rscm_unit_1.ppt

7/28/2019 rscm_unit_1.ppt

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Module 1:Supply Chain Management

The first supply chain was the barter system

Traces of outsourcing was seen when Charles S. Rollsbecame selling agent for cars made by F. Henry Royce

The essence of SCM was understood with the first phase

characterized as an inventory push era that focusedprimarily on physical distribution of finished goods

Ancient Times

1904

1960-1975

1975-1990

1980 Emergence of SCM

1985- WalMart introduced the concept of Cross Docking

Internet revolutionized the distribution system ofthe business1996-

Concept of e-commerce changed the definition ofbusiness

1998-

Companies began migrating from an inventory push toa customer pull channel


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It is a network of supplier, manufacturing, assembly, distribution and logistic

facilities that performs the function of of procurement of materials,

transformation of these materials in to intermediate and finished products

and the distributions of these products to customer

MEANING OF SUPPLY CHAIN


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It is a system approach to managing the entire flow of information,

materials and services from raw materials supplier through factories and

warehouses to the end customer

MEANING OF SUPPLY CHAIN MANAGEMENT


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OBJECTIVE OF SUPPLY CHAIN MANAGEMENT

To maximise the overall value generated.

Value generated is the difference between whatfinal product is worth to the customer and

the effort the supply chain expands in filling

the customer request.


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MANUFACTURER DISTRIBUTOR

SUPPLIER

Information flow Information flow

Material flow Material flow

SUPPLIER

Flexible System


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Module 1:Supply Chain Management

Customer could be an internalcustomer or an external customer

Next, we see the processes performed in asupply chain as a CYCLE view


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CycleIV

Cycle II

Customer

Distributor

ManufacturerSupplier

Retailer


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CUSTOMER ORDER CYCLEIt occurs at the customer/retailer

CUSTOMERARRIVAL

CUSTOMERORDER ENTRY

CUSTOMERORDER

FULFILMENT

CUSTOMERORDER

RECEIVING


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REPLENISHMENT CYCLEIt occurs at the retailer & distributor

RETAILORDER

TRIGGER

RETAILORDER

RECEIVING

RETAILORDERENTRY

RETAILORDER

FULFILLMENT


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ORDERARRIVAL

RECEIVING

MANUFACTUR-

-INGAND

SHIPING

PRODUCTIONSCHEDULING

MANUFACTURING CYCLEIt occurs at the distributor and manufacturer


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ORDERBASED

SCHEDULE

SUPPLIERPRODUCTIONSCHEDULING

RECEIVINGAT

MANUFACTURER

COMPONENTMANUFACTUR-ING/SHIPPING

PROCUREMENT CYCLEIt occurs at the manufacturer and supplier


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Push View of SCM

Execution is initiated in response to a customer order

Demand is known with certainty

It is also reactive process because they react tocustomer demand

Pull View of SCM

Execution in anticipation of customer order

Demand is not known and must be forecast

It may also be referred to as speculative process


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CUSTOMER ORDERAND

MANUFACTURINGCYCLE

PROCUREMENT CYCLE

CUSTOMER

MANUFACTURER

SUPPLIER

CUSTOMERORDER ARRIVES

PUSHPROCESS

PUSHPROCESS

DELL SUPPLY CHAIN


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FACES OF SUPPLY CHAIN MANAGEMENT

BACK END

It comprises the physical building block

It involves production, assembly and physical movement

Manufa-cturing

Distrib--ution

Procur--ement

Logist--ics

Global


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Where should be source raw materials, components and sub-

assembles from.

Can intermediate warehouses can be estimated.

Should be inventories at the plants be vendor managed.

What are the cost and services tradeoffs in alternative procurement strategies.

PROCUREMENT DECISION

aSupplier Decision:

b. Direct delivery from Suppliers:

c. Vendor managed Inventories:

d. Optimal Procurement Policy:


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How many manufacturing plants should be set up and where

should be they located.

