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Week 1: Introduction MIS 3580: Internet-Enabled Supply Chains Prof. Sunil Wattal.

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Presentation on theme: "Week 1: Introduction MIS 3580: Internet-Enabled Supply Chains Prof. Sunil Wattal."— Presentation transcript:

1 Week 1: Introduction MIS 3580: Internet-Enabled Supply Chains Prof. Sunil Wattal

2 Introductions Write on the index cards - Name - Major / Minor - Recent Internships / Industry Experience - What brings you here? Read introductions aloud

3 Have you ever wondered … How did Mattel toys get contaminated with lead paint? How Team Obama achieved a record turnout in the elections? How the milk tainted with melamine from China reached candy sold in the US? Why did the employee at one of Apple’s suppliers commit suicide? How does bin Laden release videos?

4 Have you ever wondered … How did Netflix become a dominant player in the DVD rental market? Why makes Walmart one of the largest companies in the world? How do products get shipped from China? How do the ‘Dabbawallahs’ in Mumbai deliver 175,000 lunch boxes every day? ….. and many more!

5 What this course is about? Explain the concept of supply chains and why they are important Discuss the impact of information technology on supply chains Ethics and challenges in supply chains Organizational networks Innovations in supply chains

6 Who should take it? MIS Majors / Minors ◦ New opportunities (globalization) Non MIS majors ◦ Understand competitive aspects of supply chains

7 Course formalities Syllabus Office Hours Lecture slides Evaluations Group Work Preparing for class

8 Learning Objectives Key concepts in supply chains Value chains

9 What is a Supply Chain? Customer wants detergent and goes to Jewel Jewel Supermarket Jewel or third party DC P&G or other manufacturer Plastic Producer Chemical manufacturer (e.g. Oil Company) Tenneco Packaging Paper Manufacturer Timber Industry Chemical manufacturer (e.g. Oil Company) Source: Sunil Chopra and Peter Meindl ‘Supply Chain Management’ Prentice Hall, 2006

10 What is a supply chain? Also known as a “logistics network” Consists of ◦ Suppliers ◦ Manufacturing centers ◦ Raw materials ◦ Work-in-process inventory ◦ Finished products ◦ Warehouses ◦ Distribution centers ◦ Retail Outlets

11 What constitutes a supply chain? Flow of materials Financial Flow Flow of information ◦ That’s where IT fits in Technology in a supply chain ◦ Hardware ◦ Software ◦ Networking ◦ Communications / Extranets / VPN ◦ Processes

12 Supply chain management A set of approaches utilized to efficiently integrate suppliers, manufacturers, warehouses and stores Goals ◦ To produce and distribute merchandise at right quantities, to the right locations at the right time ◦ Minimize system-wide costs while satisfying system-level requirements

13 Supply chain management Decisions about the structure of the supply chain and what processes each stage will perform Strategic supply chain decisions ◦ Locations and capacities of facilities ◦ Products to be made or stored at various locations ◦ Modes of transportation ◦ Information systems Supply chain design must support strategic objectives Supply chain design decisions are long-term and expensive to reverse – must take into account market uncertainty Source: Sunil Chopra and Peter Meindl ‘Supply Chain Management’ Prentice Hall, 2006

14 Knowledge Check Form groups of 4-5 students and explain the following terms Cycle Time Push/Pull Processes Lead Time Lot Sizing Sourcing Transportation Distribution Network Vendor Managed Inventory Incentive Alignment Demand Forecasting Customization Forecasting Process & Capacity Planning Contract manufacturing Inventory Policies Revenue Management

15 Why supply chains are important Cost Efficiency ◦ (Walmart) Agility ◦ (Gap) Complexity ◦ (Walmart) Need for innovation ◦ (iPhone APIs) Blurred organizational boundaries ◦ (Cisco)

16 Factors driving supply chain Information technology Global suppliers / customers / competition Shorter product cycles / Clockspeed Customized products Need for collaboration

17 Trends in Supply Chains Virtualization Share the Supply Chain Collaboration Virtual sourcing ◦ Materials and manpower Global Information Technology Standards Increased Awareness ◦ Sustainability ◦ Product safety

18 Competing as value chains New competitive dynamics Operational excellence & continuous innovation ◦ Companies increasingly partner with others with proven operation excellence and a trail of innovation ◦ Demonstrated ability to think ahead and to exploit new ways to compete, and avoid being challenged head-on by competitors ◦ “partner-of-choice”

19 The costs in a supply chain

20 Value chain competitiveness Extend reach into customers and suppliers ◦ Procurement and fulfillment processes require visibility into the supply chain ◦ Multi-level supply chain visibility and planning is the next frontier. ◦ Older technologies: extend reach into customers and suppliers ◦ New technologies: extend reach into customers’ customers and suppliers’ suppliers

21 Value chain competitiveness Compress supply chain ◦ Main goal: Eliminate waste in time and resources ◦ Fewer physical assets; fewer people ◦ With extended reach, organizations will learn to optimize the extended supply chain, leverage demand and supply planning and decision support

22 Value chain competitiveness Create market-level contingency ◦ Main goal: To allow flexible response to the unexpected ◦ Supply chain visibility leads to high levels of responsiveness ◦ Requires building of an industry-level shared and controlled “safety stock” of resources

23 Value chain competitiveness Support organizational change ◦ Main goal: Align people and culture with the requirements of the new business model ◦ Motivate for high performance ◦ Reward operational excellence, in order to achieve sustainable results

24 Areas of Supply Chain Focus In-Store Logistics: includes in-store visibility, shelf-ready products, shopper interaction Collaborative Physical Logistics: shared transport, shared warehouse, shared infrastructure Reverse Logistics: product recycling, packaging recycling, returnable assets Demand Fluctuation Management: joint planning, execution and monitoring

25 Shifts in Supply Chain Management Shift 1: From Cross-Functional Integration to Cross-Enterprise ◦ Old question: how do we get the various functional areas of our company to work together to supply product to immediate customers? ◦ New question: how to record and activities across companies, as well as across internal functions, to supply product to the market? Shift 2: From Physical Efficiency to Market Mediation. ◦ Old question: how do we minimize the costs our company incurs in production and distribution of our products? ◦ New question: how do we minimize the cost of matching supply and demand while continuing to reduce the costs of production and distribution? Shift 3: From Supply Focus to Demand Focus. ◦ Old question: how can we improve the way we supply product in order to match supply and demand better, given the demand pattern? ◦ New question: how can we get earlier demand information or affect the demand pattern to match supply and demand?

26 Shifts in Supply Chain Management Shift 4: From single company, product design to collaborative, concurrent product, process and supply chain design ◦ Old question: how should our company design products to minimize product cost (our cost of materials, production, and distribution)? ◦ New question: how should collaborators designed the product, process, and supply chain to minimize cost? Shift 5: From cost reduction to breakthrough business models. ◦ Old question: how can we reduce our company's production and distribution costs? ◦ New question: what new supply chain and marketing approach would lead to a breakthrough in customer value? Shift 6: From mass-market supply to tailored offerings. ◦ Old question: how should we organize our company's operations to serve the mass- market efficiently while offering customized product? ◦ New question: how should we organize a supply chain to serve each customer or segment uniquely and provide a tailored customer experience?

27 Next week… The impact of the Internet on supply- chain strategies From the “first click” to the “last mile”

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