Presentation is loading. Please wait.

Presentation is loading. Please wait.

Supply Chain Management

Similar presentations

Presentation on theme: "Supply Chain Management"— Presentation transcript:

1 Supply Chain Management
11 Supply Chain Management

2 Learning Objectives Explain what a supply chain is.
Explain the need to manage a supply chain and the potential benefits of doing so. Explain the increasing importance of outsourcing. State the objective of supply chain management. List the elements of supply chain management. Identify the strategic, tactical, and operations issues in supply chain management. Describe the bullwhip effect and the reasons why it occurs.

3 Learning Objectives Explain the value of strategic partnering.
Discuss the critical importance of information exchange across a supply chain. Outline the key steps, and potential challenges, in creating an effective supply chain. Explain the importance of the purchasing function in business organizations. Describe the responsibilities of purchasing. Explain the term value analysis. Identify several guidelines for ethical behavior in purchasing.

4 Supply Chain Management
Supply Chain: the sequence of organizations - their facilities, functions, and activities - that are involved in producing and delivering a product or service. Sometimes referred to as value chains

5 Facilities Warehouses Factories Processing centers
Distribution centers Retail outlets Offices

6 Functions and Activities
Forecasting Purchasing Inventory management Information management Quality assurance Scheduling Production and delivery Customer service

7 Typical Supply Chains Purchasing Receiving Storage Operations
Production Distribution

8 Typical Supply Chain for a Manufacturer
Figure 11.1a Supplier Storage } Mfg. Dist. Retailer Customer

9 Typical Supply Chain for a Service
Figure 11.1b Supplier } Storage Service Customer

10 Need for Supply Chain Management
Improve operations Increasing levels of outsourcing Increasing transportation costs Competitive pressures Increasing globalization Increasing importance of e-commerce Complexity of supply chains Manage inventories

11 Bullwhip Effect Figure 16.3 Demand Initial Supplier Final Customer
Inventory oscillations become progressively larger looking backward through the supply chain

12 Benefits of Supply Chain Management
Organization Benefit Campbell Soup Doubled inventory turnover rate Hewlett-Packard Cut supply costs 75% Sport Obermeyer Doubled profits and increased sales 60% National Bicycle Increased market share from 5% to 29% Wal-Mart Largest and most profitable retailer in the world

13 Benefits of Supply Chain Management
Lower inventories Higher productivity Greater agility Shorter lead times Higher profits Greater customer loyalty Integrates separate organizations into a cohesive operating system

14 Global Supply Chains Increasing more complex Language Culture
Currency fluctuations Political Transportation costs Local capabilities Finance and economics Environmental

15 Elements of Supply Chain Management
Table 11.1 Deciding how to best move and store materials Logistics Determining location of facilities Location Monitoring supplier quality, delivery, and relations Suppliers Evaluating suppliers and supporting operations Purchasing Meeting demand while managing inventory costs Inventory Controlling quality, scheduling work Processing Incorporating customer wants, mfg., and time Design Predicting quantity and timing of demand Forecasting Determining what customers want Customers Typical Issues Element

16 Strategic or Operational
Two types of decisions in supply chain management Strategic – design and policy Operational – day-today activities Major decisions areas Location Production Inventory Distribution

17 Logistics Logistics Refers to the movement of materials and information within a facility and to incoming and outgoing shipments of goods and materials in a supply chain

18 Logistics Movement within the facility Incoming and outgoing shipments
Bar coding EDI Distribution JIT Deliveries

19 Materials Movement Figure 11.4 Work center Work center Storage
RECEIVING Storage Work center Work center Shipping

20 Distribution Requirements Planning
Distribution requirements planning (DRP) is a system for inventory management and distribution planning Extends the concepts of MRPII

21 Uses of DRP Management uses DRP to plan and coordinate: Transportation
Warehousing Workers Equipment Financial flows

22 E-Business E-Business: the use of electronic technology to facilitate business transactions Applications include Internet buying and selling Order and shipment tracking Electronic data interchange

23 Advantages E-Business
Companies can: Have a global presence Improve competitiveness and quality Analyze customer interests Collect detailed information Shorten supply chain response times Realize substantial cost savings Create virtual companies Level the playing field for small companies

24 Disadvantages of E-Business
Customer expectations Order quickly -> fast delivery Order fulfillment Order rate often exceeds ability to fulfill it Inventory holding Outsourcing loss of control Internal holding costs

25 Reverse Logistics Reverse logistics – the backward flow of goods returned to the supply chain Processing returned goods Sorting, examining/testing, restocking, repairing Reconditioning, recycling, disposing Gatekeeping – screening goods to prevent incorrect acceptance of goods Avoidance – finding ways to minimize the number of items that are returned

26 Effective Supply Chain
Requires linking the market, distribution channels processes, and suppliers Supply chain should enable members to: Share forecasts Determine the status of orders in real time Access inventory data of partners

27 Successful Supply Chain
Trust among trading partners Effective communications Supply chain visibility Event-management capability The ability to detect and respond to unplanned events Performance metrics

28 SCOR Metrics Table 11.4 Perspective Metrics Reliability
On-time delivery Order fulfillment lead time Fill rate (fraction of demand met from stock) Perfect order fulfillment Flexibility Supply chain response time Upside production flexibility Expenses Supply chain management costs Warranty cost as a percent of revenue Value added per employee Assets/utilization Total inventory days of supply Cash-to-cash cycle time Net asset turns