What products should be produced at each manufacturing location

How much capacity is needed in each plant.

How do we allocate plant capacity to products

MANUFACTURING DECISION

a. Plant location:

b. Product Line selection:

c. Capacity planning:

d. Capacity Allocation:


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What raw materials/WIP/finished goods inventory should be stocked

in each center.

What are the cost and service tradeoffs in alternative manufacturing

strategies.

How do we introduce work in the plant

How do we schedule the production.

How do we optimize resource utilization when the suppliers are not enoughto fulfil the requirements

f. Optimal manufacturing strategy:

g Input Control:

h. Production Scheduling:

i Constrained supply:

e. Inventory Decision:


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What type of distributions centers are required.

Where should distribution facilities be located.

Which customers should a facility service.

What product should be handled by each facility? What product and in

how many quantities should be stocked at each facility? What should be

the replenishment strategy

DISTRIBUTION DECISIONS

a. Configuration of distribution facilities:

b. Location:

c. Customer Allocation:

d. Facility configuration:


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What are the cost and service tradeoffs of alternatives

distribution strategies

e. Optimal Distribution Strategy:


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a.What transport modes and lanes should be used to move

products throughout the network.

Which ports should be used to bring product into and out of a

country.

Which products should move directly from manufacturing centers to

customer.

What are the cost and service tradeoffs of alternative transportation strategy

LOGISTIC DECISION

d. Optimal Transportation Strategy:

c. Direct Delivery:

b. Selection of ports:

a.Logistics mode selection:


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country.

GLOBAL DECISION

d. Real time monitoring & Control

c. Global Optimization of operations

b. Planning under uncertainty

a.Product & Process Selection


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SUPPLY CHAIN DECISION

Strategic DecisionOperational Decision

Location Inventory Transportation Production


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1. Strategic Decision

It is made over a longer time horizon

It is closely linked to the corporate strategy and guideSupply chain policies from a design perspective.

2. Operational Decision

It is short term

It focus on activities over a day to day basis.

SUPPLY CHAIN DECISIONS


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1.Location Decision

Where production facilities, stocking pointsand sourcing points are located

2. Production Decision

What products to create at which plant, which suppliers willservice those plants, which plants will supply

specific distribution centres and how goods will get to thefinal customer

3. Inventory Decision

It maintained because to buffer against any uncertainty

That might exit in the supply chain

4. Transportation Decision

What modes have been used for delivering the odds to

the customers.


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DECISION PHASES IN SUPPLY CHAIN MGMT

1.Supply Chain Strategy:

How to structure the supply chain

What the chain configuration will be.

What process each stage will perform.

Strategic supply chain decisions are made

2. Supply Chain Planning:

Operating policies are define.

Constraints within each planning must be done.

Planning must be I done for the coming year ofdemand in different markets.

it establishes parameters.

Companies must include uncertainty in demand,exchange rates and competition.


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3. Supply Chain Operation:

Time horizon here is weekly.Companies makes decision regarding individuals

customers orders.

Less uncertainty about demand information.


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ELEMENTS OF SCM

1. Planning System

3. Performance Measurement System

It focus on having the right product at right time and at the right place.

It facilitate order taking and information gathering

It facilitate the physical movement of good and services

It focus on operational efficiency and application based system.

2. Planning System

It make more informed decisions n respond to changing mkt condition

The real focal point here are accounting n financial +mgmt system.


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KEY FUNCTIONS IN SCM

1. Customer asset management function:Managing information about demand to enable a better understanding

of the markets and customer needs.

2. Integrated logistics:anaging the flow of physical goods from supplier. It include production

planning, procurement and inventory management

3. Agile manufacturing:Managing the manufacturing process to ensure low production cost.

4. Financial and Accounting management:Managing the financial flows with the supplier and customer through

financial intermediaries.


