Akanksha Yadav Pankaj Rawal Arti Omar
Supply Chain Management
A Supply Chain encompasses all activities in fulfilling customer demands and requests.
Supplier management
Four flows in SCM 1. Material Flow 2. Information Flow 3. Service flow 4. Financial Flow
Customer Management
Schedule/ Resources
Conversion
Stock Deployment
Delivery
? Supply Chain Management Is Facilitated By
? ? ?
Processes Structure Technology
? Supply Chain Serves Two Functions
Physical ? Market mediation ? Supply Chain Key Drivers ? Demanding customers ? Shrinking product life cycles ? Increase product offerings ? Growing retailer power in some cases ? Concept of core competency ? Emergence of specialized logistics providers ? Globalization ? Information technology
?
Customer •Online order •Order Tracking
Retailers •Replenishes stocks • Placed order Order admin •Order Review •Customer Services
SCM Model
Distributors •Delivery note •Electronic signature Warehouse Depots •Picking •Loading Supplier Manufacturer •Stock Reorder •Stock delivery
Supply Chain Goals
? Efficient supply chain management must result in tangible business
improvements. It is characterized by a sharp focus on
– Revenue growth – Better asset utilization – Cost reduction. ? the product is produced and distributed ? In the right quantities ? To the right locations ? And at the right time ? System-wide costs are minimized and ? Service level requirements are satisfied
Supply Chain Elements
• Supply Chain Design Strategic • Resource Acquisition • Long Term Planning (1 Year ++)
• Production/ Distribution Planning Tactical • Resource Allocation
• Medium Term Planning (Quarterly, Monthly)
• Shipment Scheduling
Operational
• Resource Scheduling • Short Term Planning (Weekly,Daily)
Challenges-Services-Benefits
Challenges Services Benefits
High Cost
Inconsistent performance Limited information
• Order planning and execution • Event management • Tracking • Performance reporting • Claims management • Network optimization • Contraction • Payment administration
Reduced Cost
Greater reliability
Increased control
Supply Chain Vs. Industries
Few High Multiple Major Low Volume, Volume, Products, Products, High Higher One of a Low Volume Volume Standardiza Kind tion Job Shop Batch Assembly Line
Commercial Printer French Restaurant
Flexibility (High) Unit Cost (High)
Heavy Equipment Coffee Shop Automobile Assembly Burger King
Sugar Refinery Flexibility (Low) Unit Cost (Low)
Continuous Flow
Bullwhip Effect
Multi-tier Suppliers Tier -3
Manufacturer
Tier-2
Wholesale Distributors Tier-1
Retailers
Consumer s
Sales
Time
Sales
Time
Time
Sales
Sales
Time
Inventory
Inventory
Invento ry
Inventory
Source: John Wiley & Sons, Inc. 2006
“Customized” Product
Generic” Product
Supply Chain Timeline
Source: Balancing push and pull strategies-thought leadership
Characteristics of Push Strategy In SCM
? Communication between seller and buyer ? Communication can be interactive and non-interactive ? Applied to that portion of supply chain where demand uncertainty is ? ? ? ? ? ? ?
relatively small Production and distribution based on long term forecasts Large and variable production batches Based on past orders received from retailer’s warehouse Large safety stack is needed Less expenditure on advertising than pull strategy May lead to Bullwhip effect Example: advertizing through television and radio
Source: pull and push policy in market driven management by Margherita Corniani
Characteristics of Pull Strategy In SCM
? Consumer request the product and ‘pull’ it through the delivery channel
An example of this is the car manufacturing company Ford Australia. Ford Australia only produces cars when they have been ordered by the customers. ? Applied to that portion of the supply chain where demand uncertainty is high ? Production and distribution is demand driven ? not always make to order production. Toyota Motors Manufacturing is frequently used as an example of pull production, yet do not typically produce to order. They follow the "supermarket model" where limited inventory is kept on hand and is replenished as it is consumed
Source: pull and push policy in market driven management by Margherita Corniani
Choosing Between Push/Pull Strategies
Pull High Customization is High Demand is uncertain Demand is uncertain Scale economies are High Scale economies are Low Demand Uncertainty Computer Compute Furniture equipment r equipme Uncertainty is low Standard processes are nt Low economies of scale norm the Push-pull supply chain Demand is stable Scale economies are High Grocery, Beverages Books, CD’s Grocery Beverages Economies of Scale High Push
Push
Low Low Pull
Source- Simchi Levi
Process Reference Models
Business Process Reengineering
Benchmarking Best Practices Analysis Process Reference Model
SCOR is based on 5 processes: -Plan -Source -Make -Deliver -Return
SCOR Model Structure
Plan P2 Plan Source P1 Plan Supply Chain P3 Plan Make P4 Plan Deliver P5 Plan Returns
Suppliers
Source
S1 Source Stocked Products S2 Source MTO Products
Make
M1 Make-to-Stock
Deliver
M2 Make-to-Order
D2 Deliver MTO Products
S3 Source ETO Products
M3 Engineer-to-Order
