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SUPPLY CHAIN MANAGEMENT

Presented By:

Vincent Gaspersz
APICS CFPIM
ASQ CMQ/OE, CQE, CQA, CSSBB
IQF SSMBB
RABQSA QMS Auditor
Lean Six Sigma Master Black Belt

Prepared by: Vincent Gaspersz

Objectives
9 Understand global sourcing and distribution and other
international issues of managing the supply chain
9 Explain the strategic relationship among aliances
members of the supply chain
9 Recognize how the choices and development of
information technology affect the supply chain

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Prepared by: Vincent Gaspersz

Prepared by: Vincent Gaspersz

Supply Chain Management


9 Supply chain management is the integration of the flow of all
activities throughout improved supply chain relationships to
achieve a sustainable competitive advantage.
9 The supply chain includes: management of information
systems, sourcing and procurement, production scheduling,
demand fulfillment, cash flow, inventory management,
warehousing, customer service, after market disposition of
packaging and materials.

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A Model of SCM
The Supply Chain
The Global Environment

Interfunctional
Coordination

Marketing
Sales
R&D
Forecasting
Production
Purchasing
Logistics
IS
Finance
CSR

Supply
Chain
Flows

*Products*
*Services*
*Information*
*Financial*
*Demand*
Forecasts*

Customer
Satisfaction/value/
Profitability/
Competitive
Advantage

Suppliers Supplier
Supplier Focal Firm
Customers Customer
Customer

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Supply Chain
Transportation

Factory

Warehousing

Transportation

Customers

n
o
i
t
a
m
r
o
Inf lows
f

Transportation

Warehousing

Transportation
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Vendors/plants/ports
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Evolution of Logistics Toward


Supply Chain
Activity fragmentation to 1960
Demand forecasting
Purchasing
Requirements planning
Production planning
Manufacturing inventory
Warehousing
Material handling
Packaging
Finished good inventory
Distribution planning
Order processing
Transportation
Customer service
Strategic planning
Information services
Marketing/sales
Finance

Activity Integration 1960 to 1990

2000+

Purchasing/
Materials
Management
Logistics
Physical
Distribution

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SCM

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The Activity Mix


Business Logistics
Physical Supply
Source
of supply

Plants/
operations

Physical Distribution

Customers

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
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The Critical Customer Service Loop

Customer order processing

Inventory
Maintenance
or supply

Transportation

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Customers

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Supply Chain Management Concepts


9 Market/industry analysis characteristics: they are defect free,
just-in-time (JIT), use internal (supplier) engineering resources,
provide the best total cost for company, have the best new
technology and innovation cycles, they are generally first in
marketplace with new improvements.
9 Value chain mapping with critical standard of measure:
best/fastest cycle time, best-usage practices vs. best-industry o
best-technologies practices, best/lowest total cost, including
process, transportation, and handling costs.
9 Total cost of ownership (TCO) of the supply delivery system is
the sum total of all the cost associated with every activity of the
supply stream.
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Internal Function of
Supply Chain Management

9Managing the different processes


used in transforming the inputs
provided by the supplier network.
9Production scheduling, which
translates orders into actual
production tasks.
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External Function of
Supply Chain Management
9 Selecting the right suppliers
9 Making sure the suppliers meet performance
expectations
9 Employing the appropriate contractual mechanisms
9 Maintaining a good relationship with the suppliers
9 Acting as liaison between suppliers and other internal
members
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TIME-BASED COMPETITION
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Earlier introduction of new products


Higher profits
Increased market share
Control of inventory and overhead costs
Increased customer satisfaction
Decrease in stored inventory
Increased inventory flow
Less rework
Faster company growth
Higher product quality
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Steps to Reducing Cycle Time


9 Establish a cycle-time reduction team
9 Develop an understanding of the given supply chain
process and current cycle time performance
9 Identify opportunities for cycle-time reduction
9 Develop and implement recommendations for cycletime reduction
9 Measure process cycle-time performance
9 Conduct continuous improvement efforts for process
cycle-time reduction
efforts
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Supply Chain Managers


