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Operations Management MM UGM
Supply Chain Management Supply Chain Management
PROGRAM STUDI MAGISTER MANAJEMENUNIVERSITAS GADJAH MADA
PROGRAM STUDI MAGISTER MANAJEMENUNIVERSITAS GADJAH MADA
Adi Djoko GuritnoAdi Djoko Guritno
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Operations Management MM UGM
Schedule (Regular Class)Schedule (Regular Class)
Date Topics
1 - Introduction & Understanding Supply Chain Management
2 - Supply Chain Performance and Drivers
3 - Logistic Network Configuration
4 - Planning Demand and Supply Forecasting in Supply Chain
5 - Supply Chain Integration
6 - Managing Uncertainty in Supply Chain
7 - Customer Value and Supply Chain Management
8 - Determining Optimal Level of Product Availability
9 - Coordinated Product and Supply Chain Design
10 - IT for Supply Chain Management
11 - Strategic Lead Time
12 - Game: Computerized Beer Game & The Risk Pool Game
13 - Presentation of Big Paper
14 - Presentation of Big Paper
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Operations Management MM UGM
ReferencesReferences
Taylor, D.A. 2004. Supply Chains: A Manager’s Guide. Addison Wesley
Simchi-Levi, D, Kaminsky, P and E. Simchi-Levi, 2003. Designing and Managing the Supply Chain. McGraw-Hill Irwin.
Frazelle, E.H. 2002. Supply Chain Strategy. Logistic Management Library
Vollmann, T.E., Berry, W.L., Whyberk, D.C. and F.B. Jacobs. 2005. Manufacturing Planning and Control for Supply Chain Management, 5ed. McGraw Hill
Burt, D.N., Dobler, D.W., and S.L. Starling, 2003. World Class Supply Management: The Key to Supply Chain Management. McGraw-Hill Irwin.
OECD, 2002. OECD Guidelines for Multinational Enterprises Focus On Responsible Supply Chain Management. OECD.
Van Weele, A.J. 2002. Purchasing and Supply Chain Management: Analysis, Planning and Practice, 3ed. Thomas Learning.
Cohen, S., and J. Roussel, 2005. Strategic Supply Chain Management. McGraw Hill Co. Inc.
Christopher, M. 2005. Logistic and Supply Chain Management: Creating Value Adding Networks, 3ed. Prentice Hall
Hugo, M., 2003. Essentials of Supply Chain Management. John Wiley and Sons.
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Operations Management MM UGM
ReferencesReferencesChopra, S., and P. Meidl, 2008. Supply Chain Management: Strategy, Planning, and
Operations. Prentice Hall Inc.
Chandra, C. and J. Grabis. 2007. Supply Chains Configuration: Concepts, Solutions, and Applications. Springer.
Waters, D. 2007. Supply Chain Risk Management. The Chartered Institute of Logistics and Transport.
Blanchard, D. 2007. Supply Chain Management Best Practices. Wiley.
Vollmann, T.E., Berry, W.L., Whyberk, D.C. and F.B. Jacobs. 2005. Manufacturing Planning and Control for Supply Chain Management, 5ed. McGraw Hill
Anklesaria, J. 2008. Supply Chain Cost Management: The AIM & DRIVE Process. American Management Association.
Tyagi, R.K. and P. Gupta. 2008. A Complete and Balanced Service Scorecard. Pearson Education Inc.
Gattorna, J. 2006. Living Supply Chains. Prentice Hall..
Webster, S. 2008. Principle and Tools for Supply Chain Management. McGraw Hill Co. Inc.
Jacobs. F.R., Chase. R.B., and N.J. Aquilano. 2009. Operations and Supply Chain Management. McGraww Hill
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Operations Management - MM UGM Jakarta - ADG
Prolog.....
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6Operations Management - MM UGM Jakarta - ADG
Indonesia Logistics Facts.........