D3 Deliver ETO Products
D4 Deliver Retail Products
Return Source
Return
Enable
Source: Business Process Trends (White Paper)
Customers
D1 Deliver Stocked Products
SCOR Implementation Roadmap
Analyze Basis of Competition Operations Strategy
SCOR Level 1
Configure supply chain
Material Flow
SCOR Level 2
Align Performance Levels, Practices, and Systems
Information and Work Flow
SCOR Level 3
Implement supply chain Processes and Systems
Develop, Test, and Roll Out
18
Source: Business Process Trends (White P
Supply Chain Management – Benefits
? A 1997 PRTM Integrated Supply Chain Benchmarking Survey of 331
firms found significant benefits to integrating the supply chain
Delivery Performance Inventory Reduction Fulfillment Cycle Time Forecast Accuracy Overall Productivity Lower Supply-Chain Costs Fill Rates Improved Capacity Realization 16%-28% Improvement 25%-60% Improvement 30%-50% Improvement 25%-80% Improvement 10%-16% Improvement 25%-50% Improvement 20%-30% Improvement 10%-20% Improvement
Source: Cohen & Roussel
HIGH-LIGHTS
? Supplier’s engineers part of Dell’s design team
? Share information with partners in Real time fashion. ? Change focus from how much inventory there is to how ? ?
? ? ? ?
fast it is moving Inventory levels and replenishment needs sometimes conveyed to vendors on hourly basis. Clever segmentation - Focus on institutional markets 70% to very large customers with annual purchases exceeding $1 million Segmentation - closeness to customers and access to valuable information. Demand forecasting as a critical sales skill Dell server loads software on customers’ computers Meet customers’ needs faster and more efficiently than any other model.
Conclusion
? Supply chain management (SCM) is the combination of art and
?
? ?
?
? ?
science. It is the process of planning, implementing, and controlling the operations of supply chain. satisfy customer requirements as efficiently as possible Accelerate entry into new markets Reduce Uncertainty Reduction in lead time Decrement in Bullwhip phenomenon. ? Lack of communication ? Delay in information ? Inappropriate forecasting
doc_893789335.pptx
Supply Chain Management
A Supply Chain encompasses all activities in fulfilling customer demands and requests.
Supplier management
Four flows in SCM 1. Material Flow 2. Information Flow 3. Service flow 4. Financial Flow
Customer Management
Schedule/ Resources
Conversion
Stock Deployment
Delivery
? Supply Chain Management Is Facilitated By
? ? ?
Processes Structure Technology
? Supply Chain Serves Two Functions
Physical ? Market mediation ? Supply Chain Key Drivers ? Demanding customers ? Shrinking product life cycles ? Increase product offerings ? Growing retailer power in some cases ? Concept of core competency ? Emergence of specialized logistics providers ? Globalization ? Information technology
?
Customer •Online order •Order Tracking
Retailers •Replenishes stocks • Placed order Order admin •Order Review •Customer Services
SCM Model
Distributors •Delivery note •Electronic signature Warehouse Depots •Picking •Loading Supplier Manufacturer •Stock Reorder •Stock delivery
Supply Chain Goals
? Efficient supply chain management must result in tangible business
improvements. It is characterized by a sharp focus on
– Revenue growth – Better asset utilization – Cost reduction. ? the product is produced and distributed ? In the right quantities ? To the right locations ? And at the right time ? System-wide costs are minimized and ? Service level requirements are satisfied
Supply Chain Elements
• Supply Chain Design Strategic • Resource Acquisition • Long Term Planning (1 Year ++)
• Production/ Distribution Planning Tactical • Resource Allocation
• Medium Term Planning (Quarterly, Monthly)
• Shipment Scheduling
Operational
• Resource Scheduling • Short Term Planning (Weekly,Daily)
Challenges-Services-Benefits
Challenges Services Benefits
High Cost
Inconsistent performance Limited information
• Order planning and execution • Event management • Tracking • Performance reporting • Claims management • Network optimization • Contraction • Payment administration
Reduced Cost
Greater reliability
Increased control
Supply Chain Vs. Industries
Few High Multiple Major Low Volume, Volume, Products, Products, High Higher One of a Low Volume Volume Standardiza Kind tion Job Shop Batch Assembly Line
Commercial Printer French Restaurant
Flexibility (High) Unit Cost (High)
Heavy Equipment Coffee Shop Automobile Assembly Burger King
Sugar Refinery Flexibility (Low) Unit Cost (Low)
Continuous Flow
Bullwhip Effect
Multi-tier Suppliers Tier -3
Manufacturer
Tier-2
Wholesale Distributors Tier-1
Retailers
Consumer s
Sales
Time
Sales
Time
Time
Sales
Sales
Time
Inventory
Inventory
Invento ry
Inventory
Source: John Wiley & Sons, Inc. 2006
“Customized” Product
Generic” Product
Supply Chain Timeline
Source: Balancing push and pull strategies-thought leadership
Characteristics of Push Strategy In SCM
? Communication between seller and buyer ? Communication can be interactive and non-interactive ? Applied to that portion of supply chain where demand uncertainty is ? ? ? ? ? ? ?
