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Enhancing Supply Chain Management for Competitive Edge

Learn the critical role of supply chain in the success of companies, with an emphasis on leveraging IT investments strategically. Understand the steps to optimize supply chain operations through IT for business enhancement.

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Enhancing Supply Chain Management for Competitive Edge

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  1. Source: Adapted from Robert Hayes, Gary Pisano, David Upton, and Steven Wheelwright, Operations Strategy and Technology: Pursuing the Competitive Edge (Hoboken, NJ: 2005), p. 120 Source: Adapted from R. Chase, N. Aquilano, and R. Jacobs, Operations Management for Competitive Advantage (New York:McGraw-Hill, 2001), p. 210 • Chase, and Aquilano, “Production and Operations Management”, 7th Edition, McGraw Hill, 1995 • Vollmann, Berry, and Whybark, “Manufacturing Planning and Control Systems,” 5th Edition, McGraw Hill, 2005 • Tersine, “Principles of Inventory and Materials Management,” 3rd Edition, Elsevier Science Publishing, 1988 • Gaither and Frasier, “Operations Management,”9th Edition, South-Western Publishing, 2002 • Krajewski and Ritzman, “Operations Management,” 6th Edition, Prentice Hall, 2002 • http://www.vendormanagedinventory.com/setup.htm

  2. WHY is ______ Successful? DELL,RAHUL SINGH/711, JAPAN, VISHAL BAMBANI/WALLLMART,SAMU RAM SANDIL/HP,WAIEL Sony : + Sajid MD/AMAZON.COM,TWARITA NAYAN , NIKET- AMUL IS SUCCESSFUL ? AND. • WHAT IS THE ROLE OF IT IN SUPPLY CHAIN MANAGEMENT? WHAT ARE THE STEPS so that new investment in IT is beneficial ( especially in Supply Chain Mgmt environment)? Hard Copies 1 week time

  3. What is role of supply chain in the success of the chosen company? 1. Electronic files : the Powerpoint + 1 Word file+ Folder : Back up of internet article/ppt/pdf store in ARC 10 2. Individual Submit Word file : Hard copy 2weeks Date of Submission : 31/ Mar • Amway =Anuradha • Vimal=Jayanta • E-bay= Nidhi • Dell =Devika+Karan+ • Gail=Kishore + Bhaskar • Oriflame= Avantika+Loveleen+Debayan • Percept Picture Company / INOX: =Arijit • Amul=Goutam, Amresh, Niket, • McDonalds= Felix+ Deepak+Debashish • Nestle=Kanchan+Abhijit • Levis= Anubha • Nike= Kushal • Adidas= Mainak+Abhishek+Nag Gautam • Café Coffee Day =Kaberi

  4. What is role of supply chain in the success of the chosen company? 1. Electronic filesPowerpoint + 1 Word file+ Folder : Back up of internet article/ppt/pdf 2. Submit Word file : Hard copy : 2weeks Date of Submission : 28/ Mar • Ratul + Santanu =Nano • Rohit + Sandip =DHL/ Fed Express • Ranbaxy /Baxter • Priya + Simran : Amway • Richa+ Waiel : Walmart, • Praveen +Sonia : Rebok + Nike: • Dell : Sarvesh +Vishal • Coca cola : Prashant +Vincent

  5. Evaluation and Grade Sheet Good....................OK…....................Poor 4 3 2 1 0 Introduction ___ ___ ___ ___ ___ Clarity ___ ___ ___ ___ ___ Organization ___ ___ ___ ___ ___ Professionalism ___ ___ ___ ___ ___ Communication ___ ___ ___ ___ ___ Conclusion ___ ___ ___ ___ ___ Time limits ___ ___ ___ ___ ___ Completeness ___ ___ ___ ___ ___ Understanding ___ ___ ___ ___ ___ Questions ___ ___ ___ ___ ___ Oral_Pres_Papers.doc

  6. Session-1 : Nature and scope of Resources of an organization Strategic operations management Introduction to Operations Management and its role in organization strategy- for manufacturing and service organization. Session-2 : Production Processes, Manufacturing and Service Operations`, Process Planning and Process Design Understanding the role and characteristics and nature of product and process planning

