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A brief overview of Supply Chain Management including explanation of different types of Stock. This documents contains the brief explanation of Demand and Supply

A brief overview of Supply Chain Management including explanation of different types of Stock. This documents contains the brief explanation of Demand and Supply

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Supply chain Supply chain Presentation Transcript

  • Supply Chain Management Introduction to SUPPLY CHAIN MANAGEMENT 13.12.2013 EUROMPM- Information Supply Chain 1
  • Supply Chain Management Agenda Introduction to Supply Chain Management Planning- Supply Chain Management Production- Supply Chain Management 13.12.2013 EUROMPM- Information Supply Chain 2
  • Supply Chain Management : General Introduction to Supply Chain Management Introduction Supply Chain Management is the integration of key business processes from end users through original suppliers that provides products, services and information that add value to customers and other stakeholders. - Global Supply Chain Forum (GSCF) Two forces can be drawn out that leads in a Supply chain process of goods: 1. Product Supply 2. Customer Demand Supply Chain Management flows can be divided into three main flows: 1. The Product Flow 2. The Information Flow 3. The Finances Flow 13.12.2013 EUROMPM- Information Supply Chain 3
  • Supply Chain Management : General Introduction to Supply Chain Management Goods Information Work In Progress Raw Materials Supplier’s Supplier supplies the Product Finished Goods Reverse Funds Consumer’s Demand- consumed by the End Consumers Fig 1. showing the supply chain for breads 13.12.2013 EUROMPM- Information Supply Chain 4
  • Supply Chain Management : General Introduction to Supply Chain Management History  1750 - 1800  Industrial Revolution  Era of Mechanical Inventions  Product and process complexity increase  1800’s Increased factory complexity  Birth of Industrial Engineering movement   1900’s Assembly line, Mass production  Henry Gantt: Gantt charts, Scheduling  Human factors  Statistical Quality Control   1989 - 1993  Business Process Reengineering 13.12.2013 EUROMPM- Information Supply Chain 5
  • Supply Chain Management : General Introduction to Supply Chain Management Functional View of Supply Chain Management Fig 2. The Supply Chain Operations Reference Model (SCOR Model) • • • The ultimate objective of the SCOR Model is to build a superior supply chain that is integrated with the overall organizational strategy. It provides a framework that links business processes, best practices, metrics and technology into a unified structure. It is hierarchical in nature, interactive, and interlinked. The SCOR process reference model contains:  Performance Metrics  Processes  Practices  People 13.12.2013 • The five core supply chain performance attributes are:  Reliability  Responsiveness  Agility  Costs  Assets EUROMPM- Information Supply Chain Source: https://supply-chain.org/f/SCOR-Overview-Web.pdf 6
  • Supply Chain Management : General Introduction to Supply Chain Management Supply Chain Players  Simple Supply Chain  Supplier  Company/Factory  Customer  Extended Supply Chain  Supplier’s supplier  Supplier  Company/factory  Customer  Customer’s Customer  Service Provider 13.12.2013 Supplier Company Customer Fig 3. Simple Supply Chain Supplier’s supplier Supplier Company Customer Customer’s customer Service Provider Fig 4. Extended Supply Chain EUROMPM- Information Supply Chain 7
  • Supply Chain Management : General Introduction to Supply Chain Management Supply Chain Dynamics • The main task of the supplier in the supply chain is to make balance between the customer’s demand and the product supply. • In supply chain, the players are always responsible to maintain the level of inventory against the stock uncertainties providing a higher level of service. The sources of uncertainties are:      13.12.2013 Stock Wrong forecasts Late deliveries Poor quality Machine breakdowns Canceled orders and so on. Inventory Fig 5. The Inventory Challenge EUROMPM- Information Supply Chain 8
