1. GEOP 4355 Introduction to Global Operations and Supply Chain Management
Outline
Sources and references
Global Operations Management
What is SCM?
Why is SCM important?
SCM Decision Making
SCM and IT

2. Sources and References
In the development of all the power point presentations for this course the following sources have been used.
Wikipedia
Supply Chain Management: Strategy, Planning, & Operation, Third Edition by Chopra & Meindl
Business Logistics/ Supply Chain Management, Fifth Edition by Ballou
Transportation-related Concepts and Terminology, presentation by Spiridon Reveliotis, Professor, School of Industrial and Systems Engineering, GaTech
Operations Management, Ninth edition by Haizer & Render

3. Global Operations Management
Operations Management is
business function responsible for the transformation processes that create the goods and services required by the organization’s customers.
design and management of products, processes, services and supply chains. It considers the acquisition, development, and utilization of resources that firms need to deliver the goods and services their clients want
Global OM = transformation processes in an international context = global supply chains

4. Global Operations Management
SCM is not inherently global
In the past, extended chains were all within one country
Even today a business and its first/second tier network can be local
However, to some degree almost all are global
Almost without exceptions, use of some supplies made outside the country

5. What is SCM? SCM = Logistics Management Definitions 1:
All stages involved, directly or indirectly, in fulfilling a customer request
Includes manufacturers, suppliers, transporters, warehouses, retailers, and customers
All stages may not be present in all supply chains
Within each company, the supply chain includes all functions involved in fulfilling a customer request (product development, marketing, operations, distribution, finance, customer service)
SCM = Logistics Management

6. What is SCM? Definitions 2:
Includes movement of products from suppliers to manufacturers to distributors, but also includes movement of information, funds, and products in both directions
Spans all movement and storage of raw materials, work-in-process inventory, and finished goods from point-of-origin to point-of-consumption.
Customer is an integral part of the supply chain
Probably more accurate to use the term “supply network” or “supply web”
Another term used is demand network management.

7. What is SCM? Definitions 3:
The planning and management of all activities involved in sourcing, procurement, conversion, and logistics management activities.
It also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third-party service providers, and customers.
Integrates supply and demand management within and across companies.

8. What is SCM? Manufacturing (internal) Distribution (internal)
(external)
Suppliers
(external)
Customers
(external)

9. What is SCM? Selecting Suppliers.
Managing the flow of goods from suppliers including transportation and customs (importing).
Also called Inbound logistics.
Suppliers
(external)

10. What is SCM?
Coordinating with the Production Planning and Manufacturing elements.
Right supplies.
Right production to meet customer needs.
Manufacturing
(internal)
Suppliers
(external)

11. What is SCM? Flow to the Distribution centers
Flow to the customers as to meet their demand
Also known as Outbound logistics
Manufacturing
(internal)
Distribution
(internal)
Distribution
(external)
Customers
(external)

12. What is SCM? SCM is also about information flow What is needed?
Where is the product?
Products also flow back into the network (returns).
Information and funds
Returns

13. What is SCM? Not all SCs are the same Retailer Hospital Make to order
Stores

14. What is SCM? SCM has many components
Distribution Network Configuration
Distribution Strategy
Transportation Supplier Strategy
Information Coordination
Inventory Management

15. What is SCM?
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
Customer
Customer Order Cycle
Retailer
Replenishment Cycle
Distributor
Manufacturing Cycle
Manufacturer
Procurement Cycle
Supplier

16. What is SCM?
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)
Cycle view clearly defines processes involved and the owners of each process. Specifies the roles and responsibilities of each member and the desired outcome of each process.

17. A Framework (The Logistics Triangle)
What is SCM?
A Framework (The Logistics Triangle)
Customer
service goals
The product
Logistics service
Information sys.

18. Why is SCM Important? Everything you consume /use was enabled by SCM.
THE BACKBONE OF MOST BUSINESSES!
Efficient SCM makes it possible for organizations to provide the products and services in a competitive way.
Allows international trade and the use of economies of scale, scope, and location.
Green SCM focuses on the flow of goods in such a way the effect on the environment is minimized.

