basics scor model and metrics

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  • Supply Chain ManagementForce or Farce?K.L.Bhaskaran*

  • *

  • *External EnvironmentGlobal competitionEvolution of Info.TechnologyShorter product life cycle Impatient customers Product variety Changing customer requirements Customer expectations Quality Price Delivery After Sales serviceReliability, Responsiveness and Agility have become key drivers

  • *Global BusinessA Canadian meets his Indonesian counterpart in a French restaurant, located in London, owned by an Indian. One is dressed in an Italian suit, wearing a Brazilian pair of shoes while other wears Hong Kong suit and Thai shoes. Shirts are made of Egyptian Cotton. Business is discussed over a cup of coffee from Ivory Coast accompanied by Syrian pastries and ends with a Cuban cigar.

  • Fluffy, white idlis- Theres more to it than riceName of the company: Rice Land Agro Food Pvt.LtdBusiness: Processing of Paddy into RiceLocation: Manachanallur,near TrichyLabourers : BiharMilling Machine: Brazil Driers: ThailandSoRtex Z+ : From London,based on German Technolgy

    Quality is controlled on line from London

    *

  • Born Local

    Business Global*

  • *

  • *Why is this happening?Indian economy has opened upDeveloped country markets have saturatedCustomer expectations are highCustomer segmentation is more refined

  • Too many manufacturers

    Chasing limited customers*

  • Quality is no more a differentiatorBrand?Availability?NicheProduct?Delivery?Price?Service?*

  • Niche ProductBrand? Easy Availability?Quick After Sales ServiceWhat does customer want?State of the ArtProductsGood Payment terms*

  • *Customer NeedsRight product, at the right quality, at the right time, with the right packing, at the right price , backed up by right service.

  • A supply chain is designed

    to address these requirements*

  • *SupplierBasic Supply ChainManufacturerCustomer Raw Materials Components Supply Items Electricity Janitorial Services Manufacturer of Products

    Service providersRetailerWholesalerDistributorEnd Customer(Consumer)

  • Tier 2 SupplierRaw MaterialsTier 2 SupplierComponentsTier 2 SupplierServicesTier 2 SupplierTier 2 Supplier

    Tier 2 Supplier

    Tier 1SupplierTier 1SupplierTier 1SupplierManufacturerDistributorDistributorRetailerRetailerRetailerRetailerExpanded Supply Chain*

  • Supplier

    Information FlowReverse Logistics FlowManufacturerCustomer Primary Product Flow Primary Cash Flow Orient towards customer*

  • Primary Product FlowRaw materials, components, subassemblies, in plant components, finished products, services, supply itemsInformation FlowPrimary Cash FlowPayments to suppliers, payments from customers,Return of cash against customer returns, Receiptof payments from suppliers against rejections Reverse Product FlowRaw Material, Component Supply status, Production Status, Delivery status, Order status, sales literature, invoice, etcReturns for repair, replacement, recycling, disposal, return of rejected items to suppliers*

  • *An exampleSuppliersSupplierSupplierProducerRetailerConsumerGas Manufacturer AgriculturistsManufacturersGas SuppliersUtilitiesMilk SupplierProvision SuppliersUtilitieschefWaitersConsumersA Restaurant

  • *Beware!!!A Supply Chain is NOT

    ManufacturingLogisticsPurchasingSupplies Or any combination of the above

  • * Identifying Supply ChainsSumming up

    Supply chainsStretch from raw materials to consumersInclude various entities and processesRun in reverse as well as toward end userContain cash, product, and information flowsConnect to outside stakeholders.

  • *A simple definitionSupply Chain begins with the Customer [order placement ] and ends with the customer [ delivery ] In some cases, after sales service is a part of supply chain

  • *DEFINITION OF SCMIt is a process orientated, integrated approach to procuring, producing and delivering products and services to the customers. Integrated SCM has a broad scope and and it includes sub-suppliers, suppliers, internal operations, trade customers, retail customers, and end users. It covers management of material, information and funds flows.