  • Supply Chain Management : General Introduction to Supply Chain Management Logistics Logistics Management is that part of Supply Chain Management that plans, implements, and controls the efficient, effective forward and reverse flow and storage of goods, services and related information between the point of origin and the point of consumption in order to meet customers' requirements. -Council of Supply Chain Management http://www.cscmp.org 13.12.2013 EUROMPM- Information Supply Chain 9
  • Supply Chain Management : Planning- Supply Chain Management Bullwhip Effect 13.12.2013 EUROMPM- Information Supply Chain 10
  • Supply Chain Management : Planning- Supply Chain Management Result and Solution for Bullwhip Effect Solution Results       Excess Inventories Problems with quality Increased raw material costs Overtime expenses Increased shipping costs Lost customer service 13.12.2013 Improve communication along supply chain Improve sources of forecast data Work with firms upstream and downstream in the supply chain EUROMPM- Information Supply Chain 11
  • Supply Chain Management : Planning- Supply Chain Management Inventory Inventory can be defined as the total amount of goods and/or materials that any business firms holds in a stock. There are 3 main forms of Inventory:  Raw materials  Work in Progress  Finished goods 13.12.2013 Protect against Uncertainty Balancing Supply and demand Cost Reduction Reasons for Inventory Anticipation stock EUROMPM- Information Supply Chain Protect against quality defects Stabilize manufacturing 12
  • Supply Chain Management : Planning- Supply Chain Management Types of Inventory • • • • • • • Cycle or replenishment Stock Safety Stock In-transit Stock Seasonal Stock Promotional Stock Speculative Stock Dead or obsolete Stock 13.12.2013 EUROMPM- Information Supply Chain 13
  • Supply Chain Management : Planning- Supply Chain Management Cycle Stock & Safety Stock Cycle stock is the average amount of inventory, a business needs to meet customer demand between the times it orders more inventory from the supplier. Delivery Sales Cycle Stock 7 1 6 Tuesday - 1 5 Wednesday - 1 4 Thursday - 1 3 Friday - 1 2 Saturday - 1 1 Sunday - 1 0 Total Safety stock or buffer stock is the amount of inventory or stock that is kept on hand in order to avoid uncertainty. Monday 7 7 - Table. Showing cycle Stock 13.12.2013 EUROMPM- Information Supply Chain 14
  • Supply Chain Management : Planning- Supply Chain Management Reducing Inventory The cycle stock can be reduce by ordering more often. In safety stock case,     Reduce lead-time Reduce supplier uncertainty Reduce forecast error Reduce service level 13.12.2013 EUROMPM- Information Supply Chain 15
  • Supply Chain Management : Planning- Supply Chain Management Demand Characteristics Level High Low Frequency Patterns Product life cycle positioning Product classification Fast Stable Launch Slow 13.12.2013 Trend Emerging A 20% represent 80% Established Seasonal Decline Withdrawal B C 30% represent 15% 50% represent 5% EUROMPM- Information Supply Chain 16
  • Supply Chain Management : Planning- Supply Chain Management Frequency of Demand Different Patterns of Demand 13.12.2013 EUROMPM- Information Supply Chain 17
  • Supply Chain Management : Planning- Supply Chain Management Product Life Cycle 13.12.2013 Product Segmentation Using Pareto’s Law EUROMPM- Information Supply Chain 18
  • Supply Chain Management : Planning- Supply Chain Management Forecasting Methods 1. QUALITATIVE 2. QUANTITATIVE/ STATISTICAL Time Series Method (assumption of continuity) Human reasoning and judgment The components Purchase, Time & Season are taken from the past and projected into the future using the assumption of continuity. 13.12.2013 EUROMPM- Information Supply Chain 19
  • Supply Chain Management : Planning- Supply Chain Management Models of Order Cycle Management 1. Continuous review (fixed order quantity) Inventory is reviewed daily and a fixed quantity is ordered whenever the stock drops below a certain point 2. Periodic review (fixed order cycle) Inventory is reviewed at regular intervals and every time a sufficient quantity is ordered to raise the inventory level up to a certain level. 13.12.2013 EUROMPM- Information Supply Chain 20
