Supply Chain Engineering

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basic fundamentals of supply chain engineering

Text of Supply Chain Engineering

  • SUPPLY CHAIN ENGINEERINGMN 799
    • TEXT: SUPPLY CHAIN MANAGEMENT Chopra and Meindl Prentice Hall
    • COURSE OUTLINE Description Book pages
      • 1/22 Introduction, curriculum, rules, exams, Infrastructure (1-27)
      • 1/27 Strategic Fit and Scope. Supply Chain Drivers (27-51)
      • 2/05 No Class
      • 2/12 Demand Management (169-204)
      • 2/19 Aggregate Planning, Managing (205-225)
      • 2/26 Guest Lecture Network Operations (71-168)
      • 3/04 Managing Supply and Demand (121-144)
      • 3/11 Class trip to see Supply Chain in Operation
      • 3/18 No Class
      • 3/25 Mid Term
      • 4/01 Managing Inventory(249-295);
      • 4/08 Product Availability (297-384)
      • 4/15 Sourcing and Procurement (387-410)
      • 4/22 Transportation (411-219); Facility Decisions (109-133)
      • 4/29 Beer Game
      • 5/06 Co-ordination Information Information Technology & E-Business (477- 557)
      • 5/13 FINAL EXAMINATION
  • GUIDELINES
    • GRADING:
      • HOMEWORK 20%
      • BEER GAME 5%
      • MID TERM 30%
      • FINAL 45%
    • HOMEWORK MUST BE COMPLETED IN TIME. LATE SUBMISSIONS WILL START WITH A B GRADE
    • CLASSES WILL START AT 6.00PM AND GO STRAIGHT THRU TO 8.00PM
  • DEFINITION OF A SUPPLY CHAIN
    • WHAT IS A SUPPLY CHAIN?
    • A SUPPLY CHAIN COVERS THE FLOW OF MATERIALS, INFORMATION AND CASH ACROSS THE ENTIRE ENTERPRISE
    • SUPPLY CHAIN MANAGEMENT IS THE INTEGRATED PROCESS OF INTEGRATING, PLANNING, SOURCING, MAKING AND DELIVERING PRODUCT, FROM RAW MATERIAL TO END CUSTOMER, AND MEASURING THE RESULTS GLOBALLY
    • TO SATISFY CUSTOMERS AND MAKE A PROFIT
    • WHY A SUPPLY CHAIN?
  • Traditional View: Logistics in the Economy
    • 1990 1996 2006
    • Freight Transportation $352, $455 $809 B
    • % Freight 57% 62%
    • Inventory Expense $221, $311 $ 446 B
    • % Inventory 39% 33%
    • Administrative Expense $27, $31 $ 50 B
    • Logistics related activity 11%, 10.5%,9.9%
    • % of GNP.
    Source: Cass Logistics Homework: What are 2007 statistics?
  • Traditional View: Logistics in the Manufacturing Firm
    • Profit 4%
    • Logistics Cost 21%
    • Marketing Cost 27%
    • Manufacturing Cost 48%
    Homework: What it the profile for Consumables; Pharamas and Computers Profit Logistics Cost Marketing Cost Manufacturing Cost
  • Supply Chain Management: The Magnitude in the Traditional View
    • Estimated that the grocery industry could save $30 billion (10% of operating cost by using effective logistics and supply chain strategies
      • A typical box of cereal spends 104 days from factory to sale
      • A typical car spends 15 days from factory to dealership
    • Compaq estimates it lost $0.5 billion to $1 billion in sales in 1995 because laptops were not available when and where needed
    • P&G estimates it saved retail customers $65 million by collaboration resulting in a better match of supply and demand
    • Laura Ashley turns its inventory 10 times a year, five times faster than 3 years ago
  • HAMBURGERS AND FRIES
    • HAMBURGERS (4/LB)
    • CATTLE FARM 50c/lb
    • BUTCHER
    • PACKAGING
    • DISTRIBUTION CENTER
    • RETAILER
    • CUSTOMER
    • Provide Sales Price at each stage
    • FRIES (3Large/lb)
    • POTATO FARM 25C/lb
    • POTATO PROCESSOR
    • DISTRIBUTION CENTER
    • RETAILER
    • CUSTOMER
    • Provide Sales Price at each stage
  • What problems do you foresee in this Supply Chain? Please write some down Burger and Fries Examine this process What do you observe?
