C11- Supply ChainManagement

1. C11- Supply ChainManagement

2. Supply Chain: the sequence of organizations - their facilities, functions, and activities - that are involved in producing and delivering a product or service. Production Distribution Purchasing Receiving Storage Operations Storage Supply Chain Management Typical Supply Chains Sometimes referred to as value chains

4. Supplier } Supplier } Storage Service Customer Supplier Storage Mfg. Storage Dist. Retailer Customer Supplier Supplier • Typical Supply Chain for a Manufacturer • Typical Supply Chain for a Service

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

6. Bullwhip Effect Demand InitialSupplier Final Customer Inventory oscillations become progressivelylarger looking backward through the supply chain

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

8. Benefits from SCM

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

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

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

12. 0 214800 232087768 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

13. Work center Work center Work center Storage Work center Storage Storage RECEIVING Shipping Materials Movement

14. Distribution Requirements Planning • Distribution requirements planning (DRP) is a system for inventory management and distribution planning • Extends the concepts of MRPII • Used to plan and coordinate various operations

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

16. Advantages E-Business

17. 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 Reverse Logistics

18. 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

19. SCOR Metrics

21. 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 RFID Technology

22. 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

23. Nabisco and Wegmans 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 CPFR Results

24. 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 • Inventory 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

25. Supply chain optimization

26. Trade-offs • Bullwhip effect • 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 • Delayed differentiation • 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

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

28. Supply Chain Situational Comparison

29. 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.

30. Legal Operations Accounting Data processing Purchasing Design Receiving Suppliers Purchasing Interfaces

31. Legal Operations Accounting Data process- ing Purchasing Design Receiving Suppliers

32. Centralized purchasing Purchasing is handled by one special department Decentralized purchasing Individual departments or separate locations handle their own purchasing requirements Value analysis Examination of the function of purchased parts and materials in an effort to reduce cost and/or improve performance

33. Supplier selection • Choosing suppliers • Evaluating sources of supply • Supplier audits • Supplier certification • Supplier relationships • Supplier partnerships

34. Supplier as a Partner

35. Supplier Partnerships- Ideas could improve 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

36. Critical Issues

38. 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. Learning Objectives

39. 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. Learning Objectives