Lec.1 Introduction of SCM

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<ul><li><p>8/9/2019 Lec.1 Introduction of SCM</p><p> 1/50</p></li><li><p>8/9/2019 Lec.1 Introduction of SCM</p><p> 2/50</p><p>Shujaat Mubarik..V.U workshop 2</p><p>What is a Supply Chain?</p><p> AllAll facilities,facilities, functions,functions, activities,activities, associatedassociated withwithflowflow andand transformationtransformation ofof goodsgoods andand servicesservicesfromfrom rawraw materialsmaterials toto customercustomer,, asas wellwell asas thethe</p><p>associatedassociated informationinformation flowsflows AnAn integratedintegrated groupgroup ofof processesprocesses toto source,source,</p><p>make,make, andand deliverdeliver productsproducts</p></li><li><p>8/9/2019 Lec.1 Introduction of SCM</p><p> 3/50</p><p>Shujaat Mubarik..V.U workshop 3</p><p>Supply Chain Processes</p></li><li><p>8/9/2019 Lec.1 Introduction of SCM</p><p> 4/50</p><p>Shujaat Mubarik..V.U workshop 4</p><p>What is a Supply Chain?</p><p> Managing flow of information through supply chainin order to attain the level ofsynchronization that willmake it more responsive to customer needs whilelowering costs</p><p> Keys to effective SCM information communication cooperation trust</p></li><li><p>8/9/2019 Lec.1 Introduction of SCM</p><p> 5/50</p></li><li><p>8/9/2019 Lec.1 Introduction of SCM</p><p> 6/50</p><p>Shujaat Mubarik..V.U workshop 6</p><p>What is a Supply Chain?</p><p> Customer is an integral part of the supply chain</p><p> Includes movement ofproducts from suppliers tomanufacturers to distributors, but also includes</p><p>movement of information, funds, and products inboth directions</p><p> Probably more accurate to use the term supplynetwork or supply web</p><p> Typical supply chain stages: customers, retailers,distributors, manufacturers, suppliers</p><p> All stages may not be present in all supply chains(e.g., no retailer or distributorfor Dell)</p></li><li><p>8/9/2019 Lec.1 Introduction of SCM</p><p> 7/50</p><p>Shujaat Mubarik..V.U workshop 7</p><p>Value vs. Supply Chain</p><p> Value chain every step from raw materials to the eventual end user</p><p> ultimate goal is delivery ofmaximum value to the end user</p><p>Supply chain activities that get raw materials and subassemblies into</p><p>manufacturing operation</p><p> Terms are used interchangeably</p></li><li><p>8/9/2019 Lec.1 Introduction of SCM</p><p> 8/50</p><p>Shujaat Mubarik..V.U workshop 8</p><p>What is a Supply Chain?</p><p>Customer wants</p><p>detergent and goes</p><p>to Jewel</p><p>Jewel</p><p>Supermarket</p><p>Jewel or third</p><p>party DC</p><p>P&amp;G or other</p><p>manufacturer</p><p>Plastic</p><p>Producer</p><p>Chemical</p><p>manufacturer</p><p>(e.g. Oil Company)</p><p>Tenneco</p><p>Packaging</p><p>Paper</p><p>Manufacturer</p><p>Timber</p><p>Industry</p><p>Chemical</p><p>manufacturer</p><p>(e.g. Oil Company)</p></li><li><p>8/9/2019 Lec.1 Introduction of SCM</p><p> 9/50</p><p>Shujaat Mubarik..V.U workshop 9</p><p>Flows in a Supply Chain</p><p>Customer</p><p>Information</p><p>Product</p><p>Funds</p></li><li><p>8/9/2019 Lec.1 Introduction of SCM</p><p> 10/50</p><p>Shujaat Mubarik..V.U workshop 10</p><p>The Supply Chain Concept</p></li><li><p>8/9/2019 Lec.1 Introduction of SCM</p><p> 11/50</p><p>Shujaat Mubarik..V.U workshop 11</p><p>Supply Chain Management:</p><p>A Balancing Act</p><p>CustomerService</p><p>Costofthe</p><p>Service</p><p>Inventory Transportation</p></li><li><p>8/9/2019 Lec.1 Introduction of SCM</p><p> 12/50</p><p>Shujaat Mubarik..V.U workshop 12</p><p>Supply Chain Illustration</p></li><li><p>8/9/2019 Lec.1 Introduction of SCM</p><p> 13/50</p><p>Shujaat Mubarik..V.U workshop 13</p><p>SupplyChain for</p><p>DenimJeans</p></li><li><p>8/9/2019 Lec.1 Introduction of SCM</p><p> 14/50</p><p>Shujaat Mubarik..V.U workshop 14</p><p>SupplyChain for</p><p>DenimJeans</p><p>(cont.)