E commerce supply chain management

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E commerce supply chain management

  1. 1. Supply Chain Management E-Commerce Supply Chain Management By Zubin Poonawalla Zubin Poonawalla 1
  2. 2. Logistics and Supply Chain • Logistics and supply chain management refer to the art of managing the flow of materials and products from source to user. • Thelogisticssystem includesthetotal flow of materials, from theacquisition of raw materialsto delivery of finished productsto theultimateusers Zubin Poonawalla 2
  3. 3. Supply Chain Activities • sourcing and purchasing • conversion (manufacturing) – Capacity planning, technology solution, operations management, production scheduling, and materials planning (MRPII) • Distribution planning and management industry warehouseoperation • Inventory management and inbound and outbound transportation • Linkagewith thecustomer service, sales, promotion, and marketing activities.Zubin Poonawalla 3
  4. 4. Physical Distribution • Portion of alogisticssystem concerned with theoutward movement of productionsfrom theseller to customer or consumer. Zubin Poonawalla 4
  5. 5. Physical Supply • Theportion of alogisticssystem concerned with inward movement of materialsor productsfrom sourcesor thesuppliers. Zubin Poonawalla 5
  6. 6. Manufacturing Planning and Control • Themanagement of materialsthrough a manufacturing facility. • Generally involvesraw-material inventory control, capacity planning, production scheduling, shop-floor control, work-in- processinventory control, and purchasing. Zubin Poonawalla 6
  7. 7. Distribution • Thecombination activitiesand institutions associated with theadvertising, sale, and physical transfer of productsand services. • It isconcerned with broader mattersthan logisticsalone. Zubin Poonawalla 7
  8. 8. Extended supply chain • Theintegrated set of activitiescompleted by thefull supply chain participants. – suppliers, manufacturers, distributors, retailers/customers, and consumers/end users Zubin Poonawalla 8
  9. 9. Integrated Logistics • Integrated logisticsmanagement can improveboth cost and customer serviceperformance. • Thetotal cost concept of logisticsisbased on the interrelationship of supply, manufacturing, and distribution costs. – Ordering, inventory, transportation, production setup, warehousing, customer serviceand other logisticscosts areinterdependent Zubin Poonawalla 9
  10. 10. Example • Seasonal demand (400, 700, 500, 300) • Inventory level (450, 750, 550, 350) – To meet the inventory level, the production should be changed. (450, 700, 500, 300) – Inventory cost $10 per 50 units • Level of production – Production costs $1,000 per 600 units • Decide the method either inventory level model or level of production model. Zubin Poonawalla 10
  11. 11. Seasonal Demmand 400 700 500 300 Inventory Level 450 750 550 350 Seasonal Production 450 700 500 300 Inventory Amount 50 50 50 50 Inventory Costs 10.00$ 10.00$ 10.00$ 10.00$ production cost 1,000.00$ 2,000.00$ 1,000.00$ 1,000.00$ Level Production 600 600 600 600 Level Production Cost 1,000.00$ 1,000.00$ 1,000.00$ 1,000.00$ Inventory Amount 200 100 200 500 Inventory Cost 40.00$ 20.00$ 40.00$ 100.00$ Zubin Poonawalla 11
  12. 12. Example 2 • Regional stocking – Warehouse cost vs. bulk transportation price • Transportation cost Zubin Poonawalla 12
  13. 13. Functional Integration • Businessesmanagetheir activitiesthrough “functional groupings” – sales, marketing, manufacturing, finance, distribution • Thefunctional excellencecould be measured by higher sales, lower transportation costs, lower inventories, or better control of operations. Zubin Poonawalla 13
  14. 14. Two typesof business environments • Stableenvironment – demand certainty, low seasonality, longer product life cycles, and low competitiveintensity – it isbest to organizefor functional excellence. • Dynamic environment – Demand uncertainty, significant seasonality, short product lifecycles, or high competitiveintensity – Companiesthat organizefor functional integration tend to outperform thosethat areorganized for functional excellence. Zubin Poonawalla 14
  15. 15. Strategies for Better Performance • Mangetheprocess, not thefunction. • Align measurement systemsand incentiveswith overall goals. • Utilizeintegrating mechanismssuch asthesales and operationsplanning meeting, cross-functional teams, and team problem- solving approaches. • Work to develop aculturethat encourages teaming and cross-functional collaboration. Zubin Poonawalla 15
  16. 16. Managing thePipeline • Activities in an integrated pipeline • Supply: sourcing, purchasing, inbound transportation, raw materials, and parts inventory. • Operations: production planning, production scheduling, work-in-process inventory. • Distribution: forecasting, customer service, finished-goodsinventory, warehousing, outbound transportation. Zubin Poonawalla 16
  17. 17. Variables for Integrated Pipeline • Cost – The full cost of processing and moving materials from source to point of use. • Service-Including issues such as delivery reliability, in-stock performance, and delivery lead time. • Velocity-Thetimeit takesto moveproducts through thelogisticspipeline. Zubin Poonawalla 17
  18. 18. Pipeline Analysis • The effect of long production runs and manufacturing lead times on system inventory. • The impact of marketing promotions on operating costs and on effective net margins. • The cost of or savings available from transportation consolidations. • Thecost of multiplehandling through amulti- echelon warehousenetwork. Zubin Poonawalla 18
  19. 19. Fluid Distribution • Inventory visibility – point-of-saleinformation to monitor usagertesat the retail level • Manageflow, not replenishment • Flexibledistribution – Cross-dock operationsand plant-direct shipments – Delivery lead time, amount of freight • JIT (Just in Time) manufacturing • Advanced information systems Zubin Poonawalla 19
  20. 20. Seven Principlesof Supply Chain Management 1. Begin with the customer by understanding the customer’s values and requirements. 2. Mange logistics assets across the supply chain, not just within the enterprise. 3. Organize customer management so that it provides one “face’ to the customer for information and customer service. 4. Integrate sales and operations planning as the basis for a more responsive supply chain. Zubin Poonawalla 20
  21. 21. Seven Principlesof Supply Chain Management 5. Leverage manufacturing and sourcing for flexible and efficient operations. 6. Focus on strategic alliances and relationship management across channel partners. 7. Develop customer-driven performance measures. Zubin Poonawalla 21
  22. 22. What IsLogisticsStrategy? • Logisticsstrategy involvesthe determination of what performancecriteria thelogisticssystem must maintain-more specifically, theservicelevelsand cost objectivesthelogisticssystem must meet. Zubin Poonawalla 22
  23. 23. Logisticsstrategy development and planning • Critical inputs • Visioning session • Logisticsstrategic analysis • Logisticsplanning – summarized, outlining objectives, programs, milestones, and key measuresof performance Zubin Poonawalla 23
  24. 24. TheLogisticsStrategy Pyramid • Strategic – What arethebasic and distinctiveserviceneeds of your customers? – What must logisticsdo to meet thoseneeds? – Can weuseour logisticscapabilitiesto provide uniqueservicesto our customers? Zubin Poonawalla 24
  25. 25. TheLogisticsStrategy Pyramid • Structural – Should weservethemarket directly or should weuse distributorsor other intermediariesto reach our customers? – What should our logisticsnetwork look like? – What productsshould besourced from which manufacturing locations? – How many warehousesshould wehave? – Whereshould they belocated, and what isthemission of each facility? Zubin Poonawalla 25
  26. 26. TheLogisticsStrategy Pyramid • Functional – Achieving functional excellencerequiresthat they design optimal operating practicesfor transportation management, warehouse operations, and materialsmanagement Zubin Poonawalla 26

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