  7. Session-1 : Nature and scope of Resources of an organization Rs 1/loaf Rs 2/loaf Rs 3/loaf Rs 1/loaf Rs 5/loaf Rs 1/loaf Rs 14/loaf

  8. Session-1 : Nature and scope of Resources of an organization Inputs PROCESSES Outputs Environment Machines Men Material 1. Machines 2. Men 3 Key Rsources 3. Materials

  9. Session-1 : Nature and scope of Resources of an organization Inputs Resources Outputs Environment Machines Men Material 1. Machines Age, condition, Utilisation rate, Value, Replacement, Patents, Buildings 2. Men Number, skills, Wage Costs, Proportion of total costs, 3. Materials Source, suppliers, partnering, waste, water (Energy)

  10. Product - Session-1 : Nature and scope of Resources of an organization - Inputs PROCESSES Outputs Environment Machines Men Material Value Chain Outputs Processing Materials Flour, yeast, Bread Transporting Raw Material Labels Plastic wrapper sheets Making a recipe Baking Water Energy Cutting Labor Packing Men Building Labeling Transporting the finished Bread Machines Oven Equipment

  11. Service Hospital Process Inputs Processing Outputs Doctors, nurses Patients Examination Healthy patients Hospital Surgery Medical Supplies Monitoring Equipment Medication Laboratories Therapy

  12. Rs 1/loaf Rs 2/loaf Rs 3/loaf Rs 1/loaf Rs 5/loaf Rs 1/loaf Rs 14/loaf

  13. 1. Machines Age, condition, Utilisation rate, Value, Replacement, Patents, Buildings 2. Men Number, skills, Wage Costs, Proportion of total costs, 3. Materials Source, suppliers, partnering, waste, 4. Methods How efficient are their activities? Outsourcing, JIT 5. Money Credit and turnover periods, Cash surplus deficits, Short term finance and long term finance 6. Management Size, management skills, loyalty, Career progression, structure 7. Management Information Ability to generate and disseminate ideas, innovation, Information system 8. Markets Products and customers 9. Make-up Culture, Structure

  14. Historical Evolution of Operations Management • Industrial revolution (1770’s) • Scientific management (1911) • Mass production • Interchangeable parts • Division of labor • Human relations movement (1920-60) • Decision models (1915, 1960-70’s) • Influence of Japanese manufacturers • Toyota • TQM • Major trends • The Internet, e-commerce, e-business • Management technology • Globalization • Management of supply chains • Agility

  15. Rs 1/loaf Rs 1/loaf Rs 2/loaf Rs 2/loaf Rs 3/loaf Rs 3/loaf Rs 1/loaf Rs 0.5/loaf Rs 5/loaf Rs 4/loaf Rs 1/loaf Rs 1/loaf Rs 14/loaf Rs 12.5/loaf Session-2 : Strategic operations management Who will get more market share ?

  16. Rs 1/loaf Rs 1/loaf Rs 2/loaf Rs 2/loaf Rs 3/loaf Rs 3/loaf Rs 1/loaf Rs 0.5/loaf Rs 4/loaf Rs 5/loaf Rs 1/loaf Rs 1/loaf Rs 14/loaf Rs 12.5/loaf Session-2 : Strategic operations management Least Cost strategy producer DifferentiationStrategy Rs 14/loaf as fruit bread Focusstrategy Rs 14/loaf with more hygenically produced and sold to airlines 3 Types of Competitive strategy

  17. Rs 1/loaf Rs 1/loaf Rs 2/loaf Rs 2/loaf Rs 3/loaf Rs 3/loaf Rs 1/loaf Rs 0.5/loaf Rs 5/loaf Rs 4/loaf Rs 1/loaf Rs 1/loaf Rs 12.5/loaf Rs 14/loaf Session-2 : Strategic operations management Inputs Processes Outputs Environment Machines Men Material Methods Money Money Markets Management Information Management

