Supply Chain Management - Overview for Business Analysts
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Supply Chain Management - Overview for Business Analysts Presentation Transcript

  • 1. © Copyright 2012 Enfocus Solutions Inc. All Rights Reserved. July 2012Enfocus Solutions Inc. www.EnfocusSolutions.com 1
  • 2. What is a Supply Chain? • A supply chain consists of all parties involved, directly or indirectly, in fulfilling a customer request. The supply chain not only includes the manufacturer and suppliers, but also transporters, warehouses, retailers, and customers themselves. • Within each organization, such as manufacturers, the supply chain includes all functions involved in receiving and filling a customer request. These functions include, but are not limited to, new product development, marketing, operations, distribution, finance, and customer service. • A typical supply chain may involve a variety of stages. These supply chain stages include:  Customers  Retailers  Wholesalers/Distributors  Manufacturers  Component/Raw material suppliersEnfocus Solutions Inc. www.EnfocusSolutions.com 2
  • 3. What is a Supply Chain (continued)? A supply chain must have at least a set of three or more companies linked by one or more of the upstream or downstream flows of products, funds, or information.Enfocus Solutions Inc. www.EnfocusSolutions.com 3
  • 4. What is Supply Chain Management (SCM)? • Supply chain management is the active management of supply chain activities to maximize customer value and achieve a sustainable competitive advantage. It represents a conscious effort by the supply chain organizations to develop and run supply chains in the most efficient ways possible. • Supply chain activities cover everything from product development, sourcing, production, and logistics, as well as the information systems needed to coordinate these activities. • The organizations that make up the supply chain are “linked” together through physical flows and information flows. Physical flows involve the transformation, movement, and storage of goods and materials. They are the most visible piece of the supply chain. Information flows are just as important. Information flows allow the various supply chain partners to coordinate their long-term plans and to control the day-to- day flow of goods and material up and down the supply chain.Enfocus Solutions Inc. www.EnfocusSolutions.com 4
  • 5. Supply Chain Concept A supply change is a complex network of relationships that organizations maintain with trading partners to source, manufacture and deliver their products, including materials, information, and financial flows, as depicted below. Information Flows Product Product Product ProductSupplier Manufacturing Distribution Retailer Consumer Flow Flow Flow Flow Payment Flows Enfocus Solutions Inc. www.EnfocusSolutions.com 5
  • 6. SCM is not Traditional Materials Management • Supply chain management is significantly different from traditional materials management. The difference lies in the coordination and commitment of all the firms in the supply chain required to implement the specific strategic objectives of each firm. • Supply chain management requires partners to provide support for each to reach their objectives. Firms voluntarily agree to integrate human, financial, or technical resources in order to create a business model. All firms have something to gain from collaborating to create an efficient supply chain.Enfocus Solutions Inc. www.EnfocusSolutions.com 6
  • 7. What are the benefits of Supply Chain Management? • Lower inventories • Higher productivity • Greater agility • Shorter lead times • Higher profits • Greater customer loyaltyEnfocus Solutions Inc. www.EnfocusSolutions.com 7
  • 8. Key Issues • The goal of SCM is to match supply to demand as effectively and efficiently as possible • Key issues are:  Determining the appropriate levels of outsourcing  Managing procurement  Managing suppliers  Managing customer relationshipsEnfocus Solutions Inc. www.EnfocusSolutions.com 8
  • 9. What are the Key Challenges for SCM? • Managing supply chain complexity - Complexity within the supply chain stems primarily from handling a multiplicity of partners. And while these various partners can be integrated within the supply chain to produce a cohesive chain, a large volume of communications has the potential to compromise the integrity of supply chain processes. • Achieving visibility into the supply chain - As businesses strive to establish a fluid network, several factors must be considered for organizations to gain visibility into their supply chains. Data management is required to ensure businesses can establish the mobility of relevant data—and rapidly identify impending issues and manage by exception. • Managing collaboration - Within a supply chain, issues are rarely resolved by a single party, but are rather resolved through collaboration among multiple partners. The way a company connects with its partners to promote this collaboration and the benefits drawn from workflow tools are conducive to identifying the choke points within the supply chain.Enfocus Solutions Inc. www.EnfocusSolutions.com 9
  • 10. Types of Supply Chains • Integrated Make-to-Stock  smoothing demand in mass production industries  linked to postponement in distribution channel • Continuous Replenishment  customer-demand pull system across firms  ECR – Efficient Consumer Response  QR – Quick Response • Build-to-Order  efficient SCM allows return to BTO model  inventory substituted with information (Dell)Enfocus Solutions Inc. www.EnfocusSolutions.com 10
  • 11. Supply Chain Cycle Illustration One way to view a supply chain is as a series of cycles. The cycles are triggered by a customer order, replenishment orders from the distributors, or by the forecast of customer demand and current product availability in the warehouse.Enfocus Solutions Inc. www.EnfocusSolutions.com 11
  • 12. Order Penetration and Postponement • Order Penetration Point: The point (in time) at which a product becomes earmarked for a particular customer. Downstream from this point, the system is driven by customer orders; upstream processes are driven by forecasts and plans. • Postponement: A product design strategy that shifts product differentiation closer to the consumer by postponing identity changes, such as assembly or packaging, to the last possible supply chain location.Enfocus Solutions Inc. www.EnfocusSolutions.com 12