</p></li><li><p>8/9/2019 Lec.1 Introduction of SCM</p><p> 15/50</p><p>Shujaat Mubarik..V.U workshop 15</p><p>The Objective of a Supply Chain</p><p> Maximize overall value created</p><p> Supply chain value: difference between whatthe final product is worth to the customer andthe effort the supply chain expends in fillingthe customers request</p><p> Value is correlated to supply chain</p><p>profitability (difference between revenuegenerated from the customer and the overallcost across the supply chain)</p></li><li><p>8/9/2019 Lec.1 Introduction of SCM</p><p> 16/50</p><p>Shujaat Mubarik..V.U workshop 16</p><p>The Objective of a Supply Chain</p><p> Example: Dell receives $2000 from a customerfor acomputer (revenue)</p><p> Supply chain incurs costs (information, storage,</p><p>transportation, components, assembly, etc.) Difference between $2000 and the sum ofall of</p><p>these costs is the supply chain profit</p><p> Supply chain profitability is total profit to be sharedacross all stages of the supply chain</p><p> Supply chain success should be measured by totalsupply chain profitability, not profits at an individualstage</p></li><li><p>8/9/2019 Lec.1 Introduction of SCM</p><p> 17/50</p><p>Shujaat Mubarik..V.U workshop 17</p><p>The Objective of a Supply Chain</p><p> Sources ofsupply chain revenue: the customer</p><p> Sources ofsupply chain cost: flows of information,products, orfunds between stages of the supply</p><p>chain Supply chain management is the management of</p><p>flows between and among supply chain stages</p><p>to maximize total supply chain profitability</p></li><li><p>8/9/2019 Lec.1 Introduction of SCM</p><p> 18/50</p><p>Shujaat Mubarik..V.U workshop 18</p><p>Supply Chain Uncertainty</p><p> One goal in SCM: respond to uncertainty in</p><p>customer demand withoutcreating costly excessinventory</p><p> Negative effects ofuncertainty lateness</p><p> incomplete orders</p><p> Inventory</p><p> insurance against supplychain uncertainty</p><p> Factors that contribute to uncertainty inaccurate demand forecasting</p><p> long variable lead times</p><p> late deliveries</p><p> incomplete shipments</p><p> product changes batch ordering price fluctuations and discounts</p><p> inflated orders</p></li><li><p>8/9/2019 Lec.1 Introduction of SCM</p><p> 19/50</p><p>Shujaat Mubarik..V.U workshop 19</p><p>Bullwhip Effect</p><p> Occurs when slight demand variability is magnified as information</p><p>moves back upstream</p></li><li><p>8/9/2019 Lec.1 Introduction of SCM</p><p> 20/50</p><p>Shujaat Mubarik..V.U workshop 20</p><p>Supply Chain for Service</p><p>Providers More difficult than manufacturing</p><p> Does not focus on the flow ofphysicalgoods</p><p> Focuses on human resources and supportservices</p><p> More compact and less extended</p></li><li><p>8/9/2019 Lec.1 Introduction of SCM</p><p> 21/50</p><p>Shujaat Mubarik..V.U workshop 21</p><p>Information Technology: A Supply Chain</p><p>Enabler Information links all aspects ofsupply chain</p><p> E-business replacement ofphysical</p><p>business processes with</p><p>electronic ones Electronic data interchange</p><p>(EDI) a computer-to-computer</p><p>exchange ofbusinessdocuments</p><p> Bar code and point-of-sale data creates an instantaneous</p><p>computer record ofa sale</p><p> Radio frequencyidentification (RFID) technology can send product</p><p>data from an item to a readervia radio waves</p><p> Internet allows companies to</p><p>communicate with suppliers,customers, shippers and otherbusinesses around the world,instantaneously</p></li><li><p>8/9/2019 Lec.1 Introduction of SCM</p><p> 22/50</p><p>Shujaat Mubarik..V.U workshop 22</p><p>E-business and Supply Chain</p><p> Cost savings and price reductions Reduction or elimination of the role of intermediaries Shortening supply chain response and transaction</p><p>times Gaining a wider presence and increased visibilityfor</p><p>companies Greater choices and more information for customers</p></li><li><p>8/9/2019 Lec.1 Introduction of SCM</p><p> 23/50</p><p>Shujaat Mubarik..V.U workshop 23</p><p>E-business and Supply Chain (cont.)