Michael Robert Juadiong
ì University of the Philippines
ì Jollibee Foods Corpora7on
ì L’Oreal Philippines
ì Peking University HSBC Business School, Shenzhen
ì Bri7sh Embassy Manila
ì Chartered Ins7tute of Procurement & Supply
Supply Chain Management Problem
ì #chickensad
ì Issues ì System migra7on – Oracle to SAP ì Outsourced to a large mul7na7onal IT service provider
with no sizable local team ì Opera7ng schedule of just a year ì Tes7ng
ì PHP 500M for the new IT system
ì Jollibee lost 6% of its sales for the first 7 days of August = PHP 92M
Source: Legaspi, C. August 13, 2014. rappler.com
History: Integration of Supply Chain Activities
1962: Fragmenta7on
• Demand Forecas7ng • Purchasing • Requirements Planning • Produc7on Planning • Manufacturing Inventory • Warehousing • Materials Handling • Industrial Packaging • Finished Goods Inventory • Distribu7on Planning • Order Processing • Transporta7on • Customer Services
ì No single manager took responsibility for total material costs
ì Lack of ‘big picture’ and ‘joined up’ thinking about how material flows could be improved or streamlined to add value
Integration of Supply Chain Activities
1962: Fragmenta7on
• Demand Forecas7ng • Purchasing • Requirements Planning
• Produc7on Planning • Manufacturing Inventory
• Warehousing • Materials Handling • Industrial Packaging • Finished Goods Inventory
• Distribu7on Planning • Order Processing • Transporta7on • Customer Services
1982: Evolving Integra7on
• Materials Management
• Physical Distribu7on
2002: Total Integra7on
• Logis7cs
Adapted from The Management of Business Logis2cs, by Coyle, Bardi, and Langley
Integration of Supply Chain Activities
1962: Fragmenta7on
• Demand Forecas7ng • Purchasing • Requirements Planning
• Produc7on Planning • Manufacturing Inventory
• Warehousing • Materials Handling • Industrial Packaging • Finished Goods Inventory
• Distribu7on Planning • Order Processing • Transporta7on • Customer Services
1982: Evolving Integra7on
• Materials Management
• Physical Distribu7on
2002: Total Integra7on
• Logis7cs
Adapted from The Management of Business Logis2cs, by Coyle, Bardi, and Langley
Materials Management (MM)
ì ‘The total of all those tasks, func7ons, ac7vi7es, and rou7nes which concern the transfer of external materials and services into the organiza;on and the administra;on of the same un7l they are consumed or used in the process of produc7on, opera7ons, or sales’ (CIPS)
ì Input phase of the supply chain process
Materials Management (MM)
Materials and Inventory Planning • product R&D • planning quan77es
Procurement • transport of incoming items
Storage and Inventory Management
Produc7on Control • produc7on scheduling
• quality management
Zenz, Purchasing and the Management of Materials
MM Advantages
ì Cross-‐func7onal coopera7on and coordina7on are improved
ì Reconciled conflic7ng objec7ves in the best interest of the process as a whole (e.g. purchasing’s economies of scale vs. warehouse’s minimized inventory)
ì World class manufacturing techniques can be easily introduced due to improved integra7on (e.g. JIT, TQM)
Integration of Supply Chain Activities
1962: Fragmenta7on
• Demand Forecas7ng • Purchasing • Requirements Planning
• Produc7on Planning • Manufacturing Inventory
• Warehousing • Materials Handling • Industrial Packaging • Finished Goods Inventory
• Distribu7on Planning • Order Processing • Transporta7on • Customer Services
1982: Evolving Integra7on
• Materials Management
• Physical Distribu7on
2002: Total Integra7on
• Logis7cs
Adapted from The Management of Business Logis2cs, by Coyle, Bardi, and Langley
Physical Distribution
ì Output phase of the supply chain process
ì Outputs of produc7on (finished goods) are moved from one loca7on to another: typically from a supplier to a customer
Physical Distribution Management (PDM)
Warehouse and Storage
Transport or Distribu7on Planning • Transport routes • Delivery schedules
Materials Handling • Containerizing and Packaging for outbound transport
Inventory Management and Control • Keeping track of finished items in stock
Transporta7on and Delivery
Physical Distribution Management (PDM)
ì Basic Objec7ve: Deliver the right goods to the right place at the right 7me and at the right cost
ì Can be local or global
Integration of Supply Chain Activities
1962: Fragmenta7on
• Demand Forecas7ng • Purchasing • Requirements Planning
• Produc7on Planning • Manufacturing Inventory
• Warehousing • Materials Handling • Industrial Packaging • Finished Goods Inventory
• Distribu7on Planning • Order Processing • Transporta7on • Customer Services
1982: Evolving Integra7on
• Materials Management
• Physical Distribu7on
2002: Total Integra7on
• Logis7cs
Adapted from The Management of Business Logis2cs, by Coyle, Bardi, and Langley
Logistics Management
ì Integra7on of input phase and output phase
ì ‘process of planning, implemen7ng, and controlling the efficient, effec;ve flow and storage of raw materials, in-‐process inventory, finished goods, services, and related informa;on from point of origin to point of consump7on.. for the purpose of conforming to customer requirements’ (Council of Logis7cs Management Professionals, USA, cited by Coyle, Bardi, and Langley, The Management of Business Logis2cs)
Advantages
ì Shorter product life cycles ì Constant product upda7ng and innova7on to react
to fast-‐changing consumer demand ì Supports swim idea-‐to-‐market cycles
ì Pressure to Globalize in sourcing, manufacturing, and marke7ng and manage risk of distance
ì Development of Informa7on and Communica7on Technology (ICT) which supports integrated logis7cs planning capabili7es
Sharman (summarized by van Weele, Purchasing Management: Analysis, Planning, and Prac7ce)
Terminology
ì Terminology can be loose and inconsistent
ì ‘Logis7cs’ now used as a new name for transport, warehousing, or distribu7on
ì e.g. freight transport companies are frequently rebadged as ‘logis7cs’ companies
Emmen (Supply Chain in 90 Minutes)