Professional Documents
Culture Documents
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SCM = Integration of the activities that procure materials, transform them into intermediate goods & final products, and deliver them to customer.
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Suppliers
Manufacturers
Customers
Manufacturing Costs
Material Costs
Transportation Costs
Inventory Costs
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8% 9%
COGS Payroll
83%
Other
Retail
13% 16%
COGS
Payroll
71%
Other
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Objective of SCM
To build a chain of suppliers that focus on both reducing waste & maximizing value to the ultimate customer.
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Lead-Time Shorten lead Characterist time as long as ics it does not increase costs. ProductMax Design performance & Characterist min cost. ics
Invest aggressively to reduce development lead time. Use modular design to postpone product differentiation for as long as possible. 9
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Wholesaler
Order lead time
Delivery lead time
Distributor
Order lead time
Delivery lead time
Factory
Production lead time Example: Diapers distribution
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Bull-Whip Effect
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The ordering patterns share a common recurring theme: The variability of an upstream site are always greater than those of the downstream site
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Demand forecasting & Lead time Order batching Price fluctuation Shortage gaming / Inflated orders
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Batch Ordering
Economic of scale MRP driven requirement Lower transportation cost Push Ordering for short term performance measures
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Price Fluctuation
Discounts & promotions Quantity discounts In anticipation of future price increase
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SCM Metrics
Biz performance measure:
3 Key Dimensions
Service
Anticipate & fulfill customer demand Personalized products On time delivery
Assets
Inventory & cash
Speed
Responsiveness & velocity of execution
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Service Metrics
Measure how well we are serving our customers Make to Stock (MTS) Make to Order (MTO)
Line Item Fill Rate Complete Order Fill Rate Quoted Cust Response Time % On-Time Completion
Delivery Process On-Time Delivery Process On-Time $Backorder/Lost Sales No of Backorders Aging of Backorders $ of Late Orders # of Late Orders Aging of Late Orders
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Subscribe to our newsletter & find out more Details about the other 2 dimensions of measurement (assets & Speed) Go to SynerflexConsulting.com
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Approaches
CRP (Continuous Replenishment Program) VMI (Vendor Managed Inventory) Risk Pooling Transshipment Cross Docking Design for Logistics
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