</p><p> Improved service as a result of instant accessibilityto services</p><p> Collection and analysis ofvoluminous amounts of</p><p>customer data and preferences Creation ofvirtual companies</p><p> Leveling playingfield for small companies</p><p> Gainingglobal access to markets, suppliers, and</p><p>distribution channels</p></li><li><p>8/9/2019 Lec.1 Introduction of SCM</p><p> 24/50</p><p>Shujaat Mubarik..V.U workshop 24</p><p>Supply Chain Evolution at Nabisco</p><p>Source: F. Keenan, Logistics Gets a Little Respect, Business Week(November 20, 2000), pp. 112115.</p></li><li><p>8/9/2019 Lec.1 Introduction of SCM</p><p> 25/50</p><p>Shujaat Mubarik..V.U workshop 25</p><p>Supply Chain Evolution at Nabisco (cont.)</p><p>Source: F. Keenan, Logistics Gets a Little Respect, Business Week(November 20, 2000), pp. 112115.</p></li><li><p>8/9/2019 Lec.1 Introduction of SCM</p><p> 26/50</p><p>Shujaat Mubarik..V.U workshop 26</p><p>Supply Chain Evolution at Nabisco (cont.)</p><p>Source: F. Keenan, Logistics Gets a Little Respect, Business Week(November 20, 2000), pp. 112115.</p></li><li><p>8/9/2019 Lec.1 Introduction of SCM</p><p> 27/50</p><p>Shujaat Mubarik..V.U workshop 27</p><p>RFID Capabilities</p></li><li><p>8/9/2019 Lec.1 Introduction of SCM</p><p> 28/50</p><p>Shujaat Mubarik..V.U workshop 28</p><p>RFID Capabilities (cont.)</p></li><li><p>8/9/2019 Lec.1 Introduction of SCM</p><p> 29/50</p><p>Shujaat Mubarik..V.U workshop 29</p><p>BuildBuild--toto--order cars overorder cars overthe Internetthe Internet</p></li><li><p>8/9/2019 Lec.1 Introduction of SCM</p><p> 30/50</p><p>Shujaat Mubarik..V.U workshop 30</p><p> Customer sales</p><p> Production</p><p> Distribution</p><p> Customerrelationship</p><p> Customer sales</p><p> Production</p><p> Distribution</p><p> Customerrelationship</p><p> Pushsellfrominventory stock</p><p> Goal ofeven andstable production</p><p> Mass approach</p><p> Dealer-owned</p><p>E-Automotive</p><p>E-automotive Supply Chain</p><p> Pullbuild-to-order</p><p> Focus on customerdemand, respond withsupply chain flexibility</p><p> Fast, reliable, andcustomized to get cars</p><p>to specific customerlocation</p><p> Shared by dealers andmanufacturers</p><p>Automotive</p><p>Past</p><p>Supply Chain</p><p>Processes</p></li><li><p>8/9/2019 Lec.1 Introduction of SCM</p><p> 31/50</p><p>Shujaat Mubarik..V.U workshop 31</p><p> Managing</p><p>uncertainty</p><p> Procurement</p><p> Productdesign</p><p> Managing</p><p>uncertainty</p><p> Procurement</p><p> Productdesign</p><p> Large car</p><p>inventory atdealers</p><p> Batch-oriented;dealers orderbased onallocations</p><p> Complexproducts dontmatch customerneeds</p><p>E-Automotive</p><p>E-automotive Supply Chain (cont.)