UMMC – Supply Chain Mgmt.

1. UMMC – Supply Chain Mgmt. Course 1 Introduction to Supply Chain Management Concepts Mike Almich and Tony Bucko

2. Course List • Intro to SC Concepts • Financials • Logistics and Distribution • Purchasing • Inventory Management 1 • Inventory Management 2 • SC Technology • Production Management • Quality Control and Improvement

3. What will we cover today? • Importance of SC Management • Development of the SC Concept • Components of SC Management • Flow of Materials and Information • Issues and Challenges • Opportunities

4. What is SCM • Supply chain management can be viewed as a pipeline or conduit for the efficient and effective flow of products/materials, services, information, and financials

5. Importance of SCM • Dollars • SCM expenses average 25% of U.S. corporate budgets • Dollar value of U.S. inventory in 2004 equal to U.S. federal budget • Leverage • Cost reductions in SCM go directly to bottom line • Efficiency is amplified in ROA • SCM have direct effect on customer perceptions (timely delivery, quality, etc) • Opportunity • SCM has much opportunity for improvement in most organizations

6. http://www.youtube.com/watch?v=_8sBuBcCGs8

7. Development of the Supply Chain Concept Physical Distribution Concept Logistics Management Concept Value Chain Concept SCM

8. Physical Distribution Concept • 1950s and 1960s • Focused on outbound logistics • Logical due to value of finished goods • Total systems costs and analyzing tradeoff scenarios

9. Logistics Management Concept • 1970s and 1980s • LMC integrated inbound logistics into the Physical Distribution Concept • Came about due to deregulation of transportation • More international sourcing also led to focusing on inbound side

10. Logistics Management Concept Physical supply Physical distribution materials management outbound logistics inbound logistics

11. Value Chain Concept • 1990s • Further deregulation in the areas of finance and communication • Developed as a tool for evaluating competitive advantage • Integrated sales, marketing, purchasing, and manufacturing with logistics.

12. Supply Chain Management • Mid 1990’s to present • Globalization • Technology • Organizational consolidation • The empowered consumer

13. Manufacturing Supply Chain

14. Supply Chain Management Globalization

15. Supply Chain Management • Organizational Consolidation • Move from adversarial relationships with suppliers to collaborative relationship

16. Supply Chain Management • The Empowered Consumer • Technology and globalization has shifted power to the consumer • This increases pressure on supply chain

18. An example in Fairview System terms…

19. SCM Components • Financials • Inventory Management • Logistics and Distribution • Supply/Demand Management • SC Technology • Production Management • Quality Control and Improvement • Purchasing

20. Financials • Basic Business Financials • Income Statement • Balance Sheet • Cash Flow Statement • General Ledger • Accounting Practices • ROA/ROI

21. Financials The Supply Chain Financial Impact • A major financial objective for any organization is to produce a satisfactory return for stockholders. • The absolute size of the profit must be considered in relation to the stockholders’ net investment, or net worth. • An organization’s financial performance is also judged by the profit it generates in relationship to the assets utilized, or return on assets (ROA). • The supply chain plays a critical role in determining the level of profitability in an organization.

23. Inventory Management • In U.S. Inventory investment averages about 14% of GDP or $2.1 Trillion • When to Order/How much to Order • Balancing Supply with Demand • Large Impacts on Financials and Customer Service http://www.investopedia.com/video/play/what-is-gdp#axzz1cjqs0ph6

24. Inventory Management • Critical Decision-making for Inventory Control • Quantity Issues • Classifying Inventory • Timing Issues • Systems for Inventory Control • Continuous/Periodic • Two Bin/Kanban

25. Inventory Management • Approaches of Inventory Management • JIT • MRP and DDMRP • EOQ • Fixed Order Quantity/Order Interval • Condition of certainty • Condition of Uncertainty

26. Logistics/Distribution • In U.S. Logistics and Distribution accounts for 8.3% of GDP or $1.2 Trillion (2010) • The physical flow of goods and services up and down the supply chain • Critical to demand fulfillments

27. Supply/Demand Management • Focused efforts to manage input fluctuations • Focused efforts to process, influence, manage, and anticipate customer demand • http://www.youtube.com/watch?v=HuuweJmSXlg

28. Supply/Demand Management • VMI • EDI • CPFR • Bullwhip Effect • Buyer/Seller Relationships http://www.youtube.com/watch?v=wLNdDSYqhNw

29. SC Technology • Supports critical supply chain capabilities and strategies • A well-designed SCIS framework links people, processes, and technology in a manner that provides actionable information and enhances decision making.

31. SC Technology

32. Production Management • Production Systems • Made to Stock (MTS) • Assemble to Order (ATO) • Make to Order (MTO) • Engineer to Order (ETO) • Push/Pull Systems

33. Quality Control and Improvement • Service Process Design/Analysis • Factors Influencing Process Design • Strategic Importance • Continuous Process Improvement • Pareto Analysis • Ishikawa Diagrams • Modeling Principles

34. Quality Control and Improvement • Lean Principles • 6 Sigma • Benchmarking • Just-In-Time • TQM (Total Quality Management) • ISO:9000

35. Quality Control and Improvement

37. Purchasing • Purchasing Activities • Strategic Sourcing • Vendor Management • Total Cost of Ownership

38. Supply Chain Issues

39. So what can we do? • Control our costs • Reduce Pricing to reduce cost • Reduce variation/standardize product to reduce costs • Manage our Inventory

40. 6 Drivers of Supply Chain Excellence