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SUPPLY CHAIN MANAGEMENT
This document discusses key concepts in supply chain management including the importance of mutual goals, trust, and compatible cultures between organizations in the supply chain. It also discusses challenges like local optimization, incentives that prioritize short-term gains over efficiency, and the bullwhip effect. Opportunities in integrated supply chains are larger including accurate demand information, reduced lot sizes, and collaborative planning. E-procurement, vendor selection, logistics management, distribution systems, third-party logistics, and the tradeoffs of shipping costs and inventory holding costs are also summarized.
SUPPLY CHAIN MANAGEMENT
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- 2. 11 - 2 Managingthe Supply Chain Mutual agreement on goals Trust Compatible organizational cultures
- 3. 11 - 3 Issuesin an Integrated Supply Chain Local optimizationLocal optimization - focusing on local profit or cost minimization based on limited knowledge Incentives (sales incentives, quantityIncentives (sales incentives, quantity discounts, quotas, and promotions)discounts, quotas, and promotions) - push merchandise prior to sale Large lotsLarge lots - low unit cost but do not reflect sales
- 4. 11 - 4 Bullwhipeffect - the increasing fluctuation in orders that occurs as orders move through the supply chain Issues that complicate development of an Integrated Supply Chain
- 5. 11 - 5 Opportunitiesin an Integrated Supply Chain Accurate “pull” data Lot size reduction Single stage control of replenishment Vendor managed inventory (VMI) Collaborative planning, forecasting, and replenishment (CPFR) Blanket orders
- 6. 11 - 6 Opportunitiesin an Integrated Supply Chain Standardization Postponement Drop shipping and special packaging Pass-through facility Channel assembly
- 7. 11 - 7 E-Procurement Uses the internet to facilitate purchasing Electronic ordering and funds transfer Electronic data interchange (EDI) Advanced shipping notice
- 8. 11 - 8 Online catalogs 1. Catalogs provided by vendors 2. Catalogs published by intermediaries 3. Exchanges provided by buyers E-Procurement
- 9. 11 - 9 E-Procurement Auctions Maintained by buyers, sellers, or intermediaries Low barriers to entry Increase in the potential number of buyers RFQs Can make requests for quotes (RFQs) less costly Improves supplier selection Real-time inventory tracking
- 10. 11 - 10 VendorSelection Vendor evaluation Critical decision Find potential vendors Determine the likelihood of them becoming good suppliers Vendor Development (supply chain as competitive unit) Training Engineering and production help Establish policies and procedures
- 11. 11 - 11 VendorSelection Negotiations Cost-Based Price ModelCost-Based Price Model - supplier opens books to purchaser Market-Based Price ModelMarket-Based Price Model - price based on published, auction, or indexed price Competitive BiddingCompetitive Bidding - used for infrequent purchases but may make establishing long-term relationships difficult
- 12. 11 - 12 LogisticsManagement Objective is to obtain efficient operations through the integration of all material acquisition, movement, and storage activities Is a frequent candidate for outsourcing Allows competitive advantage to be gained through reduced costs and improved customer service
- 13. 11 - 13 DistributionSystems TruckingTrucking Moves the vast majority ofMoves the vast majority of manufactured goodsmanufactured goods Chief advantage is flexibilityChief advantage is flexibility RailroadsRailroads Capable of carrying large loadsCapable of carrying large loads Little flexibility thoughLittle flexibility though containers and piggybackingcontainers and piggybacking have helped with thishave helped with this
- 14. 11 - 14 DistributionSystems Airfreight Fast and flexible for light loads May be expensive Waterways Typically used for bulky, low-value cargo Used when shipping cost is more important than speed Pipelines Used for transporting oil, gas, and other chemical products
- 15. 11 - 15 Third-PartyLogistics Outsourcing logistics can reduce costs and improve delivery reliability and speed Coordinate supplier inventory with delivery services May provide warehousing, assembly, testing, shipping, customs
- 16. 11 - 16 Costof Shipping Alternatives Product in transit is a form of inventory and has a carrying cost Faster shipping is generally more expensive than slower shipping We can evaluate the two costs to better understand the trade-off
- 17. 11 - 17 Costof Shipping Alternatives Value of connectors = $1,750.00 Holding cost = 40% per year Second carrier is 1 day faster and $20 more expensive Daily cost of holding product = x /365 Annual holding cost Product value = (.40 x $1,750)/ 365 = $1.92 Since it costs less to hold the product one day longer than it does for the faster shipping ($1.92 < $20), we should use the cheaper, slower shipper
- 18. 11 - 18 Securityand JIT Monitoring and controlling stock moving through supply chains is more important than ever New technologies are being developed to allow close monitoring of location, storage conditions, and movement
- 19. 11 - 19 THANK YOU! JOYAMOR M. MANO MBA-1 PHILIPPINE WOMENS UNIVERSITY S.Y 2014
Editor's Notes
- #3 *There are significant management issues in controlling a supply chain involving many independent organizations *This make supply chain management easier MUTUAL AGREEMENT ON GOALS- this requires more than just an agreement . Partners