View
226
Download
0
Category
Tags:
Preview:
Citation preview
MBA 518MBA 518Operations ManagementOperations Management
Supply Chain ManagementSupply Chain Management
Greg Magnan, PhD
Fall, 2004
AGENDA
Information: Visibility / Collaboration / Sharing
Organization: Strategy / Structure / People / Processes
Demand Planning
Design
Sourcing, Ordering & Logistics
Customerinterface
Supplier interface
External
Suppliers
Custom
ers Production Engineering
Production Entities
Lean Manufacturing
Company Supply Chain Management
Internal SuppliersFactory
CRM
• SC Defined
• SC Strategy
• SC Benefits
• SC Challenges
• Summary
3
2
2
2
3
3
3
3
W
W
W
1
1
1
Tier 3
Tier 2
Tier 1 Firm
LogisticsServiceProvider
Company/CustomerWarehouses/Dist.
CustomerStores/Dealers
Information & Payment
Materials & Information
“Potential” Supply Chain Flows
Information: Visibility / Collaboration / Sharing
Organization: Strategy / Structure / People / Processes
Demand Planning
Design
Sourcing, Ordering & Logistics
Customerinterface
Supplier interface
External
Suppliers
Custom
ers Production Engineering
Production Entities
Lean Manufacturing
Company Supply Chain Management
Internal SuppliersFactory
CRM
SCM Uniquely Positioned to Address BOTH
Business Environmental Factors
• Global Competition– Cost, Quality, Delivery, Flexibility,
Innovation
• Increasing Stockholder Demands– ROIC, Asset Efficiency, EVA, etc.
Outsourcing
SupplierIntegration
Lower Costs &Expenses
Strategic Sourcing
Spend Analysis
e-ProcurementImprove AssetMgt. & Lower
CapitalInvestment
Enhance CoreCompetencies
& IncreaseAgility
Centralizedor HybridStructure
ExpandingStrategic
Role & Spanof Control
CorporateStrategicDirectives
Supply ManagementStrategic Response
OrganizationalEffects on
Supply Mgt.
Adapted from Monczka et al., (2004), O’Reilly, (2002), and Leenders and Johnson (2002).
Business StrategyCost/PriceQuality (Performance, Conformance)
Delivery (Speed, Reliability, NPD)
Flexibility (Volume, Product)
Service / Innovation
ProductDev’t / Eng.
HumanResources
Finance /Accounting
InformationSystems
PURCHASINGSupplier Selection
Supplier DevelopmentDesign InvolvementSupplier Capabilities capacity workforce process quality management planning/scheduling inventory technology improvement
OPERATIONS
TechnologyFacility LocationProcess DesignProcess Choice
CapacityWorkforce
Supplier ManagementQuality ManagementPlanning/Scheduling
InventoryOrg. Structure
LOGISTICSInbound trans.
Outbound trans.Transportation mode
Information tech.WarehousesWorkforce
Distribution PlanningQuality ManagementCarrier Management
InventoryCustoms
MARKETING
Brand ManagementSegmentation
Products/servicesRange
MixVolumes
CustomizationRelationships
Channel
Core SC Functions
SCM Defined(Fawcett & Magnan, 2001)
“Supply Chain Management involves collaboration across the enterprise and among channel members to design and manage value-added material, information and cash flows to meet the needs of the end customer. The development and integration of people and technological resources underlie successful supply chain integration.”
Potential Benefits from SCM• Increased market share and sales growth• Reduced inventory levels and total SCM
costs• Decreased order cycle/fulfillment time• Increased asset and capital utilization• Improved delivery performance• Faster response to changing customer
requirements• Improved return on assets and sales• Increased forecast accuracy• Reduced cash-to-cash cycle time
SCOR Model(www.supply-chain.org)NOTE: Barriers to SCM are
concentrated here
SCM Definition: SC Council “Suppliers’ Supplier to Customer’s Customer”
Supplier
Plan
Customer Customer’sCustomer
Make DeliverSource Make DeliverMakeSourceDeliver SourceDeliver
Internal or External Internal or External
Your Company
Source
Return Return ReturnReturn Return Return Return Return
Information: Visibility / Collaboration / Sharing
Organization: Strategy / Structure / People / Processes
Demand Planning
Design
Sourcing, Ordering & Logistics
Customerinterface
Supplier interface
External
Suppliers
Custom
ers Production Engineering
Production Entities
Lean Manufacturing
Manufacturing Supply Chain Management
Internal SuppliersFactory
CRM SRM
3
2
2
2
3
3
3
3
W
W
W
1
1
1
Tier 3
Tier 2
Tier 1 Firm
LogisticsServiceProvider
Company/CustomerWarehouses/Dist.
