Understanding the Supply Chain

1. Understanding the Supply Chain COSC 643 Sungchul Hong

2. What is a supply chain? • A supply chain consists of all stages involved, directly or indirectly, in fulfilling a customer request. • The supply chain not only includes the manufacturer and suppliers, but also transporters warehouses, retailers, and customers themselves.

4. What is a supply chain? • A supply chain is dynamic and involves the constant flow of information, production and funds between different stages. • Each stage of the supply chain performs different processes and interacts with other stages of the supply chain.

5. What is a supply chain? • A typical supply chain may involve a variety of stages. • Customers • Retailers • Wholesalers/distributors • Manufacturers • Component/raw material suppliers.

6. Stages of a Detergent Supply Chain

7. Supply Chain Stages

8. The Objective of a Supply Chain • The objective of every supply chain is to maximize the overall value generated. • The value a supply chain generates is the difference between what the final product is worth to the customer and the effort the supply chain expends in filling the customer’s request.

9. Supply Chain Profitability • Supply chain profitability is the total profit to be shared across all supply chain stages. The higher the supply chain profitability, the more successful the supply chain.

10. Supply Chain Management • Supply chain management involves the management of flows between and among stages in a supply chain to maximize total profitability.

11. Decision Phases in a Supply Chain • Supply chain strategy or design. • How to structure the supply chain. • Location, capacities of production, and warehousing facilities. • Supply chain planning • Companies define a set of operating policies that govern short-term operations. • Forecast market, inventories, subcontracting of manufacturing. • Supply chain operation

12. Supply Chain Operation • Make decisions regarding individual customer orders. • Firms allocate individual orders to inventory or production • Shipments, delivery schedules of trucks.

13. Process View of a Supply Chain • A supply chain is a sequence of processes and flows that take place within and between different supply chain stages and combine to fill a customer need for a product. • Cycle view • Push/Pull view

14. Cycle view • The processes in a supply chain are divided into a series of cycles, each performed at the interface between two successive stages of a supply chain.

15. Supply Chain Process Cycle

16. Cycle View of Supply Chain Process • ·Customer order cycle • ·Replenishment cycle (at retailer/distributor) • ·Manufacturing cycle (distributor/manufacturer) • ·Procurement cycle (manufacturer/supplier )

17. Customer Order Cycle

18. Replenishment Cycle

19. Manufacturing Cycle

20. Procurement Cycle

21. Push/Pull View • The processes in a supply chain are divided into two categories depending on whether they are executed in response to a customer order or in anticipation of customer orders. • Pull processes are initiated by a customer order, and push processes are initiated and performed in anticipation of customer orders.

22. Push/Pull View of Supply Chain Processes • The push/pull boundary in a supply chain separates push processes from pull processes.

23. Push/Pull Process for the L.L. Bean Supply Chain

24. Cycles in Dell Supply Chain Push/Pull Process for Dell Supply Chain

25. The Importance of Supply Chain Flows • There is a close connection between the design and management of supply chain flows and the success of a supply chain. • e.g.) Dell has only 10 days of inventory contrast to other pc makers of 80 to 100 days. The success of the Dell supply chain is facilitated by sophisticated information exchange. (customized web pages) • Outsourcing

26. Dell Supply Chain Stages

27. Examples of Supply Chains • Micron Electronics Inc. (A direct sales Manufacturer) • Why has assembly of certain PCs been outsourced? What characterizes PCs or orders that have been outsourced? • Why does Micron have only one manufacturing site? • Why are individual orders shipped using FedEx and large corporate orders shipped using LTL? • Why are individual orders merged in transit rather than at the assembly site itself? • How much inventor of components and finished products is maintained?

28. Examples of Supply Chains • 7-Eleven ( A Convenience Store) (Japan) • One of the company’s objectives is to micro-match supply and demand by location, season, and time of day. • Fresh food and distribution center. • Toyota (A Global Auto Manufacturer) • Global production and distribution network.

29. Examples of Supply Chains • Amazon.com (An E-Business) • Why is Amazon.com building more warehouses as it grows? How many warehouses should it have, and where should they be located? • What advantages does selling books via the Internet provide over a traditional bookstore? Are there any disadvantages to selling via the Internet? • Why does Amazon.com stock best-sellers while buying other titles from distributors? • Des the Internet channel provide greater value to a bookseller like Borders with retail outlets or to an e-business like Amazon.com?