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.
• Assemble-to-Order (ATO). With this approach, products are assembled to customer specifications from a
stock of standard and modular components. Computer manufacturers such as Dell operate using this
approach. Fulfillment times are fairly short, often a week or less.
• 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
Hassaan Tariq, SMGs, GIKI, Fall 2022, MS 491, SCM 14
Let’s Discuss Things!
• Supplier Management
• Supplier Evaluation and Certifications
• Expansion and Contraction of SCM Nearshoring, Outsourcing,
Right-Shoring
• Agile, Lean and Green Supply Chains
• 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
Insufficient Capacity Sub-
Reasons for Contracting
Buying/Outsourcin Lack of Expertise
g
Quality
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
Local Sourcing Less Bereaucracy
the
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=2.57512111.42308048.1645167337-1451748656.16333384
69
• 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.
• Technique that
averages a number of
recent actual values,
updated as new values
become available.
•A moving average
forecast tends to
smooth and lag
changes in the data
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
• 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
Managemen
t 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
Hassaan Tariq, SMGs, of
GIKI,time.
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.
Hassaan Tariq, SMGs, GIKI, Fall 2022, MS 491, SCM 96
Influencing Demand
• Positively influencing demand over the longer term involves
• Developing products that customers are actually demanding,
• Settling on the most profitable product mix,
• Setting strategic pricing,
• Placing products at various physical or online distribution points to establish a
presence and
• Level of customer convenience, and promoting products through
advertisement
• https://www.youtube.com/watch?v=6sZntBOWiAQ ERP
Flow of
Information in
ERP to
Calculate Cash
to Cash Cycle
Time
• Aggregate production plans are typically stated in terms of product families or groups.
A product family consists of different products that share similar characteristics,
components or manufacturing processes.
• 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
• Tokenization
• Smart Contracts
• Immutable Data
Chapter Ends!
Thank You for your Patience!
• • Ordering: It is a fixed cost and contains cost to place, receive and process a
batch of good including processing invoicing, auditing, labor, etc. In
manufacturing this is the set up cost for a run.
• 80-20 Analysis
• Warehousing
• Product Analysis
179
Hassaan Tariq, SMGs, GIKI, Fall 2022, MS 491, SCM
EOQ – Total Cost
• Assumptions
• – Demand is uniform and deterministic.
• – Lead time is instantaneous (0) – although this is not restrictive at all
since the lead time, L, does not influence the Order Size, Q.
• – Total amount ordered is received.
182
Hassaan Tariq, SMGs, GIKI, Fall 2022, MS 491, SCM
EOQ Focus
193
Hassaan Tariq, SMGs, GIKI, Fall 2022, MS 491, SCM
Economic Batch Quantity
EBQ/POQ
R = Annual Demand
S = Setup Cost
k = Annual Holding rate
C = Total Cost of a finished Component
P = Daily Production rate
D = Daily demand
Hassaan Tariq, SMGs, GIKI, Fall 2022, MS 491, SCM 197
EMQ Numerical
199
Hassaan Tariq, SMGs, GIKI, Fall 2022, MS 491, SCM
Graphical Solution of EMQ Numerical
206
Calculating Safety Stock
207
Hassaan Tariq, SMGs, GIKI, Fall 2022, MS 491, SCM
Calculating Safety Stock
• Agility Agility is the firm and supply chain's willing-ness and ability
to make immediate process level changes based upon the
understanding and reaction to externalities.
• Application: Persisting (in the short term), adapting (in the midterm),
and transforming (in the long term)
Strategies
for Building
Resilient SCs
226
Hassaan Tariq, SMGs, GIKI, Fall 2022, MS 491, SCM
Measuring Resilient SCs
Stress-Test for Various SCs
228
Hassaan Tariq, SMGs, GIKI, Fall 2022, MS 491, SCM
Types of Supply Chains
Demand Driven
Lean
Green
Agile/Resilient
Digital
239
Green Supply Chain Management
• https://www.youtube.com/watch?v=IMPbKVb8y8s – Amazon
Fulfillment Centre
Pattern 30 Marks Case Study – Theory will be from Post Mids Only