  18. Session-2 : Production Processes , Process Planning and Process Design Understanding the role and characteristics and nature of product and process planning • Strategy • an organization’s overall approach for physically producing goods and services • Competitive strategy : Differentiation Strategy, Cost Strategy, Focus strategy • Process • a group of related tasks with specific inputs and outputs • Process design • tasks need to be done and coordinated among functions, people, and organizations • Types of Process design – project, batch, mass production • Capital Requirements for process design high investment or low investment • Process planning • What is process planning ? converts designs into workable instructions for manufacture or delivery • How do we do process planning? 3 Process planning aids –Assembly charts, Operations process charts, flow process charts

  19. Session-2 : Production Processes , Process Planning and Process Design Understanding the role and characteristics and nature of product and process planning • Projects • one-of-a-kind production of a product to customer order • Batch production • systems process many different jobs through the system in groups or batches • Mass production • produces large volumes of a standard product for a mass market • Continuous production • used for very-high volume commodity products

  20. Session-2 : Production Processes , Process Planning and Process Design Understanding the role and characteristics and nature of product and process planning Process Selection with Break-Even Analysis • Cost • Fixed costs • constant regardless of the number of units produced • Variable costs • vary with the volume of units produced • Revenue • price at which an item is sold • Total revenue • is price times volume sold • Profit • difference between total revenue and total cost

  21. TR = TC vp = cf + vcv vp - vcv = cf v(p - cv) = cf v = cf p - cv Solving for Break-Even Volume Session-2 : Production Processes , Process Planning and Process Design Understanding the role and characteristics and nature of product and process planning Process Selection with Break-Even Analysis • Total cost = fixed cost + total variable cost • TC = cf + vcv • Total revenue = volume x price • TR = vp • Profit = total revenue - total cost • Z = TR – TC = vp - (cf + vcv)

  22. 2000 10 - 5 cf p - cv Break-even point is v = = = 400 loafs Session-2 : Production Processes , Process Planning and Process Design Understanding the role and characteristics and nature of product and process planning Break-Even Analysis: Example Fixed cost = cf = Rs 2,000 Variable cost = cv = Rs 5 per Loaf Price = p = Rs10 per loaf

  23. Rs3,000 — Rs2,000 — Rs1,000 — Total cost line Total revenue line 400 Units Break-even point Session-2 : Production Processes , Process Planning and Process Design Understanding the role and characteristics and nature of product and process planning Break-Even Analysis: Graph

  24. Process A Process B Rs 2,000 + Rs 5v = 10,000 + 2v 3v = 8,000 v = 2,667 Session-2 : Production Processes , Process Planning and Process Design Understanding the role and characteristics and nature of product and process planning Process Selection Below 2,667, choose A Above 2,667, choose B

  25. Rs20,000 — Rs15,000 — Rs10,000 — Rs 5,000 — Total cost of process A Process A Process B Rs 2,000 + Rs 5v = 10,000 + 2v 3v = 8,000 v = 2,667 Total cost of process B Choose process A Choose process B | | | | 1000 2000 3000 4000 Units Point of indifference = 2,667 Units Session-2 : Production Processes , Process Planning and Process Design Understanding the role and characteristics and nature of product and process planning Process Selection: Graph

  26. Process Plans • Set of documents that detail manufacturing and service delivery specifications • assembly charts • operations sheets • quality-control check-sheets

  27. Assembly Chart for a Big Mac Sesame seed top bun Beef patty Salt Cheese Lettuce Sauce Onions Middle bun Beef patty Salt Cheese Lettuce Sauce Onions Pickles Bottom bun Wrapper SA First-layer assembly SA Second-layer assembly Completed Big Mac

  28. An Operations Sheet for a Plastic Part Part name Crevice Tool Part No. 52074 Usage Hand-Vac Assembly No. 520 Oper. No. Description Dept. Machine/Tools Time 10 Pour in plastic bits 041 Injection molding 2 min 20 Insert mold 041 #076 2 min 30 Check settings 041 113, 67, 650 20 min & start machine 40 Collect parts & lay flat 051 Plastics finishing 10 min 50 Remove & clean mold 042 Parts washer 15 min 60 Break off rough edges 051 Plastics finishing 10 min

  29. Process Analysis • Process flowcharts • Symbolic representation of processes • Incorporate • nonproductive activities (inspection, transportation, delay, storage) • productive activities (operations)

