Supply Chain Management –An Overview

© 2008 Management Dynamics Inc.

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Management Dynamics' Global Trade Management (GTM) Suite

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Customer is the king
 In today’s global economy, cost and
quality are no longer “King.”

 But it is Rapid response to customer
needs

“Nowadays, it’s supply chains that compete with supply chains!” Price Waterhouse Coopers

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Supply Chain Management
Evolution Introduction (Supply, Chain, Management) SCM Decisions – Procurement – Production – Logistics (Transportation) • Role of IT in SCM • Difficulties in SCM

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Evolution

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The Transition (1992 – 2002)
 Bullwhip effect-

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What is Supply Chain

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Or………., is it this ?

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Supply Chain Management

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Supply Chain Flow Diagram

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Overview of Supply chain

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Supply chain decisions

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Levels of Decisions in SCM
 Three levels of decision hierarchy

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Procurement Decisions

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Production Decisions

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Physical Distribution Decisions (logistics)
 When to deliver the products  Where to deliver the products  How to deliver the products  At a reasonable cost.

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Role of Information Technology in SCM

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Radio Frequency Tags

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Eight keys to Supply Chain Success

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Supply Chain Management and Logistics

Both are concerned with efficient management of physical flows, and matching supply & demand

Logistics Scope: Within a firm Objective: Minimizing logistics cost Tactical – Ignored by top mgmt

Supply Chain Management Scope: Entire supply chain Objective: Minimizing cost & maximizing customer services Strategic -- Top mgmt attention

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Challenges in SCM(Bullwhip Effect)

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The “Bullwhip Effect”

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Major Supply Chain Drivers

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Supply Chain Drivers

 Drivers determine supply chain performance. For each
driver, managers must make tradeoffs between efficiency (cost) and responsiveness.
Inventory Transportation Facilities Information

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Old Supply Chains vs. New
VERTICAL  INTEGRATION has given way to “VIRTUAL INTEGRATION” Companies now focus on their core competencies, and partner with other companies to create supply chains for fast moving markets.

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Supply Chain Collaboration
•Companies  perform operations in one or more of these supply chain activities •Entire supply chains are more efficient if each company improves their performance •Collaborative Planning, Forecasting & Replenishment

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Activities in SCM

1. Transportation vendors 2. Credit and cash transfers 3. Suppliers 4. Distributors and banks 5. Accounts payable and receivable 6. Warehousing and inventory 7. Order fulfillment 8. Sharing customer, forecasting, and production information

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Supply Chain Operational Reference Model

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Formulas for Measuring Supply-Chain Performance

 One of the most commonly used measures in all of operations
management is “Inventory Turnover”

Cost of goods sold Inventory turnover = AverageAggregateinventory value
 In situations where distribution inventory is dominant, “Weeks
of Supply” is preferred and measures how many weeks’ worth of inventory is in the system at a particular time

 Average aggregate inventory value   52 weeks Weeks of supply =    Cost of goods sold  
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Examples of Supply Chain

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Examples of Supply Chain

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Examples of Supply Chain

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Push vs. Pull Processes

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Why Study SCM?

 Wal-Mart vs. K-Mart:
 In 10 years, Wal-Mart transformed itself by changing its logistics system
(own fleet of trucks); over 80% shipped to stores from its own 27 DCs, rest directly from suppliers; usually received within 48 hours. It has the highest sales per square foot, inventory turnover and operating profit of any discount retailer. (crossdocking, Everyday Low Price, innovative IS/IT) supply chain inefficiency (inability to respond quickly to customer demand)

 K-Mart, on the other hand, ships less than 50% on own, and suffers from

Put your money where your mouth is… (bought WMT 8/97, sold KM 5/99)

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Why Study SCM?

 Effective supply chain management is a top priority
in many companies, e.g.,
Boeing: Streamlining its procurement process using Exostar (internet exchange) -- to eliminate paper trail, facilitate information exchange across the supply chain General Motors: Reengineering its distribution operations, partnering with Vector SCM (a thrid-party service provider) -- to reduce in-transit inventory & achieve fast delivery from factories to dealers ExxonMobil: Redesigned its logistics network after the merge of Exxon and Mobil -- to drive down cost and complexity P&G, Dell, Cisco, Amazon, Bristol-Myers Squibb, McDonald’s, etc.

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Next Generation of Logistics outsourcing Approaches?

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2009: Top 20 supply chain management software suppliers

http://www.mmh.com/article/356221-2009_Top_20_supply_chain_management_software_suppliers.php
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ERP vs. CRM and SCM

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The Future of SCM: Two Closing Thoughts of Wisdom

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Conclusion
Information is the key to successful supply chain management because “no product flows until information flows”. Because the supply chain is so wide reaching, its success depends on nearly all departments within a company its acceptance with the supplier and vendors. Since the supply chain has become the key opportunity to gain competitive advantage, senior management needs to constantly remind their organizations that an improved SCMIS performance is a business issue, not a logistics or computer systems issue.

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References

 http://www.supply-chain.org/resources/  http://www.eil.utoronto.ca/profiles/rune/node5.html  http://www.managementdynamics.com/  http://en.wikipedia.org  http://www.ng.undp.org/procurement_process.html  https://www.mercy.edu 
http://www.mmh.com/article/3562212009_Top_20_supply_chain_management_software_suppliers .php

 http://www.sysoptima.com/erp/erp_definition.php

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