29 RFID Technology Used to track goods in supply chain
RFID tag attached to object Similar to bar codes but uses radio frequency to transmit product information to receiver RFID eliminates need for manual counting and bar code scanning

30 CPFR Collaborative Planning, Forecasting, and Replenishment
Focuses on information sharing among trading partners Forecasts can be frozen and then converted into a shipping plan Eliminates typical order processing

31 CPFR Process Step 1 – Front-end agreement Step 2 – Joint business plan
Steps 3-5 – Sales forecast Steps 6-8 – Order forecast collaboration Step 9 – Order generation/delivery execution

32 CPFR Results Nabisco and Wegmans Wal-mart and Sara Lee
50% increase in category sales Wal-mart and Sara Lee 14% reduction in store-level inventory 32% increase in sales Kimberly-Clark and Kmart Increased category sales that exceeded market growth

33 Creating an Effective Supply Chain
Develop strategic objectives and tactics Integrate and coordinate activities in the internal supply chain Coordinate activities with suppliers with customers Coordinate planning and execution across the supply chain Form strategic partnerships

34 Supply Chain Performance Drivers
Quality Cost Flexibility Velocity Customer service

35 Velocity Inventory velocity Information velocity
The rate at which inventory(material) goes through the supply chain Information velocity The rate at which information is communicated in a supply chain

36 Challenges Barriers to integration of organizations
Getting top management on board Dealing with trade-offs Small businesses Variability and uncertainty Long lead times

37 Trade-offs Lot-size-inventory Inventory-transportation costs
Bullwhip effect Inventory-transportation costs Cross-docking Lead time-transportation costs Product variety-inventory Delayed differentiation Cost-customer service Disintermediation

38 Trade-offs Bullwhip effect Cross-docking
Inventories are progressively larger moving backward through the supply chain Cross-docking Goods arriving at a warehouse from a supplier are unloaded from the supplier’s truck and loaded onto outbound trucks Avoids warehouse storage

39 Trade-offs Delayed differentiation Disintermediation
Production of standard components and subassemblies, which are held until late in the process to add differentiating features Disintermediation Reducing one or more steps in a supply chain by cutting out one or more intermediaries

40 Supply Chain Issues Operating Issues Tactical Issues Strategic Issues
Quality control Production planning and control Inventory policies Purchasing policies Production policies Transportation policies Quality policies Design of the supply chain, partnering Operating Issues Tactical Issues Strategic Issues

41 Supply Chain Benefits and Drawbacks
Table 11.5 Problem Potential Improvement Benefits Possible Drawbacks Large inventories Smaller, more frequent deliveries Reduced holding costs Traffic congestion Increased costs Long lead times Delayed differentiation Disintermediation Quick response May not be feasible May need absorb functions Large number of parts Modular Fewer parts Simpler ordering Less variety Cost Quality Outsourcing Reduced cost, higher quality Loss of control Variability Shorter lead times, better forecasts Able to match supply and demand

42 Purchasing Purchasing is responsible for obtaining the materials, parts, and supplies and services needed to produce a product or provide a service. Purchasing cycle: Series of steps that begin with a request for purchase and end with notification of shipment received in satisfactory condition.

43 Goal of Purchasing Develop and implement purchasing plans for products and services that support operations strategies

44 Duties of Purchasing Identifying sources of supply
Negotiating contracts Maintaining a database of suppliers Obtaining goods and services Managing supplies

45 Purchasing Interfaces
Figure 11.5 Purchasing Legal Accounting Operations Data processing Design Receiving Suppliers

46 Purchasing Cycle Requisition received Supplier selected
Legal Accounting Operations Data process- ing Design Receiving Suppliers Requisition received Supplier selected Order is placed Monitor orders Receive orders

47 Value Analysis vs. Outsourcing
Examination of the function of purchased parts and materials in an effort to reduce cost and/or improve performance

48 Centralized vs Decentralized Purchasing
Purchasing is handled by one special department Decentralized purchasing Individual departments or separate locations handle their own purchasing requirements

49 Suppliers Choosing suppliers Evaluating sources of supply
Supplier audits Supplier certification Supplier relationships Supplier partnerships

50 Factors in Choosing a Supplier
Quality and quality assurance Flexibility Location Price

51 Factors in Choosing a Supplier (cont’d)
Product or service changes Reputation and financial stability Lead times and on-time delivery Other accounts

52 Evaluating Sources of Supply
Vendor analysis: Evaluating the sources of supply in terms of price, quality, reputation, and service

53 Evaluating Sources of Supply
Vendor analysis - evaluating the sources of supply in terms of Price Quality Services Location Inventory policy Flexibility

54 Supplier as a Partner Aspect Adversary Partner Table 11.9
Number of suppliers Many One or a few Length of relationship May be brief Long-term Low price Major consideration Moderately important Reliability May not be high High Openness Low Quality May be unreliable; buyer inspects At the source; vendor certified Volume of business May be low Flexibility Relatively low Relatively high Location Widely dispersed Nearness is important

55 Supplier Partnerships
Ideas from suppliers could lead to improved competitiveness Reduce cost of making the purchase Reduce transportation costs Reduce production costs Improve product quality Improve product design Reduce time to market Improve customer satisfaction Reduce inventory costs Introduce new products or services

56 Critical Issues Strategic importance Technology management Cost
Quality Agility Customer service Competitive advantage Technology management Benefits Risks

57 Critical Issues Purchasing function Increased outsourcing
Increased conversion to lean production Just-in-time deliveries Globalization

Download ppt "Supply Chain Management"

Similar presentations

Ads by Google