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Transcript of Supply Chain Management Training Kit v5.0
8/2/2019 Supply Chain Management Training Kit v5.0
http://slidepdf.com/reader/full/supply-chain-management-training-kit-v50 1/59
Agenda
Supply Chain Flows
What is Supply Chain and SupplyChain Management
Why is SCM
SCM Evolution
Supply Chain Decision
Process View of a Supply Chain
Emerging Trends in Semiconductor & SCM help
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A supply chain is a network of facilities that procure rawmaterials, transform them into intermediate goods and thenfinal products, and deliver the products to customers through adistribution system (Lee and Billington )
A supply chain is a network of facilities and distribution options that
performs the functions of procurement of materials, transformation of
these materials into intermediate and finished products, and the
distribution of these finished products to customers.
(Ganeshan and Harrison 19)
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Supply chain management deals with the management of materials, information and financial flows in a networkconsisting of suppliers, manufacturers, distributors, andcustomers (Stanford Supply Chain Forum, 1999)
The definition -American professional association (APICS)
³Supply Chain Management encompasses the planning and
management of all activities involved in sourcing, procurement,
conversion, and logistics management activities. Importantly, it also
includes coordination and collaboration with channel partners, which can
be suppliers, intermediaries, third-party service providers, and customers´
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upstream
downstream
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Design Source Negotiate Buy Make Move Store Service Fulfill Sell Market
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Agenda
Supply Chain Flows
What is Supply Chain and SupplyChain Management
Why is SCM
SCM Evolution
Supply Chain Decision
Process View of a Supply Chain
Emerging Trends in Semiconductor & SCM help
6
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Excess Inventory costs
Excess freight charges
Lost sales / Stock outages
Wasted time and energyExtra staff
Customer dissatisfaction
Capital costs
Real Estate Costs
Manufacturing Costs
Globalization
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` Core Organizational Priorities Cost reduction
Organizational growth and survival
Creation of new markets
Improved customer service
Reduced cycle time
Increased inventory turnover
` Key problems with current SCs Un-integrated operations inside own organizations
Weak IT infrastructure outside own organizations Differing operating practices between own organization and vendors/
customers
Impact of global players on the industry
8
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` Lack of Supply Chain integration Generally very few firms have either tightly coupled or completely loosely
defined supply chain relationships.
Push Pull strategy is therefore common.
Greater degree of coupling with suppliers compared with retailers anddistributors.
` Lack of penetration of IT Systems in SC operations CBS are mostly used for financial and accounting purposes. Purchasing
and sales functions come next. The use is rather low for logistics andwarehousing functions.
Use of e- mail is very common to communicate with other organizations.
Use of EDI is rather low.
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Agenda
Supply Chain Flows
What is Supply Chain and SupplyChain Management
Why is SCM
SCM Evolution
Supply Chain Decision
Process View of a Supply Chain
Emerging Trends in Semiconductor & SCM help
10
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1950
Inbound/
outbound
Inventoryflow
1970
Materialrequirement
Planning
1980
JIT
1993
ActualSCM
2000
Advance
Planning,Webenabled
In-House
Manageable
Simple
Complex
Outsource
Globalization
SaaS
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` The NET:
Predetermined pricing is replaced by auction based price bidding. Sourcing is becoming global as suppliers all over the world sell on the
NET.
Long term partnerships with vendors are replaced by deal basedrelationships.
Buyers compete with one another to secure the best and cheapestsuppliers.
` The STRATEGY : Increasing customization requires versatile suppliers.
Competitive strategy requires the supply chain has to be fast and flexible.
Firms in mature markets build long supply chains and brand the product.
Companies that compete on cost, pick suppliers on the basis of price.
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SupplyChain LogisticsSourcing
Procurement
SupplyNetwork
JIT Movement
Tracking Capability
Shipping Accuracy
Functions
E-ENVIRONMENT
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Right products
Right quantities
Right place
Right moment
« at minimal cost.
The 4 R¶s of SCM
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Agenda
Supply Chain Flows
What is Supply Chain and SupplyChain Management
Why is SCM
SCM Evolution
Supply Chain Decision
Process View of a Supply Chain
Emerging Trends in Semiconductor & SCM help
15
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Customer
Information
Product
Funds
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second-tier
suppliers
first-tier
suppliers
first-tier
customers
second-tier
customers
For Company A
Internal supply network
Immediate supply network
Total supply network
Company B
Company C
X
X
X
XX
Supply side Demand side
U p s t r e a m
D o w n s t r e a m
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` Raw materials enter into a manufacturing organization via a supply
system and are transformed into finished goods.` Finished goods are then supplied to the consumers through a
distribution system.
` Several companies linked together in the process, each adding valueto the product as it moves through the supply chain.
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Information Flow
Products or services usually flow fromsupplier to customer. Design and
demand information usually flow from
customer to supplier.
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Agenda
Supply Chain Flows
What is Supply Chain and SupplyChain Management
Why is SCM
SCM Evolution
Supply Chain Decision
Process View of a Supply Chain
Emerging Trends in Semiconductor & SCM help
20
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Supplier
Manufacture
Manufacture
Warehouse
Warehouse
Customer
Customer
Customer
Customer Where to acquire
materials
components?
