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  1. 1. SCMN 7700/7706 Demand Fulfillment Segment 01 SC&L Overview
  2. 2. Course Introduction SCMN 7700-06 “ Execution across our supply chain is the key to maintaining our growth. Otherwise, we’re just another retailer on the Web.” Jeff Bezos,
  3. 3. Course Overview <ul><li>Introductions </li></ul><ul><li>Course and syllabus highlights </li></ul><ul><li>Instructor information </li></ul>
  4. 4. SCMN 7700 – Focus and Fit SCMN 7800 AMLG 7600 AMLG 7700 INTERNSHIP + ELECTIVE M B A C O R E M B A P R O J E C T
  5. 5. Primary Responsibilities <ul><li>Logistics Opportunity Analysis </li></ul><ul><ul><li>PEC Team Project </li></ul></ul><ul><li>Class Activities </li></ul><ul><li>Case Analysis </li></ul><ul><ul><li>Earthbound Farm </li></ul></ul><ul><li>Final Exam </li></ul><ul><ul><li>Take home, open book </li></ul></ul>
  6. 6. Instructor Information <ul><li>Professor Brian Gibson </li></ul><ul><ul><li>(334) 844-2460 </li></ul></ul><ul><ul><li>[email_address] </li></ul></ul>14+
  7. 7. Supply Chain & Logistics Overview
  8. 8. Supply Chain Overview - Some Caveats <ul><li>SCM is like art </li></ul><ul><ul><li>Everyone has their own interpretation </li></ul></ul><ul><li>SCM involves strategy </li></ul><ul><ul><li>It’s more than moving stuff </li></ul></ul><ul><li>SCM is not a department </li></ul><ul><ul><li>It crosses organizations and functions </li></ul></ul><ul><li>SCM is not rocket science </li></ul><ul><ul><li>Or is it? </li></ul></ul>
  9. 9. What is Supply Chain Management? Supply Chain Management - is the “art” of managing the flow of materials and products, information, and financial resources from source to user. Integrated Supply Chain Management - refers to the integrated set of processes completed by supply chain participants where technology is used to seamlessly share information from end-to-end. Three key items flow between the supply chain participants There are five key participants in a supply chain
  10. 10. What does SCM involve? <ul><li>SCM includes all the activities that take place to get a product in your hands – from the time of raw materials extraction to the minute you pull out your credit card and take the final product home. </li></ul><ul><li>SCM focuses on: </li></ul><ul><li>Planning and forecasting </li></ul><ul><li>Supply management and purchasing </li></ul><ul><li>Operations management and product assembly </li></ul><ul><li>Logistics, inventory, and transportation </li></ul>
  11. 11. Is SCM important? <ul><li>A well-designed and executed supply chain </li></ul><ul><ul><ul><li>Promotes efficiency and effectiveness </li></ul></ul></ul><ul><ul><ul><li>Provides customers with access to the products that they want, when they want them, at a reasonable price </li></ul></ul></ul><ul><ul><ul><li>Provides excellent career and employment opportunities </li></ul></ul></ul><ul><ul><ul><li>Provides basic necessities such as food and water </li></ul></ul></ul><ul><ul><ul><ul><li>Any breakdown of these logistics pipelines quickly threatens human life. Recall 2005 when Hurricane Katrina flooded New Orleans, LA leaving the residents without a way to get food or clean water. As a result, a massive rescue of the inhabitants had to be made. During the first weekend of the rescue effort, 1.9 million meals and 6.7 million liters of water were delivered. </li></ul></ul></ul></ul>
  12. 12. SCM – strategy or activity? A recent survey asked 750+ logistics professionals: How do you primarily view the role of Supply Chain Management within an organization? % 9.1 As a corporate function or activity within the organization 15.6 As a strategy that transcends individual functions in the organization 72.8 As a combination of strategy and activity within the organization 2.5 As something else.
