Professional Documents
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management
1
Outline
What is a Supply Chain?
Importance of Logistic for SCM
Evolutions in Supply chain
Process View of a Supply Chain
Decision Phases in a Logistic management
Analyze logistics systems from several different
perspectives to meet different objectives.
Determine the total costs and understand the
cost tradeoffs in a logistics system
2
Operations as a System
Production System
Conversion
Inputs Outputs
Subsystem
Control
Subsystem
3
4
1-5
BMW manufacturing network
6
Worldwide Configuration of BMW
IBM USA 59 55 51
6
Some Multinational Corporations
Company Home % Sales % Assets % Foreign
Country Outside Outside Workforce
Home Home
Country Country
ICI Britain 78 50 NA
Nestl Switzerland 98 95 97
Philips Netherlands 94 85 82
Electronics
Siemens Germany 51 NA 38
9
Reasons to Globalize Operations
Tangible
Reduce costs (labor, taxes, tariffs,
etc.)
Provide better goods and services
Attract new markets
Learn to improve operations
Intangible Attract and retain global talent
10
The Immediate Supply Chain for an Individual Firm
Transportation Transportation
Warehousing Customers
Information
flows
Factory
Transportation
Vendors/plants/ports
Warehousing Transportation
13
What is supply chain Management?
14
Different Flows in SCM
Material Flow
manufacturerr
Supplier Retailer
Distributor
Source
Converter Consumers
Distributor
Supplier User
Value-Added Services
Funds/Demand Flow
Information Flow
15
Supply Chain Goals
16
Supply Chain Management
Underlying Principles
Compression (Planning/Manufacturing/Supply)
Conformance (Forecasts/Plans/Distribution)
Co-operation (Cross -Functional)
Communication (Real Time Data)
18
Importance of Supply Chain Management (Cont.)
19
Revolutions in Supply Chain
The First Revolution (1910-1920)-The Ford Supply
Chain
Tightly integrated chain
The Second Revolution (1960-1970)-The Toyota
supply chain
Allowed the final assembly and manufacturing of key
components
Long term relationship with suppliers
The Third Revolution (1995-2000)-The Dell Supply
chain
Customers allowed to configure
Medium term relationship
20
The Development Chain
Set of activities and processes associated with new product introduction.
23
Current Trends in Supply Chain Management (Cont.)
24
Current Trends in Supply Chain
Management (Cont.)
The Greening of Supply Chains
- Producing, packaging, moving, storing, delivering
and other supply chain activities can be harmful to
the environment
Supply chains will work harder to reduce
environmental degradation
Large majority (75%) of U.S. consumers influenced
by a firms environmental friendliness reputation
Recycling and conservation are a growing
alternative in response to high cost of natural
resources
25
Current Trends in Supply Chain Management-
Cont.
Reducing Supply Chain Costs
Cost reduction achieved through:
Reduced purchasing costs
Reducing waste
Reducing excess inventory, and
Reducing non-value added activities
Continuous Improvement through
Benchmarking- improve over competitors performance
Trial & error
Increased knowledge of supply chain processes
26
SUCCESS FACTORS
Integration
Reduction of Uncertainty
Outsourcing/ Core Competency/ Strategic
Alliance
Flexibility/ Agility/ Lean
27
Standard products Customized products
Market
demands
No
Available in
Stock
No
Yes High technology
Can be product/services
assembled
from stock
No
Yes Can be
produced using
available
design
No
Yes Existing designs
can be
modified
Yes
Can be
Make- Engineer- to - designed using
Make -to - Assemble-
available
stock to - order to-order order
Innovate- competence
to-order 5 Yes
1 2 3 4 6
Design 5New product/ Development of
Delivery Assembly Production modification and service design new competences
variants using available
competence
Shipment Scheduling
Operational Resource Scheduling
Short Term Planning (Weekly, Daily)
29
Process View of a Supply Chain
Cycle view: processes in a supply chain are
divided into a series of cycles, each performed at
the interfaces between two successive supply
chain stages
Retailer
Replenishment Cycle
Distributor
Manufacturing Cycle
Manufacturer
Procurement Cycle
Supplier
31
Customer Order Cycle
Involves all processes directly involved in
receiving and filling the customers order
Customer arrival
Customer order entry
Customer order fulfillment
Customer order receiving
32
Replenishment Cycle
All processes involved in replenishing retailer
inventories (retailer is now the customer)
Retail order trigger
Retail order entry
Retail order fulfillment
Retail order receiving
33
Manufacturing Cycle
All processes involved in replenishing distributor
(or retailer) inventory
Order arrival from the distributor, retailer, or
customer
Production scheduling
Manufacturing and shipping
Receiving at the distributor, retailer, or
customer
34
Procurement Cycle
All processes necessary to ensure that materials
are available for manufacturing to occur
according to schedule
Manufacturer orders components from
suppliers to replenish component inventories
However, component orders can be determined
precisely from production schedules (different
from retailer/distributor orders that are based
on uncertain customer demand)
Important that suppliers be linked to the
manufacturers production schedule
35
Push/Pull View of Supply Chains
Procurement, Customer Order
Manufacturing and Cycle
Replenishment cycles
Customer
Order Arrives
36
Dell Supply Chain
Cost pressure
Speed to market
Customer delight
Time-place utility
Outsourcing
39
Logistics Management
40
Four Subdivisions of Logistics
Business logistics:
That part of the supply chain process that plans, implements, and controls the
efficient, effective flow and storage of goods, service, and related information
from point of use or consumption in order to meet customer requirements.
