1. Supply-Chain Design Chapter 9
This presentation covers the material in Chapter 9 - Supply-Chain Design. The graphic is based on Figure 9.5.
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2. External Value-Chain Linkages
First-Tier Supplier
Service/Product Provider
Support Processes
Supplier Relationship Process
New Service/ Product Development Process
Order-Fulfillment Process
Business-to-Business (B2B) Customer Relationship Process
External Suppliers
External Customers
Figure 9.1
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3. Supply Chain for a Florist
Home
customers
Commercial
Florist
FedEx delivery service
Packaging
Local delivery service
Flowers – local/ international
Arrangement materials
Internet services
Maintenance services
Required for facilitating goods
Required for explicit services
Required for supporting facilities
Required for implicit services
Figure 9.2
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4. Creation of Inventory Input flow of materials Inventory level
But some may be scrap.
Output flow of materials
Scrap flow
Figure 9.3
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5. Inventory at Different Stocking Points
Supplier Manufacturing plant Distribution center Retailer
Raw
materials
Work in
process
Finished
goods
Figure 9.4
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6. Supply Chain Figure 9.5 Customer Distribution center Manufacturer
Tier 1
Tier 2
Supplier of materials
Supplier of services
Tier 3
Legend
Figure 9.5
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7. Supply Chain Dynamics for Facial Tissue
Time
Order Quantity
9,000 –
7,000 –
5,000 –
3,000 –
0 –
Package supplier’s weekly orders to cardboard supplier
Consumers’ daily demand
Retailers’
daily orders to manufacturer
Manufacturer’s weekly orders to package supplier
Figure 9.6
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8. Materials Management Figure 9.7 Egg supplier Sugar supplier
Flour supplier
Chocolate chips supplier
Maintenance services supplier
Purchasing domain of responsibility
The first slide presents the basic inputs to the bakery process and the area of the organization primarily responsible for acquisition and control of these inputs. To improve legibility, this portion of the Figure is expanded.
Figure 9.7
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9. Materials Management FG storage Transformation process and WIP storage
RM storage
Transformation process and WIP storage
Egg supplier
Sugar supplier
Flour supplier
Chocolate chips supplier
Maintenance services supplier
Purchasing domain of responsibility
The next slide shows the basic transformation process. To improve legibility, this portion of the Figure is expanded.
Figure 9.7
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10. Materials Management Production domain of responsibility Figure 9.7
Egg supplier
Sugar supplier
Flour supplier
Chocolate chips supplier
Maintenance services supplier
Purchasing domain of responsibility
FG storage
RM storage
Transformation process and WIP storage
The production control domain is added to the Figure. To improve legibility, this portion of the Figure is expanded.
Figure 9.7
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11. Materials Management Figure 9.7
Production domain of responsibility
Egg supplier
Sugar supplier
Flour supplier
Chocolate chips supplier
Maintenance services supplier
Purchasing domain of responsibility
FG storage
RM storage
Transformation process and WIP storage
This portion of the Figure is reduced and placed in the proper position on the slide.
This slide advances automatically.
Figure 9.7
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12. Materials Management Figure 9.7 Supermarket A distribution center
Supermarket B
Transportation
services supplier
Distribution domain of responsibility
Egg supplier
Sugar supplier
Flour supplier
Chocolate chips supplier
Maintenance services supplier
Purchasing domain of responsibility
FG storage
RM storage
Transformation process and WIP storage
Production domain of responsibility
The final series shows the output and distribution flow and domain. To improve legibility, this portion of the Figure is expanded.
Figure 9.7
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13. Materials Management Figure 9.7
Egg supplier
Sugar supplier
Flour supplier
Chocolate chips supplier
Maintenance services supplier
Purchasing domain of responsibility
Supermarket A
distribution center
Supermarket B
Transportation
services supplier
Distribution domain of responsibility
FG storage
RM storage
Transformation process and WIP storage
Production domain of responsibility
This portion of the Figure is reduced and placed in the proper position on the slide.
Figure 9.7
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14. Inventory Measures Average inventory = $2 million
Cost of goods sold = $10 million
52 business weeks per year
Weeks of supply = = 10.4 weeks
$2 million
($10 million)/(52 weeks)
Inventory turns = = 5 turns/year
$10 million
$2 million
Example 9.1
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15. Inventory Measures Figure 9.8
This slide shows Figure 11.7, the Solver output from OM Explorer.
Figure 9.8
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16. Supply-Chain Process Measures
TABLE 9.1 SUPPLY–CHAIN PROCESS MEASURES
Percent of orders taken accurately
Time to complete the order placement process
Customer satisfaction with the order placement process
Customer
Relationship
Percent of incomplete orders shipped
Percent of orders shipped on time
Time to fulfill the order
Percent of botched services or returned items
Cost to produce the service or item
Customer satisfaction with the order fulfillment process
Order
Fulfillment
Percent of suppliers’ deliveries on time
Suppliers’ lead times
Percent defects in services and purchased materials
Cost of services and purchased materials
Supplier
Relationship
This side presents the process measures for Purchasing.
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17. Supply-Chain Environments
TABLE 9.2 ENVIRONMENTS BEST SUITED FOR EFFICIENT AND RESPONSIVE SUPPLY CHAINS
Factor Efficient Supply Chains Responsive Supply Chains
Demand Predictable, low Unpredictable, high
forecast errors forecast errors
Competitive Low cost, consistent Development speed, fast
priorities quality, on-time delivery times,
delivery customization, volume
flexibility, variety,
top quality
New-service/ Infrequent Frequent
product
introduction
Contribution Low High
margins
Product variety Low High
This slide shows the characteristics of responsive organizations for the basic factors.
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18. Supply-Chain Design
TABLE 9.3 DESIGN FEATURES FOR EFFICIENT AND RESPONSIVE SUPPLY CHAINS
Factor Efficient Supply Chains Responsive Supply Chains
Operation Make-to-stock or Assemble-to-order, make-
strategy standardized services; to-order, or customized
emphasize high services; emphasize
volume, standardized service or product
services or products variety
Capacity Low High
cushion
Inventory Low, enable high As needed to enable fast
investment inventory turns delivery time
This slide presents design elements for responsive organizations.
Lead time Shorten, but do not Shorten aggressively
increase costs
Supplier Emphasize low prices, Emphasize fast delivery
selection consistent quality, on- time, customization,
time delivery variety, volume flexibility,
top quality
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19. Pepperidge Farm SCM System
Order Commitment
Transportation Management
Purchasing Management
Demand Management
Vendor-Managed Inventory
Replenishment Planning
Configuration
Material Planning
Scheduling
Master Planning
Strategic Planning
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