Supply Chain Management

SUPPLYCHAIN

MANAGEMENT

S. Ameer Hassan Rizvi

Instructor’s Profile

Name : Ameer Rizvi 1998-2001: Oracle Corp.

Presale, Business Consulting, Apps Trainer 2002-2003: Deloitte & Touché

ConsultingOracle Financials Training

2003-2005: Arthur ConsultingOracle Financials Consultant

2006-2010: IBAPermanent Faculty Member

Why Study SCM ?

Expectations from the Course?

Class Rules

?

SCM Course Outline

SCM Introduction Purchasing Management Supplier Relationship Demand Forecasting and

Collaborative Planning Aggregate Planning

Inventory Management Process Management: JIT

and Quality Management Designing Distribution

Network Domestic and International

Transportation Information Technology in

SCM

Other Assignments

SCM Survey SCM Case Studies SCM Games SCM Articles and Videos (from the

Internet) SCM Term Paper (Includes SCM

Workbook)

Grading

1st & 2nd Term 30 Marks Final 30 Marks Term Report (Including Survey) 30

Marks Presentation 10 Marks

Total 100 Marks

SCM 1-9

What is a Supply Chain? Objectives of a Supply Chain. The Importance of Supply Chain Flows Tends in Supply Chain Decision Phases in a Supply Chain Process View of a Supply Chain Examples of Supply Chains

What is Supply Chain Management?

The planning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activities … also includes coordination with channel partners, which can be suppliers, intermediaries, third party service providers, and customers.

Council of Supply Chain Management Professionals

What is a Supply Chain?A supply chain consists of the flow of products

and services from: Raw materials manufacturers, to Component and intermediate

manufacturers, to Final product manufacturers, to Wholesalers and distributors and then to Retailers

Connected by transportation and storage activities, andIntegrated through information, planning, and process

sharing activitiesMany large firms are moving away from in-house

Vertically Integrated structures to Supply Chain Management

Product and Services flow

Recycling and Returns

Information/planning/activity integration and Funds

Transportation & storage activities

End-product manufacturer(or focal firm)

Raw material suppliers Wholesalers,

distributors

Intermediatecomponents

manufacturers

Retailers

EndCustomer


Information

Money

Managing Flows

DistributorManufacturerSupplier Retailer Customer

Supply chain management is the management of flows between

and among supply chain stages to maximize total supply chain

profitability

Channels of Distribution

ConsumerChannel 1

ConsumerChannels

Producer Agent/Broker Wholesaler Retailer Users

Channel 2 Consumer

Channel 3 Consumer

Channel 4 Consumer

Channel 5 Consumer/Business

Channel 6 Business

Channel 7 Business

Channel 8 Business

Consumer/ BusinessChannel

BusinessChannels

What is Supply Chain

Organizational Scope of Supply Chain Management Demand Forecasting Purchasing & Supplier Management Production / Manufacturing Inventory Management Warehouse Management Logistics / Distribution New Product Development

The Value Chain ( Product and Information flow?)

Supportactivities

Primary activities

Inbound logistics Materials receiving, storing, and distribution to manufacturing premisesOperations Transforming inputs into finished products.Outbound logistics Storing and distributing productsMarketing and Sales Promotions and sales forceService Service to maintain or enhance product valueCorporate infrastructure Support of entire value chain, e.g. general management planning,

financing, accounting, legal services, government affairs, and QMHuman resources management Recruiting, hiring, training, and developmentTechnology Development Improving product and manufacturing processProcurement Purchasing input

Flows in Supply Chain

Product Flow Information Flow Money

Exercise

Design a high level model of an Organization depicting the Product and Information flow within the departments of the organization

What is a Supply Chain?

