Supply Chain

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Supply Chain

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What is Global Supply Chain

A Supply chain that transforms a group of ad hoc and often fragmented processes, from a variety of globally based companies, into a cohesive system capable of delivering value to the customer.

A global supply chain has the same goals as a domestic supply chain. But has the added complexity of coordinating the processes of globally based companies, across multiple international borders.

Why would we want to go thru this headache?

What is It?

Supply Chain

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Global Supply Chain

Latin AmericanLatin AmericanSuppliersSuppliers

(D1)

WarehouseWarehouse

Other SuppliersOther Suppliers

(D1)

ManufacturingManufacturing

European SupplierEuropean Supplier(S1)

(SR1,SR3)

C ustom er

C ustom er

C ustom er

C ustom er

(S1, D1)(SR1,DR1,DR3)

(S1, S2, M1, D1)(SR1,SR3,DR3)

(D2)(DR1)

WarehouseWarehouse

WarehouseWarehouse

WarehouseWarehouse

(S1, D1)(SR1,DR1,DR3)

(S1, D1)(SR1,DR1,DR3)

(S1, D1)(SR1,DR1,DR3)

(S1)(SR1,SR3)

(S1)(SR1,SR3)

(S1)(SR1,SR3)

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GSCM Optimization Factors

What questions must be answered to optimize the global supply chain?

What data must be gathered to answer these questions?

Who will support this decision of optimizing the global supply chain?

The information for this discussion is based on questions and factors used in an optimization model developed by Global Supply Chain Associates (GSCA).

More information can be gathered from their website:http://www.gsca.com/whathow.htm

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Questions to Global Operations

What is our Manufacturing Strategy

What is our Supply Base Design/Vendor Consideration

What should we Outsource.

What is our Distribution Strategy

How do we implement our New Product Pipeline Design

How do we management Assets and Inventory

How do we achieve our expected Service Level

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Manufacturing Strategy

How many plants do I need?

Where should each plant be located?

What Products should each make?

What process technologies should each have ?

How much capacity of each process is

needed?

What level of vertical integration in each

plant?

What part of the world should each plant

serve?

Which parts from each vendor?

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Supply Base Design/Vendor Consideration

How do I simultaneously perform supplier selection for all parts in the same commodity group?

How many suppliers is best?

Am I missing opportunities by sourcing one part at a time?

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Outsourcing

What parts of my supply chain should I keep “in-house” and what parts to outsource?

What if a third party has a higher variable cost but a lower fixed cost than in-house production?

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Distribution Strategy

Should we ship direct from the plants or use warehouses?

How many warehouses and where located?

What service areas for each distribution

center?

What modes of transportation to use?

How best to use in-transit merge to fulfill

orders?

Should I outsource logistics? Which functions?

What spare parts and returns network design?

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New Product Pipeline Design

What should the supply chain look like for a new product?

How should I fit the new product into my current supply chain?

Should I single or double source this product?

How much do my fixed costs affect this decision?

What is the cross-over point to open up a second and third source of supply?

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Asset Management/ Inventory

What is the goal?

What performance measures?

How much capacity / capital equipment?

How much inventory?

What production schedule?

Where should extra capacity be placed?

How do pull replenishment and JIT impact capacity?

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Service Level Achievement

What level of service is desired? Why?

Should we use safety stock or supplier upside capacity?

How much safety stock is needed for x% Service Level?

What is the impact of a given amount of safety stock on costs, write-offs and lost sales?

What are the sources of uncertainty?

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Types of Data Needed

Product/Part Data• Name/Description

• List of parts

• Bill of Materials relationships

• Candidate supply points by part

• Customer demand patterns by

product & zone

• Part Weight

Part / Facility Data• Part fixed cost• Part variable cost• Lead time• Inventory Levels

Facility Data• Facility fixed cost• Candidate geographic

locations

Capacity Constraint Data• Part / location unit capacity• Part location constraint• Distribution facility capacity• Manufacturing process capacity• Resource locations constraint• Min/Max number of sites by type

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Is this the Supply Chain you want.

ACE