Military logistics:
The design and integration of all aspects of support for the operational
capability of the military forces (deployed or in garrison) and their equipment
to ensure readiness, reliability, and efficiency.
Event logistics:
The network of activities, facilities, and personnel required to organize,
schedule, and deploy the resources for an event to take place and to
efficiently withdraw after the event.
Service logistics:
The acquisition, scheduling, and management of the facilities/assets,
personnel, and materials to support and sustain a service operation or
business.
41
Value-Added Roles of Logistics
The five principal types of economic utility which add value to a product or service
are:
Form
Time
Place
Quantity
Possession
42
Pervasiveness of Logistics
Dabbawalas of Mumbai
43
Logistics Chain
S C
U U
P S
P T
Buy Make
L
Deliver O
(Procurement (Processing (Distribution)
I M
) )
E E
R R
S S
44
Logistics Chain
Inbound logistics
Operation preceding manufacturing. This includes movement of raw
materials and components from supplier to the plant.
Process logistics
Operations directly related to processing. This includes storage and
movement of raw materials and components within the factory
premises as per the manufacturing schedule.
Outbound logistics
Operations following the manufacturing. This includes warehousing,
transportation and inventory management of finished goods.
45
Distribution of Logistics Cost
Transportation 12%
Inbound logistics Storage and 8%
Inventory 8%
Transportation 2%
Process logistics Storage 5%
Transportation 33%
Storage and 15.50%
Inventory 6.50%
Outbound
logistics Order processing 10%
46
Logistics Integration
S C
Material flow
U U
P S
P T
Procurement Processing Distribution
L O
I M
E E
Information flow
R R
S S
47
Logistics Mix
Warehousing
Depot location, storage system, material handling, unitization and
packaging
Transportation
Mode decision and scheduling
Inventory
Service level planning and MRP
Information
Order processing and demand forecasting
48
Logistics Decision Levels
Strategic Level
Customer service
Structural Level
Channel design
Network strategy
Functional Level
Warehousing design
Freight management
Inventory control
Implementation Level
Policies and procedures
Information flow
Facilities and equipment
Organization and change management
Source: Anderson Consultants
49
Objectives of Logistics Management
Inventory reduction
Freight economy
Quick response
50
Logistics Activities
Transportation
Warehousing and storage
Industrial packaging
Materials handling
Inventory control
Order fulfillment
Demand forecasting
Production planning/scheduling
Procurement
Customer service
Facility location
Return goods handling
Parts and service support
Salvage and scrap disposal
51
Logistics: Macro Level Growth
Variables
Country's economic growth
Regulatory environment
Transportation Infrastructure
52
Evolution of Supply Chain Management
Activity fragmentation to 1960 Activity Integration 1960 to 2000 2000+
Demand forecasting
Purchasing
Requirements planning
Purchasing/
Production planning Materials
Management
Manufacturing inventory
Warehousing
Logistics
Material handling
Packaging
Order processing
Transportation
Customer service
Strategic planning
Information services
Marketing/sales
Finance
CR (2004) Prentice Hall, Inc. 1-53
Supply Chain Schematic
Sources of Plants/
Customers
supply operations
Transportation Transportation
Inventory maintenance Inventory maintenance
Order processing Order processing
Acquisition Product scheduling
Protective packaging Protective packaging
Warehousing Warehousing
Materials handling Materials handling
Information maintenance Information maintenance
Secondary, or supporting
- Warehousing
- Materials handling
- Acquisition (purchasing)
- Protective packaging
- Product scheduling
- Order processing
CR (2004) Prentice Hall, Inc. 1-59
The Logistics Strategy Triangle
Inventory Strategy
Forecasting
Storage fundamentals Transport Strategy
Inventory decisions Transport fundamentals
Purchasing and supply Transport decisions
scheduling decisions Customer
Storage decisions service goals
The product
Logistics service
Information sys.
Location Strategy
Location decisions
The network planning process
Production-
logistics Marketing-
interface logistics
interface
Promotion
Price
Place-Customer
service levels
Inventory Transport
Logistics
65
Contemporary Logistics Terms
Value stream/logistics process
Quick response and flexible
manufacturing
Mass customization
Supply chain management/
collaborative logistics
Reverse logistics
Service logistics
Continuous replenishment
Lean logistics
Integrated logistics 1-66
THANKS
67