Scm slides 2014

Management Program

Supply Chain and Operations Management

Dr Steyn Heckroodt

Date: 2014

Inspiring thought leadership across Africa

© Dr . Steyn Heckroodt

2

• The material

• Context

• Define Supply Chain Management

• Discussion

• Define Operations Management

• Discussion

• Supply chain management in the services industry

• Apply the principles of risk management to supply chain and

operations management

• Discuss the assignment

INTRODUCTION/AGENDA


3 © Dr . Steyn Heckroodt

ORGANISATIONAL CONTEXT

Source: Heckroodt, S. Strategic Thinking – GAME OVER. Epubsa.co.za


ORGANISATIONAL CONTEXT

Source: Amended from Heckroodt, S. Strategic Thinking – GAME OVER. Epubsa.co.za

Supply chain and operations management

5

MACRO ENVIRONMENTAL CONTEXT

Dominant attribute

QualityPrice

Variety and Range

Convenience


Demand


6

• The smarter supply chain of the future (Karen Butner, 2010)

• Discussion:

• Each group are to discuss one of the top five supply chain

challenges. Prepare a 10 minute presentation per challenge,

once the entire article has been read. Allocation of

challenge per group are only made post reading.

• Time: 30 minutes reading, 30 minutes preparation.

• Good luck

ARTICLE 1


7

SCM DEFINITION

SCM concerns the efficient integration of all stakeholders in a

distribution network in order to realise

expected service levels, being:

The right quantities, location, time, price

AND

ORGANISATIONAL SPECIFIC ONES

© Dr . Steyn HeckroodtSource: Amended from Christopher, M. Logistics and Supply Chain Management. Pearson Education

8

SC STRATEGIES

Shor

t le

ad ti

mes

Long

le

ad ti

mes

Supp

ly c

hara

cter

istics

Demand characteristics

Lean plan and optimize

Hybrid&

Postponement

Continuous replenishment

Agile quick response

Predictable Unpredictable


9

• How do we measure supply chain performance

• Composite service index

• A supply chain composite service index has a number of

factors which are averaged together to form a performance

representative of an overall market or sector.

• Used in measuring of all types of sectors – product and and/or

service related

• Explanation follows

QUESTION


10

MEASURING PERFORMANCE THROUGH A CSI

Composite (Attribute)

Weight ActualMarket

TotalsAdd totals

Quantity 15% x 80% 12% +

Location 20% x 90% 18% +

Time 10% x 90% 9% +

Price 15% x 70% 10.5% +

*Variety and range 30% x 60% 18% +

Convenience 10% x 90% 9% =

*Organisational specific onesCSI 76.5%




Weight ActualMarket

TotalsAdd totals

Quantity x +

Location x +

Time x +

Price x +

x +

x =

*Organisational specific onesCSI

EXERCISE – BUT FIRST...

12

• What are the organisational specific ones?

• How do I determine them?

• How do I measure them?

• How do I allocate a weight?

• To answer these questions, we need to understand the

principle of the dominant attribute

QUESTION


13

• Also known as value proposition, promise or USP

• One of many – prioritized to market demand

• Defined from the customer’s viewpoint

• Motivation for initial engagement and continuous support

• Point of differentiation

• Competitive edge

• Behaviour measurement – output

• Outcome of supply chain and operational processes and activities

DEFINITION OF THE DOMINANT ATTRIBUTE


14

MACRO ENVIRONMENTAL CONTEXT

Dominant attribute

QualityPrice

Variety and Range

Convenience


Demand


15

• List all possible attributes in your industry

• Identify your dominant attribute (DA)

• Design questions relating to the DA

• Question both levels of relative performance and relative importance

• Repeat the exercise for all possible attributes

• Group results on CM

• Determine DA performance (Are we achieving our objectives?)

HOW TO MEASURE ACTUAL PERFORMANCE AS PART OF THE CSI


16

Measuring attribute dominance through a CM

Perf

orm

ance

rela

tive

to c

ompe

titor

s

Relative importance to customers

HIGH

LOWLOW MEDIUM HIGH

MEDIUM


17

THAT’S HOW WE MEASURE ACTUAL PERFORMANCE AND DETERMINE WEIGHTINGS


Weight ActualMarket

TotalsAdd totals

Quantity 15% x 80% 12% +

Location 20% x 90% 18% +

Time 10% x 90% 9% +

Price 15% x 70% 10.5% +

*Variety and range 30% x 60% 18% +

Convenience 10% x 90% 9% =

*Organisational specific onesCSI 76.5%




Weight ActualMarket

TotalsAdd totals

Quantity x +

Location x +

Time x +

Price x +

x +

x =

*Organisational specific onesCSI

NOW – DO THE EXERCISE

19

• Conceptualizing and managing service supply chains (Mihalis Giannakis,

2011) – Pg. 1815 from: “Several taxonomies... To bottom of pg. 1820

• Discussion:

• Each group are to discuss the usefulness and application of the conceptual

framework for services SCM, as depicted in Figure 9 (pg. 1820) of the

article, by using a services organisation of one of the group members.