• Logistics cost = 14.08% production cost (Japan 4.08%)
•Land transportation = US$ 0.34 (Average Asia US$ 0.22)
• Country Competitiveness Index = Rank 54 - World Economy Forum
• Logistics Performance Index = Rank 43 - World Bank
• Corruption Perception Index = Rank 126 - Transparency International
•Challenges :
•Infrastructure
•Regulatory Impact Assessment
•Security and Safety
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7Operations Management - MM UGM Jakarta - ADG
•Efficiency and effectiveness of the clearance process
•Quality of Transport and IT infrastructure for logistics
•Ease and affordability of arranging shipments
•Competence in the local logistics industry
•Ability to track and trace shipments
•Domestic logistics costs
•Timeliness of shipments in reaching destination.
LPI Dimensions
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8Operations Management - MM UGM Jakarta - ADG
Fig. Logistics Performance Index
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9Operations Management - MM UGM Jakarta - ADG
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10 Operations Management - MM UGM Jakarta - ADG
Logistics Performance Index = 3,01 (Rank = 43)
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11 Operations Management - MM UGM Jakarta - ADG
Corruption Perception Index = 2,6 (Rank = 126)
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12 Operations Management - MM UGM Jakarta - ADG
Score Rank
Overall LPI 3.01 43
Customs 2.73 44
Infrastructure 2.83 45
International Shipments 3.05 44
Logistics Competence 2.90 50
Tracking 3.30 33
Domestic Logistics Costs 2.84 92
Timeliness 3.28 58
Table. LPI Indonesia
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13 Operations Management - MM UGM Jakarta - ADG
Pinpoint....the academic curriculum and supporting
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Operations Management MM UGM
Master of Management GMUMaster of Management GMU
Marketing
Finance
Operations
Etc.
SCM Supply Chain Mngt
2004
Core CoursesCore Courses Concentration Courses
Concentration Courses
Managing e-Business
e - Marketing
e-Business
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Operations Management MM UGM
Undergraduate GMUUndergraduate GMU
Product Dev.
Industrial Mngt
Operations
Etc.
SCM Supply Chain Mngt
Primary CoursesPrimary Courses Election CoursesElection Courses
Plant Lay Out
Etc.
Just In Time
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Operations Management MM UGM
Supply Chain Management Course
is a special course designed to improve students’ understanding of strategic aspect of logistics mechanism to support the successful implementation of an integrated e-Business systems. The focus of this course basically is linking-up strategic importance of information technology and operations function, such managing flow of goods and services in business within an integrated enterprise settings.
Supply Chain Management Course
is a special course designed to improve students’ understanding of strategic aspect of logistics mechanism to support the successful implementation of an integrated e-Business systems. The focus of this course basically is linking-up strategic importance of information technology and operations function, such managing flow of goods and services in business within an integrated enterprise settings.
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Operations Management MM UGM
Concentration Courses of E-BusinessConcentration Courses of E-Business
e-Business:
Managing e-Business, Analysis and Design e-Business, e-Marketing, Supply Chain Management, Strategic Information Systems, Knowledge Management, Business Project Management
e-Business:
Managing e-Business, Analysis and Design e-Business, e-Marketing, Supply Chain Management, Strategic Information Systems, Knowledge Management, Business Project Management
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Operations Management MM UGM
Definition of Supply Chain:
“The sequence of business processes and information that provides a product or service from suppliers through
manufacturing and distribution to the ultimate consumer.”
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19Operations Management - MM UGM Jakarta - ADG
Supply Chain Management defined as :
“Efficient Management of the Supply Chain (source,
make and deliver) in order to maximize the value for
money to the customer”.
19
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Operations Management - MM UGM Jakarta - ADG
Memperkuat Kolaborasi Demi Pertumbuhan Bisnis Yang SEHATMemperkuat Kolaborasi Demi Pertumbuhan Bisnis Yang SEHAT
CorporateCorporate DistribusiDistribusiPabrikPabrik CustomerCare
CustomerCare
SUPPLY CHAINSUPPLY CHAIN
TUJUAN
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21Operations Management - MM UGM Jakarta - ADG
Fig. Supply Chain Cycle
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Operations Management MM UGM
Recent Supply Chain Studies Suggest….Recent Supply Chain Studies Suggest….
