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Lecture 1 - Sent 1.pptx
- 1. Introduction : Lecture1 Mathew Paul Vizhalil Date : 20th Jan 2021 SCM
- 2. Supply Chain 2 1. Goalof a supply chain and the impact of supply chain decisions on the success of a firm. 2 .The three key supply chain decision phases and the significance of each one 3 . Cycle and push/pull views along with the macro processes of a supply chain. 4 . Important issues and decisions to be addressed in a supply chain. 5 . Develop skill that employers have identified as critical to success in the workplace.
- 3. What is SupplyChain ? (1/3) • All parties involved, directly or indirectly, in fulfilling a customer request • Includes manufacturers, suppliers, transporters, warehouses, retailers, and customers • Within each organization, the supply chain includes all functions involved in receiving and fulfilling a customer request (new product development, marketing, operations, distribution, finance, customer service)
- 4. What is SupplyChain ? (2/3) • Customer is an integral part of the supply chain • Includes movement of products from suppliers to manufacturers to distributors and information, funds, and products in both directions • May be more accurate to use the term “supply network” or “supply web” • Typical supply chain stages: customers, retailers, wholesalers, distributors, manufacturers, suppliers
- 5. What is SupplyChain ? (3/3) Automotive Example
- 6. Three Flows ofSupply Chain
- 7. The Objective ofSupply Chain (1/3) • Maximize net value generated Supply Chain Surplus = Customer Value − Supply Chain Cost
- 8. The Objective ofSupply Chain (2/3) • Example: a customer purchases a wireless router from Best Buy for $60 (revenue) • Supply chain incurs costs (convey information, produce components, storage, transportation, transfer funds, etc.) • Difference between $60 and the sum of all of these costs is the supply chain profitability • Supply chain profitability is total profit to be shared across all stages of the supply chain • Success should be measured by total supply chain surplus, not profits at an individual stage
- 9. The Objective ofSupply Chain (2/3) • Customer the only source of revenue • Sources of cost include flows of information, products, or funds between stages of the supply chain • Effective supply chain management involves the management of supply chain assets and product, information, and fund flows to grow the total supply chain surplus
- 10. Importance of SupplyChain Decisions • Wal-Mart, $1 billion sales in 1980 to $482 billion in 2016 • Seven-Eleven Japan, ¥1 billion sales in 1974 to ¥2.7 trillion in 2016 • Webvan folded in two years • Borders, $4 billion in 2004, declared bankruptcy in 2010 • Dell, $56 billion in 2006, adopted new supply chain strategies
- 11. Summary of whatwe have learnt now The goal of a supply chain should be to grow overall supply chain surplus. Supply chain surplus is the difference between the value generated for the customer and the total cost incurred across all stages of the supply chain. A focus on the supply chain surplus increases the size of the overall pie for all members of the supply chain. Supply chain decisions have a large impact on the success or failure of each firm because they significantly influence both the revenue generated and the cost incurred. Successful supply chains manage flows of product, information, and funds to provide a high level of product availability to the customer while keeping costs low.
- 12. Decision Phases ofSupply Chain 1. Supply chain strategy or design • How to structure the supply chain over the next several years 2. Supply chain planning • Decisions over the next quarter or year 3. Supply chain operation • Daily or weekly operational decisions
- 13. Supply Chain Strategyor Design • Decisions about the configuration of the supply chain, allocation of resources, and what processes each stage will perform • Strategic supply chain decisions • Outsource supply chain functions • Locations and capacities of facilities • Products to be made or stored at various locations • Modes of transportation • Information systems • Supply chain design must support strategic objectives • Supply chain design decisions are long-term and expensive to reverse – must take into account market uncertainty
- 14. Supply Chain Planning(1/2) • Definition of a set of policies that govern short-term operations • Fixed by the supply configuration from strategic phase • Goal is to maximize supply chain surplus given established constraints • Starts with a forecast of demand in the coming year
- 15. Supply Chain Planning(2/2) • Planning decisions: • Which markets will be supplied from which locations • Planned buildup of inventories • Subcontracting • Inventory policies • Timing and size of market promotions • Must consider demand uncertainty, exchange rates, competition over the time horizon in planning decisions
- 16. Supply Chain Operation •Time horizon is weekly or daily • Decisions regarding individual customer orders • Supply chain configuration is fixed and planning policies are defined • Goal is to handle incoming customer orders as effectively as possible • Allocate orders to inventory or production, set order due dates, generate pick lists at a warehouse, allocate an order to a particular shipment, set delivery schedules, place replenishment orders • Much less uncertainty (short time horizon)
- 17. Summary of Whatwe learnt Supply chain decisions may be characterized as strategic (design), planning, or operational, depending on the time horizon over which they apply. Strategic decisions relate to supply chain configuration. These decisions have a long-term impact that lasts for several years. Strategic decisions define the constraints for planning decisions, and planning decisions define the constraints for operational decisions. Planning decisions cover a period of a few months to a year and include decisions regarding production plans, subcontracting, and promotions over that period. Operational decisions span from minutes to days and include sequencing production and filling specific orders.