  • Understanding the Supply Chain a chain is only as good as its weakest link Recall that saying? The saying applies to the principles of building a competitive infrastructure: Manufacturer Wholesaler Retailer Customer Supplier there is a limit to the surplus or profit in a supply chain We are all part of a Supply Chain in everything we buy Strong, well-structured supply chains are critical to sustained competitive advantage.
  • OBJECTIVES OF A SUPPLY CHAIN
    • MAXIMIZE OVERALL VALUE GENERATED
      • SATISFYING CUSTOMER NEEDS AT A PROFIT
      • VALUE STRONGLY CORRELATED TO PROFITABILITY
      • SOURCE OF REVENUE CUSTOMER
      • COST GENERATED WITHIN SUPPLY CHAIN BY FLOWS OF INFORMATION, PRODUCT AND CASH
      • FLOWS OCCUR ACROSS ALL STAGES CUSTOMER, RETAILER, WHOLESALER, DISTRIBUTOR, MANUFACTURER AND SUPPLIER
      • MANAGEMENT OF FLOWS KEY TO SUPPLY CHAIN SUCCESS
    UNDERSTAND EACH OBJECTIVE
  • DECISION PHASES IN A SUPPLY CHAIN
    • OVERALL STRATEGY OF COMPANY EFFICIENT OR RESPONSIVE
    • SUPPLY CHAIN STRATEGY OR DESIGN ?
      • LOCATION AND CAPACITY OF PRODUCTION AND WAREHOUSE FACILITIES?
      • PRODUCTS TO BE MANUF, PURCHASED OR STORED BY LOCATION?
      • MODES OF TRANSPORTATION?
      • INFORMATION SYSTEMS TO BE USED?
      • CONFIGURATION MUST SUPPORT OVERALL STRAGEGY
    • SUPPLY CHAIN PLANNING?
      • OPERATING POLICIES MARKETS SERVED, INVENTORY HELD, SUBCONTRACTING, PROMOTIONS, ?
    • SUPPLY CHAIN OPERATION?
      • DECISIONS AND EXECUTION OF ORDERS?
  • Basic Supply Chain Architectures ( Examples ) 1. Indirect Channel 2. Direct Channel 3. Virtual Channel Supplier Supplier Supplier Supplier Supplier Supplier Supplier Supplier Customer Customer Customer Customer Customer Factory Factory Factory Wholesale Wholesale Integrator Express Freight Retailer Retailer Retailer Virtual Store Fabricator Fabricator Credit Service C 1999. William T. Walker, CFPIM, CIRM with the APICS Educational & Research Foundation. All Rights Reserved.
  • SOLE SOURCE SINGLE SOURCE MULTI-SOURCE INDIRECT CHANNEL DIRECT CHANNEL VIRTUAL CHANNEL MAKE vs. BUY Supply Demand Supply Chain Architecture
    • Strategic Issues
    • . Demand Reach . Demand Risk
    • Cost Structure
    • Asset Utilization
    • Responsiveness Supply Risk
    LOCAL REGIONAL GLOBAL MARKET MARKET MARKET C 1999. William T. Walker, CFPIM, CIRM with the APICS Educational & Research Foundation. All Rights Reserved.
  • SUPPLY CHAIN FRAMEWORK AND INFRASTRUCTURE
      • PRINCIPLE:
      • BUILD A COMPETITIVE INFRASTRUCTURE
    • This principle is about
    • VELOCITY
  • Cycle View of Supply Chains DEFINES ROLES AND RESPONSIBILITIES OF MEMBERS OF SUPPLY CHAIN Customer Order Cycle Replenishment Cycle Manufacturing Cycle Procurement Cycle Customer Retailer Distributor Manufacturer Supplier to to to to
  • PROCESS VIEW OF A SUPPLY CHAIN
    • CUSTOMER ORDER CYCLE
      • TRIGGER: MAXIMIZE CONVERSION OF CUSTOMER ARRIVALS TO CUSTOMER ORDERS
      • ENTRY: ENSURE ORDER QUICKLY AND ACCURATELY COMMUNICATED TO ALL SUPPLY CHAIN PROCESSES
      • FULFILLMENT: GET CORRECT AND COMPLETE ORDERS TO CUSTOMERS BY PROMISED DUE DATES AT LOWEST COST
      • RECEIVING: CUSTOMER GETS ORDER
  • PROCESS VIEW OF A SUPPLY CHAIN
    • REPLENISHMENT CYCLE
      • REPLENISH INVENTORIES AT RETAILER AT MINIMUM COST WHILE PROVIDING NECESSARY PRODUCT AVAILABILITY TO CUSTOMER
      • RETAIL ORDER:
        • TRIGGER REPLENISHMENT POINT BALANCE SERVICE AND INVENTORY
        • ENTRY ACCURATE AND QUICK TO ALL SUPPLY CHAIN
        • FULFILLMENT BY