Lifeline - Supply Chain

8/2/2019 Lifeline - Supply Chain

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Supply Chain Lifeline

Index

1. Supply Chain Definitions2. The objectives of SCM

3. SCM Concept

4. Traditional vs. new SC models

5. What does it take to implement SCM6. SCM IT SUPPORT

7. The benefits gained through SCM


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What is Supply Chain?

Supply-chain

is a complex sequence

of events and decisions,

which connects sourcing materials

with manufacturing and the end consumer.

LogisticsIs management

of this end-to-end supply-chain.

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What is the Supply Chain?

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Supply Chain is a set of activities (e.g. purchasing,

manufacturing, logistics, distribution, marketing) that

perform the function of delivering value to end customer

Supply chain is an effort to achieve primary goals of

producing and distributing merchandise

of right quantity, to right locations, and at right time

with minimum system wide cost

In presence of conflicting goals of various business units


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Supply Chain

Traditional Approach

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Production

PlanningClientSupplier


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Supply Chain - Phases

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High School education

Process paper

Clerical function

Reports at very low level

Some College Education

Computer Process paper

Transactiondriven

Spot buy system

Measures price reductions

Reports at low level

Primary focus: Keep

production line running

Tracks purchase price

Variances

Poor data availability

Professional Staff

Proactive approach

Some long term contracts

Measures some cost

of ownership

Supplier consideredResources

Report to higher Management

Some cross functional Support

Training andeducation Offered

Purchasing power in purchasing

Limited use ofdata

Some commodity Strategies

Supply as a competitive weapon

Supply Strategy integrated with

SBUs Strategy

Velocity: Development and Production

Measures continuous improvement

Global view

Optimize cost of ownership or

total cost of outside cost

Supply Strategy Centralized

Purchasing activity decentralized

Data available and used

Supply base by design

Leverages supplier Technology

Monitor environment

Manage relationships

Value Chain Management

Stage I

Reactive

Stage- IIMechanical

Stage- III

Proactive

Latest

Strategic S C M


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Objectivesof

Supply Chain Management

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Objectives of SCM

It is fundamental for organizations

to adopt

logistics and supply chain modelsto balance costs (direct & indirect)

of holding (or not) inventories against

need to serve end-consumers

quickly and reliably.

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Bridging the gaps

When is a product desired

Where is a product wanted

How much or how many are needed

What mix of products is called for

How is it desired

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When is a product made

Where it is made or sourced

How much or how many are made or acquired

What product mix is made or scheduled to be received

How is it delivered

D

E

M

A

ND

S

U

P

P

L

Y


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Objectives of SCM

Objectives of supply chain are to optimize

pre and post-production inventory levels,

obtain greater efficiency from labor,

equipment and space

across the company

and

provide flexible planning and controlmechanisms.

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Objectives of SCM

Supply Chain management tries to:

Release capital tied up in inventories in thepipeline from supplier to customer,

While minimizing transportation costs,

Without sacrificing desired levels of customer service.

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Better decisions making

SCM helps companies make better and faster decisions

answering questions like:

What is the best price to charge for my product?

Should I change the price if I have excess inventory?

If so, by how much?

If I am short of a product, where should I allocate supply?

Which suppliers should I buy parts from?

Which factory should I manufacture the product?

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Dynamics of Material Flow

14 Supplier Plant Warehouse Logistics Retailer


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Dynamics of Order Flow

Supplier Plant Warehouse Logistics Retailer


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Supply Chain

Planning Processes

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Demand PlanningMaterial Requirement PlanningDemand Forecasting