CustomerStores/Dealers
Information & Payment
Materials & Information
“Potential” Supply Chain Flows
Information: Visibility / Collaboration / Sharing
Organization: Strategy / Structure / People / Processes
Demand Planning
Design
Sourcing, Ordering & Logistics
Customerinterface
Supplier interface
External
Suppliers
Custom
ers Production Engineering
Production Entities
Lean Manufacturing
Company Supply Chain Management
Internal SuppliersFactory
CRM
Information: Visibility / Collaboration / Sharing
Organization: Strategy / Structure / People / Processes
Demand Planning
Design
Sourcing, Ordering & Logistics
Customerinterface
Supplier interface
External
Suppliers
Custom
ers Production Engineering
Production Entities
Lean Manufacturing
Company Supply Chain Management
Internal SuppliersFactory
CRM
Information: Visibility / Collaboration / Sharing
Organization: Strategy / Structure / People / Processes
Demand Planning
Design
Sourcing, Ordering & Logistics
Customerinterface
Supplier interface
External
Suppliers
Custom
ers Production Engineering
Production Entities
Lean Manufacturing
Company Supply Chain Management
Internal SuppliersFactory
CRM
Information: Visibility / Collaboration / Sharing
Organization: Strategy / Structure / People / Processes
Demand Planning
Design
Sourcing, Ordering & Logistics
Customerinterface
Supplier interface
External
Suppliers
Custom
ers Production Engineering
Production Entities
Lean Manufacturing
Company Supply Chain Management
Internal SuppliersFactory
CRM
Capacity, inventory, promotion, delivery/ASN
Raw mat'ls, intermediate products, finished goods
Credits, consigment, payment terms, invoice
Purch. orders, inventory/quality/promotion plans
Returns, repairs, servicing, recycling, disposal
Payments, consignment, financing
Suppliers Manufact. Distributors Retailers Customers
Information
Material
Finance
Information
Material
Finance
Source: Adapted from Lee, "Creating Value Through Supply ChainIntegration," SCMR, 2000
Supply Chain Flows
Source: Lee (2000)
SC Process Elements IT? Other Fn?
MKTG / CRM / Merchandising
• ID/Segment.; Promo
• Category Mgt., Pricing Yes Eng., Mfg., Proc.
Product Dev’t• Innov.; Make-Buy
• Project Mgt., X-Funct. YesMktg, Proc.,
Finance; Mfg
Sourcing/Proc./Sup. Rel’p Mgt
• Supplier Mgt.
• Aggregation/Leverage Yes Finance, Mfg, Eng.
Demand Mgt. / SC Planning
• Forecasting
• Collaboration Yes S/Mktg, Mfg, Proc
Manufacturing• Schedule; Ordering
• Inventory; Specs Yes Proc, Eng, Log, S/Mktg
Fulfillment• Logistics; Inventory
• Transportation YesS/Mktg, Mfg,
Proc
Risk / Returns• Disasters, interruption
• Reverse logistics YesS/Mktg, Mfg,
Proc, Log
Supply Chain PerformanceTimme & Timme, 2000
• C-level Executives: CEO, CFO, COO, etc.– What is their view of
SCM?– What language is
needed to articulate benefits?
• Growth, Profitability, Capital Utilization– How do they affect
Economic Profit (EP)?
Source: Timme and Timme, “The Financial-SCM Connection,” SCMR, 2000.
Supply Chain PerformanceTimme & Timme, 2000
• Economic Profit • SCM supports:
– Revenue growth– Customer service– Cost reduction– Asset efficiency
• Purchasing 100
Supply Chain PerformanceTimme & Timme, 2000
Supply Chain Strategy
“Companies are investing resources--of both time and capital--to improve their supply chain capabilities. But many are not pleased with the return on these investments. The lack of coherent supply chain strategy typically lies at the root of the problem.” [emphasis added]
-- Derocher and Kilpatrick, “Six Supply Chain Lessons for the Millenium,” SCMR, 2000
Strategic SC Alignment(Fisher, Marshall, “What is the Right Supply Chain
for Your Product?,” HBR, 1997)
FunctionalProducts
InnovativeProducts
EfficientSupply Chain
ResponsiveSupply Chain
Q: What happens when you have BOTH kinds of products??A: Ought to have BOTH kinds of supply chains.
Evolutionary Status of SCM
Source: Poirier & Quinn, “A Survey of SC Progress,” SCMR, 2003
Source: Poirier & Quinn, “A Survey of SC Progress,” SCMR, 2003
More from Poirier & Quinn…
SC Integration(Fawcett & Magnan, 2002)
47%
34%
11%
8%
0%
SC Relationship Barriers • Lack of Trust• Little Understanding or Commitment to
SC Principles• Fear of Relinquishing Control• Different Goals & Objectives• Inadequate Information Systems• Short-term / “Wall Street” emphasis on
outcomes• Involvement in too many supply chains
Source: Moberg, Speh & Freese, “SCM: Making the Vision a Reality,” SCMR, 2003
“Can You Hear Me Now?”
Source: Handfield & Straight, “What Sourcing Channel is Right for You,” SCMR, 2003
SC Relationship Barriers--Solutions
• Develop a New Breed of Manager
• Build “Relationship-Management” Skills
• Establish Inter-organizational Teams
• Create New Performance Measures
• Invest in Information Technology
• Develop Long-term Focus (Boards, too)
• Engage in More Practical and Applied Research
Source: Moberg, Speh & Freese, “SCM: Making the Vision a Reality,” SCMR, 2003
Bullwhip Effect
Source: Lee, et al., “The Bullwhip Effect In Supply Chains, SMR, 1997.
