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Lecture 1: Introduction
Dr. Jinxing Xie Department of Mathematical Sciences Tsinghua University, Beijing 100084, China http://faculty.math.tsinghua.edu.cn/~jxie Email: jxie@ math.tsinghua.edu.cn Voice: (86-10)62787812 Fax: (86-10)62785847 Office: Rm. 1308, New Science Building
Course Information
Objective:
Understanding the supply chain and related issues Introducing some models and technologies for supply chain management
References:
Course notes at http://www.csiam.edu.cn/scm Some journal papers from Management Sciences et. al.
Focus on:
Issues (Problems) and Models
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Wal-Mart
Store
Plastic producer
Tenneco packaging
Chemical manufacturer
Chemical manufacturer
Paper manufacturer
Timber industry
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Information Systems
Relationship Management
Logistics Network
Distribution Processes
Supplier
Retailer
Distributor
Customer
Manufacturer
Supplier
Retailer
Customer
SUPPLY
Product
Cash
DEMAND
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12 Retailers
Agents
Agents
Agents
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Issues
Supply chain is too long and too slow 58.5 weeks (excludes processing time & international transit times) Little of this time is spent in processing Only 15 of the 58.5 weeks are in-process inventory Even in processing, the ratio of processing time to wait time is notoriously low Thus, American apparel industry was reduced enormously during
the last 25 years
Opportunities
Faster response to customer orders Eliminating unnecessary inventory, stockouts and markdowns $25 billion can be saved annually
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Dealers
Supplier
Vancouver 4-5 final weeks assembly California & 1 day distribution test center
Dealers
Supplier
Dealers
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All finished goods inventory eliminated Importance of response time and transportation time increased Further improvements should be made on supply chain
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NorthAmerica
Further reduction in manufacturing cycle time is not highly beneficial after the improvements of 1980s
Example 1: Only 15 of the 58.5 weeks are WIP inventory
To improve the profitability and efficiency of the supply chain and all organizations involved
Optimizing
By
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Depending on the time frame over which the decisions made apply
Supply chain strategy or design: next few years Supply chain planning: yearly or monthly Supply chain operation: weekly or daily
(S) (S/T)
(S/T/O)
(T/O) (S) (S) (S) S T O
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DEMAND
Timing of Order - How predictable is this? Size and Composition of Order - Are there unexpected elements, and is it subject to change? Data Accuracy on Products Required, Delivery Points and Timings
SUPPLY
Lead Time to Supply - How predictable is this? Quantity Supplied - Can the delivery be accepted without being counted? Quality of Supply - Can the supplies be used without testing? 23 Data Accuracy on Products Supplied and Prices
Once uncertainty is stripped away to the maximum practicable degree, inventory can then be determined at the correct (optimal) level (for each stage of the supply chain and overall) Profit (or performance enhancement) from holding stock equals potential lost sales (or lost performance) times the gross profit margin on sales (or added value) less the cost of holding stock (interest plus holding costs, which can be substantial in real terms and are often underestimated)
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The professional disciplines that deal with the application of information technology for informed decision-making Provide rational bases for decision making by seeking to understand and structure complex situations and to use this understanding to predict system behavior and improve system performance.
Much of this work is done using analytical and numerical techniques to develop and manipulate mathematical and computer models of organizational systems composed of people, machines, and procedures.
The field is closely related to several other fields in the "decision sciences" -applied mathematics, computer science, economics, industrial engineering, and systems engineering. From http://www.informs.org/Join/Orms.html
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SCM vs. OM
What is Operations Management (OM)?
OM is the set of activities that creates goods and services by transforming inputs into outputs. OM is the business function that manages that part of a business that transforms raw materials and human inputs into goods and services of higher value. (narrow view)
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OM
(5P)
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SS/SE
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The Heritage of OM
1776-1880:
1880-1910
Gantt/
1910-1980
PERT/CPMMRP
1980-1995
JITTQMEDICAD/CAM/CAPP
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1995-2005
INTERNETE-Commerce) BPRERP SCM
OM5060
What product should we offer? How should we design these products and services?
Who is responsible for quality? How do we define the quality we want in our service or product?
Managing quality
What process will these products require and in what order? What equipment and technology is necessary for these processes?
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Location strategies
Where should we put the facility? On what criteria should we bas the location decision?
How should we arrange the facility? How large must the facility be to meet our plan? How do we provide a reasonable work environment? How much can we expect our employees to produce? Should we buy or produce the component? Who are our suppliers and who can integrate into our e34 commerce program?
Layout design
Inventory control
How much inventory of each item should we have? When do we reorder? Is subcontracting production a good idea? Are we better off keeping people on the payroll during slowdowns? Who is responsible for maintenance?
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Maintenance
Just-in-time shipments
Supply chain partners, ERP, e-Commerce Rapid product development, alliances
Standardized products
Job specialization
Mass customization
Empowered employees, teams, and lean production
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Intangible Produced and consumed simultaneously Unique High customer interaction Inconsistent product definition Knowledge-based Dispersed Difficult to automate Difficult to measure quality .
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Research Methods
Strategic Tactic Operational
Levels of Decision
Qualitative
Quantitative
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Research Methods
Empirical
Case study Survey Panel study Database
Simulation
Motivation and Objective Experiment design Independent variables Dependent variables Simulation run Data analysis Findings Insights
Theoretic models
Deterministic models Uncertainty models
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OR/MS
Established March 1999, Newest within INFORMS Membership: 950, Largest within INFORMS Society Webpage: http://msom.society.informs.org The methods which MSOM members apply in order to help the operations function add value to products and services are derived from a wide range of scientific fields, including operations research and management science, mathematics, economics, statistics, information systems and artificial intelligence.
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* INFORMS: Institute for Operations Research and Management Science Merged from ORSA (1952) and TIMS (1953) in 1994
Source of References
Top journal:
Operations Research (OR) Management Science (MS)
Quasi-Top journal:
Operations Research Letters (ORL) IIE Transactions (IIET) Naval Research Logistics (NRL) Mathematics of Operations Research (MOR) Journal of operations management (JOM)
Major journal:
European Journal of Operational Research (EJOR) International Journal of Production Research (IJPR) International Journal of Production Economics (IJPE) Journal of the Operational Research Society (JORS)
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OM Related Journals
Relevance
Quality
JOM (J. of OM) IJOPM (Int. J. Op. Prod. Mgmt.) POM (Prod. & OM) IJPR (Int. J. of Prod. Research) IJPE (Int. J. of Prod. Economics) PIMJ (Prod. Invent. Mgmt. J.) MS Management Sciences) HBR (Harvard Business Rev.) EJOR Sloan Mgmt. Review
MS (SSCI, SCI) OR (SCI) JOM IJOPM IJPR (SCI) POM (SCI) EJOR(SCI, SSCI) HBR Academy of Mgmt. Journal DS (Decision Sciences) (SSCI)
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MSOM
Summary
What is Supply chain / SCM? What kinds of issues SCM concern? What are the Theory and Techniques which can be possibly potential in SCM? SCM vs. OR/MS/DS/OM/IE/EM/SS/SE? Top journals publishing SCM studies
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