Supplier Plant Warehouse Logistics Retailer

Production

Plan

Component

Requirement

Order Management


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Supply Chain

Plann

in

g De

cision

s

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OPERATIONAL

TACTICAL

STRATEGIC

Procurement DistributionManufacturing

Logistics


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Supply Chain

Plann

in

g De

cision

s

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Supplier Selection

Allocation of Suppliers

to the Plants

Location, Number,

Capacity of Plants

What Products to Produce

Which Plants to Producethem

Location, Number, Size of

Warehouses

Mode of Shipment

Port Selection

Procurement Policy

Warehouse Allocation

Inventory Decisions

Manufacturing Policy

Customer Allocation

Distribution Policy

Vehicle Routing

Fleet Size

Production Schedule

Scheduling on Machines

Workload Balancing

Finished Goods Inventory Vehicle Routing

Procurement Manufacturing Distribution Logistics


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Supply Chain - Concept

Traditional

versusnew supply chain

models

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Traditional approach of SCM

Supplier Manufacturers Warehouse Retailers Customers

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Supply Chain Partners Operate in Silos

Interface between entities

Traditional organizations set performance goals

for each function to be managed in isolation

with no or little attention given to inter-

functional relationships.


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Traditional approach of SCM

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Supplier Manufacturers Warehouse Retailers Customers

Over

forecasting

OverPurchasing

OverProducing

OverStocking

Over

forecasting

OverPurchasing

OverProducing

OverStocking

Over

forecasting

OverPurchasing

OverProducing

OverStocking

Over

forecasting

OverPurchasing

OverProducing

OverStocking

Over

forecasting

OverPurchasing

OverProducing

OverStocking

By making use of local information to make demand forecasts and passing them onto

downstream partners, information distortion is created.


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Effective implementation

of Supply Chain

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PUSH PULL PULL PULL

Order are

Received

Push-Pull

Boundary

Suppliers

Manufacturing

Warehouse

Retailer

s

Customers

Supply Chain Management concept accepts the whole supply chain as a single entity &

enable a total transparency of demand information across all business partners

The Product is pulled by Demand


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For transforming a traditional company with

functional organization to a successful

Supply Chain Organization,the key challenge is to build a platform,

(the SC network)

that will facilitate the 3 flows i.e.material, information, financial flows.

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Supply Chain Management (SCM)

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Supplier

Capacity

From Supplier

availability

From

Production

Availability

Finished

Product

Availability

Production

Capacity

Components

Raw MaterialGoods

Goods To Customer

Customer

Orders in

Hand

Expected

Customer

Orders

Material flow from Supplier to Customer

A Platform that facilitates the 3 flows:

Material, information and financials

Information flow in both directions

Financial Flows


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Supply chain integration a reality

Four key dimensions

will have to be

implemented.

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Workflow coordination

Streamlining workflow activities

among supply chain partners.

-

Workflow coordination encompasses

of a host of activities

including procurement, order execution,

(engineering change,

design optimization and financial exchanges).

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Synchronization

The goal of synchronization

in SC integration

is to develop production,

delivery mechanisms and processes

that can produce goods

to the actual end-users rate.

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Information integrationInformation is the enabler of

supply chain integration.

It refers to sharing & exploiting the informationcollectively so that the entire chain is driven

by true consumer demand.

The business platform should provide both connectivityand the ability to integrate a large variety

of operational systems

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Supply Chain

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ITSupport


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Software Packages

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ARIBA SpendManagement: It helpscompanies driving down enterprise wide spend

mySAP SCM: A complete supply chainplanning solution

iBann: A complete solution suite from demandcollaboration to order management


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Software Packages

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i2 Six: A comprehensive solution suite for spend/production/ revenue/ logistics/ fulfillment optimization

Solution suites for network design & optimization/manufacturing planning & scheduling/ global logistics

management/ service & parts management

JD EDWARD:The advanced planning softwareto synchronize demand & planning/ network

Optimization/ production & distribution planning


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The benefits

gained through

implementation

of Supply Chain

solutions.


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The benefits gained through SCM

solutions

Squeeze inefficienciesThrough the efficient matching of supply and demand, one reduces obsolete or

unwanted inventories deriving savings, energy savings, reduced pollution.

Increase the velocity of businessInformation flows faster through the extended supply chain enabling faster response

lead times inducing faster response time to customer requirements

.Savings and revenue improvements..


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Why is the SMC so important?

Effective management of

supply chain

can lead to up to

5% cost decrease that

has the same impact on profit as30% increase in sales.


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Documents

Lifeline - Supply Chain