  • Supply Chain Management : Planning- Supply Chain Management The Economic Order Quantity (EOQ) How much should I order at a time? The magical formula: C = ordering cost per order R = annual demand in units P = purchase cost of one unit F = annual holding cost as a fraction of unit cost PF = holding cost per unit per year Method for calculating order quantities at individual SKU (Stock keeping unit) level (Norek 1998) 13.12.2013 EUROMPM- Information Supply Chain 21
  • Supply Chain Management : Planning- Supply Chain Management Sales and Operations Planning A formal process, consisting of series of meetings, where data from various areas of business is discussed and decisions are made. Normal Time Frame Takes a monthly look at product groups at least 6- 12 months across the planning horizon. Types of Data Considered  Current plan for each product group  Manufacturing plans and capacity  Current finished goods inventory  Distribution capacity  Sales forecasts  Shipping capacity  Purchase Orders received  Performance measures  Materials available  Customer Service 13.12.2013 EUROMPM- Information Supply Chain 22
  • Supply Chain Management : Planning- Supply Chain Management Sales and Operations Planning Cycle 13.12.2013 EUROMPM- Information Supply Chain 23
  • Supply Chain Management : Planning- Supply Chain Management Benefits of S & OP Process  Greater visibility of demand and supply  Improved Product Lifecycle Management process  Better promotional planning  Improved inventory management  More predictable revenue management  More accurate budget forecasting Why S & OP Implementations fail?  People  Process  Strategy  Performance 13.12.2013 EUROMPM- Information Supply Chain 24
  • Supply Chain Management : Planning- Supply Chain Management Tips for a Successful Implementation  Develop a formal structure to support S&OP.  Identify KPIs prior to beginning & monitor them monthly to identify areas for improvement.  Attitude of continuous improvement.  Stabilize the Demand Planning process  Hold regular meetings The S&OP process is a decision making tool – don’t confuse having meetings with making progress. 13.12.2013 EUROMPM- Information Supply Chain 25
  • Supply Chain Management : Production- Supply Chain Management Introduction to MAKE The term “MAKE” describes the process that transforms inputs into outputs MAKE can be defined as the physical act of making the product. It is also known as Manufacturing, assembling or processing function 13.12.2013 EUROMPM- Information Supply Chain 26
  • Supply Chain Management : Production- Supply Chain Management From Craft to Mass Manufacturing Craft 13.12.2013 Mass EUROMPM- Information Supply Chain 27
  • Supply Chain Management : Production- Supply Chain Management Five types of Manufacturing Process Project Batch • Meets very specific customer requirements • Too large to be moved once completed 13.12.2013 Job Shop • End product meets the unique customer order requirements • Assembly usually takes place offsite • Similar items are provided on a repeat basis • Process is divided into a chain of activities that take place after each other EUROMPM- Information Supply Chain 28
  • Supply Chain Management : Production- Supply Chain Management Five types of Manufacturing Process Line Continuous Flow • Products are passed through thesame sequence of operations • Can be made to order or to stock • Choice of process is based on the liquid or gas-like product nature and high volumes 13.12.2013 EUROMPM- Information Supply Chain Other set up Considerations • Product companies can implement a combination of all these manufacturing processes 29
  • Supply Chain Management : Production- Supply Chain Management Manufacturing Planning and Control Demand forecast finished goods Master Production Schedule Customer Orders Bill of Materials Material requirement Planning Inventory file Assembly Dispatch 13.12.2013 EUROMPM- Information Supply Chain 30
  • Supply Chain Management : Production- Supply Chain Management Other MAKE planning concepts Capacity Requirements Planning Distribution Requirements Planning 13.12.2013 • Process of determining the impact on key resources required to support manufacturing plan • Focuses on the planned delivery of finished products to customers EUROMPM- Information Supply Chain 31
