DIPLOMA IN LOGISTICS AND SUPPLY CHAIN

MANAGEMENT

SUPPLY CHAIN AND OPERATION STRATEGY

Y/618/1233

Conducted by: Chanaka Karunasena (BSc. MIT Special(UOK), MBA (UK), ACMA, CGMA)

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 GROUND RULES
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 THOUGHT OF THE DAY

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 LEARNING OBJECTIVES

 Evaluate the concepts of collaborative forecasting, planning and

replenishment
 Evaluate the key decision made by the business to improve the supply
chain and operation
 Discuss the key drivers of supply chain management and how effective it
in operations and enhance in competitiveness

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  Asses the relevance of performance measurement within supply chin and
operations management
STRATEGIC MANAGEMENT

 Strategic management provides overall direction by developing plans and policies

designed to achieve objectives and then allocating resources to implement the
plans. Ultimately, strategic management is for organization's to gain a competitive
edge over their competitors.
SUPPLY CHAIN STRATEGIES

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  A supply chain strategy is like a roadmap that helps companies get their products to
customers with as little friction as possible. This plan ensures that every phase of the
supply chain is optimized, including the sourcing of materials, manufacturing, delivery,
and logistics.
 Supply chain management operates at three levels: strategic, tactical, and operational.
 Having a supply chain strategy helps companies know how to work with their
products' distributors and vendors to improve operational efficiencies and drive
down costs and that can help enable profitable growth.

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HIERARCHY OF OBJECTIVES IN AN
ORGANISATION
All Mission Statement
Mission
Embracing P urpose, business
area, key values in
qualitative terms

Goals
General
Goals Desired future –
state where we
want to get to

Specific Objectives
Objectives Specific targets –
what we need to do

Detailed Strategic Plans

Strategy Whole organisation
Targets
Broad direction
Long term (3 – 5
years)
Implementation Tactical Plans
Tactics
Targets e.g. Procurement
Medium term
(1 – 2 years )
SMART OBJECTIVES
The objective should state exactly what is to be achieved
Specific

Measurable An objective should be capable of measurement – so that it is possible to determine

whether (or how far) it has been achieved

Achievable The objective should be realistic given the circumstances in which it is set and the
resources available to the business
 Objectives should be relevant to the people responsible for achieving them
Relevant

Time bound Objectives should be set with a time frame in mind. These deadlines also need to be
realistic
THREE TYPES OF SUPPLY CHAIN STRATEGIES
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STRATEGIC LEVEL

 Strategic network optimization, including the number, location, and size of warehousing,
distribution centers, and facilities.
 Strategic partnerships with suppliers, distributors, and customers, creating communication
channels for critical information and operational improvements such as cross docking, direct
shipping, and third-party logistics.
 Product life cycle management, so that new and existing products can be optimally integrated
into the supply chain and capacity management activities.
 Information technology chain operations.
 Where-to-make and make-buy decisions.
 Aligning overall organizational strategy with supply strategy.
 It is for long term and needs resource commitment.
 TACTICAL LEVEL

 Sourcing contracts and other purchasing decisions.

 Production decisions, including contracting, scheduling, and planning process
definition.
 Inventory decisions, including quantity, location, and quality of inventory.
 Transportation strategy, including frequency, routes, and contracting.
 Benchmarking of all operations against competitors and implementation of best
practices throughout the enterprise. Milestone payments.
 Focus on customer demand and Habits.
 OPERATIONAL LEVEL
 Daily production and distribution planning, including all nodes in the supply chain.
 Production scheduling for each manufacturing facility in the supply chain (minute by minute).
 Demand planning and forecasting, coordinating the demand forecast of all customers and
sharing the forecast with all suppliers. Sourcing planning, including current inventory and
forecast demand, in collaboration with all suppliers.
 Inbound operations, including transportation from suppliers and receiving inventory.
 Production operations, including the consumption of materials and flow of finished goods.
 Outbound operations, including all fulfillment activities, warehousing and transportation to
customers.
 Order promising, accounting for all constraints in the supply chain, including all suppliers,
manufacturing facilities, distribution centers, and other customers.From production level to
supply level accounting all transit damage cases & arrange to settlement at customer level by
maintaining company loss through insurance company.
CROSSDOCKING
 INTERNATIONAL SUPPLY CHAIN MANAGEMENT

 Management or control of both physical and information flow concerning a

wide variety of goods
 Tracking them from the point of their origin and until they reach to the
destination
 Implications:
Stimulates the growth of various economies
Help in the improvement of the standards of the living
Helps with the creation of the new jobs
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 Improves customer service
CHARACTERISTICS OF INTERNATIONAL SCM

