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Download Supply Chain Management. 10-2 Lecture Outline   Supply Chain Management   Information Technology: A Supply Chain Enabler   Supply Chain Integration

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  • Supply Chain Management

  • Lecture OutlineSupply Chain ManagementInformation Technology: A Supply Chain EnablerSupply Chain IntegrationSuppliers

  • Lecture Outline (cont.)E-ProcurementDistributionSupply Chain Management SoftwareMeasuring Supply Chain PerformanceGlobal Supply Chain

  • Supply ChainAll facilities, functions, activities, associated with flow and transformation of goods and services from raw materials to customer, as well as the associated information flowsAn integrated group of processes to source, make, and deliver products

  • Supply Chain Illustration

  • Supply Chain for Denim Jeans

  • Supply Chain for Denim Jeans (cont.)

  • Supply Chain Processes

  • Supply Chain for Service ProvidersMore difficult than manufacturingDoes not focus on the flow of physical goodsFocuses on human resources and support servicesMore compact and less extended

  • Value vs. Supply ChainValue chainevery step from raw materials to the eventual end userultimate goal is delivery of maximum value to the end userSupply chainactivities that get raw materials and subassemblies into manufacturing operationTerms are used interchangeably

  • Supply Chain Management (SCM)Managing flow of information through supply chain in order to attain the level of synchronization that will make it more responsive to customer needs while lowering costsKeys to effective SCMinformationcommunicationcooperationtrust

  • Supply Chain UncertaintyOne goal in SCM:respond to uncertainty in customer demand without creating costly excess inventoryNegative effects of uncertaintylatenessincomplete ordersInventoryinsurance against supply chain uncertaintyFactors that contribute to uncertaintyinaccurate demand forecastinglong variable lead timeslate deliveriesincomplete shipmentsproduct changes batch ordering price fluctuations and discountsinflated orders

  • Bullwhip EffectOccurs when slight demand variability is magnified as information moves back upstream

  • Information Technology: A Supply Chain EnablerInformation links all aspects of supply chainE-businessreplacement of physical business processes with electronic onesElectronic data interchange (EDI)a computer-to-computer exchange of business documentsBar code and point-of-saledata creates an instantaneous computer record of a saleRadio frequency identification (RFID)technology can send product data from an item to a reader via radio wavesInternetallows companies to communicate with suppliers, customers, shippers and other businesses around the world, instantaneously

  • E-business and Supply ChainCost savings and price reductionsReduction or elimination of the role of intermediariesShortening supply chain response and transaction timesGaining a wider presence and increased visibility for companiesGreater choices and more information for customers

  • E-business and Supply Chain (cont.)Improved service as a result of instant accessibility to servicesCollection and analysis of voluminous amounts of customer data and preferencesCreation of virtual companiesLeveling playing field for small companiesGaining global access to markets, suppliers, and distribution channels

  • Customer sales

    Production

    Distribution

    Customer relationshipPushsell from inventory stockGoal of even and stable production

    Mass approach

    Dealer-ownedE-AutomotiveE-automotive Supply ChainPullbuild-to-order

    Focus on customer demand, respond with supply chain flexibilityFast, reliable, and customized to get cars to specific customer locationShared by dealers and manufacturersAutomotivePastSupply ChainProcesses

  • Managing uncertainty

    Procurement

    Product designLarge car inventory at dealersBatch-oriented; dealers order based on allocationsComplex products dont match customer needsE-AutomotiveE-automotive Supply Chain (cont.)Small inventories with shared information and strategically placed parts inventoriesOrders made in real time based on available-to-promise informationSimplified products based on better information about what customers wantAutomotivePastSupply ChainProcesses

  • Supply Chain IntegrationInformation sharing among supply chain membersReduced bullwhip effectEarly problem detectionFaster responseBuilds trust and confidenceCollaborative planning, forecasting, replenishment, and designReduced bullwhip effectLower Costs (material, logistics, operating, etc.)Higher capacity utilizationImproved customer service levels

  • Supply Chain Integration (cont.)Coordinated workflow, production and operations, procurementProduction efficienciesFast responseImproved serviceQuicker to marketAdopt new business models and technologiesPenetration of new marketsCreation of new productsImproved efficiencyMass customization

  • Collaborative Planning, Forecasting, and ReplenishmentProcess for two or more companies in a supply chain to synchronize their demand forecasts into a single plan to meet customer demandParties electronically exchangepast sales trendspoint-of-sale dataon-hand inventoryscheduled promotionsforecasts

  • SuppliersProcurementpurchase of goods and services from suppliersOn-demand (direct response) deliveryrequires supplier to deliver goods when demanded by customerContinuous replenishmentsupplying orders in a short period of time according to a predetermined scheduleCross-enterprise teams coordinate processes between company and supplier

  • OutsourcingSourcingselection of suppliersOutsourcingpurchase of goods and services from an outside supplierCore competencieswhat a company does bestSingle sourcinga company purchases goods and services from only a few (or one) suppliers

  • DistributionEncompasses all channels, processes, and functions, including warehousing and transportation, that a product passes on its way to final customerOften called logisticsLogistics transportation and distribution of goods and servicesDriving force today is speedParticularly important for Internet dot-coms

  • Amazon.com

  • Distribution Centers (DC)and WarehousingDCs are some of the largest business facilities in the United StatesTrend is for more frequent orders in smaller quantitiesFlow-through facilities and automated material handlingPostponementfinal assembly and product configuration may be done at the DC

  • Warehouse Management SystemsHighly automated system that runs day-to-day operations of a DCControls item putaway, picking, packing, and shippingFeaturestransportation managementorder managementyard managementlabor managementwarehouse optimization

  • A WMS

  • Vendor-Managed InventoryManufacturers generate orders, not distributors or retailersStocking information is accessed using EDIA first step towards supply chain collaborationIncreased speed, reduced errors, and improved service

  • Collaborative Logistics and Distribution OutsourcingCollaborative planning, forecasting, and replenishment create greater economies of scaleInternet-based exchange of data and informationSignificant decrease in inventory levels and more efficient logisticsCompanies focus on core competencies

  • SCM SoftwareEnterprise Resource Planning (ERP)software that integrates components of a company by sharing and organizing information and dataSAP was first ERP softwaremySAP.com web enabled modules that allow collaboration between companies along the supply chain

  • Measuring Supply Chain PerformanceKey performance indicatorsinventory turnovercost of annual sales per inventory unitinventory days of supplytotal value of all items being held in inventoryfill ratefraction of orders filled by a distribution center within a specific time period

  • Key Performance Indicators

  • Key Performance Indicators: ExampleCost of goods sold: $425 millionProduction materials and parts: $4,629,000Work-in-process: $17,465,000Finished goods: $12,322,000Total average aggregate value of inventory (2+3+4): $34,416,000

  • Other Measures of Supply Chain Performance Process Controlused to monitor and control any process in supply chainSupply Chain Operations Reference (SCOR)establish targets to achieve best in class performance

  • SCOR Model ProcessesPlanDevelop a course of action that best meets sourcing, production and delivery requirementsSourceProcure goodsand services tomeet plannedor actualdemandMakeTransformproduct to a finished state to meet planned or actualdemandDeliverProvide products to meet demand, including ordermanagement, transportation and distributionReturnReturnproducts,post-deliverycustomersupport

  • Global Supply ChainTo compete globally requires an effective supply chainInformation technology is an enabler of global tradeNations form trading groupsTariffs or duties

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