  30. Operations Inspection Transportation Delay Storage Process Flowchart Symbols

  31. Date: 9-30-02 Location: Graves Mountain Analyst: TLR Process: Apple Sauce Step Operation Transport Inspect Delay Storage Description of process Distance (feet) Time (min) 1 Unload apples from truck 20 2 Move to inspection station 100 ft 3 Weigh, inspect, sort 30 4 Move to storage 50 ft 5 360 Wait until needed Move to peeler 6 20 ft 7 Apples peeled and cored 15 8 Soak in water until needed 20 9 5 Place in conveyor 10 Move to mixing area 20 ft 11 30 Weigh, inspect, sort Page 1 0f 3 Total 480 190 ft Process Flowchart of Apple Processing

  32. Is order complete? Customer Waiter Salad Chef Dinner Chef Prepare soup or salad order Give soup or salad order to chef N Prepare dinner order Give dinner order to chef Place order Y Get drinks for customer Give order to waiter Deliver salad or soup order to customer Drink Give order to waiter Eat salad or soup Deliver dinner to customer Eat dinner Deliver check to customer Receives check Receive payment for meal Gives payment to waiter Cash or Credit? Credit A Process Map of Restaurant Service Cash Collect change, leave tip Bring change to customer Run credit card through Fill in tip amount Return credit slip to customer Collect tip

  33. Service Blueprint for an Installment Lending Operation Source: Lynn Shostack, “Service Positioning through Structural Change,” Journal of Marketing 51 (January 1987), p. 36. Reprinted with permission by the American Marketing Association

  34. Session-2 : Production Processes , Process Planning and Process Design Understanding the role and characteristics and nature of product and process planning Cost behaviour: operational gearing Operational Gearing means Ratio of Fixed Costs to Variable cost Sales B E pt Fixed Cost Variable Cost Total Cost Time Fixed Costs : High Fixed Costs : low As Machine Investment high, so small investment in men 2 firms have same breakeven point Rs

  35. Profit zone Sales Fixed Cost Variable Cost Rs Total Cost loss zone loss zone Time Fixed Costs : High Fixed Costs : low As Machine Investment high, so small labour force 2 firms have same breakeven point

  36. What are the supply chain drivers of supply chain ? What is the fit between supply chain strategy and competitive strategy ? 25 What is the role of IT in supply chain ? 26 How doesE-Business help supply chain? E-business frame work and B2B addition to the E-Business

  37. Session 3 Production Technology Understanding automation and mechanization in production 2 Session-4 : Objectives and functions of purchasing, purchasing cycle,

  38. Session 3 Production Technology Understanding automation and mechanization in production Mission (Objectives) Strategy – 1. Machines 2. Men 3. Materials 4. Methods 5. Money

  39. Components of e-Manufacturing Session 3 Production Technology Understanding automation and mechanization in production

  40. Computer-aided design (CAD) Group technology (GT) Computer-aided engineering (CAE) Collaborative product commerce (CPC) Product Technology • Creates and communicates designs electronically • Classifies designs into families for easy retrieval and modification • Tests functionality of CAD designs electronically • Facilitates electronic communication and exchange of information among designers and suppliers • Product data management (PDM) • Product life cycle management (PLC) • Product definition • Keeps track of design specs and revisions for the life of the product • Integrates decisions of those involved in product development, manufacturing, sales, customer service, recycling, and disposal • Confines products “built” by customers who have selected among various options, usually from a Web site

  41. Standard for exchange of product model data (STEP) Computer-aided design and manufacture (CAD/CAM) Computer aided process (CAPP) E-procurement A Technology Primer (cont.) Process Technology • Set standards for communication among different CAD vendors; translates CAD data into requirements for automated inspection and manufacture • Electronic link between automated design (CAD) and automated manufacture (CAM) • Generates process plans based on database of similar requirements • Electronic procurement of items from e-marketplaces, auctions, or company websites

  42. Computer numerically control (CNC) Flexible manufacturing system (FMS) Robots Conveyors A Technology Primer (cont.) Manufacturing Technology • Machines controlled by software code to perform a variety of operations with the help of automated tool changers; also collects processing information and quality data • A collection of CNC machines connected by an automated material handling system to produce a wide variety of parts • Manipulators that can be programmed to perform repetitive tasks; more consistent than workers but less flexible • Fixed-path material handling; moves items along a belt or overhead chain; “reads” packages and diverts them to different directions; can be very fast

