Scm slides 2014

Management
Program
Supply Chain and
Operations Management
Dr Steyn Heckroodt
Date: 2014
Inspiring thought leadership
across Africa

• The material
• Context
• Define Supply Chain Management
• Discussion
• Define Operations Management
• Discussion
• Supply chain management in the services industry
• Apply the principles of risk management to supply chain and
operations management
• Discuss the assignment 2
INTRODUCTION/AGENDA
© Dr . Steyn Heckroodt

ORGANISATIONAL CONTEXT
3
Source: Heckroodt, S. Strategic Thinking – GAME OVER.
Epubsa.co.za

ORGANISATIONAL CONTEXT
4
Source: Amended from Heckroodt, S. Strategic
Thinking – GAME OVER. Epubsa.co.za
Supply chain and operations management

MACRO ENVIRONMENTAL CONTEXT
Dominant attribute
Quality
Price
Variety and Range
Convenience
Demand
5

• The smarter supply chain of the future (Karen Butner, 2010)
• Discussion:
• Each group are to discuss one of the top five supply chain
challenges. Prepare a 10 minute presentation per challenge,
once the entire article has been read. Allocation of challenge
per group are only made post reading.
• Time: 30 minutes reading, 30 minutes preparation.
• Good luck
6
ARTICLE 1

SCM DEFINITION
SCM concerns the efficient integration of all stakeholders in a
distribution network in order to realise
expected service levels, being:
The right quantities, location, time, price
AND
ORGANISATIONAL SPECIFIC ONES
Source: Amended from Christopher, M. Logistics and
Supply Chain Management. Pearson Education
7

SC STRATEGIES
Short
leadtimes
Long
leadtimes
Supplycharacteristics
Demand characteristics
Lean plan and
optimize
Hybrid
&
Postponement
Continuous
replenishment
Agile quick
response
Predictable Unpredictable
8

• How do we measure supply chain performance
• Composite service index
• A supply chain composite service index has a number of
factors which are averaged together to form a performance
representative of an overall market or sector.
• Used in measuring of all types of sectors – product and and/or
service related
• Explanation follows
9
QUESTION

MEASURING PERFORMANCE THROUGH A CSI
Composite
(Attribute)
Weight Actual
Market
Totals
Add totals
Quantity 15% x 80% 12% +
Location 20% x 90% 18% +
Time 10% x 90% 9% +
Price 15% x 70% 10.5% +
*Variety and range 30% x 60% 18% +
Convenience 10% x 90% 9% =
*Organisational specific ones
CSI 76.5%
10

11
Composite
(Attribute)
Weight Actual
Market
Totals
Add totals
Quantity x +
Location x +
Time x +
Price x +
x +
x =
CSI
EXERCISE – BUT FIRST...

• What are the organisational specific ones?
• How do I determine them?
• How do I measure them?
• How do I allocate a weight?
• To answer these questions, we need to understand the
principle of the dominant attribute
12
QUESTION

• Also known as value proposition, promise or USP
• One of many – prioritized to market demand
• Defined from the customer’s viewpoint
• Motivation for initial engagement and continuous support
• Point of differentiation
• Competitive edge
• Behaviour measurement – output
• Outcome of supply chain and operational processes and activities
DEFINITION OF THE DOMINANT ATTRIBUTE
13

MACRO ENVIRONMENTAL CONTEXT
Dominant attribute
Quality
Price
Variety and Range
Convenience
Demand
14

• List all possible attributes in your industry
• Identify your dominant attribute (DA)
• Design questions relating to the DA
• Question both levels of relative performance and relative importance
• Repeat the exercise for all possible attributes
• Group results on CM
• Determine DA performance (Are we achieving our objectives?)
HOW TO MEASURE ACTUAL PERFORMANCE AS PART
OF THE CSI
15

Measuring attribute dominance through a CM
Performancerelative
to
competitors
Relative importance to customers
HIGH
LOW
LOW MEDIUM HIGH
MEDIUM
16

THAT’S HOW WE MEASURE ACTUAL PERFORMANCE
AND DETERMINE WEIGHTINGS
Composite
(Attribute)
Weight Actual
Market
Totals
Add totals
Quantity 15% x 80% 12% +
Location 20% x 90% 18% +
Time 10% x 90% 9% +
Price 15% x 70% 10.5% +
*Variety and range 30% x 60% 18% +
Convenience 10% x 90% 9% =
CSI 76.5%
17

18
Composite
(Attribute)
Weight Actual
Market
Totals
Add totals
Quantity x +
Location x +
Time x +
Price x +
x +
x =
CSI
NOW – DO THE EXERCISE