9 Understand the best technology to use
9 Can determine cost
9 Know how to use, store, valuate, and improve a
company product
9 Know which supplier has the best resources
9 Benchmark with other customers
9 Have clear and measurable business goals
9 Deliver the best products, costs, and processes
9 Have a supply strategy
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Customer Relationship Management (CRM)


9 Identify the most important customers
9 Distribute value differently to customer based upon importance
9 Compete by broadening the scope of business with selected
customers
9 Focus on companys ability to fulfill strategic needs of
customers
9 Compete by innovating ways to create new value for the
customers
9 Develop a set of metrics to measure customer perfomance
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Innovative Customer/Supplier Relationship and Agreements

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Vendor-managed inventory (VMI)


Quick response program (QRP)
Virtual corporation
On-site vendor/customer representative

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(Suppler Evaluation)

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Quantitative Criteria and Weights

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Supplier Improvement
9 A supplier may be audited before or during the contract, and
the audit may include many of the following items:
Management
Resource Management
Communication
Manufacture
Inspection Procedures
Design Control
Quality Planning
Purchasing
Quality Control
Quality Coordination
Data Systems
Quality Results
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Supplier Improvement in the Real World


9 Honda Motors
Partnered with Parker Hannifin Corp
Honda engineers worked over six Parker plants making basic
efficiency changes saving Parker over $1.6 million a year.
9 Improvements in Parker products directly related to Hondas
developmental help
Decreased cylinder line travel from 19 days to 5 minutes
Reorganized production process to decrease scrap from 5% to 2% and
increase output per man-hour by 30%
9 Areas Honda helped to improve do not all involve parts supplied to Honda
9 Why help suppliers improve areas that do not directly affect the company?
We want suppliers to be better companies because, ultimately, that
makes us a better company, Richard Mayo, Honda purchasing executive
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More Supplier Improvement in the Real World

9Dell and Wal-Mart both use exclusive


collaborations with suppliers to optimize
efficiencies and cost.
9In particular, they share proprietary
information (confidential financial data)
to help improve their suppliers ability to
meet future needs

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Supplier Certification, Partnerships,


and Alliances
9 The certification process described by the Customer/Supplier
Technical Committee of ASQ is:
1. The customer and supplier shall have agreed upon specifications.
2. The supplier shall have no product-related lot rejections for a
significant period of time.
3. The supplier shall have no product-related lot rejections for a
stated period of time.
4. The supplier shall have no nonproduct-related incidents for a
stated period of time.
5. The supplier shall have a fully documented quality system, such as
ISO 9001.
6. The supplier shall have successfully passed an on-site system
evaluation.
7. The supplier must conduct inspections and tests, including
laboratory results and/or statistical process control (SPC).
8. The supplier shall have the ability to provide timely inspection and
test data
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Supplier Logistics
9 Traditional customer/supplier relationships have involved some
assessment of incoming quality via source or incoming
inspection. The suppliers quality was not trusted and was
monitored. This approach led to inefficient use of resources, late
discovery of problems, inflated inventories, lengthy cycle times,
etc.
9 Ship-to-stock (STS) activities are part of the newer customersupplier partnership. STS has three phases:
1. Candidacy: Review of the suppliers past quality history, unique
requirements, other background data, STS agreement criteria
2. Qualification: The supplier is surveyed as to adequacy and
adherence to process controls and adequacy of the quality
system.
3. Maintenance: System, process, and product audits, and any
necessary related inspections.
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Ship-to-stock Advantages
Mutual purchaser/supplier trust
Reduced inventory levels
Reduced purchaser testing time and expense
Reduced incoming rejects
Replacement of inspection activities with audits
Enhanced supplier quality responsibility
Supplier quality reputation
If all of the controls are in place for successful Shipto-stock, a transition to just-in-time (JIT) is possible
9 JIT procurement focuses on rigid: Forecasting,
Scheduling, Inventory cost control, Freight and
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transportation costPrepared
control
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Ship-to-stock in the Real World