  43. Automatic guided vehicle (AGV) Automated storage and retrieval system (ASRS) Process Control Computer-integrated manufacturing (CIM) A Technology Primer (cont.) Manufacturing Technology • A driverless truck that moves material along a specified path; directed by wire or tape embedded in floor or by radio frequencies; very flexible • An automated warehouse—some 26 stores high—in which items are placed in a carousel-type storage system and retrieved by fast-moving stacker cranes; controlled by computer • Continuous monitoring of automated equipment; makes real-time decisions on ongoing operation, maintenance, and quality • Automated manufacturing systems integrated through computer technology; also called e-manufacturing

  44. Business – to –Business (B2B) Business – to –Customer (B2C) Internet Intranet Extranet A Technology Primer (cont.) • Electronic transactions between businesses usually over the Internet • Electronic transactions between businesses and their customers usually over the Internet • A global information system of computer networks that facilitates communication and data transfer • Communication networks internal to an organization; can be password (i.e., firewall) protected sites on the Internet • Intranets connected to the Internet for shared access with select suppliers, customers, and trading partners

  45. Bar Codes Radio Frequency Identification tags (RFID) Electronic data interchange (EDI) Extensive markup language (XML) Enterprise resource planning (ERP) A Technology Primer (cont.) Information Technology • A series of vertical lines printed on most packages that identifies item and other information when read by a scanner • An integrated circuit embedded in a tag that can send and receive information; a twenty-first century bar code with read/write capabilities • A computer-to-computer exchange of business documents over a proprietary network; very expensive and inflexible • A programming language that enables computer – to - computer communication over the Internet by tagging data before its is sent • Software for managing basic requirements of an enterprise, including sales & marketing, finance and accounting, production & materials management, and human resources

  46. Supply chain management (SCM) Customer relationship management (CRM) Decision support systems (DSS) Expert systems (ES) Artificial intelligence (AI) A Technology Primer (cont.) Information Technology • Software for managing flow of goods and information among a network of suppliers, manufacturers and distributors • Software for managing interactions with customers and compiling and analyzing customer data • An information system that helps managers make decisions includes a quantitative modeling component and an interactive component for what-if analysis • A computer system that uses an expert knowledge base to diagnose or solve a problem • A field of study that attempts to replicate elements of human thought in computer processes; includes expert systems, genetic algorithms, neural networks, and fuzzy logic

  47. Session-4 : Objectives and functions of purchasing, purchasing cycle, Vision Mission Strategy : D, C, F Process Objectives Decisions in Materials offer maximum Scope for cost reduction strategy in traditional manufacturing firms 1. Machines 2. Men 3. Materials 4. Methods 5. Money

  48. Session-4 : Objectives and functions of purchasing, purchasing cycle, Vision Mission Strategy : D, C, F Objectives Materials Maximum Scope for cost reduction 1. Machines Pay reasonably low prices Recruit and develop people of Purchase department Develop co-ordination with Production and other departments 2. Men Develop source of supply ( long term contracts with single source) Locate new materials for production and packaging Keep low inventories but no stockouts Rate the suppliers ( good/ bad, partnering) based on Rt quality, Rt qty, Rt delivery date 3. Materials 4. Methods How efficient are their activities? Outsourcing, JIT 5. Money Credit and turnover periods, As per Material budget,

  49. Session-4 : Objectives and functions of purchasing, purchasing cycle, Objectives Men in the department function 1. Machines Pay reasonably low prices Obtain reasonably low prices Select and train Select vendors Award purchase orders to vendors Follow up on deliveries Adjust and settle complaints Recruit and develop people Develop co-ordination with Production and other departments Inform Top management how to reduce cost 2. Men Develop source of supply, Locate new materials for production and packaging Keep low inventories but no stockouts Rate the suppliers ( good/ bad, partnering) based on Rt quality, Rt qty, Rt delivery date 3. Materials 4. Methods How efficient are their activities? Outsourcing, JIT 5. Money Credit and turnover periods, As per Material budget,

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