• Conceptualizing and managing service supply chains (Mihalis Giannakis,
2011) – Pg. 1815 from: “Several taxonomies... To bottom of pg. 1820
• Discussion:
• Each group are to discuss the usefulness and application of the conceptual
framework for services SCM, as depicted in Figure 9 (pg. 1820) of the
article, by using a services organisation of one of the group members.
Prepare a 10 minute presentation.
• Time: 30 minutes reading and then 30 minutes preparation. HOWEVER,
let’s first have a larger group discussion post the reading time to ensure
everybody understands what was read.
• Good luck
19
ARTICLE 2

• Operations management is an area of management
concerned with overseeing, designing, and controlling the
process of production and redesigning business operations in
the production of goods or services
• It concerns core business processes, support business
processes and organisational support processes
• It concerns the flow of products/services, funds and
information (visibility)
OPERATIONS MANAGEMENT
20

OPERATIONAL FLOWS
Raw material
Sub-assembly
Full
Distributors
Retailers
Customers
Product and service flow
Information flow
Funds flow
21

OPERATIONAL PROCESSES
CEO
Outward directed
Concerned with product and/or
service delivery
Main purpose of business
Source: Amended from Dostal, E. Biomatrix – A Systems
Approach to Organisational and Societal Change. Sun Press.
Inward directed
Line function and specialization
Concerned with resource
allocation
Self directed
Concerned with maintaining the
organisation as a entity
22
Corebusiness
processes
Business support
processes

• Critical path = the longest route in the shortest time
• Affects products/services, funds and information flows
• Changes
• Mainly used when having to manage risk and prioritise risk
mitigating projects
• Redesign to increase lead time efficiency, visibility and overall
cost reduction
23
CRITICAL PATH AND OPERATIONAL PROCESSES

A
Place
order
0 5 5
D
6 5 11
B
6 180 186
C
6 10 16
F
187 9 196
E
187 13 200
G
197 24 221
H
Collect
money
222
ES ID EF
SL Description
LS Duration LF

A
Place
order
0 5 5
D
6 5 11
B
6 150
C
6 10 16
F
9
E
13
G
24
H
Collect
money
ES ID EF
SL Description
LS Duration LF

A
Place
order
0 5 5
D
6 5 11
B
6 180 186
C
6 10 16
F
5
E
13
G
5
H
Collect
money
ES ID EF
SL Description
LS Duration LF

A
Place
order
0 5 5
D
6 5 11
B
6 180 186
C
6 1
F
9
E
5
G
24
H
Collect
money
ES ID EF
SL Description
LS Duration LF

• Identify a organisation in your group, one per group, which
you want to use as an example
• Identify which operational process you would want to
improve and brainstorm the ideas pertaining to the possible
improvement
• The process improvement needs to consist of a reduction of
lead time
• Map the current process – as it is currently
• Time: 30 min
• Please wait for further instructions
28
EXERCISE

• Map the ideal process – as you would want it to be like
• Once completed – apply the Failure Mode and Effect Analysis
(FMEA) on your proposed improvement area
• Ask and answer the following three questions:
– What could go wrong?
– What could cause it to go wrong?
– What would the impact be if things go wrong?
• Time: 30 min
• Please wait for further instructions
29
EXERCISE CONTINUE...

Risk analysis scoring system
Severity 1. No direct effect on operating service level
2. Minor deterioration
3. Definite reduction
4. Serious deterioration
5. Approaches zero
Likelihood of
occurrence
1. Probability of once in many years
2. In many months
3. In some weeks
4. Weekly
5. Daily
Likelihood of
detection
1. Very high
2. Considerable prior warning
3. Some warning
4. Little warning
5. Effectively zero 30
• Rate the possibility of things going wrong against the following criteria
• Create a combined priority and risk score by multiplying the three scores
A risk mitigating project is
now created to reduce the
highest risk factor
pertaining to things
possibly going wrong
This completes the exercise
NOW CALCULATE THE RISK AND DETERMINE
PRIORITIES

RISK AND THE RELATION TO FINANCES
Turnover
Costs
Cash
Accounts
receivable/payable
Inventory
Fixed assets
Profit
Capital
employment
ROI
31

10
8
2
2
2
2
2
8
25%
32

10
7
2
2
2
2
3
8
37.5%
33

10
7
2
2
2
2
3
8
37.5%
34
12
16

• Identify an operational process in your workplace that you
want to improve. Follow the exact same steps as that in slides
28, 29 and 30. Calculate the risk factors of things that can go
wrong and determine the priorities in terms of tackling them.
Conclude by highlighting possible risk mitigating projects that
you have in mind.
• Requirements are as per the assignment handout document
35
ASSIGNMENT

Scm slides 2014

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