Where to produce &assemble goods?
How muc h to produce?
When to produce?
What fleet size?
What vehicle routes?
What shipment size?
How muc h to ship?
When to ship?
What modes of transportation?
Where to store finished goods?
Where to store spare parts? How muc h to store?
How to retrieve from storage?
What markets to serve?
What level of service?
What level of service cost?
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Strategize location Produc tMix ««
Plan ProductionSupply Demand
Match«..
Execute Pick Pack ShipDeliver
Replenishments «..
Collaborate Monitor Control
Months
/ Years
Days/
Weeks
Hours/
Minutes
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` Decisions about the structure of the SC and what processes each
stage will perform
`
` Strategic SC decisions
Facilities - Locations and capacities
Inventory made or stored at various locations
Transportation Modes
Information systems
` SC design must support strategic objectives
` SC design decisions are long-term and expensive to reverse ± must
take into account market uncertainty
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` How do we achieve Corporate Strategic Goals
` Start with a forecast of demand in the coming year
`
` Planning/Policy decisions:
Which markets will be supplied from which locations?
Planned buildup of inventories
Subcontracting, backup locations
Inventory policies
Timing and size of market promotions
` Must consider in demand uncertainty, exchange rates, competition
over the time horizon
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` Time horizon is weekly or daily
` Decisions regarding individual customer orders
` SC structure and operating policies are determined
` Goal is to implement the operating policies as effectively as possible
` Allocate orders to inventory or production, set order due dates,
generate pick lists at a warehouse, allocate an order to a particular
shipment, set delivery schedules, place replenishment orders
` Much less uncertainty (short time horizon)
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Agenda
Supply Chain Flows
What is Supply Chain and SupplyChain Management
Why is SCM
SCM Evolution
Supply Chain Decision
Process View of a Supply Chain
Emerging Trends in Semiconductor & SCM help
26
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` Cycle view: processes in a supply chain are divided into a series of
cycles, each performed at the interfaces between two successive
supply chain stages
` P
ush/pull view: processes in a supply chain are divided into twocategories depending on whether they are executed in response to
a customer order (pull) or in anticipation of a customer order (push)
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Customer Order Cycle
Replenishment Cycle
Manufacturing Cycle
Procurement Cycle
Customer
Retailer
Distributor
Manufacturer
Supplier
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` Each cycle occurs at the interface between two stages
` Customer order cycle (customer-retailer)
` Replenishment cycle (retailer-distributor)
` Manufacturing cycle (distributor-manufacturer)
` Procurement cycle (manufacturer-supplier)
` Cycle view defines processes involved, the owners of each process.
` Specifies the roles and responsibilities of each member and thedesired outcome of each process.
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` Involves all processes directly involved in receiving and filling the
customer¶s order
` Customer arrival
` Customer order entry
` Customer order fulfillment
` Customer order receiving
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Customer
Arrival
Customer
Order Entry
Customer
Order Receiving
Customer
Order Fulfillment
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` All processes involved in replenishing retailer inventories (retailer is
now the customer)
` Retail order trigger
` Retail order entry
` Retail order fulfillment
` Retail order receiving
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Retail Order
Trigger
Retail Order
Entry
Retail Order
Receiving
Retail Order
Fulfillment
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` All processes involved in replenishing distributor (or retailer)
inventory
` Order arrival from the distributor, retailer, or customer
` Production scheduling
` Manufacturing and shipping
` Receiving at the distributor, retailer, or customer
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Order
Arrival
Production
Scheduling
Receiving
Manufacturing and
Shipping
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` All processes necessary to ensure that materials are availableaccording to schedule
` Manufacturer orders components from suppliers to replenish
component inventories
` However, component orders can be determined precisely from
production schedules (different from retailer/distributor orders that are
based on uncertain customer demand)
` Important that suppliers be linked to the manufacturer¶s productionschedule
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Procurement,
Manufacturing and
Replenishment cycles
Customer Order
Cycle
Customer
Order Arrives
PUSH PROCESSES PULL PROCESSES
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` A push / pull view of the Supply Chain categorizes processes based on
whether they are initiated in response to a customer order ( pull ) or inanticipation of a customer order ( push ). This view is very useful when
considering strategic decisions relating to supply chain design.
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Pull Process
Customer order
arrives
Push Process
Customer order
cycle
Replenishment,
ManufacturingProcurement
cycles
Manufacturer
Supplier
Customer
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Pull Process
Push Process
Customer order&
manufacturing
cycle
Procurement
cycle
Customer order
arrives
Customer
Manufacturer ( Dell )
Supplier
Dell Company Supply Chain
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` Supply chain processes fall into push or pull depending on times of
execution and customer demand
` Pull: execution is initiated in response to a customer order (reactive) ±
Made or Assembled to Order
` Push: execution is initiated in anticipation of customer orders
(speculative) ± Made or Assemble to Stock
` Push/pull boundary separates push processes from pull processes
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` P/P are strategic decisions of SC design ± a global view of how SCprocesses relate to customer orders
` Can combine the push/pull and cycle views
` The relative proportion of push and pull processes often impact
supply chain performance
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` Production decisions based on long-term forecasts
` Ordering decisions based on inventory & forecasts
` What are the problems with push strategies?