Prepare a 10 minute presentation.

• Time: 30 minutes reading and then 30 minutes preparation. HOWEVER, let’s

first have a larger group discussion post the reading time to ensure

everybody understands what was read.

• Good luck

ARTICLE 2


20

• Operations management is an area of management

concerned with overseeing, designing, and controlling the

process of production and redesigning business operations in

the production of goods or services

• It concerns core business processes, support business

processes and organisational support processes

• It concerns the flow of products/services, funds and

information (visibility)

OPERATIONS MANAGEMENT


21

OPERATIONAL FLOWS

Raw material

Sub-assembly

Full

Distributors

Retailers

Customers

Product and service flow

Information flow

Funds flow


22

OPERATIONAL PROCESSES

CEO

Outward directed Concerned with product and/or service deliveryMain purpose of business

Source: Amended from Dostal, E. Biomatrix – A Systems Approach to Organisational and Societal Change. Sun Press.

Inward directedLine function and specializationConcerned with resource allocation

Self directedConcerned with maintaining the organisation as a entity


Core

bus

ines

spr

oces

ses

Organisa

tional

support

processe

s

Business support processes

23

• Critical path = the longest route in the shortest time

• Affects products/services, funds and information flows

• Changes

• Mainly used when having to manage risk and prioritise risk

mitigating projects

• Redesign to increase lead time efficiency, visibility and overall

cost reduction

CRITICAL PATH AND OPERATIONAL PROCESSES


A

Place order

0 5 5

D

6 5 11

B

6 180 186

C

6 10 16

F

187 9 196

E

187 13 200

G

197 24 221

H

Collect money

222

ES ID EF

SL Description

LS Duration LF

A

Place order

0 5 5

D

6 5 11

B

6 150

C

6 10 16

F

9

E

13

G

24

H

Collect money

ES ID EF

SL Description

LS Duration LF

A

Place order

0 5 5

D

6 5 11

B

6 180 186

C

6 10 16

F

5

E

13

G

5

H

Collect money

ES ID EF

SL Description

LS Duration LF

A

Place order

0 5 5

D

6 5 11

B

6 180 186

C

6 1

F

9

E

5

G

24

H

Collect money

ES ID EF

SL Description

LS Duration LF

28

• Identify a organisation in your group, one per group, which you

want to use as an example

• Identify which operational process you would want to improve

and brainstorm the ideas pertaining to the possible

improvement

• The process improvement needs to consist of a reduction of

lead time

• Map the current process – as it is currently

• Time: 30 min

• Please wait for further instructions

EXERCISE


29

• Map the ideal process – as you would want it to be like

• Once completed – apply the Failure Mode and Effect Analysis

(FMEA) on your proposed improvement area

• Ask and answer the following three questions:

– What could go wrong?

– What could cause it to go wrong?

– What would the impact be if things go wrong?

• Time: 30 min

• Please wait for further instructions

EXERCISE CONTINUE...


30

Risk analysis scoring system

Severity 1. No direct effect on operating service level

2. Minor deterioration

3. Definite reduction

4. Serious deterioration

5. Approaches zero

Likelihood of

occurrence

1. Probability of once in many years

2. In many months

3. In some weeks

4. Weekly

5. Daily

Likelihood of

detection

1. Very high

2. Considerable prior warning

3. Some warning

4. Little warning

5. Effectively zero

• Rate the possibility of things going wrong against the following criteria• Create a combined priority and risk score by multiplying the three scores

A risk mitigating project is now created to reduce the highest risk factor pertaining to things possibly going wrong This completes the exercise

NOW CALCULATE THE RISK AND DETERMINE PRIORITIES


31

RISK AND THE RELATION TO FINANCES


Turnover

Costs

Cash

Accounts receivable/payable

Inventory

Fixed assets

Profit

Capital employment

ROI

Source: Amended from Christopher, M. Logistics and Supply Chain Management. Pearson Education

32



10

8

2

2

2

2

2

8

25%


33



10

7

2

2

2

2

3

8

37.5%


34



10

7

2

2

2

2

3

8

37.5%


12

16

35

• Identify an operational process in your workplace that you

want to improve. Follow the exact same steps as that in slides

28, 29 and 30. Calculate the risk factors of things that can go

wrong and determine the priorities in terms of tackling them.

Conclude by highlighting possible risk mitigating projects that

you have in mind.

• Requirements are as per the assignment handout document

ASSIGNMENT
