SUPPLY CHAIN MANAGEMENT

PendahuluanDefinisi

KlasifikasiAplikasi

DEFINISI

• Supply chain management (SCM) is the oversight of materials, information, and finances as they move in a process from supplier to manufacturer to wholesaler to retailer to consumer. Supply chain management involves coordinating and integrating these flows both within and among companies. It is said that the ultimate goal of any effective supply chain management system is to reduce inventory (with the assumption that products are available when needed). As a solution for successful supply chain management, sophisticated software systems with Web interfaces are competing with Web-based application service providers (ASP) who promise to provide part or all of the SCM service for companies who rent their service.

ALIRAN SCM

Supply chain management flows can be

divided into three main flows:

• The product flow

• The information flow

• The finances flow

• The product flow includes the movement of goods from a supplier to a customer, as well as any customer returns or service needs. The information flow involves transmitting ordersand updating the status of delivery. The financial flow consists of credit terms, payment schedules, and consignment and title ownership arrangements.

• There are two main types of SCM software: planning applications and execution applications. Planning applications use advanced algorithms to determine the best way to fill an order. Execution applications track the physical status of goods, the management of materials, and financial information involving all parties

• Some SCM applications are based on open data models that support the sharing of data both inside and outside the enterprise (this is called the extended enterprise, and includes key suppliers, manufacturers, and end customers of a specific company). This shared data may reside in diverse database systems, or data warehouses, at several different sites and companies.

• By sharing this data "upstream" (with a company's suppliers) and "downstream" (with a company's clients), SCM applications have the potential to improve the time-to-market of products, reduce costs, and allow all parties in the supply chain to better manage current resources and plan for future needs.

Here's an example dealing with a computer printer:

• Depending on the situation, the supply chain may include major product elements, various suppliers, geographically dispersed activities, and both upstream and downstream activities. It is critical to go beyond your immediate suppliers and customers to encompass the entire chain, since hidden value often emerges once the entire chain is visualized. For example, a diesel engine manufacturer may be able to integrate a GPS locator system into their engine control system. Their immediate customer, a heavy truck manufacturer, may see no need for this functionality. However, the downstream customer, a trucking company with a large fleet, may be very interested in a locator system. Understanding the value to the downstream customer is part of the supply chain management process.

Three Flows: Materials, Information, and Financial

• There is more to supply chain management than just material flows; information flows and financial flows are also important. Consider the figure below, which lists examples of material, information, and financial flows in each pull-down menu. For each row, choose the appropriate item. For example, if you feel that "products and parts" are materials that flow downstream from suppliers to customers, select "Product and parts" from the menu under "Material" in the downstream area. When you have chosen an answer for all six areas, click "Check Answers" at the bottom to see how you did.

DOWNSTREAM

BTO vs BTS

• Companies today are often presented with a myriad of supply chain strategies. How can you learn more about these strategies and decide which ones will help you the most? Are you operating the most appropriate type of supply chain? Are you spending time and money on strategies that aren't providing the maximum benefit? This is the first of two modules on Supply Chain Strategies designed to help you answer these questions.

• You will begin by looking at product and supply chain characteristics and learning a framework for aligning the right strategies for your needs; you'll then learn strategies to improve efficiency and reduce costs. You will play a version of the classic "Beer Game" simulation used by business schools and executive training programs. Through the simulation you will see firsthand the causes of the Bullwhip Effect, which leads to major supply chain inefficiencies, including unpredictable lead times, stockouts, mistrust between supply chain partners, and higher manufacturing and transportation costs. Once you have covered the causes of these problems, you will learn the best strategies to mitigate or remove them.

SUPPLY CHAIN MANAGEMENT

• A supply chain is a network that includes vendors of raw materials, plants that transform those materials into useful products, and distribution centers to get those products to customers

• Without any specific effort to coordinate the overall supply chain system, each organization in the network has its own agenda and operates independently from the others. However, such an unmanaged network results in inefficiencies. For example, a plant may have the goal of maximizing throughput in order to lower unit costs. If the end demand seen by the distribution system does not consume this throughput, there will be an accumulation of inventory. Clearly, there is much to be gained by managing the supply chain network to improve its performance and efficiency.

Decision Variables in Supply Chain Management

In managing the supply chain, the following are decision variables: • Location - of facilities and sourcing points • Production - what to produce in which

facilities • Inventory - how much to order, when to

order, safety stocks • Transportation - mode of transport,

shipment size, routing, and scheduling

The Bullwhip Effect

• A problem frequently observed in unmanaged supply chains is the bullwhip effect. This effect is an oscillation in the supply chain caused by demand variability. This problem must be addressed in order to avoid the poorer service and higher costs that stem from it.

Inventory Management

• Variation in demand increases the challenge of maintaining inventory to avoid stockouts. There exist techniques for inventory management that optimize the performance for a given set of parameters.

Vendor Managed Inventory

• An effective way to improve supply chain performance is for the vendor to determine the quantities that should be ordered by its downstream customers, rather than the other way around. This approach is known as Vendor Managed Inventory, abbreviated VMI. While its implementation faces practical challenges, it can be an effective method for reducing inventory and stock-outs.

Accurate Response

• In the classical news vendor problem, one must decide the best order quantity that maximizes profits given that some money is lost if all of the units do not sell and given the fact that potential profits are lost if the units sell out. In some situations, a second order can be placed once the sales period begins. Such an opportunity helps one to better match supply and demand, since the first order can be a quantity equal to the expected demand minus a selected number of standard deviations ( 2, for example) below that mean. Of course, any minimum order quantities must be taken into account.

• In many industries, the variance in demand is proportional to the variance in the forecasts for that demand. This relationship even exists in stock price forecasting. When this relationship holds, it can be used to estimate the mean demand and its variance, and these values can be used in optimization models.

For seasonal goods such as winter sportswear, which has a short selling season and long lead

times, a firm can do several things to better match supply and demand:

• Additional events can be held before large trade fairs in order to secure orders further in advance.

• Supplier capacity can be reserved without specifying the exact product mix. This postponement of the final mix has benefits similar to those of postponing product customization until the distribution center.

• Common parts can be used in designs in order to pool some of the variation between individual demands.

Supply Chain Structure

• The performance of a supply chain is measured in terms of profit, average product fill rate, response time, and capacity utilization.

Profit projections may improve if another parameter is relaxed, but one must consider the impact of all aspects of the relaxed parameter on profits. For example, if customers are lost because response time is too slow, then the profit projections may be artificially high.

• Average fill rate can be improved by carrying more inventory in order to reduce stock-outs. The optimal balance must be achieved between inventory cost and lost profits due to stock-outs.

Response time often can be improved at the expense of higher overall costs. As with fill rate, the optimal trade-off should be found. If response time is sacrificed in order to achieve higher profits, sales forecasts may have to be modified if the elasticity of demand with respect to service is significant at the chosen service levels.

• Capacity utilization should be high enough to reduce overhead sufficiently, but not so high that there is no room to grow or to handle fluctuations in demand. Problems often are encountered when capacity utilization exceeds 85%. Lower capacity utilization in effect buys an option for increased output in the future. Higher capacity utilization decreases downside risk since costs are reduced, but also limits the upside gain if future demand should outstrip supply.