Inability to meet changing demand patterns
Obsolescence
The bullwhip effect:
x Excessive inventory
x Excessive production variability
x Poor service levels Hard to predict production capacity or transportation capacity
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` Production is demand driven
Production and distribution coordinated with true customer demand Firms respond to specific orders
` Pull Strategies result in: Reduced lead times (better anticipation)
Decreased inventory levels at retailers and manufacturers
Decreased system variability
Better response to changing markets
` But: Harder to leverage economies of scale
Doesn
t work in all cases
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Push Strategy Pull Strategy
Raw
Materials
End
Customer
Push-
Pull
Boundary
Supply chain time line
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`
A shift from a Push System... Production decisions are based on forecast
` «to a Push-Pull System Initial portion of the supply chain is replenished
based on long-term forecastsx For example, parts inventory may be replenished based on
forecasts
Final supply chain stages based on actualcustomer demand.x For example, assembly may based on actual orders.
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` Build to Stock
Forecast demand
Buys components
Assembles computers
Observes demand andmeets demand if possible.
` A traditional push system
` Build to order
Forecast demand
Buys components
Observes demand
Assembles computers Meets demand
` A push-pull system
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Pull Push
Pull
Push
Demanduncertainty
Delivery cost
Unit price
L H
H
L
Economies
of Scale
IComputers IIFurniture
IV
Books & CDs
III
Grocery
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` Higher demand uncertainty suggests pull
` Higher importance of economies of scale suggests push
` High uncertainty/ EOS not important such as the computer industry
implies pull
` Low uncertainty/ EOS important such as groceries implies push
Demand is stable
Transportation cost reduction is critical
Pull would not be appropriate here.
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` Low uncertainty but low value of economies of scale (high volumebooks and CDs)
Either push strategies or push/pull strategies might be mostappropriate
` High uncertainty and high value of economies of scale For example, the furniture industry
How can production be pull but delivery push?
Is this a ³pull-push´ system?
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Push Pull
Objective Minimize cost Maximize service level
Complexity High Low
Focus Resource allocation Responsiveness
Lead time Long Short
Processes Supply chain planning Order fulfillment
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` The push section:
Uncertainty is relatively low
Economies of scale important
Long lead times
Complex supply chain structures:
` Thus
Management based on forecasts is appropriate
Focus is on cost minimization
Achieved by effective resource utilization ± supply chain
optimization
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` The pull section:
High uncertainty
Simple supply chain structure
Short lead times
` Thus
Reacting to realized demand is important Focus on service level
Flexible and responsive approaches
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` The push section requires:
Supply chain planning
Long term strategies
` The pull section requires:
Order fulfillment processes Customer relationship management
` Buffer inventory at the boundaries:
The output of the tactical planning process
The input to the order fulfillment process.
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Agenda
Supply Chain Flows
What is Supply Chain and Supply
Chain Management
Why is SCM
SCM Evolution
Supply Chain Decision
Process View of a Supply Chain
Emerging Trends i & SCM help
55
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Increased levels of outsourcing
± Multiple levels of outsourcing
Increased focus on customer intimacy
± Proliferation of VMI/SMI/CMI programs
Increased focus on Tactical and Business planning
± Higher value add planning processes Increased focus on the complete value chain
± More collaboration between strategic customers and suppliers
Demand shaping based on business strategy, manufacturing constraints,
and inventory
± Demand creation based on intelligent pricing tied to availability Increased focus on CRD performance improvement
± To maintain/increase market share
Tighter coupling between planning and execution
± Exception based intervention in execution of plans
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Maximize
capacity/equipment
utilization across business
divisions.
Optimize profits based on
product mix.
Increased outsourcing.
Extensive Capital
Investment
Strategic Corporate
Planning.
Good procurement
system
Profit Optimization.
Issue Industry Response
Instant response to requests.
Perfect delivery.Increasing customer
demands
Shrinking product life
cycles
Shorter lead times andfaster time to market.
Reduce excess/obsolete
Inventory.
Integrated Planning &
Fulfillment.
Interactive delivery
quoting.
Inventory planning.
SCM systems can do
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Demand variabilityIncreased forecast
accuracy
Carefully managed
response buffers
Intense competition Global penetration
Cost effective
operations
Customer satisfaction
Integrated Value Chain
Planning.
Integrated Value Chain
Planning.
Customer Program
Management.
Issue Industry Response SCM Systems Can Do
Long manufacturingcycle times
Strategic positioning of
inventory along the
supply chain
Inventory planning.
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Design and validate your supply chain strategy before youdeploy ± define scope and scale
Collaborate on demand and gain consensus for the mostaccurate forecast ± execution
Collaborate, optimize, monitor and control, production, inventory,distribution and transportation simultaneously across multipleenterprises ± global optimization
Execute, monitor, and review your SCM performance carefullywith predefined KPI and objectives ± operations evaluation