• “Only 7% of companies today are effectively managing their supply chain. However, these companies are 73% more profitable than other manufacturers. …”
• “Only 7% of companies today are effectively managing their supply chain. However, these companies are 73% more profitable than other manufacturers. …”
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Operations Management - MM UGM Jakarta - ADG
Market driven
Supplier driven
Mass Customization
Mass Production
Yesterday model• Independent entities• Inventory based• Low cost production
Tomorrow’s model• Virtual network• Information based• Customer value oriented
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Operations Management MM UGM
Competitive Strategy
Supply Chain Strategy
Facilities Inventory Transportation Information
Supply Chain Structure
ResponsivenessEfficiency
Drivers
Supply Chain Decision Making Framework
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25Operations Management - MM UGM Jakarta - ADG
THE 6 MYTHS OF CREATIVITY
• 1. Creativity comes from creative types
• 2. Money is a creativity motivator
• 3. Time pressure fuels creativity
• 4. Fear forces breakthrough
• 5. Competition beats collaboration
• 6. A streamlined organization is a creative organization
» (HBR, March 2008)
25
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Operations Management MM UGM
The 7 Principles of SCM (1)
The 7 Principles of SCM (1)1.Segment customer based on service needs
•Supermarket needs frequent visit, monitor stock closely•Wholesaler needs big discount, drug store needs display
2. Customize your distributor• Distributor with strong modern trade team for cosmetic/consumer products• Distributor with strong General Trade (warung) coverage for certain product
3. Listen to signals of market demand• Increase stock level when consumers show good response• Limit distribution if product shows slow sell-out
4. Product closer to customer• Retail is better, closer to end users. Longer SC will impact price to end
consumer
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Operations Management MM UGM
5. Source strategically• In house production versus toll manufacture• Local raw materials versus import
6. Develop supporting strategy• When to expand factory? Expand warehouse? Increase no of salesman?
7. Performance measures• Evaluation, corrective actions
The 7 Principles of SCM (2)
The 7 Principles of SCM (2)
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Operations Management MM UGM
Ord
er S
ize
Time
CustomerDemand
Retailer Orders
Distributor Orders
Production Plan
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Operations Management MM UGM
Ord
er S
ize
Time
CustomerDemand
Production Plan
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Operations Management MM UGM
A Typical Supply ChainA Typical Supply Chain
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Operations Management MM UGM
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Operations Management MM UGM
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Operations Management MM UGM
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Operations Management MM UGM
Decision Phases in A Supply ChainDecision Phases in A Supply Chain
Supply chain strategy or design Supply chain planning Supply chain operation
Supply chain strategy or design Supply chain planning Supply chain operation
Key Point: Supply chain decision phases may be categorized as design, planning, or operational, depending on the time frame over which the decision made in a given phase apply.
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Operations Management MM UGM
Process View of A Supply ChainProcess View of A Supply Chain
• Cycle View: divided into a series of cycles (customer order, replenishment, manufacturing, procurement)
• Push/Pull View: divided into pull (initiated by a customer order) and push (initiated and performed in anticipation of customer order)
• Cycle View: divided into a series of cycles (customer order, replenishment, manufacturing, procurement)
• Push/Pull View: divided into pull (initiated by a customer order) and push (initiated and performed in anticipation of customer order)
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Operations Management MM UGM
Customer Order Cycle
Replenishment Cycle
Manufacturing Cycle
Procurement Cycle
Customer
Retailer
Distributor
Manufacturer
Supplier
Supply Chain Process Cycle
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Operations Management MM UGM
SRM ISCM CRM
Supplier Firm Customer
Source
Negotiate
Buy
Design Collaboration
Supply Collaboration
Strategic Planning
Demand Planning
Supply Planning
Fulfillment
Field Service
Market
Sell
Call Center
Order Management
Supply Chain Macro ProcessesSupply Chain Macro Processes
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Operations Management MM UGM
How Is Strategic Fit Achieved?How Is Strategic Fit Achieved?