9 Ship-to-Stock
Praxair MRC has developed, in partnership with customers,
ship-to-stock systems and agreements. This allows Praxair MRC
to deliver sputtering targets directly into a customer's
production line without the need for any incoming inspection on
the part of the customer. This capability provides the customer
with improved Cost of Operations, reduced cycle time and is
indicative of the excellent quality history from Praxair MRC
products at the customer site.
The ship-to-stock agreement also defines specific goals in terms
of SPC (Cpk values, etc.) and definitions on major and minor
changes.
Products shipped to customer sites under this agreement can be
specifically identified with labels and highlighted on relevant
documents (packaging slips, etc.).

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Lean Purchasing
9 An approach to purchasing that requires
long-term agreements with few suppliers
9 Lean Purchasing Advantages:

Reduces the need for central warehousing and storage


More personal relationship with suppliers
Long-term relationships that help to certify suppliers
Receiving inspection is reduced and in some cases eliminated
Lowered variety in suppliers
Reliable delivery schedules
High quality materials used
Reduced waste

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Benefits of Single-Source Supplier


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Simpler traceability
Ability to focus on process
Reduction in freight costs
Elimination of paperwork and excess handling
A more table schedule for suppliers
A true feeling of alliance, communication, and mutual
trust
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Demands on Purchasing of Lean


9 Reduced number of suppliers
9 Stable and good communication throughout a
firm
9 Locating suppliers nearby
9 Long-term relationships
9 Helping suppliers to increase quality

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Differences between Lean and Traditional Purchasing

Lean Purchasing
9 Smaller lot sizes
9 More frequent deliveries
9 No rejection from the
supplier
9 Long-term contracts
9 Buyer decides delivery
schedule
9 Innovation encouraged
9 Minimal paper work
9 Less formal
communication

Traditional

Relatively large lot sizes


Less deliveries at higher quantities
2% rejection from supplier
Lowest price is main objective
Time consuming, formal paperwork
Formal communication

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Why organizations use Lean Purchasing


9Reduce waste
9Increased cycle times
9Higher quality in products
9Fewer suppliers
9Reduction in warehouses
9Dependable delivery

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Contact:

The End

Vincent Gaspersz
Phone: 0251-332933 or
0813-1940-6433
E-mail: vincentgaspersz@yahoo.com

SMARTER
Specific Goals
Measurable
Achievable
Result-oriented
Timely
Empowerment
Reward & Recognition

Smarter:
Shorter Cycle Time
Smoother processes
Simpler rules or procedures

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BIODATA
9 Prof. Dr. Vincent Gaspersz, CQE, CQA, CMQ/OE, CSSBB/MBB, CFPIM, QMS-A
9 Professor (Guru Besar) Total Quality and Operations Management pada Program
Magister Manajemen (S2) dan Doktor (S3) Universitas Trisakti, Juli 2002-sekarang
9 Magister Sains Statistika Terapan IPB, Sep 1983- June 1985
9 Doktor Teknik Sistem dan Manajemen Industri ITB, Jan 1988- Sep 1991
9 Doctor of Science in Management of Engineering and Technology, Southern California
University for Professional Studies, 1998-2000
9 American Society for Quality (ASQ) Certified Manager of Quality and Organizational
Excellence (CMQOE), USA, March 2006
9 American Society for Quality (ASQ) Certified Quality Engineer, June 2006
9 International Quality Federation (IQF) Six Sigma Master Black Belt, USA, August 2005
9 ASQ Certified Six Sigma Black Belt, Certified Quality Auditor, RABQSA QMS Audior
9 Certified Quality Auditor (CIQA), Novo Quality Services (NQS) Singapore, Sep 1994
9 Certified Fellow in Production and Inventory Management (CFPIM), the American
Production and Inventory Control Society (APICS) USA, April 1998
9 Anggota Senior dari the American Society for Quality No. 00749775 sejak Feb 1994 sekarang
9 Anggota Senior dari the American Production and Inventory Control Society No.
1023620 sejak June 1995-sekarang
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BIODATA
Pengalaman dalam Bidang Konsultasi dan Pelatihan di Industri (Perusahaan)