Customer is an integral part of the supply chain

Includes movement of products, information, and funds in both directions

Potential stages in a Supply Chain

DistributorManufacturerSupplier Retailer Customer



Information/planning/activity integration




distributors


manufacturers

Retailers

EndCustomer

1-22


Customer wantsdetergent and goes

to Jewel

JewelSupermarket

Jewel or thirdparty DC

P&G or othermanufacturer

1-23



to Jewel

JewelSupermarket



PlasticProducer

TennecoPackaging

Chemicalmanufacturer

(e.g. Oil Company)

1-24



to Jewel

JewelSupermarket



PlasticProducer


(e.g. Oil Company)

TennecoPackaging

Paper Manufacturer

TimberIndustry


(e.g. Oil Company)

Supply Chain Management

Old paradigm - Vertically integrated firm with emphasis on short-term, company focused performance.

New paradigm - Focused activities in areas of specialization; voluntary, trust-based relationships with suppliers and customers. All participants in the supply chain benefit. Boundaries extend from “the firm’s suppliers’

suppliers to its customers’ customers (i.e., second tier suppliers and customers).”

Supply chains use reverse logistics to handle returned products, warranty repairs, and recycling.

No. of Supply Chain Partners Impact on Supply Chains

Higher the cost Longer the lead time More Inventory build ups (Higher Inventory

Cost) Information mismanagement


ConsumerChannel 1

ConsumerChannels


Channel 2 Consumer

Channel 3 Consumer

Channel 4 Consumer


Channel 6 Business

Channel 7 Business

Channel 8 Business


BusinessChannels

Why Supply Chain Management?

Responsiveness

QualityAffordability

What the Customer Wants ?

Poor Performing Supply Chain

Typical Problems along the Supply Chain Frequent Inventory Stock out or large

Inventory build ups Very Long Lead Times Poor Information Flow among supply chain

partners Poor Material flow among supply chain

partners Poor Demand Forecasting

Result is Increased operational cost and poor organizational performance

Typical Issues in Organization Poor Quality of the Finished Products Poor Supplier Management Excess Inventory Inventory Stockout Poor Production Scheduling Poor warehouse Management Lack of departmental Coordination Poor Demand Forecasting Poor Purchasing Management

SCM provides Solutions for Problems

Poor Quality of the Finished Products ( TQM and Six Sigma)

Poor Supplier Management (Supplier evaluation & Certification)

Excess Inventory (JIT, ERP Procurement and Visibility)

Inventory Stockout (ERP Inventory Management) Poor Production Scheduling ( MRP Planning and

Production) Poor warehouse Management ( ERP Warehouse

Management) Lack of Partner Coordination (Supplier

Management and Channel management ERP to ERP)

Poor Demand Forecasting (CPFR and ERP) Poor Purchasing Management ( ERP Procurement

and Smaller Supply base)

Why Supply Chain Management? Helps in the Integration of all the departments of an

organization (improve coordination and communication) Helps in the optimization of

Demand Forecasting Purchasing & Supplier Management Production Inventory Management Warehouse Management Logistics New Product Development

SCM helps in fulfilling the Customer’s Needs and WantsSCM helps in reducing cost and increasing efficiency


Information replaces inventory throughout the supply chain

The further the information transfers up and down the supply chain

the more efficient the response the more timely the supply of goods resultant costs reduced

Supply Chain Management: The True Magnitude

1-35

Compaq estimates it lost $.5 billion to $1 billion in sales in 1995 because laptops were not available when and where needed

When the 1 gig processor was introduced by AMD, the price of the 800 mb processor dropped by 30%

P&G estimates it saved retail customers $65 million by collaboration resulting in a better match of supply and demand


Information replaces inventory throughout the supply chain if:

Relationships allow the trust to share Accuracy assures information is useful Responsiveness builds the

relationships

Supply Chain Performance?

Poor Performance Good Performance

Supply Chain Objective







distributors


manufacturers

Retailers

EndCustomer

Supply Chain Objectives

Reduce Cost(Maintain/ Improve Quality and Customer Services level)

Optimize the profitability of all of the supply chain partners through customer satisfaction

The Objective of a Supply Chain

Example: Dell receives $2000 from a customer for a computer (revenue)

Supply chain incurs costs (information, storage, transportation, components, assembly, etc.)

Difference between $2000 and the sum of all of these costs is the supply chain profit

Supply chain profitability is total profit to be shared across all stages of the supply chain

Supply chain success should be measured by total supply chain profitability, not profits at an individual stage

So how do we reduce Cost ?