</p><p> Small inventories with</p><p>shared information andstrategically placed partsinventories</p><p> Orders made in real timebased on available-to-promise information</p><p> Simplified products based onbetter information aboutwhat customers want</p><p>Automotive</p><p>Past</p><p>Supply Chain</p><p>Processes</p></li><li><p>8/9/2019 Lec.1 Introduction of SCM</p><p> 32/50</p><p>Shujaat Mubarik..V.U workshop 32</p><p>Supply Chain Integration</p><p> Information sharing among supply chain members Reduced bullwhip effect Early problem detection Faster response Builds trust and confidence</p><p> Collaborative planning, forecasting, replenishment, anddesign Reduced bullwhip effect Lower Costs (material, logistics, operating, etc.) Higher capacity utilization</p><p> Improved customer service levels</p></li><li><p>8/9/2019 Lec.1 Introduction of SCM</p><p> 33/50</p><p>Shujaat Mubarik..V.U workshop 33</p><p> Coordinated workflow, production and operations,procurement Production efficiencies Fast response Improved service Quicker to market</p><p> Adopt new business models and technologies Penetration ofnew markets Creation ofnew products Improved efficiency</p><p> Mass customization</p><p>Supply Chain Integration (cont.)</p></li><li><p>8/9/2019 Lec.1 Introduction of SCM</p><p> 34/50</p><p>Shujaat Mubarik..V.U workshop 34</p><p>Collaborative Planning, Forecasting, andReplenishment</p><p> Process for two or more companies in asupply chain to synchronize their demandforecasts into a single plan to meetcustomer demand</p><p> Parties electronically exchange past sales trends point-of-sale data on-hand inventory scheduled promotions</p><p> forecasts</p></li><li><p>8/9/2019 Lec.1 Introduction of SCM</p><p> 35/50</p><p>Shujaat Mubarik..V.U workshop 35</p><p>Elements of Supply Chain Management</p><p> From previous slides , we can divide SCMprocess into following stages:</p><p> Procurement</p><p> Operation</p><p> Distribution</p><p> Integration</p></li><li><p>8/9/2019 Lec.1 Introduction of SCM</p><p> 36/50</p><p>Shujaat Mubarik..V.U workshop 36</p><p>Supply Chain</p><p>Management</p><p>Suppler Relationship management</p><p>Procurement management</p><p>External Supply Chain</p><p>Management</p><p> World Class Supply Chain Management: Definitions, Concepts and Importance</p><p> Process view of Supply chain Management</p><p> Purchasing : Importance, Methods &amp; Techniques</p><p> Cross Functional Teams: Benefits, Implementation and Challenges</p><p> Specification , Standardization , and Simplification</p><p> Application of SSS concept in procurement</p><p> Strategic Sourcing</p><p> Creating and Managing Buyer Supplier Relationship</p><p>Internal Supply Chain management</p><p>Operation management</p><p>Production Management</p><p> Demand Forecasting and Replenishment</p><p> Demand Forecasting and replenishment II</p><p> Aggregate Planning: Aggregate production Planning (APP)</p><p> Aggregate Planning: Master Production Schedule (MPS)</p><p> Aggregate Planning: Material requirement Planning (MRP)</p><p> Aggregate Planning: Execution of MRP and BOM</p><p> Inventory Management</p><p> Inventory Management II</p><p> e-Commerce</p><p> Enterprise Resource Planning (ERP)</p><p>Customer Relationship managementDistribution management</p><p>Logistics management</p><p> Distribution Management: Multi model Transportation Distribution Management: Formation of efficient distribution networks</p><p>Chain efficiency and integration</p><p> Process Management: Total Quality management and just In Time (JIT)</p><p>Management</p><p> Process Management: Six Sigma</p></li><li><p>8/9/2019 Lec.1 Introduction of SCM</p><p> 37/50</p><p>Shujaat Mubarik..V.U workshop 37</p><p>Process View of a Supply Chain</p><p> Cycle view: processes in a supply chain aredivided into a series ofcycles, eachperformed at the interfaces between two</p><p>successive supply chain stages</p><p> Push/pull view: processes in a supply chainare divided into two categories depending on</p><p>whether they are executed in response to acustomer order (pull) or in anticipation ofacustomer order (push)</p></li><li><p>8/9/2019 Lec.1 Introduction of SCM</p><p> 