- 18. Process views ofSupply Chain 1. Cycle View: The processes in a supply chain are divided into a series of cycles, each performed at the interface between two successive stages of the supply chain. 2. Push/Pull View: The processes in a supply chain are divided into two categories, depending on whether they are executed in response to a customer order or in anticipation of customer orders. Pull processes are initiated by a customer order, whereas push processes are initiated and performed in anticipation of customer orders.
- 19. Cyclic View ofSupply Chain Processes (1/2)
- 20. Cyclic View ofSupply Chain Processes (2/2)
- 21. Push Pull viewof Supply Chain Processes • Supply chain processes fall into one of two categories depending on the timing of their execution relative to customer demand • Pull: execution is initiated in response to a customer order (reactive) • Push: execution is initiated in anticipation of customer orders (speculative) • Push/pull boundary separates push processes from pull processes
- 22. Push/Pull View ofSupply Chains
- 23. Push/Pull View ofSupply Chain
- 24. Push/Pull View –Ethan Allen
- 25. Supply Chain MacroProcesses Supply chain processes discussed in the two views can be classified into 1. Customer Relationship Management (CRM): – all processes at the interface between the firm and its customers 2. Internal Supply Chain Management (ISCM): – all processes that are internal to the firm 3. Supplier Relationship Management (SRM): – all processes at the interface between the firm and its suppliers
- 26. Supply Chain MacroProcesses
- 27. Summary of Whatwe have learnt now (1/2) The cycle view divides processes into cycles, each performed at the interface between two successive stages of a supply chain. Each cycle starts with an order placed by one stage of the supply chain and ends when the order is received from the supplier stage. A push/pull view of a supply chain characterizes processes based on their timing relative to that of a customer order. Pull processes are performed in response to a customer order, whereas push processes are performed in anticipation of customer orders.
- 28. Summary of Whatwe have learnt now (2/2) All supply chain processes within a firm can be classified into three macro processes: CRM, ISCM, and SRM. The CRM macro process consists of all processes at the interface between the firm and the customer that work to generate, receive, and track customer orders. The ISCM macro process consists of all supply chain processes that are internal to the firm and work to plan for and fulfill customer orders. The SRM macro process consists of all supply chain processes at the inter- face between the firm and its suppliers that work to evaluate and select suppliers and then source goods and services from them. Integration among the three macro processes is crucial for successful supply chain management.
- 29. Examples of SupplyChain • Gateway and Apple • Zara • W.W. Grainger and McMaster-Carr • Toyota • Amazon • Macy's
- 30. Gateway and Apple 1.Why did Gateway choose not to carry any finished-product inventory at its retail stores? Why did Apple choose to carry inventory at its stores? 2. What are the characteristics of products that are most suitable to be carried in finished-goods inventory in a retail store? What characterizes products that are best manufactured to order? 3. How does product variety affect the level of inventory a retail store must carry? 4. Is a direct selling supply chain without retail stores always less expensive than a supply chain with retail stores? 5. What factors explain the success of Apple retail and the failure of Gateway Country stores?
- 31. Zara 1. What advantagedoes Zara gain against the competition by having a very responsive supply chain? 2. Why has Inditex chosen to have both in-house manufacturing and outsourced manufacturing? Why has Inditex maintained manufacturing capacity in Europe even though manufacturing in Asia is much cheaper? 3. Why does Zara source products with uncertain demand from local manufacturers and products with predictable demand from Asian manufacturers? 4. What advantage does Zara gain from replenishing its stores multiple times a week compared to a less frequent schedule? 5. Do you think Zara’s responsive replenishment infrastructure is better suited for online sales or retail sales?
- 32. W.W. Grainger andMcMaster-Carr 1. How many DCs should be built and where should they be located? 2. How should product stocking be managed at the DCs? Should all DCs carry all products? 3. What products should be carried in inventory and what products should be left with the supplier to be shipped directly in response to a customer order? 4. What products should W.W. Grainger carry at a store? 5. How should markets be allocated to DCs in terms of order fulfillment? What should be done if an order cannot be completely filled from a DC? Should there be specified backup locations? How should they be selected?
- 33. Toyota 1. Where shouldthe plants be located, and what degree of flexibility should be built into each? What capacity should each plant have? 2. Should plants be able to produce for all markets or only for specific contingency markets? 3. How should markets be allocated to plants and how frequently should this allocation be revised? 4. How should the investment in flexibility be valued?
- 34. Amazon 1. Why isAmazon building more warehouses as it grows? How many warehouses should it have, and where should they be located? 2. Should Amazon stock every product it sells? 3. What advantage can online players derive from setting up a brick-and-mortar location? How should they use the two channels to gain maximum advantage? 4. What advantages and disadvantages does the online channel enjoy in the sale of shoes and diapers relative to a retail store? 5. For what products does the online channel offer the greater advantage relative to retail stores? What characterizes these products?
- 35. Macy’s and W.W.Grainger 1. Should online orders be filled from stores or fulfillment centers? What role(s) should each facility play? 2. How should store inventories be managed in an omni-channel setting? 3. Should returns be kept at a store or sent to a fulfillment center?
- 36.