19. Why is SCM important?
Large percentage of the cost of products
A product sells for $100
Raw materials (purchasing) = $50
Production and manufacturing = $15
Sales and marketing/distribution = $15
Transportation and storage = $15
Profit = $5
Therefore every cost element has a relationship with SCM.
SCM increase the value to the customer (customer will be willing to pay more than $100) by customization, speed of delivery, availability,…
Ways to reduce costs as to maximize profit (for example more efficient transportation or lower raw material costs)

20. Why is SCM important?
SCM is the key to serve the customers and to be profitable.
Competition is not between companies, its between companies and their SCs.
Another relevant side: humanitarian logistics

21. Supply Chain Decisions
Strategic Focus
Responsiveness: focus on short cycle times and fast delivery; extra capacity.
Flexible: makes/has available a high variety of products in variable amounts as requested by the customer.
Reliable: delivers when it promised.
Efficient: provides the product at a low cost, high utilization, low cost suppliers, slow transportation.
There are tradeoffs. A SC cannot be all of these at the same time.

22. Supply Chain Decisions
Order Winner Criteria
OW: What is unique about the product. The benefit/ characteristic/ feature that will make this be selected versus alternatives.
Supply chain decisions again relate to the product’s focus
Cost: Procurement, transportation, inventory, import export…
Speed/Availability: Transportation, location, inventory policies ….
Variety: Customization capability, materials availability
Quality: Supplier selection, handling,….

23. Supply Chain Decisions
SCM (operations) decisions made under three primary elements of uncertainty
demand (customer related)
supply (suppliers related)
competition + environment
Level of uncertainty depending on the planning horizon under consideration
Planning horizon: short, medium, long term

24. Supply Chain Decisions
Three decision levels
Strategic:
Long term planning
1+ years into the future
Tactical:
Medium term planning
Next 3 months to a year
Operational:
Short term planning:
Today, tomorrow, next week, next 1-3 months short term planning

25. Supply Chain Decisions
Strategic
Facility location: where to locate new factories, and warehouses (or which ones to expand, which ones to close down).
Strategic partnership with suppliers, distributors, and customers.
Supplier development.
Information Technology infrastructure to support supply chain operations.
Where-to-make and what-to-make-or-buy decisions (outsourcing).

26. Supply Chain Decisions
Tactical
Sourcing contracts and other purchasing decisions.
Production decisions, including contracting, locations, scheduling, and planning process definition.
Inventory decisions, including quantity and location of inventory.
Transportation strategy, including frequency, routes, and contracting.

27. Supply Chain Decisions
Operational
Short term production and distribution plans for each plant/ area (daily/weekly production schedules).
Inbound operations, including transportation from suppliers and receiving inventory.
Inventory tracking and reordering.
Outbound operations, including all fulfillment activities and transportation to customers.
Order promising, when can an order make it to the customer.
Customs and other international trade issues.

28. Supply Chain Decisions
One fit SC versus Specialization Model
Creates manufacturing and distribution networks composed of multiple, individual supply chains specific to products/customers.
These SCs work together to design, manufacture, distribute, market, sell, and service a product.
The set of partners may change according to a given market, region, or channel with its own unique characteristics and demands.

29. Supply Chain Decisions
For example. XYZ Company makes two families of washers/dryers:
Economy and Luxury
They are designed by different teams.
They use different components and suppliers.
Low cost for the Economy product family.
High quality and technology for Luxury product family.
Maybe manufactured in different locations. Stored in different areas of the distribution centers with different levels of customer service.
Thus each family has its own Specialized SC.

30. SC and Information Technology
Information technology plays a key role in Supply Chain Management.
ERP = Enterprise Resource Planning Systems
ERP are information technology systems that integrate most functional elements of the enterprise including:
Customer orders and demand
Suppliers and production
Transportation, Warehouses, Inventories
Accounts payable and other financials
Human resources
Customer Returns
Lot more on the interaction between IT and SCM