Understanding the customer and supply chain
uncertainty
Understanding the supply chain capabilities
Achieving strategic
Understanding the customer and supply chain
uncertainty
Understanding the supply chain capabilities
Achieving strategic
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Operations Management MM UGM
Step 1: Understanding the Customer and Supply Chain Uncertainty
Step 1: Understanding the Customer and Supply Chain Uncertainty
• The quantity of the product needed in each lot
• The response time that customer are willing to tolerate
• The variety of product needed
• The service level required
• The price of the product
• The desired rate of innovation in the product
• The quantity of the product needed in each lot
• The response time that customer are willing to tolerate
• The variety of product needed
• The service level required
• The price of the product
• The desired rate of innovation in the product
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Operations Management MM UGM
Step 2 : Understanding the Supply ChainStep 2 : Understanding the Supply Chain
• Respond to wide ranges of quantities demanded
• Meet short lead times
• Handle a large variety of products
• Build highly innovative products
• Meet a very high service level
• Handle supply uncertainty
• Respond to wide ranges of quantities demanded
• Meet short lead times
• Handle a large variety of products
• Build highly innovative products
• Meet a very high service level
• Handle supply uncertainty
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Operations Management MM UGM
Highly efficient
Somewhat efficient
Somewhat responsive
Highly responsive
Production scheduled weeks
or months in advance with little
variety or flexibility
Production scheduled weeks
or months in advance with little
variety or flexibility
A traditional make-to-stock
manufacturer with production lead time of several
weeks
A traditional make-to-stock
manufacturer with production lead time of several
weeks
Delivering a large variety of
products in a couple of weeks
Delivering a large variety of
products in a couple of weeks
Custom made PCs and servers
in a few days
Custom made PCs and servers
in a few days
The Responsiveness Spectrum
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Operations Management MM UGM
Step 3 : Achieving Strategic FitStep 3 : Achieving Strategic Fit
Implied Uncertainty Spectrum
Responsive Supply Chain
Certain Demand
Uncertain Demand
Efficient Supply Chain
Responsiveness Spectrum
Zone of S
trategic F
it
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Operations Management MM UGM
Efficient Supply Chains Responsive Supply Chains
Primary goal Supply demand at the lowest cost Respond quickly to demand
Product design strategy
Maximize performance at a minimum product cost
Create modularity to allow postponement of product differentiation
Pricing strategyLower margins because price is a prime customer driver
Higher margins because price is not a prime customer driver
Manufacturing strategy
Lower costs through high utilizationMaintain capacity flexibility to buffer againts demand/supply uncertainty
Inventory strategy Minimize inventory to lower costMaintain buffer inventory to deal with demand/supply uncertainty
Lead time strategyReduce but not at the expense of cost
Aggressively reduce even the costs are significant
Supplier strategy Select based on cost and qualitySelect based on speed, flexibility, reliability, and quality
Comparison Efficient and Responsive Supply Chains
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Operations Management MM UGM
Responsive
Product Maturity
Product Introduction
Efficient
Responsiveness Spectrum
Zone of S
trategic F
it
Implied Uncertainty Spectrum
Changes in Supply Chain Strategy Over a PLC
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45
Operations Management - MM UGM Jakarta - ADG
Demand-Driven Strategies
• Demand forecast: a process in which historical demand data
are used to develop long-term estimates of expected demand,
that is, forecast
• Demand shaping: a process in which the firm determines the