  • What Is Supply Chain Management?Supply chain management is a set of approaches utilized to efficiently integrate suppliers, manufacturers, warehouses, and stores, so that merchandise is produced and distributed at the right quantities, to the right locations, and at the right time, in order to minimize system wide costs while satisfying service level requirements.*

  • Two Other Formal DefinitionsThe design and management of seamless, value-added process across organizational boundaries to meet the real needs of the end customerInstitute for Supply ManagementManaging supply and demand, sourcing raw materials and parts, manufacturing and assembly, warehousing and inventory tracking, order entry and order management, distribution across all channels, and delivery to the customerThe Supply Chain Council*

  • * SC Management includes Forecasting Demand driven Sourcing and Procurement Production Scheduling Order Processing Inventory Management Transportation Warehousing Customer Service Collection of money Location A proper information system

  • *SCM DRIVERSCostInventoryLogisticsInformationCycle TimeAfter Sales ServiceResponsivenessReliability

  • *Successful SCM excels inCost ReductionImproving reliabilityImproving responsivenessImproving agilityImproving asset utilization

  • *SUPPLY CHAINA well designed supply chain addresses - Cycle time - Cost Control - Lead time at all levels - Inventory Planning, build up and disposal - Information across the chain - Products and material flow - Process considerations - Logistics - Cash Flow

  • * Evolution of Supply Chain ManagementStages of SCM evolution

    1: Baseline2: Functional Integration3: Internal Integration4: ExternalIntegrationUnplanned activityPep talks, threatsNo teamworkLittle information exchangeMostly manual opsEfficiency improvement in owned facilitiesNew low-price purchasing strategiesSome hard-skills training, job enhancementEnhanced marketing and forecastingNo coordination of initiativesNew focus on processInternal process integrationERPIntranets, etc., across functionsDesign teamsEnhanced warehousing, logistics, forecasting, etc.Process integration across entity boundariesEventual electronic information connections among multiple partnersERP-to-ERP linksE-commerceSupply chain vs. supply chain competition

  • *SupplierProducercustomer Stakeholder ValueWho are the stakeholders?

  • Stakeholders ValueFirmEnd customerInvestorsLendersSocietyGovernmentEmployeesCompetition Quality, Affordability, Availability and Service Profitability, Growth, Market Share, Image Return on investment, timely communication, growth Interest Stability and return of Principal Job creation, Clean Environment, Development Tax, Environment, Job creation, Abiding by LawCareer Path, Security, Salary,good working conditionMakes or mars your business*

  • Creating Value through SC ManagementSupply chain values Financial valueCustomer value

    Social value (for community, environment, etc.)*

  • Creating Value through SC ManagementFinancial valuePotentially self-defeating tradeoffs (e.g., cost cutting without net gain)It takes money to make money (such as investments in upgrades)Distribution of net gains (with all stakeholders in mind)*

  • Creating Value through SC ManagementCustomer value

    *

  • Creating Value through SC ManagementSocial value*

  • Creating Value through SC ManagementAnswer: aDiscussion questionWhich of the following is most likely to increase long-term net financial value for a supply chain firm?Reinvesting profits in research and infrastructure upgradesChanneling SC cost savings into end-userdiscountsUse of market leverage to force down suppliercostsLarge-scale layoffs and plant closings*

  • *VelocityFive Vs of Supply ChainVisibilityVariabilityVarietyVolume Increase SpeedWider Visibility Better Control over operations Tune to the Market Demand Tune to the Market Demand

  • *Domestic Global Operations Standard ProductsMass CustomizationWork OrdersFlow ProductionVertical IntegrationOutsourcingDisconnectedNetworked Forecast DrivenCustomer ResponseTransformation to Best Practices

  • *Business Transformation From To Inward Centric Customer Centric Push to Pull Inventory Information Transactions Relationship From Functions Processes Stand Alone Network

  • * *RisksKnownUnknownUncontrollableControllable Natural disastersPolitical RisksEpidemicsTerrorismFuel PriceCurrency FluctuationPort delaysMarket ChangesSupplier PerformanceExecution Issues

  • Functional and Process PerspectiveORDER - TO - DELIVERY PROCESSSUPPLY CHAIN PROCESSProcurementDistributionManufacturingLogistics*

  • Processes*P2P3P4PnP1SuppliersPurchaseMfgSalesCustomersDiscrete Processes

  • ProcessesSupply chain processes

    *

  • SCOR ProcessesFive SCOR processes

    *

  • * Balance resources with requirements and establish and communicate plans for the whole supply chain, including return and the execution processes of Source, make and deliverManagement of business rules, SC performance, Data co

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