into key supply chainprocesses.processes.

EG; the purchasing department placesEG; the purchasing department placesorders as requirements becomeorders as requirements becomeappropriate. Marketing, responding toappropriate. Marketing, responding tocustomer demand, communicates withcustomer demand, communicates withseveral distributors and retailers, andseveral distributors and retailers, andattempts to satisfy this demand.attempts to satisfy this demand.

Shared information between supply chainShared information between supply chainpartners can only be fully leveragedpartners can only be fully leveragedthrough process integrationthrough process integration

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Supply chain business processSupply chain business process

integration involves collaborativeintegration involves collaborative

work between buyers and supplierswork between buyers and suppliers

joint product developmentjoint product development

common systems and sharedcommon systems and shared

informationinformation

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According to Lambert and Cooper (2000)According to Lambert and Cooper (2000)

operating an integrated supply chainoperating an integrated supply chain

requires continuous information flows,requires continuous information flows,

which in turn assist to achieve the bestwhich in turn assist to achieve the bestproduct flows.product flows.

However, in many companies,However, in many companies,

management has reached the conclusionmanagement has reached the conclusion

that optimizing the product flows cannotthat optimizing the product flows cannotbe accomplished without implementing abe accomplished without implementing a

process approach to the business.process approach to the business.

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The key supply chain processes stated byThe key supply chain processes stated byLambert (2004) are:Lambert (2004) are:

Customer relationship managementCustomer relationship management Customer service managementCustomer service management Demand managementDemand management Order fulfillmentOrder fulfillment Manufacturing flow managementManufacturing flow management

Supplier relationship managementSupplier relationship management Product development andProduct development andcommercializationcommercialization

Returns managementReturns management

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One could suggest other key criticalOne could suggest other key criticalsupply business processes combiningsupply business processes combiningthese processes stated by Lambert suchthese processes stated by Lambert suchas:as:

Customer service managementCustomer service management ProcurementProcurement Product development andProduct development and

commercializationcommercialization

Manufacturing flow management/supportManufacturing flow management/support Physical distributionPhysical distribution Outsourcing/partnershipsOutsourcing/partnerships Performance measurementPerformance measurement

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SCM PERFORMANCESCM PERFORMANCE

INTERNAL MESUREMENTINTERNAL MESUREMENT

EXTERNAL MESUREMENTEXTERNAL MESUREMENT

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SCM INTERNAL MEASURESCM INTERNAL MEASURE

CostCost

Customer ServiceCustomer Service

Productivity measuresProductivity measures Asset measurement, andAsset measurement, and

Quality.Quality.

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S C M EXTERNALS C M EXTERNAL

MESURESMESURES customer perception measurement,customer perception measurement,

best practice benchmarking.best practice benchmarking.

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S C M COMPONENTSS C M COMPONENTS

The literature on business processThe literature on business process

reengineering, buyer-supplierreengineering, buyer-supplier

relationships, and SCM suggestsrelationships, and SCM suggests

various possible components thatvarious possible components thatmust receive managerial attentionmust receive managerial attention

when managing supply relationships.when managing supply relationships.

Lambert and Cooper (2000)Lambert and Cooper (2000)identified the following componentsidentified the following components

which arewhich are

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S C M COMPONENTSS C M COMPONENTS

Planning and controlPlanning and control

Work structureWork structure

Organization structureOrganization structure

Product flow facility structureProduct flow facility structure Information flow facility structureInformation flow facility structure

Management methodsManagement methods

Power and leadership structurePower and leadership structure

Risk and reward structureRisk and reward structure

Culture and attitudeCulture and attitude

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SCM COMPONETNSSCM COMPONETNS

Based on study, Baziotopoulos (2004)Based on study, Baziotopoulos (2004)

suggests the following supply chainsuggests the following supply chain

components:components:

ForFor customer service managementcustomer service management::Includes the primary level component ofIncludes the primary level component of

customer relationship management, andcustomer relationship management, and

secondary level components such assecondary level components such as

benchmarking and order fulfillment.benchmarking and order fulfillment.

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ForFor product development andproduct development and

commercializationcommercialization: Includes the: Includes the

primary level component of Productprimary level component of Product

Data Management (PDM), andData Management (PDM), andsecondary level components such assecondary level components such as

market share, customer satisfaction,market share, customer satisfaction,

profit margins, and returns toprofit margins, and returns tostakeholdersstakeholders

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ForFor physical distribution,physical distribution,

manufacturing support andmanufacturing support and

procurementprocurement: Includes the primary: Includes the primary

level component of enterpriselevel component of enterpriseresource planning (ERP), withresource planning (ERP), with

secondary level components such assecondary level components such as

warehouse management, materialwarehouse management, materialmanagement, manufacturingmanagement, manufacturing

planning, personnel management,planning, personnel management,

and postponement (orderand postponement (order

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ForFor performance measurementperformance measurement::

Includes the primary level component ofIncludes the primary level component of

logistics performance measurement,logistics performance measurement,

which is correlated with the informationwhich is correlated with the informationflow facility structure within theflow facility structure within the

organization. Secondary level componentsorganization. Secondary level components

may include four types of measurementmay include four types of measurement

such as: variation, direction, decision andsuch as: variation, direction, decision andpolicy measurements. More specifically, inpolicy measurements. More specifically, in

accordance with these secondary levelaccordance with these secondary level

components, total cost analysis (TCA),components, total cost analysis (TCA),

customer profitability analysis (CPA), andcustomer profitability analysis (CPA), and

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ForFor outsourcingoutsourcing: Includes the: Includes the

primary level component ofprimary level component of

management methods, and themanagement methods, and the

strategic objectives for particularstrategic objectives for particularinitiatives in key areas ofinitiatives in key areas of

information technology, operations,information technology, operations,

manufacturing capabilities, andmanufacturing capabilities, andlogistics (secondary levellogistics (secondary level

components).components).

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