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  • Key point – modern supply chains can actually increase costs if they are not managed properly Why is this? Everyone wants better ROA (Return On Assets) so everyone is focusing on core competencies So, non-core competencies are outsourced This leads to more partners Everyone is going global to find cheaper sources of supply – this leads to a distributed supply network More partners leads to more forecast errors because every link in the supply chain generates forecast errors – the bull-whip effect More errors leads to more inventory buffers; the buffer gets bigger as you go back in the chain Inventory buffers add cost to the final product and make your supply chain less competitive Need a story here Furthermore, competitive pressures are forcing everyone to try to improve customer choice and customer service This leads to shorter product lifecycles Side-effect of the bull-whip effect is it forces earlier configuration decisions (no postponement) More customisation and delayed configuration Need a story here

SCM.ppt Presentation Transcript

  • 1. Business Plug-In B8 Supply Chain Management
  • 2. LEARNING OUTCOMES
    • List and describe the four drivers of supply chain management
    • Explain supply chain management strategies focused on efficiency
    • Explain supply chain management strategies focused on effectiveness
    • Summarize the future of supply chain management
  • 3. INTRODUCTION
    • Supply chain – consists of all parties involved, directly or indirectly, in the procurement of a product or raw material
    • Supply chain management (SCM) – involves the management of information flows between and among stages in a supply chain to maximize total supply chain effectiveness and profitability
  • 4. Supply Chain Planning and Supply Chain Execution
          • Payment Flows
    • Supplier Manufacturer Distributor Retailer Consumer
    • Information Flows
    Supply Chain Execution Supply Chain Planning
  • 5. Case: Nike’s Supply Chain www.Nike.com
  • 6. SUPPLY CHAIN DRIVERS
    • The four primary drivers of supply chain management
      • Facilities
      • Inventory
      • Transportation
      • Information
    • Organizations use these four drivers to support either a supply chain strategy focusing on efficiency or a supply chain strategy focusing on effectiveness
  • 7. SUPPLY CHAIN DRIVERS
  • 8. FACILITIES DRIVER
    • Facility – processes or transforms inventory into another product, or it stores the inventory before shipping it to the next facility
    • Three primary facilities components
      • Location
      • Capacity
      • Operational design
  • 9. FACILITIES 1: Location
    • Location efficiency – centralize the location to gain economies of scale, which increases efficiency
    • Location effectiveness – decentralize the locations to be closer to the customers, which increases effectiveness
  • 10. FACILITIES 2: Capacity
    • Capacity efficiency – minimal excess capacity with the ability to produce only what is required
    • Capacity effectiveness – large amounts of excess capacity which can handle wide swings in demand
  • 11. FACILITIES 3: Operational Design
    • Operational design efficiency – product focus design allows the facility to become highly efficient at producing one single product, increasing efficiency
    • Operational design effectiveness – functional focus design allows the facility to perform a specific function on many different types of products, increasing effectiveness
  • 12. FACILITIES DRIVER
  • 13. INVENTORY DRIVER
    • Inventory – offsets discrepancies between supply and demand
    • Inventory management and control software – provides control and visibility to the status of individual items maintained in inventory
    • Two primary inventory components
      • Cycle inventory
      • Safety inventory
  • 14. INVENTORY 1: Cycle Inventory
    • Cycle inventory – the average amount of inventory held to satisfy customer demands between inventory deliveries
      • Cycle inventory efficiency – holding small amounts of inventory and receiving orders weekly or even daily
      • Cycle inventory effectiveness – holding large amounts of inventory and receiving inventory deliveries only once a month
  • 15. INVENTORY 2: Safety Inventory
    • Safety inventory – extra inventory held in the event demand exceeds supply
      • Safety inventory efficiency – holding small amounts of safety inventory
      • Safety inventory effectiveness – holding large amounts of safety inventory
  • 16. INVENTORY DRIVER
  • 17. TRANSPORTATION DRIVER
    • Transportation – moves inventories between the different stages in the supply chain
    • Two primary inventory components
      • Method of transportation
      • Transportation route
  • 18. TRANSPORTATION 1: Method of Transportation
    • Global inventory management system – provides the ability to locate, track, and predict the movement of every component or material anywhere upstream or downstream in the supply chain
      • Method of transportation efficiency
      • Method of transportation effectiveness
  • 19. TRANSPORTATION 2: Transportation Route
    • Transportation planning software – tracks and analyzes the movement of materials and products to ensure the delivery of materials and finished goods at the right time, the right place, and the lowest cost
    • Distribution management software – coordinates the process of transporting materials from a manufacturer to distribution centers to the final customer
      • Transportation route efficiency
      • Transportation route effectiveness
  • 20. TRANSPORTATION DRIVER
  • 21. INFORMATION DRIVER
    • Information – an organization must decide how and what information it wants to share with its supply chain partners
    • Two primary information components
      • Information sharing
      • Push verses pull strategy
  • 22. INFORMATION 1: Information Sharing
    • Information sharing efficiency – freely share lots of information to increase the speed and decrease the costs of supply chain processing
    • Information sharing effectiveness – share only selected information with certain individuals, which will decrease the speed and increase the costs of supply chain processing
  • 23. INFORMATION 2: Push vs. Pull Information Strategy
    • Pull information strategy (efficiency) – supply chain partners are responsible for pulling all relevant information
      • Pull technology – pulls information
    • Push information strategy effectiveness – organization takes on the responsibility to push information out to its supply chain partners
      • Push technology – sends information
  • 24. INFORMATION DRIVER
  • 25. APPLYING A SUPPLY CHAIN DESIGN
    • Wal-Mart’s supply chain management strategy emphasizes efficiency, but also maintains adequate levels of effectiveness
      • Facilities focus – Efficiency
      • Inventory focus – Efficiency
      • Transportation focus – Effectiveness
      • Information focus – Efficiency
  • 26. APPLYING A SUPPLY CHAIN DESIGN
  • 27. Future Trends
    • Fastest growing SCM components
      • Supply chain event management (SCEM)
      • Selling chain management
      • Collaborative engineering
      • Collaborative demand planning
  • 28. Today’s Supply Chain Reality
    • Increased outsourcing
    • Large global supply networks
    • Increased competition
    • Consumer driven
    • Lack of visibility reduces suppliers’ ability to handle variability
    • Suppliers use inventory buffers to compensate increasing costs
    • Errors in manual replenishment (filling) processes can cause stock-outs
    • All of these issues can increase costs, lower customer service and reduce revenue
  • 29. 1. Share data and information to create visibility 2. Interact to match expectations 3. Synchronize resources and processes to perform as one Collaboration is Key for Adaptiveness My Company Customers Suppliers Outsourcing Partner