Upload
roger-clyde-hampton
View
217
Download
0
Tags:
Embed Size (px)
Citation preview
1
Supply Chain Management
Professor Soheila Jorjani, Ph.D.June 22, 2002
Team:
Barbara Sepich Amy Wheeler Tom Arant Shon Sloat
Supply Chain ManagementSupply Chain Management
..
2
Supply Chain Management
Summary of Presentation
1. Definition: Supply Chain Management (SCM)
2. History, Performance measures
3. SCM example: Wal-Mart, Inc.
4. Wal-Mart SCM vendor: Upper Deck, Inc.
5. Role of Operations Management in SCM
6. Leading edge operations management issues
7. Role of managing inventory in the supply chain
8. Importance of Information Technology (ERP)
9. Summary
3
Supply Chain Management
1. The sequence of business processes and information that provides a product or service from suppliers through the manufacturing and distribution to the ultimate consumer.
2. Planning, design, and control of the flow of information and materials along the supply chain in order to meet customer requirements in an efficient manner, now and in the future.
Supply Chain Management is.......
4
Supply Chain Management
A typical Supply Chain
Final CustomerSupplierSupplier
SupplierSupplier
SupplierSupplier
SupplierSupplier
ManufacturerManufacturer
ManufacturerManufacturer
RetailerRetailer
RetailerRetailer
Information Flow
Distribution
Material Flow
ISSUES: Supply Chain Distribution channels
Demand Logistics Inventory
Transportation Planning Cost controls
5
Supply Chain Management
History of SCM
• Textile and grocery industries (early 1980s)
• Advent of Efficient consumer response (ECR)
• Electronic data interchange (EDI)
• Point-of-sale (POS) systems
• Concept of continuous replenishment (CRP):
• General Mills
• Whirlpool
• Wal-Mart
• Georgia Pacific
• Comprehensive SCM: 1990s
6
Supply Chain Management
Performance Parameters
Optimized supply chain management “harmonizes and synchronizes the performance process of the enterprise”, where performance is measured in terms of concurrent minimization and maximization objectives:
• reduced production time • increased efficiency
• reduced costs • higher quality products and services
than would otherwise be produced separately by any entity constituting the supply chain. The effectiveness of the enterprise supply chain is further measured by the organization’s ability to simultaneously manage its operations free of historical constraints:
• backlog • bottlenecks • waste
Fundamental Objectives
7
Supply Chain Management
SCM Case: Wal-Mart
• World’s Largest Retailer, with $224 Billion Sales
• 4,400 Stores
• SCM has Long Been its Recognized Strength
• SCM Unmatched Competitive Advantage
• Pioneer of the CPFR (Collaborative Planning, Forecasting, and Replenishment)
• Supply-Chain Infrastructure: “Supplier-Link”
• Electronic Data Interchange Networks and Extranets
• Immediate Linkage: Buyers and its 10,000 Suppliers
8
Supply Chain Management
Wal-Mart Supplier: Upper Deck
9
Supply Chain Management
• Upper Deck Supplies Trading Cards & Memorabilia
• Hobby & Retail Channels
• Pricing Strategies Vary by Channel
• Wal-Mart Calls the Shots & Demands Lowest Possible Prices
Upper Deck & Wal-MartSupply Chain Experience
10
Supply Chain Management
Upper Deck’s Return Policy
• Small Hobby Distributors – No Return Privileges
• Large Hobby Distributors – Returns Up to 4% of Purchases
• Retail Distributors (Except Wal-Mart) – Returns Up to 11% of Purchases
• Wal-Mart – Full Return Privileges
11
Supply Chain Management
Payment Terms
• 2% 10 Net 30 for All Hobby Distributors
• Net 60 for Large Retailers
• Toys R Us
• Target
• Rite-Aid
• POS (Point of Sale) for Wal-Mart
12
Supply Chain Management
“Point” of POS Payment Terms
• Wal-Mart Maintains Zero Inventory• Consignment Sales – Revenue Recognition Delayed
• Upper Deck Lost Control of Physical Inventory
• Reconciliation Nightmare
• Ownership Transferred to Wal-Mart at POS & Ownership Immediately Transferred to Customer
• Wal-Mart Paid Only for Products Sold
• Wal-Mart Assumed No Risk• Upper Deck was Forced to Write Off Pilferage
• Wal-Mart Returned Remaining Products Regardless of Condition
13
Supply Chain Management
Upper Deck’s Solution
• Sell to Wal-Mart Through Distributors – Rather than Direct Sales
• Retail Distributors Now Assume Risk of Inventory Loss, Damage, and Excess Returns
• Upper Deck Recognizes Revenue at Time of Shipment
14
Supply Chain Management
Wal-Mart Assumes No Risk
A SCM Story ....
15
Supply Chain Management
Operations Management in SCM
• DECISION VARIABLES • Quantity of resource supplied • Quantity of Inventory required• Price of sale product• Process Technology: YES / NO
• Fixed Cost• Unit variable cost• Production time
• Objective Function • Maximal Inventory Turn• Minimal spoilage• Minimal lead time• Maximum profit
• Constraints• Resource Availability• Consumer Demand
A well-defined problem?