Cost Factor in Supply Chain

Raw Material ( Supplier ) Internal Cost ( in the Value Chain) Information Management Cost Channel Members Markup Services

Cost in the Value Chain

Procurement Manufacturing Inventory Management Marketing Inbound and Outbound Logistics Warehousing Administrative Others

Cost in Supply Chain

Raw Material Supplier

Component Manufacturer

Finished Product Manufacturer

Distributer / Wholesaler

Retailer

Customer

Typical Series of Markups

14 - 46

Manufacturer’s Cost $25.00

Manufacturer’s Markup $3.75 (15%)

Wholesaler’s Markup $5.75 (20%)

Retailer’s Markup $25.88 (75%)

Customer’s Price $60.38

Supply Chain Importance

Importance of Supply Chain Management

Firms have discovered value-enhancing and long term benefits by employing SCM principles and techniques

Who benefits most? Firms with? Large inventories Large number of suppliers Complex products Customers with large purchasing budgets

Importance of Supply Chain Management (Cont.)

Lower costs, better quality, and better customer service are

reasons to employ Supply Chain Management. Also: Reduced Bullwhip Effect- the magnified reduction of

safety stock costs based on coordinated planning and sharing of information (Information replaces inventory throughout the supply chain)

Collaborative planning, forecasting, and replenishment activities reduce the Bullwhip Effect and lead to better customer service, lower inventory costs, improved quality, reduced cycle time, better production methods, and other benefits.

Course Content

Supply Chain Elements







distributors


manufacturers

Retailers

EndCustomer

53

Purchasing Trends: Long term relationships Supplier management- improve performance

through Supplier evaluation (determining supplier

capabilities) Supplier certification (third party or internal

certification to assure product quality and service requirements)

Strategic partnerships- successful and trusting relationships with top-performing suppliers

Important Supply Chain Elements

54

Operations Trends:

Demand management- match demand to available capacity

Linking buyers & suppliers via MRP and ERP systems

Use JIT to improve the “pull” of materials to reduce inventory levels

Employ TQM to improve quality compliance among suppliers



Wal-Mart and Procter & Gamble (P&G) SCM

INTEGRATING SCM, CRM, AND ERP Data points where SCM, CRM, and ERP

integrate

57

Distribution Trends: Transportation management- tradeoff

decisions between cost & timing of delivery/customer service via trucks, rail, water & air

Customer relationship management- strategies to ensure deliveries, resolve complaints, improve communications, & determine service requirements

Network design- creating distribution networks based on tradeoff decisions between cost & sophistication of distribution system


Important Elements of Supply Chain Management (Cont.)

Integration Trends: Supply Chain Process Integration-

when supply chain participants work for common goals. Requires intrafirm functional integration. Based on efforts to change attitudes & adversarial relationships

59

Supply Chain Integration

Proper SCM

Proper SCM

•Ensure that goods move smoothly and on time from suppliers to customers•Keep inventories low•Keep costs down

Proper SCM and inventory management

requires coordination

of all activities and links in the

supply chain to:

The Value Chain

Supportactivities

Primary activities









distributors


manufacturers

Retailers

EndCustomer

Proper SCM (cont.)

• Supply chain partners depend on each other

• Partners don’t always work together toward the same goal

Coordination is needed becaus

e:

Proper SCM (cont.)

Information flow is a key: communications between business partners should be:• Effective• Efficient

Support is needed to ensure this communication and is enabled by:• IT support• EC support

Benefits of Proper SCM

Reduce uncertainty along the chain

Proper inventory levels in the chain

Minimize delays

Eliminate rush (unplanned) activities

Provide superb customer service

Major contributor of success (ever survival)

SCM

What is a Supply Chain Model ? What is the Distribution Model ? SCM Process ? What is Cycle View and Push & Pull

View ? When to take the customer order ? How to determine Lead Time?







