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INTERNATIONAL SUPPLY CHAIN MANAGEMENT
1. INTERNATIONAL LOGISTICS
AND
SUPPLY CHAIN
MANAGEMENT
BY
C.RAJA
V.VINEETH
R.NAVEEN RAJ
B.SREEHARINATH
VICTOR JAYAKUMAR EDWARD
2. HIGHLIGHTS
Supply Chain definition
Logistics definition
History of Supply Chain
Objectives, Importance, Measuring factors
Principles of Supply Chain
Decision phases in Supply Chain
Process views
Supply Chain Drivers
Supply Chain Macro processes in a firm
Key issues of Supply Chain
Bull Whip Effect
Operation Strategies
Imperatives for Success
Supply Chain collaboration
Emerging Best Practices in SCM
3. SUPPLY CHAIN MANAGEMENT
Also referred to as the logistics network
Suppliers, manufacturers, warehouses, distribution centers
and retail outlets – “facilities”
and the
Raw materials
Work-in-process (WIP) inventory
Finished products
that flow between the facilities.
Hence SCM is a network of all parties involved, either directly
(or) indirectly, in fulfilling a customer request.
4. Supply Chain includes
Material flows
Information flows
Financial flows
LOGISTICS
Physical Distribution Management(1976)
Logistics is the process of
planning, implementing, controlling efficient and
effective flow and storage of goods, services and
related information from the point of origin to the
point of consumption.
5. TRADITIONAL SUPPLY CHAIN SYSTEMS
Supplier Manufacturer MDC WDC Retail Customer
plant
3rd Party Logistics
Providers (3PL)
Material Flow
Information Flow
8. Supply Chain objectives
To have the right products in the right
quantities at the right place at the right
moment at minimal cost.
It is characterized by a sharp focus on
Maximize the overall profit
Better asset utilization
Cost reduction.
9. Importance of SC
Reduced inventories along the chain.
Better information sharing among the partners.
Planning being done in consultation rather than in
isolation.
Supply chain design, planning and operation decisions
play a significant role in the success or failure of the firm
Measuring Factors of SCM
Responsiveness
Efficiency
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10. Principles of SC
Sourcing, procurement and supply management
Component order arrival
Production scheduling
Receiving
Materials management
Forecasting, Inventory, stores management, stock
keeping
Logistics and distribution management
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12. Decisons in Developing a strategy or Design:
What is the chain’s configuration?
How resources will be allocated?
What process each stages will perform?
Whether to outsource or perform
in/house?
13. Decisions in Planning Supply Chain:
Forecasting the demand for the coming year
Which markets will be supplied from which locations?
The inventory policies to be followed
The timing and size of marketing and size of marketing and
pricing promotions
14. Steps in Supply Chain Operations:
Set delivery schedules of trucks
and placing orders
Set a date that the order to be filled.
Generate pick lists at a warehouse
Allocate a particular order to particular shipping
mode or shipment
Allocate inventory or production to individual orders.
15. PROCESS VIEWS
Cycle view
Push/pull view
Cycle View: The process is divided into a series of
cycles, each performed at the interface between two
successive stages of a supply chain.
Push/Pull view: The process in supply chain are
divided into two categories depending on whether
they are executedin response to the consumer order
or in anticipation of the customer orders.
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16. Cycle View:
• Given the fivestages of supply chain :
• Customer Customer
order cycle
• Retailer Replenishment
Cycle
• Distributor
Manufacturing
• Manufacturer cycle
Procurement
• Supplier Cycle
17. Sub Process in each cycle:
Supplier markets
Supplier receives
product Buyer places order
order
Buyer reverse flows
to supplier or third Buyer receives Supplier supplies
party supply order
18. PUSH STRATEGIES
Classical manufacturing supply chain strategy
Manufacturing forecasts are long-range
Orders from retailers’ warehouses
Longer response time to react to marketplace changes
Unable to meet changing demand patterns
Supply chain inventory becomes obsolete as demand for
certain products disappears
Increased variability (Bullwhip effect) leading to:
Large inventory safety stocks
Larger and more variably sized production batches
Unacceptable service levels
Inventory obsolescence
Inefficient use of production facilities (factories)
How is demand determined? Peak? Average?
How is transportation capacity determined?
Examples: Auto industry, large appliances, others?
