Professional Documents
Culture Documents
Supply Chain Management
Supply Chain Management
1
Definitions
2
What Is the Supply Chain?
and the
• Raw materials
• Work-in-process (WIP) inventory Transportation Transportation
Costs
3
The Supply Chain
Suppliers Manufacturers Warehouses & Customers
Distribution Centers
Transportation Transportation
Costs Costs
Material Costs Transportation
Manufacturing Costs Inventory Costs Costs
4
The Supply Chain – Another View
Transportation Transportation
Material Costs Costs Costs Transportation
Manufacturing Costs Inventory Costs Costs
5
What Is Supply Chain Management (SCM)?
6
History of Supply Chain Management
7
Why Is SCM Difficult?
8
The Importance of Supply Chain Management
9
The Importance of Supply Chain Management
10
Supply Chain Management and Uncertainty
Multi-tier Wholesale
Suppliers Manufacturer Distributors Retailers Consumers
Sales
Sales
Sales
Sales
Bullwhip Effect
11
Factors Contributing to the Bullwhip
12
Today’s Marketplace Requires:
14
Supply Chain Management – Key Issues
Customer Service/
Purchasing Manufacturing Distribution
Sales
High
Low pur- Few change- inventories
chase price overs
Low High service
Multiple Stable invent- levels
schedules ories
vendors
Regional
Long run stocks
lengths Low trans-
portation
15
Supply Chain Management – Key Issues
ISSUE CONSIDERATIONS
Network Planning • Warehouse locations and capacities
• Plant locations and production levels
• Transportation flows between facilities to minimize cost and time
Inventory Control • How should inventory be managed?
• Why does inventory fluctuate and what strategies minimize this?
Distribution Strategies • Selection of distribution strategies (e.g., direct ship vs. cross-docking)
• How many cross-dock points are needed?
• Cost/Benefits of different strategies
Integration and Strategic • How can integration with partners be achieved?
Partnering • What level of integration is best?
• What information and processes can be shared?
• What partnerships should be implemented and in which situations?
Outsourcing & Procurement • What are our core supply chain capabilities and which are not?
Strategies • Does our product design mandate different outsourcing approaches?
• Risk management
Product Design • How are inventory holding and transportation costs affected by product
design?
• How does product design enable mass customization?
Source: Simchi-Levi 16
Supply Chain Management Operations Strategies
Source: Simchi-Levi
17
Supply Chain Management – Benefits
19
Value of Information
and SCM
20
Information In The Supply Chain
Plan
Warehouses & Retailer
Suppliers Manufacturers
Distribution Centers
21
Taming the Bullwhip
22
Methods for Improving Forecasts
Judgment Methods
Market Research Analysis
Panels of Experts
• Internal experts
• External experts
• Market testing
• Domain experts
• Market surveys
• Delphi technique
• Focus groups
Time-Series Methods Accurate
Forecasts
Causal Analysis
• Moving average
• Exponential smoothing
• Relies on data other than
• Trend analysis
that being predicted
• Seasonality analysis
• Economic data, commodity
data, etc. 23
The Evolving Supply Chain
24
Supply Chain Integration – Push Strategies
26
Supply Chain Integration – Push/Pull Strategies
• Aircraft?
Computer Furniture
equipment • Fashion?
• Petroleum refining?
• Pharmaceuticals?
Industries where: Industries where:
• Biotechnology?
• Uncertainty is low • Standard processes are the • Medical Devices?
• Low economies of scale norm
• Push-pull supply chain • Demand is stable
• Scale economies are High
Pull Push
Source: Simchi-Levi 28
Characteristics of Push, Pull and Push/Pull Strategies
PUSH PULL
Objective Minimize Cost Maximize Service Level
Source: Simchi-Levi
29
Supply Chain Collaboration – What Is It?
30
Supply Chain Collaboration
Logistics Providers
31
Benefits of Supply Chain Collaboration
34
Emerging Best Practices in SCM Strategy
35
The SCOR Model
36
Collaboration and the SCOR Model
37
Process Reference Models
• Process reference models integrate the well-known concepts of
business process reengineering, benchmarking, and process
measurement into a cross-functional framework
38
SCOR Structure
Plan
Deliver Source Make Deliver Source Make Deliver Source Make Deliver Source
SCOR Model
39
SCOR 7.0 Model Structure
Customers
S1 Source Stocked Products M1 Make-to-Stock D1 Deliver Stocked Products
Return Return
Source Deliver
Enable
40
SCOR Implementation Roadmap
Align
Performance
•AS IS Level 2, 3, and 4 Maps
Levels, Practices, Information •Disconnects
and Systems and Work Flow •Design Specifications
SCOR Level 3
•TO BE Level 2, 3, and 4 Maps
41
Examples of SCOR Adoptions
• Consumer Foods
– Project Time (Start to Finish) – 3 months
– Investment - $50,000
– 1st Year Return - $4,300,000
• Electronics
– Project Time (Start to Finish) – 6 months
– Investment - $3-5 Million
– Projected Return on Investment - $ 230 Million
• Software and Planning
– SAP bases APO key performance indicators (KPIs) on SCOR
Model
• Aerospace and Defense
– SCOR Benchmarking and use of SCOR metrics to specify
performance criteria and provide basis for contracts / purchase
orders
42
The SCOR Model As Context for This Course
• Pharmaceutical sales and marketing activities have their own set
of logistics related activities that can be fully described using the
SCOR model
Segment
Analysis,
Marketing
Plan Planning
Patients
Pharmacies,
Hospitals,
Doctors Make Deliver
Deliver Source Make Deliver
Source Source Make Deliver Source
Customer’s
Suppliers’ Supplier Your Company Customer Customer
Supplier
43
The SCOR Model As Context for This Course
• Two interrelated “supply chains” work together to deliver drugs
to market:
– The Marketing and Sales “supply chain” which is principally
information-based
– The Logistics supply chain which is principally product-based
Plan
Make Deliver
Source
Sales
Deliver Source Make Deliver Source Make Deliver Source
Customer’s
Suppliers’ Supplier Your Company Customer Customer
Supplier
Plan
Internal or External Internal or External
Distribution Suppliers’
Supplier
Supplier Your Company Customer
Customer’s
Customer
44
Internal or External Internal or External