38/50</p><p>Shujaat Mubarik..V.U workshop 38</p><p>Cycle View of Supply Chains</p><p>Customer Order Cycle</p><p>Replenishment Cycle</p><p>Manufacturing Cycle</p><p>Procurement Cycle</p><p>Customer</p><p>Retailer</p><p>Distributor</p><p>Manufacturer</p><p>Supplier</p></li><li><p>8/9/2019 Lec.1 Introduction of SCM</p><p> 39/50</p><p>Shujaat Mubarik..V.U workshop 39</p><p>Cycle View of a Supply Chain</p><p> Each cycle occurs at the interface between twosuccessive stages</p><p> Customer order cycle (customer-retailer)</p><p> Replenishment cycle (retailer-distributor)</p><p> Manufacturing cycle (distributor-manufacturer)</p><p> Procurement cycle (manufacturer-supplier)</p></li><li><p>8/9/2019 Lec.1 Introduction of SCM</p><p> 40/50</p><p>Shujaat Mubarik..V.U workshop 40</p><p>Cycle View of a Supply Chain (Cont,d)</p><p> Cycle view clearly defines processes involvedand the owners ofeach process. Specifies theroles and responsibilities ofeach member and</p><p>the desired outcome ofeach process.</p></li><li><p>8/9/2019 Lec.1 Introduction of SCM</p><p> 41/50</p><p>Shujaat Mubarik..V.U workshop 41</p><p>Push/Pull View of Supply Chains</p><p>Procurement,Manufacturing andReplenishment cycles</p><p>Customer Order Cycle</p><p>Customer</p><p>Order Arrives</p><p> PUSH PROCESSES PULL PROCESSES </p><p>Demand Forecasting</p></li><li><p>8/9/2019 Lec.1 Introduction of SCM</p><p> 42/50</p><p>Shujaat Mubarik..V.U workshop 42</p><p>Push/Pull View of</p><p>Supply Chain Processes Supply chain processes fall into one of two</p><p>categories depending on the timing of theirexecution relative to customer demand</p><p> Pull: execution is initiated in response to acustomer order (reactive)</p><p> Push: execution is initiated in anticipation of</p><p>customer orders (speculative) Push/pull boundary separates push</p><p>processes from pull processes</p></li><li><p>8/9/2019 Lec.1 Introduction of SCM</p><p> 43/50</p><p>Shujaat Mubarik..V.U workshop 43</p><p>Five Major Developments In SCM</p><p> Cross Functional Teams</p><p> Strategic Alliances</p><p>Supply Web E-procurement</p><p> Strategic Sourcing</p></li><li><p>8/9/2019 Lec.1 Introduction of SCM</p><p> 44/50</p><p>Shujaat Mubarik..V.U workshop 44</p><p>Five Major Developments In SCM</p><p> Cross Functional Teams</p><p> A bilateral approach, leading towards consensusbased solution.</p></li><li><p>8/9/2019 Lec.1 Introduction of SCM</p><p> 45/50</p><p>Shujaat Mubarik..V.U workshop 45</p><p>Five Major Developments In SCM</p><p> Strategic Alliances</p><p> A degree ofrelationship with supplier</p></li><li><p>8/9/2019 Lec.1 Introduction of SCM</p><p> 46/50</p><p>Shujaat Mubarik..V.U workshop 46</p><p>Five Major Developments In SCM</p><p> Supply Web</p><p> An integrated supply chain, flowing material,information and funds across the chain without</p><p>any interruption..</p></li><li><p>8/9/2019 Lec.1 Introduction of SCM</p><p> 47/50</p><p>Shujaat Mubarik..V.U workshop 47</p><p>Five Major Developments In SCM</p><p> E-procurement</p><p> Involvement ofsupplier in procurement processthrough internet and other EDI sources..</p></li><li><p>8/9/2019 Lec.1 Introduction of SCM</p><p> 48/50</p><p>Shujaat Mubarik..V.U workshop 48</p><p>Five Major Developments In SCM</p><p> Strategic Sourcing</p><p> Maintaining ofa comprehensive suppliers basethrough proper sourcing strategies.</p></li><li><p>8/9/2019 Lec.1 Introduction of SCM</p><p> 49/50</p><p>Shujaat Mubarik..V.U workshop 49</p><p>How to maintain the Chain??</p><p> Cost Effectiveness</p><p> Chain Efficiency</p></li><li><p>8/9/2019 Lec.1 Introduction of SCM</p><p> 50/50</p><p>Shujaat Mubarik..V.U workshop 50</p><p>Thanx.In next session we will discuss</p><p>Procurement management.</p></li></ul>