distributors


manufacturers

Retailers

EndCustomer


ConsumerChannel 1

ConsumerChannels


Channel 2 Consumer

Channel 3 Consumer

Channel 4 Consumer


Channel 6 Business

Channel 7 Business

Channel 8 Business


BusinessChannels

Process view of a supply chain







distributors


manufacturers

Retailers

EndCustomer

Process View of a Supply Chain Cycle view: processes in a supply chain

are divided into a series of cycles, each performed at the interfaces between two successive supply chain stages

Push/pull view: processes in a supply chain are divided into two categories: Executed in response to a customer

order (pull) Executed in anticipation of a

customer order (push)

Cycle View of Supply Chains

Customer Order Cycle

Replenishment Cycle

Manufacturing Cycle

Procurement Cycle

Customer

Retailer

Distributor

Manufacturer

Supplier

Cycle View of a Supply Chain

Each cycle occurs at the interface between two successive stages Customer order cycle (customer-retailer) Replenishment cycle (retailer-distributor) Manufacturing cycle (distributor-

manufacturer) Procurement cycle (manufacturer-supplier)

Subprocesses in each SC Process

Supplier Stage

Market Products

Buyer returns reverse flow to

suppliers or third party

Buyer Stage

Receive Supplies

Supplier Stage

Supplies Order

Buyer Stage

Places Order

Supplier Stage

Receive Order

Within each Cycle

The Goal of the buyer Ensure Product availability Achieve economies of scale Reduce the cost of receiving the order

The Goal of the Supplier Accurate Customer order forecast Reduce the cost of receiving the order Fill the order on time Improve efficiency and accuracy of the order

fulfillment

Cycle View of Supply Chains


Replenishment Cycle

Manufacturing Cycle

Procurement Cycle

Customer

Retailer

Distributor

Manufacturer

Supplier


Involves all processes directly involved in receiving and filling the customer’s order

Customer arrival Customer order entry Customer order fulfillment Customer order receiving

Replenishment Cycle

All processes involved in replenishing retailer inventories (retailer is now the customer)

Retail order trigger Retail order entry Retail order fulfillment Retail order receiving

Manufacturing Cycle

All processes involved in replenishing distributor (or retailer) inventory

Order arrival from the distributor, retailer, or customer

Production scheduling Manufacturing and shipping Receiving at the distributor, retailer, or

customer

Procurement Cycle

All processes necessary to ensure that materials are available for manufacturing to occur according to schedule

Manufacturer orders components from suppliers to replenish component inventories

However, component orders can be determined precisely from production schedules (different from retailer/distributor orders that are based on uncertain customer demand)

Important that suppliers be linked to the manufacturer’s production schedule


Wal-Mart and Procter & Gamble (P&G) SCM

Cycle View of a Supply Chain

Key Point A cycle view of the supply chain clearly

defines the process involved and the owners of each process. This view is very useful when considering operational decision because it specifies and responsibilities of each member of the supply chain and the desired outcome for each process.

Push and Pull View of the Supply Chain

The Value Chain ( Process Flow)

Supportactivities

Primary activities



Business Processes

Make to Stock ? Assemble to Order? Make to Order ? Design to Order ( Engineer to

order)?

Where to Take the Customer Order?

Order fulfillment Lead Time ?

Design to Order

Make to Order

Assemble to Order

Make to Stock

Pack and Ship

Stock as

Inventory

Test

Sub Assem

ble

Design

Procure

Fabricate

Final Assem

ble

Stock Standar

d Module

as Inventor

y

Stock Compone

nt Design & Standard

Part

(Custom Design if required)

Design(Unique Engg.

Design or Significant

Customization

Procure (RM,

Standard Componen

t , ETC

SCM Process building blocks

Design to Order

Make to Order

Assemble to Order

Make to Stock

Pack and Ship

Stock as

Inventory

Test Sub

Assemble

Design ProcureFabricat

e

Final Assembl

e

Pack and Ship

Test

Final Assembl

e The

Customer

Selected Module

Sub Assembl

e Design Procure

Fabricate

Stock Standar

d Module

as Inventor

y

Pack and Ship

Test Final

Assemble

Sub Assemb

le Design

Procure

Fabricate

Stock Compone


Part


Pack and Ship

Test Final

Assemble

Sub Assemb

le

Design(Unique Engg.


