The document discusses supply chain management and strategy. It defines key terms, describes supply chain processes and integration, and identifies metrics for measuring supply chain performance such as inventory turns and days of supply.
The document discusses supply chain management and strategy. It defines key terms, describes supply chain processes and integration, and identifies metrics for measuring supply chain performance such as inventory turns and days of supply.
The document discusses supply chain management and strategy. It defines key terms, describes supply chain processes and integration, and identifies metrics for measuring supply chain performance such as inventory turns and days of supply.
The document discusses supply chain management and strategy. It defines key terms, describes supply chain processes and integration, and identifies metrics for measuring supply chain performance such as inventory turns and days of supply.
Learning Outcomes Distinguish between supply chains and value chains; Explain, with reference to particular firms and industries, the significance of supply chains in the twenty-first century competitive landscape; Discuss the requisite conditions for effective supply chain management and, specifically, how supply chain uncertainty could be dealt with; Describe how contemporary information technology creates the enabling platform upon which effective supply chains could be built; Copyright 2011 John Wiley & Sons, Inc.
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Learning Outcomes Elaborate upon the critical elements that must be set in place to establish optimal supply chain integration and to put forward illustrative examples from both manufacturing enterprises and firms providing services; Identify the SCOR performance metrics and to explain the underlying rationale for each one;
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Supply Chains All facilities, functions, and 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
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The Supply Chain Figure10.1
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Supply Chain for Denim Jeans
Figure 10.2a
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Supply Chain for Denim Jeans (cont.)
Figure 10.2b
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Supply Chain Processes
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Supply Chain for Service Providers
More difficult than manufacturing Does not focus on the flow of physical goods Focuses on human resources and support services More compact and less extended
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Value Chains Value chain every step from raw materials to the eventual end user ultimate goal is delivery of maximum value to the end user
Supply chain activities that get raw materials and subassemblies into manufacturing operation ultimate goal is same as that of value chain
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Value Chains Demand chain increase value for any part or all of chain
Terms are used interchangeably
Value creation of value for customer is important aspect of supply chain management
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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
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Supply Chain Uncertainty and Inventory A major objective of 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
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Supply Chain Uncertainty and Inventory Factors that contribute to uncertainty
inaccurate demand forecasting
long variable lead times late deliveries incomplete shipments product changes batch ordering price fluctuations and discounts inflated orders
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Bullwhip Effect Occurs when slight demand variability is magnified as information moves back upstream
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Risk Pooling Risks are aggregated to reduce the impact of individual risks Combine inventories from multiple locations into one Reduce parts and product variability, thereby reducing the number of product components Create flexible capacity
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Green Supply Chains
Sustainability Meeting present needs without compromising the ability of future generations to meet their needs Sustaining human and social resources It can be cost effective and profitable Can provide impetus for product and process innovations Impetus comes from downstream in the supply chain and moves upstream to suppliers
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Sustainability and Quality Management
Reducing waste through quality programs helps achieve sustainability goals Improving fuel efficiency of vehicles Telecommuting Eco-friendly packing materials Energy-efficient facilities
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Information Technology: A Supply Chain Enabler Information links all aspects of supply chain E-business replacement of physical business processes with electronic ones
Electronic data interchange (EDI)
a computer-to-computer exchange of business documents
Bar code and point-of-sale
data creates an instantaneous computer record of a sale
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IT: Supply Chain Enabler
Radio frequency identification (RFID) technology can send product data from an item to a reader via radio waves
Internet allows companies to communicate with suppliers, customers, shippers and other businesses around the world instantaneously
Build-to-order (BTO) direct-sell-to-customers model via the Internet; extensive communication with suppliers and customer
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Supply Chain Enablers
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E-Business & Supply Chain Management
Savings due to lower transaction costs
Reduction of intermediary roles Shorter supply chain response times Wider presence and increased visibility Greater choices & more info for customers Improved service Collection & analysis of huge amounts of customer data & preferences Access to global markets, suppliers & distribution channels
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Electronic Data Interchange
Computer-to-computer exchange of documents in a standard format Purchasing, shipping and receiving Improve customer service Reduce paperwork Increase productivity Improve billing and cost efficiency Reduce bullwhip effect through information sharing Copyright 2011 John Wiley & Sons, Inc.
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Bar Codes
Automated data collection system
Bar code contains identifying information Provide instantaneous tracking information Checkout scanners create point-of-sale data Update inventory records Identify trends Order material Schedule orders Plan deliveries
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Radio Frequency Identification (RFID)
Use radio waves to transfer data from chip to a reader Provides complete visibility of product location Continuous inventory monitoring Reduce labor to manage inventory Reduce inventory costs RFID is not standardized yet Difficult to track between systems
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RFID Capabilities
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RFID Capabilities
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Supply Chain Integration
Share information among supply chain members
Reduced bullwhip effect
Early problem detection Faster response Builds trust and confidence
Coordinated workflow, production and operations, procurement
Production efficiencies Fast response Improved service Quicker to market
Adopt new business models and technologies
Penetration of new markets
Creation of new products Improved efficiency Mass customization
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Collaborative Planning, Forecasting,
and Replenishment (CPFR) Two or more companies in a supply chain to synchronize their demand forecasts into a single plan to meet customer demand Parties electronically exchange
past sales trends
point-of-sale data on-hand inventory scheduled promotions forecasts
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SCM Software Enterprise resource planning (ERP) software that integrates the components of a company by sharing and organizing information and data
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Measuring Supply Chain Performance
Metrics used to measure supply chain performance Inventory turnover
Inventory turns
Cost of goods sold
Average aggregate value of inventory
Total value (at cost) of inventory
Average aggregate value of inventory (average inventory for item i ) (unit value item i )
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Measuring Supply Chain Performance
Days of supply
Days of supply
Average aggregate value of inventory
(Cost of goods sold)/(365 days)
Fill rate: fraction of orders filled by a distribution center
within a specific time period
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Computing Key Performance Indicators
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Process Control and SCOR
Process Control not only for manufacturing operations can be used in any processes of supply chain
Supply Chain Operations Reference (SCOR)
a cross industry supply chain diagnostic tool maintained by the Supply Chain Council
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SCOR Model Processes
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SCOR Performance Metrics
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Copyright 2011 John Wiley & Sons, Inc.
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