impact of various marketing plans such as promotion, pricing
discounts, rebates. New product introduction, and product
withdrawal on demand forecast
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Operations Management MM UGM
Matching Supply-Chains with Products Matching Supply-Chains with Products
Efficient
Supply-Chain
Responsive
Supply-Chain
Functional
Products
Innovative
Products
Match
MatchMismatch
Mismatch
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47Operations Management - MM UGM Jakarta - ADG
Push, Pull, and Push-Pull System
• Push Supply Chain : produksi dan distribusi berdasar ramalan jangka
panjang (tidak merespon perubahan permintaan yg mendadak atau
menyediakan inventory yg besar)
• Pull Supply Chain : produksi dan distribusi dikendalikan menurut
permintaan konsumen dan kurang mendasarkan pada ramalan permintaan
• Push-Pull Supply Chain : kombinasi antara push dan pull SC
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Operations Management - MM UGM Jakarta - ADG
Push-Pull Supply Chains
Low
Uncertainty High
Uncertainty
CustomersSuppliers
PUSH STRATEGY PULL STRATEGY
Push-Pull Boundary
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Operations Management MM UGM
Collaborative Planning Forecasting and Replenishment (CPFR)
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Operations Management MM UGM
“Collaboration”
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Operations Management MM UGM
Pressure for change
Pressure for change
Clear shared vision
Clear shared vision
Capacity for change
Capacity for change
Actionable first step
Actionable first step+ + +
Effective management of peopleEffective management of people
=
Sustainable change
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Operations Management MM UGM
• “a collaboration process whereby supply
chain trading partners can jointly plan key
supply chain activities from production and
delivery of raw materials to production and
delivery of final products to end customers”
Collaborative Planning, Forecasting, and Replenishment
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Operations Management MM UGM
Why SC collaboration is important?
• Cut Costs
• Improve Forecast Accuracy
• Reduce Inventory
• Cut Lead & Cycle Times
• Improve Customer Service
Improved Communication
Fewer
Surprises
Better Execution
Leverage Strengths
Of Each Partner
Coordination for Better Optimizations
Win / WinPartnerships
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Operations Management MM UGM
– Information Collaboration
• Basic information sharing
– Process Collaboration
• Close process integration
– Decision Collaboration
• Collaborative decision making
Three Levels of Collaboration
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Operations Management MM UGM
ANALYSIS PLANNING /STRATEGY
EXECUTION
DEMAND & SUPPLY
MANAGEMENT
Fig.CPFR Business Practices
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Operations Management MM UGM
• CPFR is a Long Term effort
– Takes Time to Build Trust
• Both Partners Should be Open Minded
• Open Communication is Key
• Know Your Partner
Things to Remember
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Operations Management MM UGM
• Start from scratch
• Building on existing initiatives
– From SMI/VMI/CRP to CPFR (replenishment as
catalyst)
– From Promotion Planning to CPFR (demand
planning as catalyst)
Starting Point
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Operations Management MM UGM
CPFR Process
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59
Operations Management MM UGM
- Develop Collaborative Arrangement
- What Info are We Going to Share?
- Create Joint Business Plan
- How are We Going to do Business?
- Create Sales Forecast
- What does the Future Look Like?
- Identify Exceptions for Sales Forecast
- What We Know that the Supplier Doesn’t
- What the Supplier Knows that We Don’t
- Resolve/Collaborate on Exception Items
- How are We Going to Overcome the Exceptions?
- Create Order Forecast
- What can We Live With and Move Forward With?