Bullwhip Effect – Order Variation
Source: Lee, et al., “The Bullwhip Effect In Supply Chains, SMR, 1997.
Matching Supply & Demand
Source: Vitasek, et al., “Solving the Supply–Demand Mismatch,” SCMR, 2003.
Matching Supply & Demand
Source: Vitasek, et al., “Solving the Supply–Demand Mismatch,” SCMR, 2003.
SC Responsiveness
Order Management
Warehouse Management
Transportation Management
International Trade Logistics
Inventory Management
Production Scheduling
Manufacturing Planning
Distribution Planning
Supply Planning
Supply Chain CollaborationDemand Forecasting and Planning
SC Network Design
Decision Support
Seconds /Minutes
Hours /Days
Weeks /Months
Quarters Years
SCM Enterprise ApplicationDecision Support Tools
Supply Chain Execution
Supply Chain Planning
Source: AMR Research, 2000
Supply Chain Planning & Execution
SC Planning Systems
Source: Taylor, David A. “A Master Plan for Software Selection,” SCMR, 2004
SC Planning Systems
Source: Taylor, David A. “A Master Plan for Software Selection,” SCMR, 2004
e-Procurement: What is it?• What are the steps in procurement?
– Need / Requisition– Supplier Selection
• RFx, Negotiation, Auction, Criteria
– Contract– Transactions
• PO through payment
– Relationship Maintenance • Performance
• Which can be automated?
e-Procurement: Transactions
• Purchase Order / Order– PO change?
• ASN receipt• Tracking• Receiving / Inspection
• Accounting: matching– Payment
• Supplier Performance
• PO Ack. / Sales Order• Fulfillment (stock / mfg)• ASN• Transportation
• Invoice• Payment received
Buyer Supplier
Other issues: Forecasting, collaboration, planning systems, cost improvement (product and trans.)
Strategic Sourcing• “Applying standard analytics-driven processes
for sourcing any category of spend.” • Purchasing Magazine
• “Sourcing will be key to unlocking value.”– ISM/Forrester– Focus on procurement automation limits payback– Spend Management must begin with a sourcing
strategy• Spend analysis, aggregation, supplier reduction
– Online sourcing will catch up• “real value is in using enterprise-wide tools to enforce
employee compliance with strategic sourcing agreements.”
ISM/Forrester Report on Technology in SM: Q3/2003
• Adoption of online purchasing continues to grow– Large companies: 20% fully adopted
• More companies are saving $ as a result– 45% of large volume
• Materials purchased:– Indirect (89% bought some / 12% of indirect online)– Direct (74% bought some / 9.9% of direct online)
• Auctions (25% used...large volume) and eMarketplaces (33%): about 45% increased use
• Enterprise-wide tools: 46%• Online tools strengthen relationships: collaboration• Buyers mostly dissatisfied w/ Supplier online capability• Integration with suppliers was biggest challenge
PRTM’s SC AdviceSC Critical Elements• SC Strategy• SC Processes• Organizational Model• Integrated Info. Sys.• Perf. Mgt. Framework
Setting Your Strategy1. Define the Performance
Criteria of SC
2. Set Perform. Targets
3. ID Operational Processes (order mgt., dist, etc.)
4. Select integration level for customers & suppliers
Source: PRTM, “Managing Your SC in the 21st Century,” 2002
2
1 2 34
1
3
4
3
4
1
2
1
2
3
4
2 134
1
2
3
1
2
3
4
1
2
3
Transpo. & Logistics Visibility of costs Access to
ordering data Carrier reduction Material handling POU
Procurement Supplier development e-procurement Supplier rationalization Supplier metrics X-functional integration
Supply Chain Tech Visibility Data integrity Supplier access Links with legacy
systems Use of Internet
Org. Strategy,Structure & People Strategy Culture Processes/Metrics People
Engineering SC costs SC knowledge DFM Old/new models Suppliers
Supply Chain Strategy Vision / Strategy Processes / Metrics Collaboration Information Sharing Executive support
Materials Management Inventory reduction Fill rate Supplier collaboration Process definition Manufacturing links Procurement links
Mfg./Operations Schedule stability Pull-based Cycle time
reduction Quality / DFM X-functional
integration
Supply Chain ManagementDiagnostic Results (Sample)
Technology Enabled Supply Chain
Source: Porter, A.M. (2004), “The Case for Holistic Strategies,” Purchasing, March 18, pp. 55-59.
Supplier Rating Criteria
Source: Carbone, James (2004), “Using TCO to Rate Suppliers,” Purchasing, Feb. 19, pp. 30-34.
Lucent (con’t)
Summary• Supply Chain Management
– People, processes, technology– Materials, information, cash
• Supply Chain Performance– Growth, profitability, capital utilization– Growing gap between haves and have-nots
• Supply Chain Solutions– Strategy: Align internal and external processes &
resources to business strategy and company performance objectives
– Diagnostic: Pinpoint improvement needs– Education: Relationships, process change,
executives
Recommended