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STRATEGIC

STRUCTURAL

FUNCTIONAL

IMPLEMENTATION

InformationSystem

Policies And

Procedures

Facilities

AndEquipments

OrgnChangemMgmt

ChannelDesign

NetworkStrategy

MaterialTransport-ation

Warehou-se design

Customer


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SCM FRAMEWORK

1. Strategic

What are the basic and distinctive service need of the customers.

What can SCM do to meet these needs

Be used to provide unique services to the customer.

2. FUNCTIONALWhat should the SCM network look like

What product should be sourced from which manufacturing location.

How many warehouses should the company have and where should

be located.What is the mission of each facility.


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3. Functional

Operational details are decided.

4. IMPLEMENTATION

To give the means or authority to do something


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FACTORS AFFECTING SUPPLY CHAIN MANAGEMENT

factors

Geographical CulturalGovt

LegislationTime


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SUPPLY CHAIN COMPONENTS

1. Procurement

Procurement cost is influenced by the:

The way procurement decisions are made.Procedures adopted in the procurement process.

Relationship with suppliers.Firms credibility.

Market intelligence

1a. Material Requirement Planning

It will cover inventory requirements in the entiresupply chain, including both firms and its suppliers


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2. Processing

Focused on to manufacture standard products.Curtailing the huge inventory cost.

3.Warehousing Transportation

Management of demand i.e. to make available the rightproduct, at the right place, at the right time andat the least cost.

3a. Demand Management

Anticipation of the customer requirements of customerproducts and fulfils that requirements against

defined customer service needs.


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FLOWS IN SUPPLY CHAIN MANAGEMENT

1. Value Flow

Moving largely from the vendor to customer.Flows as good flows and service flows.

1a. Good Flows:Raw materials. Work in Process, Finished Goods.

1b. Service Flows:Intangible cannot be stored.


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2. Information Flow

Flows from vendor to the customer and from thecustomer to the vendor.

a. Backward Flow.b. Forward Flow

3. Cash Flow

Money paid for goods and services received.


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Raw

MaterialsInventory Processing

FinishedGoods

Fieldstock

CustomerOrder

Procurement

Manufacturing

Distribution

Cost Addition

Value

addition

MAPPING SUPPLY CHAIN


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MAPPING SUPPLY CHAIN

Value Added Activities

Conversion of raw materials in to final products

Non value added activities

Adding to the cost and the order performance cycle time


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FUNDAMENTALS OF SUPPLY CHAIN MANAGEMENT

1.Single Entity

Reducing administrative delays and improvingempathy across the supply chain.

2. Inventory perspective

According to traditional view: inventories have bee viewedas a buffer to reduce co-ordination requirements

across activities.

According to current concept: inventories is a buffer to be

used as a last resort after ensuring proper informationSharing and co-ordination.


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3.Strategic decision Making:

It facilitates strategic implication.

It facilitates smoother and more reliabletransport logistic in the long run

4.System Approach

It is a single integrated system.

5. Doing what one can do best:

It is important to focus on doing what one can dobest.


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THRUST AREAS OF SUPPLY CHAIN MANGEMENT

1. Improving Process quality

2.Minimising variety

3. Managing demand

4. Planning for multiple Supply Chains

5. Minimizing the number of stages.6. Reducing lead time

7. Improving flexibility

8. Kitting of suppliers.

9. Focusing on A category.

10. Competing on service.

11. Moving from functions to process.

12. Taking an initiative Industry level


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A push-based SCM takes longer to react to thechanging market place

In a push-based supply chain, production decisions

are usually based on long-term forecasts

In push-based strategies, SCM experienceincreased transportation costs, high inventorylevels and high manufacturing costs

In a pull-based supply chain, manufacturing is demand drivenso that it is coordinated with actual external customerdemand rather than a forecast

Push View of SCM

Pull View of SCM

Lead-time reduction occurs as the variabilitiesare better monitored in pull-based SCM

Pull-based systems are often difficult to implement when lead timesare so long that it is impractical to react to demand information

rscm_unit_1.ppt

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