- Identify Exceptions for Order Forecast
- Resolve/Collaborate on Exception Items
- Generate the Orders
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Operations Management MM UGM
1 – Develop Front End Agreement
Manage
Business
Rules
Service Requirements
Planning Decision Policies
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Operations Management MM UGM
2 – Create Joint Business Plan
Supply-Chain
Execution Data
Planning Data
Manage Plan
Data
Collection
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Operations Management MM UGM
3, 4 & 5 - Sales Forecast
Collaborative Sales Forecast
Aggregate Demand Plan
(Sales Forecast)
Step 3: Sales Forecast CollaborationStep 4: Identify Exceptions for Sales ForecastStep 5: Resolve / Collaborate on exception items
Identify,
Prioritize and
Aggregate
Supply
Chain
Requirements
Aggregate Forecast, Projections and
Business Assumptions
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Operations Management MM UGM
6,7 & 8 – Order Forecast
Collaborative Order
Order Forecast
Step 6: Order Forecast CollaborationStep 7: Identify Exceptions for Order ForecastStep 8: Resolve / Collaborate on exception items
Establish
Supply-Chain
Plans
Aggregate Supply Plan (Sales Forecast
balanced with SC Resources)
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Operations Management MM UGM
9 – Generate Order
Customer Order
Sales Order
Receive,
Enter and
Validate
Order
Automatic PO Generation (Frozen
Forecast)
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Operations Management MM UGM
Deconstructing CPFRDeconstructing CPFR
CFR
C
CFCP CR
CPF
CPFR
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Operations Management MM UGM
Design Options for a Distribution NetworkDesign Options for a Distribution Network
• Manufacturer storage with direct shipping
• Manufacturer storage with direct shipping and in-transit merge
• Distributor storage with package carrier delivery
• Distributor storage with last mile delivery
• Manufacturer/distributor storage with customer pickup
• Retail storage with customer pickup
• Manufacturer storage with direct shipping
• Manufacturer storage with direct shipping and in-transit merge
• Distributor storage with package carrier delivery
• Distributor storage with last mile delivery
• Manufacturer/distributor storage with customer pickup
• Retail storage with customer pickup
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Operations Management MM UGM
Manufacturer
Retailer
Customer
Product flow Information flow
Manufacturer storage with direct shipping
Operations Management MM UGM
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Operations Management MM UGM
Factories
Retailer
Customer
Product flow Information flow
Manufacturer storage with direct shipping and in-transit merge
In-Transit Merge by Carrier
Operations Management MM UGM
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Operations Management MM UGM
Factories
Warehouse Storage by Distributor/ Retailer
Customer
Product flow Information flow
Distributor storage with package carrier delivery
Operations Management MM UGM
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Operations Management MM UGM
Factories
Distributor/ Retailer Warehouse
Customer
Product flow Information flow
Distributor storage with last mile delivery
Operations Management MM UGM
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Operations Management MM UGM
Manufacturer/distributor storage with customer pickup
Factories
Cross Dock
Customer
Product flow Information flow
Retailer
Pickup Sites
Operations Management MM UGM
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Operations Management MM UGM
Current Trends (Japan)Current Trends (Japan)
• Product cycle and segmentation (Wall-Mart-Nishimoto)
• Demand for freshness of agricultural products and seafood (Carrefour-AEON)
• Infrastructure and the cultural bias for smaller volume/higher frequency conveyance
• Product cycle and segmentation (Wall-Mart-Nishimoto)
• Demand for freshness of agricultural products and seafood (Carrefour-AEON)
• Infrastructure and the cultural bias for smaller volume/higher frequency conveyance
Uniqueness of Consumer Demands
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Operations Management MM UGM
Current Trends (Japan)Current Trends (Japan)
• Tonya• Sogo sosha
• Tonya• Sogo sosha
Unique Business Models Found in Japan
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Operations Management MM UGM
Current Trends (Japan)Current Trends (Japan)
Tonya’s Position in Supply Chain
Producer Producer Producer
Retail Retail Retail
Producer Producer Producer
Retail Retail Retail
TONYA
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Operations Management MM UGM
Current Trends (Japan)Current Trends (Japan)
• Third Party Logistics• Streamlining the Physical Process• Collaboration• Globalization and Production Shift• Environmental Friendliness and Modal Shift• Shift to Customer Driven Logistics
• Third Party Logistics• Streamlining the Physical Process• Collaboration• Globalization and Production Shift• Environmental Friendliness and Modal Shift• Shift to Customer Driven Logistics
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Operations Management MM UGM
Strategic OperationsStrategic
Operations