Supply Chain Management

1. Supply Chain Management UNIT 4

2. Supply Chain All facilities, functions, activities, associated with flow and transformation of goods and services from raw materials to customer, as well as the associated information flows. An integrated group of processes to “source,” “make,” and “deliver” products.

3. Supply Chain Management – Definitions Supply chain management is the management of a network of interconnected businesses involved in the ultimate provision of product and service packages required by end customers (Harland, 1996).

4. Supply chain activities transform natural resources, raw material and components into a finished product that is delivered to end customer  •In SCM companies and corporations involve themselves in supply chain by exchanging information regarding market fluctuations, production capabilities , demand forecasts etc. •Supply Chain is a system of organizations, people, technology, activities and Information and resources In moving a product or service from supplier to customer .

5. Key objective of SCM • Design a supply chain network that delivers high quality products to the right customers at the right time at minimum cost.

6. Supply Chain Illustration

7. Supply Chain for Denim Jeans

9. Supply Chain Processes

10. Value vs. Supply Chain • Terms are used interchangeably • Supply chain • activities that get raw materials and subassemblies into manufacturing operation & to final consumer. • Value chain • every step from raw materials to the eventual end user • ultimate goal is delivery of maximum value to the end user

11. Supply Chain Management (SCM) • Managing flow of information through supply chain in order to attain the level of synchronization that will make it more responsive to customer needs while lowering costs. • Keys to effective SCM • information • communication • cooperation • trust

12. Supply Chain Uncertainty • One goal in SCM: • respond to uncertainty in customer demand without creating costly excess inventory • Negative effects of uncertainty • lateness • incomplete orders • Inventory • insurance against supply chain uncertainty • Factors that contribute to uncertainty • inaccurate demand forecasting • Long& variable lead times • late deliveries • incomplete shipments • price fluctuations and discounts • inflated orders

13. Importance • Reduce uncertainty • impact on profitability -According to A.T. Kearney's research, inefficiencies in the supply chain can waste up to 25 percent of a company's operating costs. • right thing right time at right place • customer delight, • competitive advantage • minimizing waste

14. Working-capital reductions-Increasing inventory turns, managing receivables and payables, minimising days of supply in inventory, and accelerating the cash-to-cash cycle all are affected by supply chain execution. A the case of a consumer products company that took 20 minutes to make a product and five and a half months to collect payment for it. If you can cut the cash cycle down, there are millions of dollars there. • Fixed-capital efficiency-This refers to network optimisation--for instance, assuring that the company has the right number of warehouses in the right places, or outsourcing functions where it makes more economic sense.

15. Bullwhip Effect Occurs when slight demand variability is magnified as information moves back upstream

16. JUST IN TIME

17. What is just-in-time • If you think about someone's journey to work, they could leave the house just-in-time to cycle to the train station, just-in-time to catch their train, which would get them to their place of work just-in-time, allowing them to be at their desk just-in-time to start work. • There is no problem with this concept; however, achieving it would be rather more complex and so too is applying this concept in engineering manufacture.

18. What is just-in-time? • In engineering, using the just-in-time theory would allow the components that are needed to produce a product to be delivered to the worker, just-in-time. • The products can then be made available for the customers just-in-time. • This process allows for all types of stock, including materials and finished products, to be eliminated. • Implementing a just-in-time structure can mean a company is adopting a lean production system.

19. JIT is both a philosophy and collection of management methods and techniques used to eliminate waste (particularly inventory) • JIT also known as lean production or stockless production • JIT improves profits and return on investment by:- • Reducing inventory levels • Increasing the inventory turnover rate • Reducing variability • Improving product quality, • Reducing production and delivery lead times, • And reducing other costs (such as those associated with machine setup and equipment breakdown).

20. KEY ELEMENTS OF JIT To have a flexible workforce capable of using multiple skills. Insist for defect free materials & supplies be delivered when needed. Strives for reduced set-up times & small lot sizes.

21. There should be reliable vendors, employee involvement & co-operation with total productive maintenance. • As a concept JIT means that, virtually no inventories are held at any stage of production and that the exact number of units are brought to each successive stages of production at the right time.

22. THAT’S WHY THE JIT CONCCEPT IS OTHERWISE KNOWN AS : ZIPS (ZERO INVENTORY PRODUCTION SYSTEM), ZIN (ZERO INVENTORIES), MAN ( MATERIALS AS NEEDED), NOT (NICK OF TIME).