Module 1.pptx
- 2. Reference Book • Wisner, J. D., Leong, G. K. and Tan, KC., Principles of Supply Chain Management, Cengage Learning, 2009 (1st edition) • Chopra, S., and Meindl, P., Supply Chain Management: Strategy, Planning, & Operation, 2nd edition, Upper Saddle River, NJ: Prentice-Hall, Inc., (Latest Edition : 06)
- 3. Chapter 1 Understanding The Supply Chain Learning Objectives • Discuss the goal of a supply chain and explain the impact of supply chain decisions on the success of a firm • Identify the three key supply chain decision phases and explain the significance of each one • Describe the cycle and push/pull views of a supply chain • Classify the supply chain macro processes in a firm
- 4. What is a Supply Chain? • All stages involved, directly or indirectly, in fulfilling a customer request • Includes manufacturers, suppliers, transporters, warehouses, retailers, and customers • Within each company, the supply chain includes all functions involved in fulfilling a customer request (product development, marketing, operations, distribution, finance, customer service)
- 5. What is a Supply Chain? • 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, distributors, manufacturers, suppliers • All stages may not be present in all supply chains (e.g., no retailer or distributor for Dell)
- 6. What is a Supply Chain? Figure 1-1 Stages of a detergent supply chain
- 7. Flows in a Supply Chain Figure 1-2 Supply chain stages
- 8. 8 Origins of Supply Chain Management 1950s & 1960s U.S. manufacturers focused on cost reduction and productivity improvement strategies 1960s-1970s Introduction of new computer technology lead to development of Materials Requirements Planning (MRP) to coordinate inventory management
- 9. Principles of Supply Chain Management: A Balanced Approach by Wisner, Leong, and Tan. © 2005 Thomson Business and Professional Publishing 9 Origins of Supply Chain Management –Cont. 1980s & 1990s Intense global competition led U.S. manufacturers to adopt Supply Chain Management along with Just-In-Time (JIT), Total Quality Management (TQM), and Business Process Reengineering (BPR) practices
- 10. Principles of Supply Chain Management: A Balanced Approach by Wisner, Leong, and Tan. © 2005 Thomson Business 10 Origins of Supply Chain Management –Cont. 2000s and Beyond Industrial buyers will rely more on third-party service providers to improve purchasing and supply management Wholesalers/retailers will focus on transportation and logistics more & refer to these as quick response, service response logistics, and integrated logistics
- 11. The Objective of a Supply Chain • Maximize overall value created • Disaster supply chains Supply Chain Surplus = Customer Value – Supply Chain Cost
- 12. The Objective of a Supply Chain • Example: a customer purchases a wireless router from Best Buy for $60 (revenue) • Supply chain incurs costs (information, storage, transportation, components, assembly, etc.) • Difference between $60 and the sum of all of these costs is the supply chain profit • Supply chain profitability is total profit to be shared across all stages of the supply chain • Success should be measured by total supply chain profitability, not profits at an individual stage
- 13. The Objective of a Supply Chain • 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 is the management of flows between and among the supply chain stages to maximize total supply chain surplus
- 14. Importance of Supply Chain Decisions – Cases • Wal-Mart, $1 billion sales in 1980 to $408 billion in 2010 • Seven-Eleven Japan, ¥1 billion sales in 1974 to ¥3 trillion in 2009 • Dell, $56 billion in 2006, adopted new supply chain strategies
- 15. Decision Phases of a Supply Chain • Supply chain strategy or design – How to structure the supply chain over the next several years • Supply chain planning – Decisions over the next quarter or year • Supply chain operation – Daily or weekly operational decisions
- 16. Supply Chain Strategy or Design • Decisions about the structure of the supply chain and what processes each stage will perform • Strategic supply chain decisions – 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
- 17. Supply Chain Planning • Definition of a set of policies that govern short-term operations • Fixed by the supply configuration from previous phase • Starts with a forecast of demand in the coming year
- 18. Supply Chain Planning • Planning decisions: – Which markets will be supplied from which locations – Planned buildup of inventories – Subcontracting, backup locations – Inventory policies – Timing and size of market promotions • Must consider in planning decisions demand uncertainty, exchange rates, competition over the time horizon
- 19. Supply Chain Operation • Time horizon is weekly or daily • Decisions regarding individual customer orders • Supply chain configuration is fixed and operating policies are determined • Goal is to implement the operating policies 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)
- 20. Process View of a Supply Chain • Cycle View: processes in a supply chain are divided into a series of cycles, each performed at the interfaces between two successive supply chain stages • Push/Pull View: processes in a supply chain are divided into two categories depending on whether they are executed in response to a customer order (pull) or in anticipation of a customer order (push)
- 22. Push/Pull View of Supply Chains Figure 1-5
- 23. Push/Pull View of 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
- 24. Push/Pull View of Supply Chain Processes • Useful in considering strategic decisions relating to supply chain design – more global view of how supply chain processes relate to customer orders • The relative proportion of push and pull processes can have an impact on supply chain performance
- 25. Push/Pull View – Dell Figure 1-7
- 26. Supply Chain Macro Processes • Supply chain processes discussed in the two views can be classified into – Customer Relationship Management (CRM) – Internal Supply Chain Management (ISCM) – Supplier Relationship Management (SRM) • Integration among the above three macro processes is critical for effective and successful supply chain management
- 27. Supply Chain Macro Processes Figure 1-8