relatively small Production and distribution based on long term forecasts Large and variable production batches Based on past orders received from retailer’s warehouse Large safety stack is needed Less expenditure on advertising than pull strategy May lead to Bullwhip effect Example: advertizing through television and radio
Source: pull and push policy in market driven management by Margherita Corniani
Characteristics of Pull Strategy In SCM
? Consumer request the product and ‘pull’ it through the delivery channel
An example of this is the car manufacturing company Ford Australia. Ford Australia only produces cars when they have been ordered by the customers. ? Applied to that portion of the supply chain where demand uncertainty is high ? Production and distribution is demand driven ? not always make to order production. Toyota Motors Manufacturing is frequently used as an example of pull production, yet do not typically produce to order. They follow the "supermarket model" where limited inventory is kept on hand and is replenished as it is consumed
Source: pull and push policy in market driven management by Margherita Corniani
Choosing Between Push/Pull Strategies
Pull High Customization is High Demand is uncertain Demand is uncertain Scale economies are High Scale economies are Low Demand Uncertainty Computer Compute Furniture equipment r equipme Uncertainty is low Standard processes are nt Low economies of scale norm the Push-pull supply chain Demand is stable Scale economies are High Grocery, Beverages Books, CD’s Grocery Beverages Economies of Scale High Push
Push
Low Low Pull
Source- Simchi Levi
Process Reference Models
Business Process Reengineering
Benchmarking Best Practices Analysis Process Reference Model
SCOR is based on 5 processes: -Plan -Source -Make -Deliver -Return
SCOR Model Structure
Plan P2 Plan Source P1 Plan Supply Chain P3 Plan Make P4 Plan Deliver P5 Plan Returns
Suppliers
Source
S1 Source Stocked Products S2 Source MTO Products
Make
M1 Make-to-Stock
Deliver
M2 Make-to-Order
D2 Deliver MTO Products
S3 Source ETO Products
M3 Engineer-to-Order
D3 Deliver ETO Products
D4 Deliver Retail Products
Return Source
Return
Enable
Source: Business Process Trends (White Paper)
Customers
D1 Deliver Stocked Products
SCOR Implementation Roadmap
Analyze Basis of Competition Operations Strategy
SCOR Level 1
Configure supply chain
Material Flow
SCOR Level 2
Align Performance Levels, Practices, and Systems
Information and Work Flow
SCOR Level 3
Implement supply chain Processes and Systems
Develop, Test, and Roll Out
18
Source: Business Process Trends (White P
Supply Chain Management – Benefits
? A 1997 PRTM Integrated Supply Chain Benchmarking Survey of 331
firms found significant benefits to integrating the supply chain
Delivery Performance Inventory Reduction Fulfillment Cycle Time Forecast Accuracy Overall Productivity Lower Supply-Chain Costs Fill Rates Improved Capacity Realization 16%-28% Improvement 25%-60% Improvement 30%-50% Improvement 25%-80% Improvement 10%-16% Improvement 25%-50% Improvement 20%-30% Improvement 10%-20% Improvement
Source: Cohen & Roussel
HIGH-LIGHTS
? Supplier’s engineers part of Dell’s design team
? Share information with partners in Real time fashion. ? Change focus from how much inventory there is to how ? ?
? ? ? ?
fast it is moving Inventory levels and replenishment needs sometimes conveyed to vendors on hourly basis. Clever segmentation - Focus on institutional markets 70% to very large customers with annual purchases exceeding $1 million Segmentation - closeness to customers and access to valuable information. Demand forecasting as a critical sales skill Dell server loads software on customers’ computers Meet customers’ needs faster and more efficiently than any other model.
Conclusion
? Supply chain management (SCM) is the combination of art and
?
? ?
?
? ?
science. It is the process of planning, implementing, and controlling the operations of supply chain. satisfy customer requirements as efficiently as possible Accelerate entry into new markets Reduce Uncertainty Reduction in lead time Decrement in Bullwhip phenomenon. ? Lack of communication ? Delay in information ? Inappropriate forecasting
doc_893789335.pptx