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Strategic Decisions (Part I)

Strategic Decisions (Part I). Decision Phases of a Supply Chain. Supply chain strategy or design Automate flow of information between company and supply chain partners Supply chain planning

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Strategic Decisions (Part I)

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  1. Strategic Decisions (Part I)

  2. Decision Phases of a Supply Chain • Supply chain strategy or design • Automate flow of information between company and supply chain partners • Supply chain planning • Generate demand forecasts for a product (demand planning) and help develop sourcing and manufacturing plans for that product • Supply chain operation • Manage the flow of products through distribution centers and warehouses to ensure that products are delivered to the right locations in the most efficient manner

  3. Supply Chain Strategy or Design • Decisions about the structure of the supply chain and what processes each stage will perform • Strategic supply chain decisions • Locations and capacities of facilities • Products to be made or stored at various locations • Modes of transportation • Information systems • Supply chain design must support strategic objectives • Supply chain design decisions are long-term and expensive to reverse – must take into account market uncertainty

  4. Supply Chain Processes • Plan: Balancing demand and supply to meet sourcing, production, and delivery requirements • Source: Procurement of goods and services needed to create a product or service • Make: Processes that transform a product into a finished state • Deliver: Processes to manage order transportation and distribution • Return: Processes associated with product returns and post delivery customer support

  5. Processes and Related Efficiency Problems in Supply Chain • Processes • Inventory moving through a retail store or warehouse • Products moving by trucks, trains and ships through a supply chain • Efficiency Problems • What is the best delivery policy for goods at a warehouse? • How much inventory should be kept on the shelves in a retail store • How should inventory be distributed along a supply chain

  6. Demand Forecasting in a Supply Chain • The basis for all strategic and planning decisions in a supply chain • Used for both push and pull processes • Examples: • Production: scheduling, inventory, aggregate planning • Marketing: sales force allocation, promotions, new production introduction • Finance: plant/equipment investment, budgetary planning • Personnel: workforce planning, hiring, layoffs • All of these decisions are interrelated

  7. Forecasting Methods • Qualitative: primarily subjective; rely on judgment and opinion • Time Series: use historical demand only • Static • Adaptive • Causal: use the relationship between demand and some other factor to develop forecast • Simulation • Imitate consumer choices that give rise to demand • Can combine time series and causal methods

  8. Understanding the Supply Chain: Cost-Responsiveness Efficient Responsiveness High Low Cost High Low

  9. Comparison of Efficient and Responsive Supply Chains

  10. Case Study :Bayer’s Forecasting and Planning with SAP • A large healthcare company with more than 36,000 employee and recently underwent a restructuring. • It requires a new solution that give key regional market direct access to the central planning system.

  11. Bayer HealthCare’s Challenges • Realign planning processes in response to groupwide restructuring • transparency in forecasting and inventory • reduction in stocks of sales articles awaiting distribution.

  12. Bayer HealthCare’s Supply Chain Solution • To integrate central planning functions into the regional sales subsidiaries more effectively and implementing global sales and replenishment /quantity planning • VMI – both with and without consignment stock – forms the basis for centralized replenishment /quantity planning

  13. How did SAP technology help Bayer HealthCare? • To involve an upgrade of SAP Advanced Planning & Optimization (SAP APO) – functionality currently available in mySAP Supply Chain Management

  14. The Outcome • Timely deliveries to customers • Greater ability to control flow of goods and inventory • Flexible, more accurate demand planning

  15. Discuss the following questions: • What problems do Bayer HealthCare address? How does SAP supply chain solution help solve these problems? • What issues and challenges do Bayer HealthCare present? What can be done to address these issues? • What are the business as well as the technology issues that should be addressed when Bayer HealthCare implement SAP solution?

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