Description
salient features of new age supply chain. It gives key benefits of ecommerce, postponement strategy. Further it gives supply chain balanced scorecard.
Management Development Institute - Gurgaon
Supply Chain Management
Consumer Durable: Durable Supply Chains
Roll No.
1
Name
09P124 09P126 09P127 09P142 09P173 09P179 09P180
Abhishek Vyas Amitrajit Sett Ankit Gupta Jagesh Purohit Siddharth Parmar Vishal Gupta Waquaar Ahmed
SCM Minor Project
2
3
4
5
6
7
Submission Date: 29-Aug-2010
Post-Graduate Programme in Management
(PGPM: 2009-11) Section: B
Term: IV
Supply Chains in the past
• • • • Supply Chain was seen as the mere means to transport goods The push system was used Forecasting was based on historical data and was mostly inaccurate Requirements planning in ad hoc manner and far removed from actual market demand • Long Order Cycle times (up to 3 months) • Fragmented industry • Focus on Link Optimization rather than Chain Optimization
Value Chains
• Waste reduction • Speed of delivery to the customer • Collaboration with customers to shorten product life cycle • Develop tighter value chains to avoid shortages • Make to order replacing forecasting • Automatic replenishment of inventory at dealers
Salient Features of new age SC
• Retailing
– – – – Whether to sell to all retailers Variety and product availability Fast Order fulfillment Replenishment of sold inventory
• Emergence of Organized Retail
Logistics of Order Fulfilment
E-Commerce
• Key benefits :
– – – – – – Faster flow of information Integration of virtual and physical supply chains Optimization of cost Greater contact with the customers, better POS data collections and CRM efforts Reduction in finished goods inventory Better production planning
Advantages :
• • • • Reduction in finished goods inventory Reduction in risk of obsolescence Customer gets the product with his exact specifications No sales discounts
Disadvantages :
• Susceptible to demand fluctuations • Reduced capacity utilization in times of slow demand
Other new trends
• • • Forecasting Techniques Flexible Manufacturing Third party logistics (3PLs)
Potential issues/challenges
• Upstream Side
– – – – Limited Visibility Product Variety Global Sourcing Investment in Technology
?
Downstream Side
? ? ? ? Warehouse management Transportation management Retail Customer Satisfaction
•
Internal Side
– Demand Management: Switching from a "push“ to a "pull" method – Inventory Management – Reducing Operating Expenses – Supply chain risk management – Production Planning – Choosing between ERP and best-of-breed supply chain solutions
SC Balanced Scorecard
Goals
Cash Flow Material Value Add COGS percentage EBIT percentage Inbound Logistics Cost %
Financial Perspective Measures
Cash to Cash Cycle Time The unit “sell price” minus material cost divided by material cost.
COGS divided by Total Revenue EBIT divided by Sales
Inbound Logistics Cost/Sales
Internal Business Process Perspective Goals Measures
Flexible Response Unit Cost Reduction Time Compression No. of Choices/avg response time % of SC target costs achieved SC cycle efficiency
Innovation and learning perspective Goals Measures
Information Flows Innovation Employee Training No. of shared datasets/total data sets and Speed of data sharing Product finalization point/Postponement No. of trained service engineers
Goals
Order Fill Rate
Customer Perspective Measures
No of orders / total amount ordered, multiplied by of days (hours) from the time a The number 100. shipment leaves the facility to the time it arrives at the customer's location vs. standard transit time quoted by the carrier for each traffic lane.
Transit time Backorder Customer Value No of backorders/Total orders received Customer Value Ratio
SC Balanced Scorecard
• Customer Perspective
– Order fill rate should increase – Transit time: Companies should look to minimize the transit time – Back Order: Companies cannot afford to have any back orders as the customer may switch to a competitor’s product – Customer Value: Intent of supply chain should be to increase customer satisfaction or reducing cost
•
Finance Perspective
– – – – Supply chains should have fast cash to cash cycles COGS as percentage of sales should be minimized EBIT as a percentage of sales should increase Inbound logistics costs: It is a non value adding cost and firms must try to minimize it
SC Balanced Scorecard
• Business Process Perspective
– No of choices relative to response time ratio should increase – % of SC target costs achieved should high – SC efficiency: The goal is to progress towards a SC efficiency of 1 or 100% so that nonvalue added time is eliminated
•
Innovation and Learning Perspective
– Information Flows goal can be used to encourage SC partners to create a common language for managing various processes – The goal should be to push final production as close to the customer as possible to prevent inventory pile up and risk of obsolescence – SC needs trained service engineers to install and/or service products
doc_832724067.ppt
salient features of new age supply chain. It gives key benefits of ecommerce, postponement strategy. Further it gives supply chain balanced scorecard.