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19. PULL STRATEGIES
Demand-driven
Coordinated with true customer demand
None or little inventory held
Only in response to specific orders
Decreased lead times
Decreased retailer inventory
Decreased variability in the supply chain and especially at
manufacturers
Decreased manufacturer inventory
More efficient use of resources
More difficult to take advantage of scale opportunities
Examples: Dell, Amazon
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20. PUSH/PULL STRATEGIES
Hybrid of “push” and “pull” strategies to overcome
disadvantages of each
Early stages of product assembly are done in a “push”
manner
Partial assembly of product based on aggregate demand
forecasts (which are more accurate than individual product
demand forecasts)
Uncertainty is reduced so safety stock inventory is lower
Final product assembly is done based on customer
demand for specific product configurations
Supply chain timeline determines “push-pull boundary”
Push-
Pull
Boundary
“Generic” Product “Customized” Product
Push Strategy Pull Strategy
Raw End
Materials Consumer
Supply Chain Timeline 20
21. CHARACTERISTICS OF PUSH, PULL AND
PUSH/PULL STRATEGIES
PUSH PULL
Objective Minimize Cost Maximize Service Level
Complexity High Low
Focus Resource Allocation Responsiveness
Lead Time Long Short
Processes Supply Chain Planning Order Fulfillment
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24. SUPPLY CHAIN MANAGEMENT – KEY ISSUES
Overcoming functional silos with conflicting goals
Customer Service/
Purchasing Manufacturing Distribution
Sales
Low pur- Few change-
chase price overs High service
Low levels
Multiple Stable inventories
schedules Low costs
vendors
Low
transportation
costs
SOURCE MAKE DELIVER SELL
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25. SUPPLY CHAIN MANAGEMENT – KEY
ISSUES
ISSUE CONSIDERATIONS
Network Planning • Warehouse locations and capacities
• Plant locations and production levels
• Transportation flows between facilities to minimize cost and time
Inventory Control • How should inventory be managed?
• Why does inventory fluctuate and what strategies minimize this?
Supply Contracts • Impact of Revenue sharing
• Pricing strategies
Strategic Partnering • What information and processes can be shared?
• What partnerships should be implemented and in which situations?
Outsourcing & Procurement • What are our core supply chain capabilities and which are not?
Strategies • Does our product design mandate different outsourcing approaches?
• Risk management
Product Design • How are inventory holding and transportation costs affected by product
design?
• How does product design enable mass customization?
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26. BULL WHIP EFFECT
Inventory and back-order levels fluctuate considerably across
the supply chain even when customer demand doesn’t vary
The variability worsens as we travel “up” the supply chain
Forecasting doesn’t help
Multi-tier Wholesale
Suppliers Manufacturer Distributors Retailers Consumers
Sales
Sales
Sales
Sales
Time Time Time
Time
Bullwhip Effect
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27. FACTORS CONTRIBUTING TO THE
BULLWHIP
Demand forecasting practices
Min-max inventory management (reorder points to bring
inventory up to predicted levels)
Lead time
Longer lead times lead to greater variability in estimates of
average demand, thus increasing variability and safety stock
costs
Batch ordering
Fixed ordering costs
Impact of transportation costs (e.g., fuel costs)
Sales quotas
Price fluctuations
Promotion and discount policies
Lack of centralized information
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28. TAMING THE BULLWHIP
Four critical methods for reducing the Bullwhip effect:
Reduce uncertainty in the supply chain
Centralize demand information
Keep each stage of the supply chain provided with up-to-
date customer demand information
More frequent planning (continuous real-time planning the
goal)
Reduce variability in the supply chain
Every-day-low-price strategies for stable demand patterns
Eliminate the bullwhip through strategic partnerships
Vendor-managed inventory (VMI)
Collaborative planning, forecasting and replenishment
(CPFR)
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29. SUPPLY CHAIN MANAGEMENT OPERATIONS
STRATEGIES
STRATEGY WHEN TO CHOOSE BENEFITS
Make to Stock standardized products, Low manufacturing costs;
relatively predictable meet customer demands
demand quickly
Make to Order customized products, Customization; reduced
many variations inventory; improved service
levels
Configure to Order many variations on Low inventory levels; wide
finished product; range of product offerings;
infrequent demand simplified planning
Engineer to Order complex products, Enables response to specific
unique customer customer requirements
specifications
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30. SUPPLY CHAIN IMPERATIVES FOR SUCCESS
View the supply chain as a strategic asset
Dell’s innovative direct-to-consumer sales and build-to-order
manufacturing
Create unique supply chain configurations that align with
your company’s strategic objectives
Operations strategy
Outsourcing strategy
Channel strategy Supply chain configuration components
Customer service strategy
Asset network
Reduce uncertainty
Forecasting
Collaboration
Integration
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31. SUPPLY CHAIN COLLABORATION
Many different definitions depending on perspective
The means by which companies within the supply chain
work together towards mutual goals by sharing
Ideas
Information
Processes
Knowledge
Information
Risks
Rewards
Why collaborate?
Accelerate entry into new markets
Changes the relationship between cost/value/profit equation
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32. SUPPLY CHAIN COLLABORATION
The only method that has the potential to eliminate or
minimize the Bullwhip effect
Retailers
Suppliers Synchronized Manufacturer
Production
Scheduling Collaborative
Distributors/
Demand
Collaborative Wholesalers
Planning
Product
Development
Collaborative Logistics Planning
•Transportation services
•Distribution center services
Logistics Providers
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33. BENEFITS OF SUPPLY CHAIN COLLABORATION
CUSTOMERS MATERIAL SERVICE
SUPPLIERS SUPPLIERS
• Reduced inventory • Reduced inventory • Lower freight costs
• Increased revenue • Lower warehousing costs • Faster and more reliable
• Lower order management • Lower material acquisition delivery
costs costs • Lower capital costs
• Higher Gross Margin • Fewer stockout conditions • Reduced depreciation
• Better forecast accuracy • Lower fixed costs
• Better allocation of
promotional budgets
• Improved customer service
• More efficient use of human resources
Source: Cohen & Roussel
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