supply chain fundamentals trainign
TRANSCRIPT
Supply Chain Management
Introduction
Supply Chain Management
Management of the flow of goods or services between entities in the chain to realize delivery of end products or
services, satisfying customers at minimum cost.
OR Set of approaches utilized to efficiently integrate suppliers, manufacturers, warehouses and stores, so that merchandise
is produced and distributed in the right quantities, to the right locations at the right time in order to
minimize system wide costs while satisfying service level requirements.
Supply Chain Management
Supply Chain Management1. PURCHASING2. MANUFACTURING3. WAREHOUSING4. INVENTORY MANAGEMENT5. LOGISTICS
Supply Chain Management
Supply Chain ManagementMore Realistic Supply Chain
Flow within a Supply Chain
Cash Flow
Material Flow
Consumer
Retailer
FactorySupplier
Supplier Distr. Center
Retailer
Information Flow
Returned Goods
Why is SCM difficult?Different facilities may have different, conflicting
objectives◦ Suppliers want manufacturers to commit themselves to
purchasing large quantities in stable volumes with flexible delivery dates
◦ Manufacturers want large production runs◦ Warehouses and Distribution Centers want to reduce
inventory ◦ Reduction in inventory levels increase transportation costs
Supply Chain Management
Supply Chain Management
Conclusion Supply chains compete, not companies Most of the opportunities for cost reduction and
value enhancement lie at the interface between supply chain partners
Supply chain integration implies process integration
Purchasing
Supply Chain Management
Purchasing
The acquisition of goods and services needed to support the various activities of an organization, at the best possible cost and from reliable suppliers.
Supply Chain Management
Purchasing Topics• Importance of Purchasing Today• Purchasing Processes• Import Documentation• Negotiation Skills• Make – or – Buy Analysis• Ethics in Buying
Supply Chain Management
Importance of purchasing:• Competition • Material cost• Lead time• Customer Demand• Quality
Supply Chain Management
Negotiation
Supply Chain Management
Negotiation Definition and Comments:
The process whereby two or more parties decide what each will give and take in an Exchange between them.” (Lysons & Farrinton)
“Negotiation is the process by which we search for terms to obtain what we want from somebody who wants something from us.”
(Total Success Training) “Negotiation is discussing or bargaining in order to reach
agreement.” (Owen)
Supply Chain Management
Types of negotiation: Adversarial Negotiation Collaborative Negotiation Adversarial Negotiation (distributive or win-losenegotiation)Collaborative Negotiation (integrative or win-win negotiation)
Supply Chain Management
MakeOR
Buy
Supply Chain Management
Why would we buy something(items, components, services)
when we could provide it ourselves?
Supply Chain Management
Reasons to buy: The unit cost is cheaper, We don't use it enough, We don't have space, We don't understand the technology, We don't have the skill, It's not our core business/expertise, It's expensive to set up the process,
Supply Chain Management
Reasons to provide in-house: The unit cost is cheaper, It's critical to the business, Retain specialist knowledge/skills, We have control over the supply, Quality issues are critical, No suitable supplier, It's part of our core business/expertise
Supply Chain Management
Manufacturing
Supply Chain Management
Manufacturing is all about converting raw material into consumer or industrial products.
A firms manufacturing competency is based on Brand power Volume Variety Lead time
Supply Chain Management
Warehouse A warehouse is a commercial building for storage of
goods.
They are usually large plain buildings in industrial areas of cities and towns.
Today warehouses are not used to store things but rather to receive, breakdown, repackage and distribute components to a manufacturing location or finished products to customers
Supply Chain Management
FUNCTIONS OF A WAREHOUSE
Supply Chain Management
Receiving, Storing, switching, change SKU size, Allows stock rotation (FIFO, LIFO), Buffer stock for customers – retail or commercial, Command and control centre – inventory control, Enables off-the-shelf (JIT) for customers, Provides a more-local 'Market Presence'.
FUNCTIONS OF A WAREHOUSE Consolidation and Break-Bulk Assortment (Cross Docking, Mixing) Postponement (Packaging, Labelling) Stockpiling (Seasonal, Bulk-Buy) Reverse Logistics
Supply Chain Management
Plant 1
Plant 2
Plant 3
Consolidation Warehouse Store B
Store C
Store A
Supply Chain Management
PlantBreak-BulkWarehouse Store B
Store C
Store A
Supply Chain Management
CROSS-DOCK =
No storage(?)Cross-dock (from multiple suppliers):● goods sorted as they arrive,● goods moved across dock and loaded onto trailers,● benefits - optimal vehicle use and low handling
costs,● requires sophisticated planning techniques.
Supply Chain Management
Supply Chain Management
Cross Docking• Transferring goods
• from incoming trucks at receiving docks
• to outgoing trucks at shipping docks
• Avoids placing goods into storage
• Requires suppliers provide effective addressing (bar codes) and packaging that provides for rapid transshipment
In-comin
g Outgoing
Safety and Maintenance Health and safety Incidents Environment
Supply Chain Management
Warehouse management System (WMS)
• Computer software designed to manage the storage and movement of items throughout the warehouse.
Supply Chain Management
Inventory Management
Supply Chain Management
Supply Chain Management
Inventory is one of the most expensive assets of many companies.
It represents as much as 60% of total invested capital.
Inventory Management
Why do we hold Inventory? Improve customer service Reduce certain costs such as
◦ ordering costs◦ stockout costs
Contribute to the efficient and effective operation of the production system
Supply Chain Management
Why we do not hold Inventory? Certain costs increase such as
◦ Carrying costs, Handling cost◦ Labor Cost◦ Warehouse Cost◦ Logistics Cost◦ cost of return on investment◦ reduced-capacity costs (Storage, warehouse)◦ cost of production problems (Excess Inventory)
Supply Chain Management
Two Fundamental Inventory Decisions
How much to order of each material when orders are placed with either outside suppliers or production departments within organizations
When to place the orders
Supply Chain Management
Logistics
Supply Chain Management
Logistics is“The process of planning, implementing and
controlling the efficient, effective flow and storage of goods, services and related information from point of origin to point of consumption for the purpose of customer Satisfaction”
(council of logistics management)
Supply Chain Management
THE PURPOSE OF LOGISTICS SYSTEM Right quantities of the Right goods to the Right places at the Right time in the Right condition at the Right cost.
Supply Chain Management
A Simple Logistics Channel
Supply Chain Management
Raw materials
supply point
Raw materials
supply point
Production facility
MarketCustomers
MarketCustomers
MarketCustomers
Product Flow
Supply Chain ManagementA Multi-Echelon Logistics Channel
Raw materials
supply point
Raw materials
supply point
Production facility
Retailer
Product Flow
Retailer
Retailer
Retailer
Retailer
Retailer
Warehouse
Warehouse
Raw materials
supply point
Two Main Types Inbound logistics: The management of materials
from suppliers and vendors into production processes or storage facilities.
Outbound Logistics: The process related to the movement and storage of products from the end of the production line to the end user.
Supply Chain Management
Steps toward improving Logistics performance
• Make transport a customer service activity instead of a cost
• Reduce your stock pipeline to cut costs and improve service (go easy by low inventory)
• Pick as soon as you can (pick once, pick right and cut the cost time and error)
• Is everything you are doing is really necessary
Supply Chain Management