Customization

Procure (RM,

Standard Componen

t , ETC

Fabricate

Design to Order

Make to Order

Assemble to Order

Make to Stock

Pack and Ship

Stock as

Inventory

Test Sub

Assemble

Design

ProcureFabrica

te

Final Assem

ble

Make to stock

Pack and Ship

Stock as

Inventory

Test Sub

Assemble

Design

ProcureFabrica

te

Final Assem

ble

Make to stock

MAKE TO STOCK. Refers to a product environment where products can be and usually finished before receipt of a customer order. Customer orders are typically filled from existing stock, and production orders are used to replenish those stocks. This is mass manufacturing with pushing the sales philosophy.

Pack and Ship

Stock as

Inventory

Test Sub

Assemble

Design

ProcureFabrica

te

Final Assem

ble

Customer Order

Make to stock

L.T

Pack and Ship

Test

Final Assem

ble The

Customer

Selected

Module

Sub Assem

ble Design

Procure

Fabricate

Stock Standa

rd Module

as Invento

ry

Assemble to Order

Pack and Ship

Test

Final Assem

ble The

Customer

Selected

Module

Sub Assem

ble Design

Procure

Fabricate

Stock Standa

rd Module

as Invento

ry

Assemble to Order

Denotes a production environment where goods or service can be assembled after receipt of a customer’s order. The key components ( bulk, semi-finished , intermediate, subassembly, fabricated, purchased, packaging, etc.) used in the assembly or finishing process are planned and possibly stocked in anticipation of a customer order. Receipt of an order initiates assembly of the customized product. This strategy is useful where a large number of end products ( based on the selection of options and accessories) can be assembled from common components.

Pack and Ship

Test

Final Assem

ble The

Customer

Selected

Module

Sub Assem

ble Design

Procure

Fabricate

Stock Standa

rd Module

as Invento

ry

Customer Order

Assemble to Order

L.T

Pack and Ship

Test Final

Assemble

Sub Assemb

le Design

Procure

Fabricate

Stock Compone


Part


Make to Order

Pack and Ship

Test Final

Assemble

Sub Assemb

le Design

Procure

Fabricate

Stock Compone


Part


Make to Order

MAKE TO ORDER. In this environment, goods or service can be manufactured / offered after receipt of a customer’s order. The final product is usually a combination of standard items custom- designed to meet the special needs of the customer. This gives more option( as compared to assemble-to-order) to the customer in design, aesthetics, utility, accessories, etc.

Pack and Ship

Test Final

Assemble

Sub Assemb

le Design

Procure

Fabricate

Stock Compone


Part


Customer Order

Make to Order

L.T

Pack and Ship

Test Final

Assemble

Sub Assemb

le

Design(Unique Engg.


Customization

Procure (RM,

Standard Componen

t , ETC

Fabricate

Design to Order

Pack and Ship

Test Final

Assemble

Sub Assemb

le

Design(Unique Engg.


Customization

Procure (RM,

Standard Componen

t , ETC

Fabricate

Design to Order

DESIGN TO ORDER. (ENGINEERING-TO-ORDER). This is a highly focused environment where the individual customer gives product specifications that require unique engineering design, significant customization in manufacturing, or even new purchased materials. Each customer order result in unique set of part numbers, bills of material, and routings.

Pack and Ship

Test Final

Assemble

Sub Assemb

le

Design(Unique Engg.


Customization

Procure (RM,

Standard Componen

t , ETC

Fabricate

Customer Order

Design to Order

L.T

Pack and Ship

Stock as

Inventory

Test Sub

Assemble

Design

ProcureFabrica

te

Final Assem

ble

Customer

Order

Pack and Ship

Test

Final Assemble

The Customer Selected Module

Sub Assemble

Design Procure Fabricate

Stock Standard Module

as Inventory

Customer

Order

Pack and Ship

Test Final

Assemble

Sub Assemb

le Design

Procure

Fabricate

Stock Compone


Part


Customer

Order


IntegratedSystem

Push Pull

DemandForecasting

SourcingandPurchasing

PackagingMaterialHandling

RawMaterialsInventory

InboundTransportation

ManufacturingCustomerOrderProcessing

Packaging/MaterialHandling

FinishedGoods InventoryDeployment

OutboundTransportation

Customer’sCustomer

Push and Pull View of the Supply Chain

Process View of a Supply Chain Cycle view: processes in a supply chain

are divided into a series of cycles, each performed at the interfaces between two successive supply chain stages

