Supply Chain Management

Course Facilitator: Anas Iftikhar Iqra University Alumni MSc (Supply Chain & Logistics Management (Warwick)

Supply Chain Management

Attendance Policy
- Only 5 min late after that Absent. - No leniency or proxy - Max 6 after that SOA

Supply Chain Management

Marks Distribution:
Class Quizzes: 10 % Assignments: 10% Mid Term / Monthly: 20 % Final Exam: 50 % Final Term Report: 10%

You may expect un announced quizzes and marked assessment during the semester.

Course Outline
1. Introduction to SCM 2. Procurement & Purchasing 3. Building Deep Supplier Relationship HBR Article 4. Logistics Management 5. Inventory Management 6. Warehousing Management 7. Manufacturing 8. Production Planning Systems 9. Master Production Schedule 10. Material Requirement Planning 11. Vendor Managed Inventory Recommended Books: Principles of Supply chain management: A balanced approach by Joel D. Wisner Essentials of Supply Chain Management by Michael Hugos Designing and Managing the Supply Chain by Simchi-Levi, D and E and Kaminsky, P.

Restaurant Supply Chain

When you buy a burger from McDonald or a Zinger from KFC, have you thought where all of the ingredients came from that produced your sandwich? Depending on the restaurants location, McDonalds and KFC source their ingredients from both local and global suppliers. The challenge is to ensure that all restaurants in their network have enough ingredients to meet customer demand.

Supply Chain Video

http://www.youtube.com/watch?v=XEWsgIUi Hyo (Working at Beiersdorf) http://www.youtube.com/watch?v=GHNuOLr Awlo (Unilever Supply Chain)

Brief Historical Background

Academic study of logistics management could be dated back to the 1850s, when Henry Adams, an economist who was president of Yale University, Offered a course in the Economics of Transportation In 1962, Peter Drucker argues that logistics was unexplored and left behind as a dark continent . In the 1970s and 1980s the importance of logistics was brought to the surface. Over the early 1980s, logistics has penetrated into a broader management philosophy known as Supply Chain Management The term supply chain management first appeared in a Financial Times article written by Oliver and Webber in 1982 (Laseter, T, & Oliver, K., (2003). When will Supply Chain Management Grow Up. Strategy and Business, 32, pp.1 5.) describing the range of activities performed by the organization in procuring and managing supplies.

Brief Historical Background The distinction between supply chain management and logistics is blurry in the literature and the terms often used interchangeably.

Today it focuses more on dynamic buyer-supplier relationships towards the entire supply chain integration, of which the implementation of e-business is the new dimension.

Modern SC View An effective SC ensures high level of Customer Service at optimum level! So simple yet extremly demanding...... Operational view an efficient supply chain that ensures products are on the shelf, available for sale, when Shoppers come to buy them ... all the time!

Supply Chain Flows

Material Flow Information Flow Finance Flow Return Product Flow

Supply Chain Definitions

Managing supply and demand, sourcing raw materials and

parts, manufacturing and assembly, warehousing and inventory tracking, order entry and order management, distribution across all channels, and delivery to the customer

The Supply Chain Council

Supply Chain Definitions

The planning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activities also includes coordination with channel partners, which can be suppliers, intermediaries, third party service providers, and customers.

Council of Supply Chain Management Professionals

Supply Chain Model

Source: Bowersox 1996

Supply Chain Network

Source: Nigel Slack, 2002

Supply Chain Management

A definition: Maximising added value and reducing total cost across the entire trading process through focusing on speed and certainty of response to the market.

Tom McGuffog

Key Activities of Supply Chain Operations

PLAN Demand Forecasting Product Pricing Inventory Management

DELIVER Order Management Delivery Scheduling

SOURCE Procurement Credit & Collection

MAKE Product Design Production Scheduling Facility Management

Supply Chain Drivers

1. PRODUCTION What, how, and when to produce 2. INVENTORY How much to make and how much to store

5. INFORMATION The basis for making these decisions

4.
TRANSPORTATION

How and when to move product

3. LOCATION Where best to do what activity

Key Players in Supply Chain

A supply chain consists of all stages involved, directly or indirectly in fulfilling a customer request. The supply chain not only includes the manufacturer and supplier, but also transporters, warehouses , retailers and customer themselves
--- Chopra & Meindl

Why is SCM difficult?

Different facilities may have different, conflicting objectives
Suppliers want manufacturers to commit themselves to purchasing large quantities in stable volumes with flexible delivery dates Manufacturers want continuous production runs, high quality, low production cost. Warehouses and Distribution Centers want to low inventory, reduced transportation cost. Reduction in inventory levels increase transportation costs Customer need shorter lead times, low prices.

Cycle Time
A key aspect of supply chain management is cycle time. Cycle time refers to the total time required to complete a process. Much of this can be wasted time or time that is not used efficiently.
A number of factors can slow down cycle time: unnecessary steps;

Activities that may have been in place for a long time but no longer add value;
Ineffective or poorly utilized technology; Excessive bureaucracy (procedures, controls, and forms that stagnate the process); Poor communication, coordination, and cooperation.

Cycle Time
1. Supply Chain Cycle time - time spent by the supply chain to convert the
raw materials into final products plus the time needed to reach the products to the customer

2. Order to delivery cycle time - the time elapsed between the placement of
an order by a customer and the delivery of products to the customer

"Work smarter, not harder

Elimination of unnecessary work Any activity or process that is not adding any value must be eliminated

Customer Wait Time

Customer wait time refers to the time that is incurred in fulfillment of a customer order. Also called as Logistics Response Time

Function: It looks at what is stocked locally, what is stocked elsewhere, how long it takes to repair or procure items not in stock, how long it takes to ship material, how long it takes to receive shipments, and other factors.

Velocity Management
Velocity management improves the speed and accuracy with which materials and information flow from providers to users. This in turn reduces the need for massive stockpiles of resources. The result has been impressive. Accelerated deliveries of spare parts have accelerated the repairs of cars.

Three Ts

Old Supply Chains vs. New

Vertically Integrated

Raw Materials Company

Raw Materials Transportation Company Transportation Manufacturing Company

Manufacturing

Distribution

Independent Distributor

Retail Show Room Independent Retailer

Slow Moving, Industrial Mass Markets

Fragmented, Fast Moving Markets

What is the Bottom Line?

Efficient Supply Chain

 Efficiently means with minimal commitment of financial resources Effectiveness means providing customer satisfaction and value, which (combined with efficiency) leads to profitability Ultimately its Competitive Advantage

Typical Benefits From Integrating the Supply Chain

Enhanced Delivery Performance Excess Inventory Reduction Reduce Customer Wait Time Enhanced Forecast Accuracy

Improvement in Overall Productivity

Lower Supply Chain Costs

The Heart of Supply Chain Management

Delivering the right product to the right place at the right time and at the right price To all customers For all the orders At all the time

HOW?

Current Trends in Supply Chain Management

Expanding the Supply Chain

Firms are expanding partnerships and building facilities in foreign markets The expansion involves:
breadth- foreign manufacturing, office & retail sites, foreign suppliers & customers depth- second and third tier suppliers & customers

Current Trends in Supply Chain Management (Cont.)

Increasing Supply Chain Responsiveness

Firms will increasingly need to be more flexible and responsive to customer needs Shorter product life cycles, rapid product development, Samsung S1, S2, S3, Ipods, Iphone, Ipads. Supply chains will need to benchmark industry performance and meet and improve on a continuous basis Supply chain responsiveness requires firms to reevaluate their supply chain relationships, utilize business process reengineering, design new products and services.

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

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 Increased knowledge of supply chain processes

End of Topic