 Optimization of inventory
 Flexibility in Supply Chain
 Customization for meeting the demands of the client
 Sustainability
 Global partnership
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  Leveraging technology
RISK IN INTERNATIONAL SCM

 Political and Government changers

 Economic instability
 Extreme whether event
 Environmental risk
 Connectivity
 Cyber attach
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  Data integrity and Quality
 Transport losses
SUPPLY CHAIN OPERATIONAL REFERENCE MODEL (SCOR)

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 SUPPLY CHAIN OPERATIONAL REFERENCE MODEL (SCOR)
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  Plan – Balance aggregate demand and supply to develop a course of action that best meets
Sourcing production and delivery requirement
 Source – Includes activity related to procuring goods and services to meet planed and actual
demand
 Make – Include activities related to transforming products into a finished state to meet
planed or actual demand
 Deliver – Provides finished goods or services to meet planed or actual demand, typically
include order management, transportation management, and distribution management
 Return – Deals with returning or receiving returned products for any reason and extends
into post delivery customer support.

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 SUPPLY CHAIN DRIVERS
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 DRIVERS OF SUPPLY CHAIN

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 THE KEY COLLABORATIVE PLANNING, FORECASTING AND REPLENISHMENT (CPFR)

 Collaborative Planning, Forecasting and Replenishment (CPFR) is defined as a business practice that
combines the brainpower of two or more trading partners in planning the ways to fulfill the customer
demand. They also explained the relationship that CPFR links best practices of sales and marketing, such
as category management, to the implementation of supply chain planning and completion process, to
increase availability while reducing inventory, transportation and logistics costs. Basically CPFR is an
approach that deals with the requirements for good demand management. The most involved industries
with CPFR are consumer products and food and beverage.
 The main objective of Collaborative Planning,Forecasting and Replenishment (CPFR) is to “optimize” the
supply chain process by:
• Improving accuracy of forecasting demand
• Delivering the right product at the right time to the right location,

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 • Reducing inventory,
• Avoiding stock outs
• Improving customer services.

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 THE KEY COLLABORATIVE PLANNING, FORECASTING AND REPLENISHMENT (CPFR)

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 THE KEY COLLABORATIVE PLANNING, FORECASTING AND REPLENISHMENT (CPFR)

1. Strategy & Planning – Establish the rules for collaborative relationship. Determine
the product mix and develop event plans for the period.
2. Demand and Supply Management – Project consumer (POS) demand, as well as
order and shipment requirements over the planning period.
3. Execution – Place orders, prepare and deliver shipments, receive and stock products
in retail stores, record sales transactions and make payments.
4. Analysis – Monitor planning and execution activities for exception conditions.
Aggregate results and calculate KPI’s. Share insights and adjust plans for better
performance.
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 CHALLENGERS FOR CPFR IMPLEMENTATION

1.Making internal changes: Internal changes must always be tackled by top

management as change is always difficult but if the top management is dedicated
to the project and in educating employees about the benefits of CPFR then there
are more chances of getting a successful internal change.
2.Total implementation cost: Although cost is an important factor to be
considered always but companies must determine whether they are at a
competitive disadvantage.

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 3.Trust: It is one of the biggest hurdles in general implementation of CPFR as
many retailers are unwilling to share the information required to implement
CPFR.
BENEFITS OF CPFR

• Strengthens supply chain partner relationships.

• Provides analysis of sales and order forecast which improves the forecast
accuracy.
• Manage the demand chain and proactively eliminate problems before they appear.
• Allow collaboration on future requirements and plans.
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 • Combine planning, forecasting and logistic activities.
• Provides efficient category management and understanding of
consumer purchasing patterns.
PERFORMANCE MEASUREMENT IN SCM

• Supply chain measurement ensures control over organizational behaviors thereby saving
the firm from revenue loss and poor long term growth. Therefore, if you want to keep
your company in track, it is vital to implement the primary strategies for measuring
supply chain performance.

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 • The SCOR model defines a supply chain as being composed of five main integrated
processes: Plan, Source, Make, Deliver and Return. Performance of most processes is
measured from 5 perspectives:Reliability,Responsiveness,Flexibility,Cost andAsset.
• qualitative measures (such as customer satisfaction and product quality) and quantitative
measures (such as order-to-delivery lead time, supply chain response time, flexibility,
resource utilization, delivery performance, etc.).
PERFORMANCE MEASUREMENT IN SCM

• Customer focus, product complexity coupled with shortened product life cycle

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 • Customization of products and services faster deliveries, global scale, cost
competition in fulfilment, delivery in full on time and increase sustainability focus
• Digital transformation of supply chain is disrupting established organization
Eg: New technologies encourage process automation and precision in execution
while exponential growth of data permits first hand insight with the help of analytics

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 10 R’S IN PURCHASING
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THANK YOU!