1. Menjadi Koordinator Pelatihan merangkap Instruktur dan Konsultan dalam


Bidang Manajemen Industri dan Kualitas pada Pusat Pelatihan Salim Group,
1991 - 1992.
2. Menjadi Manajer merangkap Instruktur dan Konsultan dalam Bidang Manajemen
Industri dan Kualitas pada Pusat Pelatihan Gajah Tunggal Group, 1992 - 1996.
3. Menjadi Instruktur dan Konsultan Utama dari Gramedia Pro-Q, Lembaga
Pelatihan dan Konsultasi Kelompok GRAMEDIA, Jakarta, Sejak 1997 - 2003
4. Bekerja sebagai Instruktur dan Konsultan Profesional Mandiri (Independent
Instructor and Consultant) dalam Bidang Manajemen Industri dan Kualitas sejak
Juni 1996 2003 di Indonesia
5. Principal Consultant & Senior Coach dalam bidang Strategic Planning, Lean
Enterprise, Quality Management System, and Integrated Performance
Management System of MBNQA, Lean, Six Sigma and Balanced Scorecard,
yang bertempat tinggal di Vancouver, Canada, 2003 2005.
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BIODATA
Pengalaman Keterlibatan dalam Industri:
1.

Sebagai Anggota Tim ISO 9000 pada Perusahaan-Perusahaan dalam Lingkup Gajah Tunggal Group 1994 1996 Untuk Membantu: PT Gajah Tunggal, PT Filamendo Sakti, dan PT Gajah Tunggal Prakarsa. Perusahaanperusahaan ini telah memperoleh sertifikat ISO 9002.
2. Membantu Mengintegrasikan Total Quality Management (TQM) dengan ISO 9002 pada PT Erna Djuliawati
Plymill, Kalimantan Barat, 1997.
3. Membantu Pembenahan Sistem Produksi pada PT Intinusa Rimbasari, 1998.
4. Membantu Meningkatkan Efisiensi Industri Melalui Pembenahan Standard Operating Procedures (SOP) pada
PT Indah Kiat Pulp & Paper Tbk, 1998.
5. Membantu menetapkan sistem manajemen industri dan kualitas pada PT Citra Serayu Mas Woodworking
Industries, 1999-2000
6. Membantu Perumusan Metode Pengukuran dan Evaluasi Teknologi Pertamina, 2001; dan Penyusunan Buku
Pengukuran Indeks Produktivitas Pertamina, 2002.
7. Menjadi Instruktur dalam Berbagai Topik Manajemen Kualitas dan Strategik pada Pusat Pelatihan Pertamina,
Jakarta sejak: 2000-sekarang.
8. Sebagai Pembicara (Instruktur) Tamu pada Lembaga-lembaga: LPPM, Kursus Kader Pimpinan PertaminaYayasan Patra Cendekia, Pusdiklat Pemda DKI Jaya, PT Astra International Tbk, PT Showa Indonesia
Manufacturing, PT Asuransi Astra Buana, PT PLN UBS P3B Jawa-Bali, PT Telkom, PT Pertamina (Korporat),
Badan Pendidikan dan Pelatihan PT Pertamina, PT Indah Kiat Pulp and Paper, PT BRI (Bank Rakyat
Indonesia), PT Semen Gresik, dan berbagai seminar publik maupun in-house (dalam perusahaan) sejak 1996
sekarang.
9. Menjadi Direktur Lean Enterprise dan TQM pada Garibaldi Industries, Inc., Canada, 2003 2004.
10. Principal Consultant dari Penaga Consult, Perusahaan Training dan Konsultansi di Canada, Malaysia dan
Indonesia, 2005-sekarang
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