Professional Documents
Culture Documents
Management
MS 491
Hassaan Tariq
School of Management Sciences
Fall 2022
• Differentiation
• Response
• Make-to-Order (MTO). With this approach, a standard product design is used, but production
of the final product is linked to the final customer’s specifications. This approach is used by
aircraft manufacturers such as Boeing. Fulfillment time is generally less than with ETO
fulfillment, but still fairly long.
• Make-to-Stock (MTS). With this approach, production is based on a forecast, and products are
sold to the customer from finished goods stock. This approach is used in department stores
and supermarkets. The order fulfillment time is immediate. A variation of this is e-commerce;
although goods have already been produced, there is a lag in fulfillment to allow for shipping.
Hassaan Tariq, SMGs, GIKI, Fall 2022, MS 491, SCM 9
Push vs Pull
View in Supply
Chain - MTS
• What is SCM
• Vertical Integration
• Reverse Logistics
• Flows in SCM
• 1st and 2nd Tier Suppliers and Customers
• 3PL vs 4th Party Logistics
• Bull-Whip Effect
• Business Process Re-Engineering
• Impact on Pakistan?????
24
Hassaan Tariq, SMGs, GIKI, Fall 2022, MS 491, SCM
Efficient vs Responsive SC
Ease of
Mobility Trackability Business for Management
Suppliers
31
Hassaan Tariq, SMGs, GIKI, Fall 2022, MS 491, SCM
Make or Buy
The Decision
to Source or Backward Vertical Integration
Out-Source or
In-House
Forward Vertical Integration
32
Cost Saving → Economies of Scale
Geographical Advantage
No competent Supplier
25000+ 5Q = 500+7Q
• Capacity Enhancement
• Less Risk of Supply Disruptions
• Creates Inter-Supplier Competition
• Information
• Social Sustainability → Promotion of women lead business, Social
Sustainability
Closer
knowledge of the Local Sourcing Less Bereaucracy
requirements
43
Hassaan Tariq, SMGs, GIKI, Fall 2022, MS 491, SCM
Self-Study
• http://globalstandard.cips.org/?utm_source=CIPSwebsite&utm_medi
um=webpage&utm_campaign=AccessTheInteractiveToolScreenshotSt
ep2&_ga=2.57512111.42308048.1645167337-
1451748656.1633338469
• Logistics → Definition
• Modes of Logistics→ Air , Sea, Ship, Road → Advantages and
Disadvantages
• Inbound/Internal/Outbound
• Last Mile Logistics
• 3PL vs 4PL
• Risks in Logistics
Mandatory Reading.
https://hbr.org/1971/07/how-to-choose-the-right-forecasting-technique
Hassaan Tariq, SMGs, GIKI, Fall 2022, MS 491, SCM 53
2 Main types of Forecasting
• Qualitative → Qualitative techniques permit inclusion of soft
information (e.g., human factors, personal opinions, hunches) in the
forecasting process. Those factors are often omitted or downplayed
when quantitative techniques are used because they are difficult or
impossible to quantify
• Since these forecasts rely solely on past demand data, all quantitative
methods become less accurate as the forecast’s time horizon
increases.
•A moving average
forecast tends to
smooth and lag
changes in the data
MA 3 vs 5 Periods
Weighted
Moving
Average
75
Hassaan Tariq, SMGs, GIKI, Fall 2022, MS 491, SCM
Measuring Forecasting Accuracy
• Mean absolute deviation
(MAD) The average absolute
forecast error
• Mean squared error (MSE) The
average of squared forecast
errors.
• Mean absolute percent error
(MAPE) The average absolute
percent error.
9.5
Complex Forecasting Numerals
• Zoom Session
• Demand driven supply chain (DDSC), also known as demand-driven supply network
(DDSN), is a system of technologies and processes that sense and react to real-time
demand across a network of customers, suppliers and employees, this has been
significantly enabled due to the rise in the use of e-commerce systems and new
technologies due to the onset of the Internet of Things (IoT).
• In a traditional supply chain, inventory or services are provided based on a forecasted
demand and historical sales patterns, however, in a demand driven supply chain
companies that form part of the supply chain work closely to shape market demand by
sharing and collaborating information so avoiding time lags in information flow, with a
view to avoiding the bullwhip effect occurring across the supply chain.
• A demand driven supply chain focuses on the demand from the consumer data and
feeds this data through to the supply base so driving greater efficiency into inventory
availability giving a demand-pull technique.
Hassaan Tariq, SMGs, GIKI, Fall 2022, MS 491, SCM 92
Demand
Management
Process
• ERP Systems can help to reduce Demand Variability through small and frequent orders,
and integrating Up and Down Stream SCM.
• Levers Include:-
• • Pricing – incentives (discounts, MOQ’s, etc.) → MOQ (Minimum Order Qty)
• • Advertising – increasing brand awareness, and
• • Promotions – price reduction over short period of time.
Hassaan Tariq, SMGs, GIKI, Fall 2022, MS 491, SCM 94
Demand Shaping
• Changing how customers order goods can also be called external balancing
and the two key external balancing levers that most organizations have are
adjustments in price and Promotions and adjustments in lead time.
• https://www.youtube.com/watch?v=6sZntBOWiAQ → ERP
Flow of
Information in
ERP to Calculate
Cash to Cash
Cycle Time
• The objective is to provide sufficient finished goods in each period to meet the
sales plan while meeting financial and production constraints.
• Costs relevant to the aggregate planning decision include inventory cost, setup
cost, machine operating cost, hiring cost, firing cost, training cost, overtime cost
and costs incurred for hiring part-time and temporary workers to meet peak
demand.
• There are three basic production strategies that firms use for completing the
aggregate plan: (1) the chase strategy, (2) the level strategy and (3) the mixed
strategy.
Hassaan Tariq, SMGs, GIKI, Fall 2022, MS 491, SCM 118
Aggregate Production Plan - Example
Chase Using this strategy, the firm will hire and lay off workers to
match its production rate to demand.
Bill of
Materials
(BOM)
Basic MRP
Record
Gross Requirement → Anticipated Future Use/Demand
143
Hassaan Tariq, SMGs, GIKI, Fall 2022, MS 491, SCM
Rough Cut Capacity Planning (RCCP)
• Actual Output → Looking into Human Errors and product failures, the
actual output is less than Effective Capacity. 75 Bottles/Day
• Efficiency → Output to
Input as percentage. Can
be in hours as well.
• Hours utilized/Hours Work Done
Kanban Cards !
Just Talk – Self -
Reminder
• Warehousing
• Product Analysis
Shine
Hassaan Tariq, SMGs, GIKI, Fall 2022, MS 491, SCM 227
5S in Action
• Lower Risk
• Secure
• Transparent
• Adaptive
• Fast
• Optimized
• Sustainability
• Risk and Revenue Sharing Robustness
• Trust Recovery, Impact , Performance Loss,
• Visibility Inbound and Outbound Flows
• Risk Mgt Culture NPV, Customer Service Levels, Investments
• Adaptive Capability Geographical Segregation
• Structure Backup Supplier