Supply Chain Management

Outline What is Supply Chain Management  Supply Chain Planning Process  Supply Chain Planning Decisions Supply Chain Strategies  Software Tools .

manufacturing. marketing) that perform the function of delivering value to end customer External Suppliers Internal Functions External Distributors INFORMATION . distribution.g. purchasing.WHAT IS SUPPLY CHAIN MANAGEMENT Supply Chain is a set of activities (e. logistics.

Supply Chain Structure SUPPLIER FACTORY DC WHOLESALER RETAILER Raw Materials Finished Goods Information Flow .

Dynamics of Material Flow Supplier Plant Warehouse Logistics Retailer .

Supply Chain Planning Processes Material Requirement Planning Component Requirement Demand Forecasting Demand Planning Production Plan Supplier Plant Warehouse Logistics Retailer Order Management .

Supply Chain Planning Decisions STRATEGIC TACTICAL OPERATIONAL Procurement Manufacturing Distribution Logistics .

Mont Operational • Shipment Scheduling • Resource Scheduling • Short Term Planning (Weekly.Daily) .SUPPLY CHAIN ELEMENTS Strategic • Supply Chain Design • Resource Acquisition • Long Term Planning (1 Year ++) Tactical • Production/ Distribution Planning • Resource Allocation • Medium Term Planning (Qtrly.

others? . large appliances.Supply Chain Integration – Push Strategies • • • • • • Classical manufacturing supply chain strategy Manufacturing forecasts are long-range Longer response time to react to marketplace changes Increased variability (Bullwhip effect) leading to: Inefficient use of production facilities (factories) Examples: Auto industry.

Supply Chain Integration – Pull Strategies • • • • • • • • • • Production and distribution are demand-driven None or little inventory held Fast information flow mechanisms Decreased lead times Decreased retailer inventory Decreased variability in the supply chain and especially at manufacturers Decreased manufacturer inventory More efficient use of resources More difficult to take advantage of scale opportunities Examples: Dell. Amazon .

Beverages High Push Economies of Scale . CD’s Grocery.Choosing Between Push/Pull Strategies Pull High • Customization is High • Demand is uncertain • Demand is uncertain • Scale economies are Low • Scale economies are High • Low economies of scale Where do the following industries fit in this model: • Automobile? • Aircraft? • Fashion? • Petroleum refining? • Pharmaceuticals? • Biotechnology? • Medical Devices? Demand Uncertainty Computer equipment • Uncertainty is low • Low economies of scale • Push-pull supply chain Furniture Standard processes are the norm • Demand is stable • Scale economies are High Push Low Low Pull Books.

Characteristics of Push. Pull and Push/Pull Strategies PUSH Objective Complexity Focus Lead Time Processes Minimize Cost PULL Maximize Service Level Low High Resource Allocation Responsiveness Long Short Supply Chain Planning Order Fulfillment .

Software Packages i2 Six: A comprehensive solution suite for spend/ production/ revenue/ logistics/ fulfillment optimization It helps companies driving down enterprise wide spend ARIBA Spend Management: mySAP SCM: planning solution A complete supply chain A complete solution suite from demand collaboration to order management iBann: .

Conclusions  Supply Chain Planning: A critical factor in the success and profitability of a company  Short Product Life Cycle: Improper planning can take the company out of business  Bad News: Planning is an hard problem to formulate as well as solve  Good News: Plethora of Commercially available software for supply chain planning .

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