Professional Documents
Culture Documents
Definitions
and the Raw materials Work-in-process (WIP) inventory Finished products that flow between the facilities
3
Material Costs
Transportation Costs
Transportation Costs
Manufacturing Costs
Plan Plan
Source Source
Make Make
Deliver Deliver
Buy Buy
Suppliers
Manufacturers
Transportation Transportation Costs Costs Transportation Material Costs Manufacturing Costs Inventory Costs Costs
System-wide costs are minimized and Service level requirements are satisfied
6
U.S. firms spent $898 billion (10% of GDP) on supply-chain related activities in 1998
9
The growth of technologies such as the Internet enable greater collaboration between supply chain trading partners
If you dont do it, your competitor will Major buyers such as Wal-Mart demand a level of supply chain maturity of its suppliers Firms have access to multiple products (e.g., SAP, Baan, Oracle, JD Edwards) with which to integrate internal processes
10
Multitier Supplie rs
Sales
Sales
Time
Sales
Time
Time
Sales
Time
Bullwhip Effect
11
Lead time
Batch ordering
Nevertheless, forecasts (or plans, if you prefer) are important management tools when some methods are applied to reduce uncertainty
14
Purchasing
SOURCE
MAKE
DELIVER
SELL
15
What are our core supply chain capabilities and which are not? Does our product design mandate different outsourcing approaches? Risk management How are inventory holding and transportation costs affected by product design? How does product design enable mass customization?
16
BENEFITS
Low manufacturing costs; meet customer demands quickly Customization; reduced inventory; improved service levels Low inventory levels; wide range of product offerings; simplified planning
Make to Order
Configure to Order
Engineer to Order
Source: Simchi-Levi 17
Delivery Performance Inventory Reduction Fulfillment Cycle Time Forecast Accuracy Overall Productivity Lower Supply-Chain Costs Fill Rates Improved Capacity Realization
Source: Cohen & Roussel
18
Create unique supply chain configurations that align with your companys strategic objectives
Operations strategy Outsourcing strategy Channel strategy Customer service strategy Asset network Forecasting Collaboration Integration
19
Reduce uncertainty
20
Source Source
Make Make
Deliver Deliver
Sell Sell
Each facility further away from actual customer demand must make forecasts of demand Lacking actual customer buying data, each facility bases its forecasts on downstream orders, which are more variable than actual demand To accommodate variability, inventory levels are overstocked thus increasing inventory carrying costs
Its estimated that the typical pharmaceutical company supply chain carries over 100 days of product to accommodate uncertainty
21
Panels of Experts Internal experts External experts Domain experts Delphi technique Accurate Forecasts Causal Analysis
Time-Series Methods
23
24
25
None or little inventory held Fast information flow mechanisms Decreased lead times Decreased retailer inventory Decreased variability in the supply chain and especially at manufacturers Decreased manufacturer inventory More efficient use of resources More difficult to take advantage of scale opportunities Examples: Dell, Amazon
26
Final product assembly is done based on customer demand for specific product configurations Supply chain timeline determines push-pull boundary
Generic Product Push Strategy
PushPull Boundary
Raw Materials
27
Industries where:
Demand is uncertain Scale economies are High Low economies of scale
Where do the following industries fit in this model: Automobile? Aircraft? Fashion? Petroleum refining? Pharmaceuticals? Biotechnology? Medical Devices?
Demand Uncertainty
Furniture
Industries where:
Standard processes are the norm Demand is stable Scale economies are High
Economies of Scale
PULL
Maximize Service Level Low
High
Resource Allocation
Responsiveness
Long
Short
Order Fulfillment
Source: Simchi-Levi 29
Why collaborate?
30
Manufacturer
Distributors/ Wholesalers
Logistics Providers
31
CUSTOMERS
MATERIAL SUPPLIERS
SERVICE SUPPLIERS
Reduced inventory Increased revenue Lower order management costs Higher Gross Margin Better forecast accuracy Better allocation of promotional budgets
Lower freight costs Reduced inventory Faster and more reliable Lower warehousing costs Lower material acquisition costsdelivery Lower capital costs Fewer stockout conditions Reduced depreciation Lower fixed costs
Extent of Collaboration
Coordinated Collaboration
Cooperative Collaboration
Higher levels of collaboration imply the need for both trading partners to have equivalent (or close) levels of supply chain maturity Synchronized collaboration demands joint planning, R&D and sharing of information and processing models
Movement to real-time customer demand information throughout the supply chain
Low Return
Few
33
34
35
36
SCC sponsors and supports educational programs including conferences, retreats, benchmarking studies, and development of the Supply-Chain Operations Reference-model (SCOR), the process reference model designed to improve users' efficiency and productivity Promotes research and thought leadership in the supply chain management area Adoption of common standards for reference to process, information and material goods flows is essential to enable trading partner collaboration
37
Business Process Reengineering Capture the as-is Capture the as-is state of aaprocess state of the and derive process and derive the desired to-be desired to-be future state future state
Benchmarking
Characterize the Characterize management the management practices and practices and software solutions software in that resultsolutions that result in best-in-class best-in-class performance performance
38
SCOR Structure
Plan
Deliver Return
Source Return
Make
Deliver Return
Source Return
Make
Deliver Return
Source Return
Make
Deliver Return
Source Return
Suppliers Supplier
Supplier
Internal or External
Your Company
Customer
Internal or External
Customers Customer
SCOR Model
Building Block Approach Processes Best Practice Metrics Technology
39
Suppliers
Source
S1 Source Stocked Products S2 Source MTO Products
Make
M1 Make-to-Stock M2 Make-to-Order
Deliver
D1 Deliver Stocked Products D2 Deliver MTO Products
M3 Engineer-to-Order
Return Source
Return Deliver
Enable
40
Customers
SCOR Level 1
Material Flow
AS IS Geographic Map AS IS Thread Diagram Design Specifications TO BE Thread Diagram TO BE Geographic Map
SCOR Level 2
SCOR Level 3
Implement Implement supply chain supply chain Processes and Processes and Systems Systems
41
42
Plan
Source Return
Make
Deliver
Source
Make
Deliver
Source
Return
Return
Return
Return
Suppliers Supplier
Supplier
Your Company
Customer
Customers Customer
Internal or External
Internal or External
Doctors, Hospitals
43
Plan
Sales
Deliver Return
Source Return
Make
Deliver Return
Source
Make
Deliver
Source Make Deliver Return Source Return
Return
Return
Return
Suppliers Supplier
Supplier
Your Company
Customer Plan
Customers Customer
Internal or External
Internal or External
Deliver Return
Source Return
Make
Deliver Return
Source
Make
Deliver
Source Make Deliver Return Source Return
Return
Return
Return
Suppliers Supplier
Supplier
Your Company
Customer
Customers Customer
44
Internal or External Internal or External