Management Development Institute - Gurgaon
Supply Chain Management
Consumer Durable: Durable Supply Chains
Roll No.
1
Name
09P124 09P126 09P127 09P142 09P173 09P179 09P180
Abhishek Vyas Amitrajit Sett Ankit Gupta Jagesh Purohit Siddharth Parmar Vishal Gupta Waquaar Ahmed
SCM Minor Project
2
3
4
5
6
7
Submission Date: 29-Aug-2010
Post-Graduate Programme in Management
(PGPM: 2009-11) Section: B
Term: IV
Supply Chains in the past
• • • • Supply Chain was seen as the mere means to transport goods The push system was used Forecasting was based on historical data and was mostly inaccurate Requirements planning in ad hoc manner and far removed from actual market demand • Long Order Cycle times (up to 3 months) • Fragmented industry • Focus on Link Optimization rather than Chain Optimization
Value Chains
• Waste reduction • Speed of delivery to the customer • Collaboration with customers to shorten product life cycle • Develop tighter value chains to avoid shortages • Make to order replacing forecasting • Automatic replenishment of inventory at dealers
Salient Features of new age SC
• Retailing
– – – – Whether to sell to all retailers Variety and product availability Fast Order fulfillment Replenishment of sold inventory
• Emergence of Organized Retail
Logistics of Order Fulfilment
E-Commerce
• Key benefits :
– – – – – – Faster flow of information Integration of virtual and physical supply chains Optimization of cost Greater contact with the customers, better POS data collections and CRM efforts Reduction in finished goods inventory Better production planning
Advantages :
• • • • Reduction in finished goods inventory Reduction in risk of obsolescence Customer gets the product with his exact specifications No sales discounts
Disadvantages :
• Susceptible to demand fluctuations • Reduced capacity utilization in times of slow demand
Other new trends
• • • Forecasting Techniques Flexible Manufacturing Third party logistics (3PLs)
Potential issues/challenges
• Upstream Side
– – – – Limited Visibility Product Variety Global Sourcing Investment in Technology
?
Downstream Side
? ? ? ? Warehouse management Transportation management Retail Customer Satisfaction
•
Internal Side
– Demand Management: Switching from a "push“ to a "pull" method – Inventory Management – Reducing Operating Expenses – Supply chain risk management – Production Planning – Choosing between ERP and best-of-breed supply chain solutions
SC Balanced Scorecard
Goals
Cash Flow Material Value Add COGS percentage EBIT percentage Inbound Logistics Cost %
Financial Perspective Measures
Cash to Cash Cycle Time The unit “sell price” minus material cost divided by material cost.
COGS divided by Total Revenue EBIT divided by Sales
Inbound Logistics Cost/Sales
Internal Business Process Perspective Goals Measures
Flexible Response Unit Cost Reduction Time Compression No. of Choices/avg response time % of SC target costs achieved SC cycle efficiency
Innovation and learning perspective Goals Measures
Information Flows Innovation Employee Training No. of shared datasets/total data sets and Speed of data sharing Product finalization point/Postponement No. of trained service engineers
Goals
Order Fill Rate
Customer Perspective Measures
No of orders / total amount ordered, multiplied by of days (hours) from the time a The number 100. shipment leaves the facility to the time it arrives at the customer's location vs. standard transit time quoted by the carrier for each traffic lane.
Transit time Backorder Customer Value No of backorders/Total orders received Customer Value Ratio
SC Balanced Scorecard
• Customer Perspective
– Order fill rate should increase – Transit time: Companies should look to minimize the transit time – Back Order: Companies cannot afford to have any back orders as the customer may switch to a competitor’s product – Customer Value: Intent of supply chain should be to increase customer satisfaction or reducing cost
•
Finance Perspective
– – – – Supply chains should have fast cash to cash cycles COGS as percentage of sales should be minimized EBIT as a percentage of sales should increase Inbound logistics costs: It is a non value adding cost and firms must try to minimize it
SC Balanced Scorecard
• Business Process Perspective
– No of choices relative to response time ratio should increase – % of SC target costs achieved should high – SC efficiency: The goal is to progress towards a SC efficiency of 1 or 100% so that nonvalue added time is eliminated
•
Innovation and Learning Perspective
– Information Flows goal can be used to encourage SC partners to create a common language for managing various processes – The goal should be to push final production as close to the customer as possible to prevent inventory pile up and risk of obsolescence – SC needs trained service engineers to install and/or service products
doc_832724067.ppt