  13. 13. Supply Chain Participants
  14. 14. SCM promotes competitive advantage in the marketplace… <ul><li>Simply stated, SCM can help an organization move materials, product, and information BETTER , FASTER , and CHEAPER than their competition. </li></ul><ul><li>SCM provides valuable opportunities to… </li></ul><ul><ul><li>… develop collaborative, trusting relationships </li></ul></ul><ul><ul><li>… rationalize product touch points </li></ul></ul><ul><ul><li>… drive out costs and achieve tremendous efficiencies </li></ul></ul><ul><ul><li>… improve customer satisfaction </li></ul></ul>
  15. 15. … if it is properly implemented…
  16. 16. … and obstacles are overcome 1. Inefficient process design 2. Uncoordinated/ ineffective network operations 3. Inadequate or wrong information 4. Inappropriate performance measurements 1. Network complexity 2. Incompatible goals among SC members 3. Unsynchronized supply and demand 4. Lack of history and relationships Challenges Pitfalls 1. Segment Customers Based on Service Needs 2. Customize the Logistics Network 3. Drive Operations From Demand 4. Differentiate Product Closer to the Customer 5. Source Strategically 6. Develop Supply Chain-Wide Technology Strategy 7. Use Supply Chain Spanning Performance Measures
  17. 17. Multiple SCM benefits… <ul><li>Properly implemented SCM promotes…. </li></ul>Product visibility Control and consistency Total cost reduction Customer satisfaction
  18. 18. … can be accomplished simultaneously <ul><li>Review the results for a supply chain that we’ve seen </li></ul>Reduced cost Quicker delivery Less product waste Happier customers Better planning Faster payment Key Metrics Before SCM With SCM Inventory in system 75 days 21 days Order cycle time 14-35 days 3-8 days Inventory turns (plant) 10 per year 52 per year On time deliveries 78% 95% Forecast accuracy 35-45% 65-75% Cash conversion +23 days -21 days
  19. 19. SCM: In Summary <ul><li>What It Is Not ... </li></ul><ul><li>“ Silver Bullet” </li></ul><ul><li>“ Flavor of the Month” </li></ul><ul><li>Applicable to everything </li></ul><ul><li>Simple replacement or modified version of pre-existing, interfirm relationships </li></ul><ul><li>What It Is ... </li></ul><ul><li>A customer focused framework </li></ul><ul><li>Facilitating strategy to integrate logistics, manufacturing, and customer service </li></ul><ul><li>Challenging </li></ul><ul><li>Time consuming </li></ul>Source: Adapted from Coopers and Lybrand
  20. 20. Logistics: A Key SC Process Logistics is so critical to Wal-Mart, and the fact that David Glass has that background is a plus -- logistics is one of the biggest competitive advantages they have.&quot; Securities Analyst
  21. 21. Logistics Defined <ul><li>Frazelle text </li></ul><ul><ul><li>The flow of material, information, and money between consumers and suppliers </li></ul></ul><ul><li>Council of Supply Chain Mgt Professionals </li></ul><ul><ul><li>Logistics is that part of the supply chain process that plans, implements, and controls the efficient, effective flow and storage of goods, services, and related information from point of origin to point of consumption in order to meet customers’ requirements. </li></ul></ul>
  22. 22. What does logistics involve? …the coordination and management of interdependent functions LOGISTICS Customer Response Fulfillment Transportation Supply Inventory
  23. 23. Where did logistics come from? Integrated logistics
  24. 24. What’s the logistics-SCM link? Scope and Influence 1950’s 1960’s 1970’s 1980’s 1990’s Workplace Logistics Facility Logistics Corporate Logistics Supply Chain Logistics Global Logistics
  25. 25. Why has logistics gained importance? <ul><li>Provides value through time and place utility </li></ul><ul><ul><ul><li>Time utility – products are available when needed by customers (e.g., plywood before hurricanes) </li></ul></ul></ul><ul><ul><ul><li>Place utility – products are available where needed by customers (e.g., bathing suits in Miami, not Anchorage) </li></ul></ul></ul><ul><li>Promotes activity integration within & across firms </li></ul><ul><ul><ul><li>Serves as the link between corporate departments </li></ul></ul></ul><ul><ul><ul><li>Requires cross-company cooperation </li></ul></ul></ul><ul><li>Generates demand </li></ul><ul><ul><ul><li>Superior service can result in increased sales </li></ul></ul></ul><ul><li>Promotes efficiency and profitability </li></ul><ul><ul><ul><li>Reducing cost while increasing service </li></ul></ul></ul>Service Impacts
  26. 26. Why has logistics gained importance? Financial Impact: Logistics costs have risen to the point where companies can no longer afford to ignore them
  27. 27. Why has logistics gained importance? <ul><li>Past </li></ul><ul><ul><ul><li>Large manufacturers conceived of and implemented innovations </li></ul></ul></ul><ul><li>Today </li></ul><ul><ul><ul><li>Retailers and consumers hold the power </li></ul></ul></ul><ul><ul><ul><ul><li>Increased demands which translate into logistics requirements for manufacturers </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Innovation brought about by retailers but implemented by manufacturers </li></ul></ul></ul></ul>Logistics departments must provide top quality service AND control costs Key Players = New Focus
  28. 28. The Role of Logistics in SCM <ul><li>Facilitate the “flows” </li></ul><ul><li>Provide inventory visibility </li></ul><ul><li>Promote supply chain efficiency </li></ul><ul><ul><li>Lower landed cost of goods </li></ul></ul><ul><ul><li>Eliminate duplication </li></ul></ul><ul><li>Create customer satisfaction </li></ul><ul><ul><li>On-time, every time </li></ul></ul>