Push/pull view: processes in a supply chain are divided into two categories: Executed in response to a customer

order (pull) Executed in anticipation of a

customer order (push)

Push/Pull View of Supply Chain Processes

Supply chain processes fall into one of two categories depending on the timing of their execution relative to customer demand

Pull: execution is initiated in response to a customer order (reactive)

Push: execution is initiated in anticipation of customer orders (speculative)

Push/pull boundary separates push processes from pull processes

Strategic supply chain decisions may lead to changing the push/pull boundary

Push/Pull View of L.L Beans Supply Chains

Procurement,Manufacturing andReplenishment cycles

Customer OrderCycle

CustomerOrder Arrives

PUSH PROCESSES PULL PROCESSES

Push/Pull View of DELL Supply ChainProcurement Cycle Customer Order

And Manufacturing cycle

Customer Order Arrives

PUSH PROCESSES PULL PROCESSES

Push and Pull Processes Execution is

initiated in the anticipation of a customer order

Demand is not known and must be forecasted

Speculative Process

Execution is initiated in response to a customer order

Customer demand is known with certainty

Reactive Process Pull processes are

often constrained by the inventory and capacity decision that are made in the Push Phase

Push and Pull View

Key Point A push and pull view of the supply chain

categories processes based on whether they are initiated in response to a customer order(pull) or in the in the anticipation of a customer order (push) . This view is very useful when considering strategic decisions relating to Supply Chain Design.

Push/Pull View of Supply ChainsDevelop Push / Pull View for the following

Buying Dell computer from the net.

Buying a PC from a Retail store.

Decision Phase in Supply Chain

Decision Phases of a Supply ChainSupply chain strategy or design

Supply chain planning

Supply chain operation

Decisions Strategic Planning Operational

Generate pick list at the warehouse

Timing and size of market promotions

Allocate an order to a particular shipping mode and shipment

Planned buildup of inventories

Subcontracting, backup locations

Set a date that an order is to be filled

Allocate inventory or production to individual order

Selection of Modes of transportation

Set delivery schedules of trucks

Inventory policies

Products to be made or stored at various locations

Outsourcing decisions

Which markets will be supplied from which locations

Locations and capacities of facilities (warehouse and Production)

Information systems

Place replenishment order

Supply Chain Strategy or Design

Decisions about the structure of the supply chain and what processes each stage will perform

What are some strategic supply chain decisions? Locations and capacities of facilities (warehouse

and Production) Products to be made or stored at various locations Modes of transportation Information systems Outsourcing decisions

Supply chain design must support strategic objectives

Supply chain design decisions are long-term and expensive to reverse – must take into account market uncertainty

Supply Chain Planning

Definition of a set of policies that govern short-term operations

Fixed by the supply configuration from previous phase

Starts with a forecast of demand in the coming year

Supply Chain Planning

What are some planning decisions? Which markets will be supplied from which

locations Planned buildup of inventories Subcontracting, backup locations Inventory policies Timing and size of market promotions

Must consider in planning decisions demand uncertainty, exchange rates, competition over the time horizon

Supply Chain Operations

What are some Operation decisions? Allocate inventory or production to individual

order Set a date that an order is to be filled Generate pick list at the warehouse Allocate an order to a particular shipping

mode and shipment Set delivery schedules of trucks Place replenishment order

The goal of the Supply Chain Operations is to handle the customer order in the best possible manner.