16
Supply Chain Management
Operations Management in SCMExample
Aggregate Plan Decision Variables
Ht Lt Wt Ot It St Ct Pt
Period # Hired # Laid off # Workforce Overtime Inventory Stockout Subcontract Production Demand Price
0 0 0 80 0 1,000 0 01 0 15 65 0 1,983 0 0 2,583 1,600 402 0 0 65 0 1,567 0 0 2,583 3,000 403 0 0 65 0 950 0 0 2,583 3,200 404 0 0 65 0 0 267 0 2,583 3,800 405 0 0 65 0 117 0 0 2,583 2,200 406 0 0 65 0 500 0 0 2,583 2,200 40
Aggregate Plan CostsPeriod Hiring Lay off Regular time Over time Inventory Stockout Subcontract Material
1 0 7,708 41,333 0 3,967 0 0 25,8332 0 0 41,333 0 3,133 0 0 25,8333 0 0 41,333 0 1,900 0 0 25,8334 0 0 41,333 0 0 1,333 0 25,8335 0 0 41,333 0 233 0 0 25,8336 0 0 41,333 0 1,000 0 0 25,833
Total Cost = 422,275$
Total Revenue = 640,000$ Profit = 217,725$
Workforce Production Inventory Over time
0 0 0 6460 0 0 6460 0 0 6460 0 0 6460 0 0 6460 0 0 646
Co
nst
rain
ts
16
17
Supply Chain Management
Operations Management in SCMExample
18
Supply Chain Management
Operations Management in SCMA well-defined problem? NOT
• Immense # of Parameters• Dynamic rather than static problem• Highly synergistic interaction across many boundaries• Highly interdisciplinary
PM
4cast Qing
ModSim
19
Supply Chain Management
• Linear Programming to determine optimal transportation and shipping logistics
• Forecasting to estimate highly dynamic consumer demand
• Project Management to maximize production and labor resource allocation efficiency
• Queuing to optimize delivery truck scheduling, loading and unloading, and labor deployment
• Simulation for SCM system sensitivity assessment
Operations Management in SCM
20
Supply Chain Management
The RightProducts
In the RightQuantities
At the RightMoment
At MinimalCost
OBJECTIVES
Demand Compliance
Delivery Reliability
Delivery TimeLead Time
InventoryLevel
CONSTRAINTS
Characteristics • Forecasting uncertainty• Product Proliferation• Short Product Life Cycles• Risk and Uncertainty Abound
Multivariate “tweaking” across many layersWith many boundaries with multiple objectives
Operations Management in SCM
21
Supply Chain Management
Operations Management in SCMSuboptimization? INSUFFICIENT
optimization
optimization
optimization
optimization
Retailer
Supplier
Distributor
Manufacturer
22
Supply Chain Management
Retailer
Distributor
Manufacturer
Supplier
Operations Management in SCMGlobal Optimization across the …
Once the environment is• Organized• Streamlined• ConnectedReal SCM can begin
VIRTUAL FIRM
23
Supply Chain Management
Managing Inventory in the supply chain
Inventory Management through supply chain management addresses two conflicting objectives:
• Maintenance of inventories large enough to support good customer service
• Maintenance of inventories small enough to limit the financial investment (risk)
Suppliers Procurement Manufacturing Factory Distribution Customer
Raw material
In process
Distribution Selling Point
End users
24
Supply Chain ManagementO
rder
Q
uan t
ity
Time
Retailer’s Orders
Ord
er
Qua
n tit
y
Time
Wholesaler’s Orders
Ord
er
Qua
n tit
y
Time
Manufacturer’s Orders
The magnification of variability in orders in the supply-chain.
A lot of retailers each with little variability in their orders….
…can lead to greater variability for a fewer number of wholesalers, and…
…can lead to even greater variability for a single manufacturer.
The “Bullwhip” Effect
25
Supply Chain Management
Leading edge Operations Management issues in SCM
• Demand Based Management (DBM)• Seeks to fully synchronize marketing with SCM
• Agent-based Systems:• Rule-based entities, triggered by events• Run automatically• Objectives:
• Minimize Bullwhip effect. Increase efficiencies• Automate and increase speed of supply chain
Searches for optimization points
Searches for optimization points
26
Supply Chain Management
Information Technology in SCM
ERP system can provide:
• Rapid optimization of the total supply chain
• Support ‘what-if’ functionality – to test the effect of possible events on the total supply chain
• Ability to adapt rapidly to unforeseen problems
• Flexible scheduling – allowing for more than the first-in-first-out (FIFO) approach adopted by most MRP systems
• Ability to provide accurate and flexible information about the supply chain characteristics
27
Supply Chain Management
SCM Company example:SCM Company example:
28
Supply Chain Management
SummarySummary
1. Definition: Supply Chain Management (SCM)
2. History, Performance Measures
3. SCM Example: Wal-Mart, Inc.
4. Wal-Mart SCM Vendor: Upper Deck, Inc.
5. Role of Operations Management in SCM
6. Leading Edge Operations Management Issues
7. Role of Managing Inventory in the Supply Chain
8. Importance of Information Technology (ERP)
9. Summary: strategic, tactical, operational levels