  • Supply Chain Management : Production- Supply Chain Management Just-in-Time Powerful strategy for improving operation Uses a systems approach to develop and operate a manufacturing system Organizes the production process so that parts are available when they are needed A method for optimizing processes that involves continual reduction of waste 13.12.2013 EUROMPM- Information Supply Chain 32
  • Supply Chain Management : Production- Supply Chain Management Philosophy behind JIT Traditional approach 13.12.2013 EUROMPM- Information Supply Chain 33
  • Supply Chain Management : Production- Supply Chain Management Philosophy behind JIT  Just-in-time approach Inventory level 13.12.2013 EUROMPM- Information Supply Chain 34
  • Supply Chain Management : Production- Supply Chain Management Overview Pull Scheduling Elements of JIT A system of controlling materials whereby the use signals to the maker or provider that more material is needed. 13.12.2013 EUROMPM- Information Supply Chain People Plant System 35
  • Supply Chain Management : Production- Supply Chain Management Limitations of JIT     Cultural difference Loss of safety stock Decreased individual autonomy Industry-specific success 13.12.2013 EUROMPM- Information Supply Chain 36
  • Supply Chain Management : Production- Supply Chain Management Lean Manufacturing  Lean focuses on flow, the value stream and eliminating “Muda”, the Japanese word for waste.  A way to eliminate waste and improve efficiency in a manufacturing environment.  Lean manufacturing is the production of goods using less of everything compared to traditional mass production: less waste, human effort, manufacturing space, investment in tools, inventory, and engineering time to develop a new product. 13.12.2013 EUROMPM- Information Supply Chain 37
  • Supply Chain Management : Production- Supply Chain Management Improving Performance through waste reduction Over-production: producing more than the customer orders or producing early. Inventory of any kind is usually waste. Queues: idle time, storage, and waiting are wastes. Transportation: moving material between parts, between work centers, and handling more than once is waste. Motion: Movement of equipment or people. Over-processing: work performed on product that adds no value. Inventory: unnecessary raw material, work-in-progress (WIP), finished goods, and excess operating suppliers. Defective Product: Returns, warranty claims, rework and scrap 13.12.2013 EUROMPM- Information Supply Chain 38
  • Supply Chain Management : Production- Supply Chain Management Tools to Improve “Make” Performance Bottle Leakage 391 (100%)  Loss tree analysis  Tool to identify priorities when aiming for quality improvements.  A loss tree is a visual aid to identify where the issues are, it allows the user to focus on specific areas rather than generating a problem list Bottle Leakage 219 (56.01%) Caps 40 (10.23%) Why are the caps faulty? 13.12.2013 EUROMPM- Information Supply Chain Packing 172 (43.99%) Bottles 179(45.78%) What’s the problem with packing? Why are the bottles damaged? 39
  • Supply Chain Management : Production- Supply Chain Management Tools to Improve “Make” Performance 5- Why Analysis  Method of exploring the causes of problems by asking “why?” five times  This method builds upon the principle that the real cause can often be found as a result of repeating “why?” five times  Simple structured root cause analysis technique applicable to simple issues as well as complex problems with many variables 13.12.2013 EUROMPM- Information Supply Chain 40
  • Supply Chain Management : Production- Supply Chain Management Tools to Improve “Make” Performance Fishbone Diagram  Effective problem-solving tool to be used by groups of people involved in finding the possible causes of problems.  The cause can be split into the four categories man, method, materials and machine. 13.12.2013 EUROMPM- Information Supply Chain 41
  • Supply Chain Management References • • • • • https://supply-chain.org/f/SCOR-Overview-Web.pdf https://searchmanufacturingerp.techtarget.com http://www.cscmp.org http://www.slideshare.net/anandsubramaniam/the-bullwhip-effect http://smallbusiness.chron.com/justintime-method-31185.html 13.12.2013 EUROMPM- Information Supply Chain 42
  • Supply Chain Management Contact ujjwaljoshi1990@gmail.com 13.12.2013 EUROMPM- Information Supply Chain 43