SCM Tools levels

Supply Chain Planning services configure operations to best meet projected demand levels

The planning horizon ranges from developing a long term strategic outlook to developing a short term tactical production schedule

Event Management

Order Management

Inventory Management

Warehouse Management

Production Planning

Supply Planning

Demand Planning

Network Design

SCM Service Offering

OperationalPlanning

TacticalPlanning

StrategicPlanning

Real time /Minutes

Hours /Days

Weeks / Months

Quarters Years

Supply Chain Planning Tools Supply Chain Execution Tools

Supply Chain Execution services monitor and control production operations

They provide real time tracking and alert notification

Supply Chain Elements

Transportation Management

Source: BAH

Supply Chain Planning Process

Supply PlanningSupply Planning

Balances unconstrained demand against high level supply chain constraints

Reflect order priority and due dates

Balances unconstrained demand against high level supply chain constraints

Reflect order priority and due dates

Network DesignNetwork Design

Design where to place production facilities and optimize the end to end chain

Construct alternate flow scenarios that incorporate associated constraints

Design where to place production facilities and optimize the end to end chain

Construct alternate flow scenarios that incorporate associated constraints

Production PlanningProduction Planning

Decompose the supply plan into sub assembly / production needs by site

Balance production capacity across sites

Decompose the supply plan into sub assembly / production needs by site

Balance production capacity across sites

Production SchedulingProduction Scheduling

Optimize processing flows, sequence, and timing

Produce a finite capacity production schedule

Optimize processing flows, sequence, and timing

Produce a finite capacity production schedule

Demand PlanningDemand Planning

Anticipate demand based on historical trends and current conditions

Perform what if analysis - highlight the impact of changing demand drivers

Anticipate demand based on historical trends and current conditions

Perform what if analysis - highlight the impact of changing demand drivers

Hours /Days

Weeks / Months

QuartersYearsPlanningHorizon

124

Supply Chain Execution Process

Order ManagementOrder Management Record customer

orders and track status from receipt to final delivery

Direct efficient response to orders with dynamic cost / benefit analysis of options

Record customer orders and track status from receipt to final delivery

Direct efficient response to orders with dynamic cost / benefit analysis of options



Streamline information movement and provide tight inventory control

Inventories replenished using kanban, min-max, or reorder point

Streamline information movement and provide tight inventory control

Inventories replenished using kanban, min-max, or reorder point

Event ManagementEvent Management

Monitor and manage critical planning and event information Broadcast alert notification and present response alternatives based on pre determined

business rules

Monitor and manage critical planning and event information Broadcast alert notification and present response alternatives based on pre determined

business rules

Transportation ManagementTransportation Management

Optimize and track outbound and inbound shipping

Optimize and track outbound and inbound shipping



Optimization and management of warehouse processes

Optimization and management of warehouse processes







distributors


manufacturers

Retailers

EndCustomer

Best Practices & Trends

127

Firms using Supply Chain Management:1. Start working with key suppliers2. Move on to other suppliers,

customers, and shippers3. Integrate second tier suppliers and

customers (second tier refers to the customer’s customers and the supplier’s suppliers)

Current Trends in Supply Chain Management

Current Trends in Supply Chain Management

Expanding the Supply Chain Firms are expanding partnerships and

building facilities in foreign markets The expansion involves:

breadth- foreign manufacturing, office & retail sites, foreign suppliers & customers

depth- second and third tier suppliers & customers

Current Trends in Supply Chain Management- Cont.

Reducing Supply Chain Costs Cost reduction achieved through:

Reduced purchasing costs Reducing waste Reducing excess inventory, and Reducing non-value added activities

Continuous Improvement through Benchmarking- copy competitors Trial & error Increased knowledge of supply chain processes

(experience)

Current Trends in Supply Chain Management (Cont.)Increasing Supply Chain

Responsiveness

Firms will increasingly need to be more flexible and responsive to customer needs

Supply chains will need to benchmark industry performance and meet and improve on a continuous basis

Responsiveness improvement will come from more effective and faster product & service delivery systems

131

Current Trends in Supply Chain Management (Cont.)

The Greening of Supply Chains

- Producing, packaging, moving, storing, delivering and other supply chain activities can be harmful to the environment

Supply chains will work harder to reduce environmental degradation

Large majority (75%) of U.S. consumers influenced by a firm’s environmental friendliness reputation

Recycling and conservation are a growing alternative in response to high cost of natural resources

Documents

Supply Chain Management