Supply Chain Basics Supply Chain Management IEEM 341 Fall, 2004 Dr. Lu.
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Transcript of Supply Chain Basics Supply Chain Management IEEM 341 Fall, 2004 Dr. Lu.
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Supply Chain Basics
Supply Chain Management IEEM 341Fall, 2004
Dr. Lu
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Outline
• Syllabus of the class
• The definition of supply chain and supply chain management
• The layout of this course
• The goal of this this course
• Read: Chapter 1 and chapter 3
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Syllabus of IEEM 341
• Instructor: Dr. Xiangwen Lu – Phone: 2358-8627– Office: Room 5544. – E-mail: [email protected]
• Tentative office hours: – Tuesday 10-12, Thursday 10-12, by appointm
ent, drop by
• Teaching assistant: Mr. Miao Zhaowei, E-mail: [email protected]
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Tentative Schedule (1)
• Basic Picture about SCM– Week 1-2: Introduction of Supply Chain
Management– Week 3: The Strategic fit and scope; play the
beer game– Week 4: The bullwhip effect
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Tentative Schedule (2)
• Demand Forecasting and planning– Week 5-6, demand forecasting – Week 7: Aggregate Planning and Forward
Buying
• Managing the material flow– Week 8-11: Joint replenishment, forward
buying, risk-pooling, postponement, tailored sourcing
– Week 12: Network design and transportation
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Tentative Schedule (3)• Managing the information flow
– Week 4: The bullwhip effect – Week 8: Guest speakers: the supply chain
management in the internet age – Week 10: Risk pooling, postponement – Week 13: e-business
• Managing the financial flow– Week 13: Supply chain coordination: buy
back, discount and rebate
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Textbook and Reference
• Textbook– Chopra and Meindl : Supply chain manageme
nt, second edition, Prentice Hall.
• Reference– Nahmias: Production and operation analysis, I
rwin.– Thomas: Quantitative methods for business st
udies, Prentice Hall
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Grade Distribution
• Homework 30%
• Mid-term 35%
• Final project 30%
• Class participation 5%
• Project– Finding a supply chain and provide detailed
analysis for the current practice and for the recommendations
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Why SCM hot now?
• 1970, Quality• 1980, lean manufacturing• 1990 and beyond, SCM
– The Increased complexity of supply chain• Emergence of global supply chain• More demanding customers• Shorter production lifecycles• Outsourcing, decentralized control and more…
– Feasibilities• radical improvement in information technology and
communication capabilities
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Definition of Supply Chain
A Network of facilities including• Material supply from the suppliers• Transformation of materials to finished products• Distribution of finished products to the customer
As well as associated information flow and financial flow
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P &G Product of Detergent
Detergentmanufacturer
P&SSupermarket
P&S or third party DC
Customer wants detergent and goes
To Supermarket
PlasticsProducer
ChemicalManufacturer
(e.g. Oil Company)
PackagingFirm
PaperManufacturer
TimberIndustry
Chemical Manufacturer
(e.g. Oil Company)
Manufacturer Wholesaler Retailer Customer
Supplier Supplier Supplier
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Dell Computer
Website or Phone
Dell Assembly Plant
Customer wants To buy computer
Master Board
Hard disk
SRAM
Direct Shipment
Customer’s Order
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Different Names
• Supply network, supply network management
• Demand chain, demand network management, demand network integration
• Value chain, value chain management
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Supply Chain FlowsCapacity, promotion plans, delivery schedulesRaw materials, in-process products, finished goods Credits, payment terms, invoices
InformationMaterialFinance
Sales, orders, inventory, quality, promotion plansReturns, repairs, servicing, recycling, disposal Payments, consignment
InformationMaterialFinance
Suppliers manufacturer Distributors Resellers Customers
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Structures and Players
• Basic supply chain structure– Serial, Distribution and Assemble
• Players/Echelons– Supplier– Manufacturer– Distributor/Wholesaler– Retailer
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Serial Supply Chain
• Boxes=Inventory/process locations• Arrows=product flows
Supplier
Wholesaler
Retailer
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Distribution Network
Supplier
Wholesaler
Retailer
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Assembly Network
Supplier
Manufacturer
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What Is SCM
• SCM is the systematic coordination of activities/processes that procure, produce and deliver products and/or service in a manner that maximizes value to the end customer
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Goal of SCM
• Maximize the overall value generated in the chain
• Generate cost savings and better customer service over the entire supply chain
• Ideal:– Have the right product
– In the right amount
– At the right place
– At the right time
– At the least cost
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SCM v.s. Logistics
• Logistics– Transportation, inventory management, material
management and purchasing– Functional area (s) within a firm
• SCM– Accomplish logistics task from a chain’s perspective– Seeking strategic advantage by coordinating logistics
activities among firms in the supply chain– Creative use of technology, reallocation decision
rights, reconfiguring the supply chain network
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Pampers
• Pampers is diaper produced by Procter and Gamble
• The consumers are babies– They consume the product at pretty steady
rate
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Bullwhip Effect Example (P & G)
Lee et al., 1997, Sloan Management Review
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Bullwhip Effect
• The variability is amplified when we move up along the chain
DemandOrders by the retailer
Orders by the manufacturer
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Ways to Reduce Bullwhip Effect
• Good demand forecasting– We will discuss how to make good forecasting based
on known information
• Information sharing– Value of information sharing and VMI will be
addressed– E-biz will be discussed
• Coordination– Several kinds of mechanism to coordinate the chain
will be introduced
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Course Layout
• Demand forecasting• Managing the flow of material
– Inventory, transportation and network design
• The role of information and technology– Value of information sharing, e-business, e-commerce
• Managing relationship: coordination and integration– Outsourcing, partnership, incentives, contracts
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Different Distribution System
• Central warehousing Cross-docking Direct shipment
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Recent Successful Innovations• Cross docking
– Wal-Mart
• Direct Shipments– Amazon.com, Dell, eBay
• Vendor managed inventory (VMI) programs– Wal-Mart and Procter & Gamble
• Postponement– Hewlett-Packard
• Assemble to order– Dell
• Dynamic pricing– eBay (bid), IBM and airlines
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Course Objectives
• Questions– Why are these innovations successful?– Can they be simply copied by other company?– Are there any theory or guidelines?– Can we innovate too?
• We are trying to answer these questions by– Studying the basic concepts and theory– Listening to guest speaker– Analyzing the case
• A bigger goal: a way of thinking
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Summary
• What is supply chain• What is supply chain management (SCM)• Bullwhip effect• Successful innovations • Course layout and course goal• Next week
– The drivers for the performance of the supply chain– The basic facts and their implications in the supply ch
ain management