  • 13. SCM ExampleEnfocus Solutions Inc. www.EnfocusSolutions.com 13
  • 14. Example – who is this?Enfocus Solutions Inc. www.EnfocusSolutions.com 14
  • 15. Comparison of Lean, Agile, and Leagile Supply Chains(Source: Agarwal, A. et.al. 2006)Enfocus Solutions Inc. www.EnfocusSolutions.com 15
  • 16. Getting Started 1. Understand industry specifics 2. Start with customer expectations 3. Reduce cycle time to gain competitive advantage 4. Consider starting with internal supply chain 5. Focus on problem areasEnfocus Solutions Inc. www.EnfocusSolutions.com 16
  • 17. #1 Understand Industry specifics • Type of product • Complexity of production process • Type(s) of customers • Complexity of supply chain (e.g., lead times) • Complexity of demand function (e.g., seasonality) These attributes determine the strategies that are suitable.Enfocus Solutions Inc. www.EnfocusSolutions.com 17
  • 18. #2 Start with Customer Expectations • Product availability • Length of order cycle time • Consistency of order cycle time • Invoice/billing procedure accuracy • Information requests responsiveness • Flexibility in resolving problems • Distance to suppliers warehouse • Special customer request • Frequency of damaged goods • Quality of order department • On time delivery A combination of these will add to customer satisfaction.Enfocus Solutions Inc. www.EnfocusSolutions.com 18
  • 19. #3 Reduce Cycle Time to Gain Competitive Advantage • Reducing supply chain cycle time means decreasing the days of inventory held and reducing the cash conversion cycle. The savings mean that capital is available for other uses. • By focusing on key processes, the supply chain can significantly improve its performance and become a source of competitive advantage for the organization. • Opportunities for cycle-time reduction exist on both an intra- organizational and inter-organizational basis.Enfocus Solutions Inc. www.EnfocusSolutions.com 19
  • 20. #4 Internal Supply Chains • The internal supply chain is that portion of a given supply chain that occurs within an individual organization. • Internal supply chains can be quite complex. Given the multidivisional, international organizational structures found in many business enterprises, it is not uncommon for the internal part of a supply chain to have multiple “links” that span the globe. • Developing an understanding of the organizations internal supply chain is often an appropriate starting point for firms considering an SCM initiative.Enfocus Solutions Inc. www.EnfocusSolutions.com 20
  • 21. #5 Typical SCM Areas that Require Attention • Lack of knowledge of the end-to-end demand function – high levels of uncertainty • Erratic variations in demand (Bull whip effect) • Inconsistent / out-of-date data about SC (poor decision making) • Fragmentation of processes and operations • Lack of process integration with partners • Need for fundamental structural changes • Need for integrated information systemsEnfocus Solutions Inc. www.EnfocusSolutions.com 21
  • 22. Key Components for SCM Automation • Demand management and planning • Warehouse management • Order management • Transportation management • Collaboration and integration • Supplier relationship management • Supply chain analyticsEnfocus Solutions Inc. www.EnfocusSolutions.com 22
  • 23. Demand Management and Planning • S&OP – Sales and Operations Planning • Life-Cycle Planning • Vendor Managed Inventory • Consensus Planning Replenishment • Collaborative Planning • DRP – Distributed Requirements Planning • Event Planning • APS – Advanced Planning & Scheduling • Metrics and Reporting • DDM – Demand Driven Manufacturing • Demand Management • Mathematical Forecasting Architecture • Promotion Planning • Pricing and Profit Optimization • Forecasting • Merchandise PlanningEnfocus Solutions Inc. www.EnfocusSolutions.com 23
  • 24. Warehouse Management• Product Setup • Warehouse Optimization• Warehouse Configuration • Kitting and Assembly• Bin Location Setup • Cross-Docking• Inventory Control • Available to Promise• License Plate Tracking • Vendor Managed Inventory• Receiving • Reverse Logistics• Quality Control • Multi-Term Aliases• Put Away• Picking• Packing• Shipping• RFID• Reports, Documents, and QueriesEnfocus Solutions Inc. www.EnfocusSolutions.com 24
  • 25. Order Management • Order Promising • Inventory Management and Visibility • Sourcing • Execution Visibility • Inbound Assembly Coordination • Shipping and Outbound ManagementEnfocus Solutions Inc. www.EnfocusSolutions.com 25
  • 26. Transportation Management • System Definition • Interfaces and Integration • Planning • Execution • Shipment Tracking • Transportation Network Optimization • AnalysisEnfocus Solutions Inc. www.EnfocusSolutions.com 26
  • 27. Collaboration and Integration • Portals • Commerce Platform (EDI)  Purchase Order Processing  Sales Order Processing  Payment Processing  Outbound Shipments  Inbound Shipments  Accounting • Workflow • Content Management  Product  Compliance  Logistics • Integrative TechnologiesEnfocus Solutions Inc. www.EnfocusSolutions.com 27
  • 28. Supplier Relationship Management • Design and Setup • Returns • Sourcing • Manufacturing • Supplier Management • Settlement • Supplier Scorecard • Project Management • RFI/RFP and Bid management • Bill of Materials Explosion • Contract Management • Activity Based Costing • Risk, Liability, and Flexibility • Supplier and Buyer Portal • Catalog Management • Analytics • MRP Driven Procurement • Requisition Driven Procurement • Procurement Reporting, and Queries • Prices, Discounts, and Cost ManagementEnfocus Solutions Inc. www.EnfocusSolutions.com 28
  • 29. Supply Chain Analytics• Supply chain network optimization • Procurement collaboration• Transportation network optimization • Order management and fulfillment• Inventory management optimization• Supply chain event management• Production and supply planning• Sales and operations planning• Supply pipeline planning• Operational planning• Process manufacturing• Repetitive manufacturing• Discrete manufacturing• Engineer to OrderEnfocus Solutions Inc. www.EnfocusSolutions.com 29