Global Supply Chain Management by Professor S. Mathur (smathur.com)

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GLOBAL SUPPLY-CHAIN MANAGEMENT Sameer Mathur, Ph.D.

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Agenda

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Sameer Mathur smathur.com Asst. Professor (Marketing) 2009 – 2013 Ph.D. and M.S. (Marketing) 2003 – 2009

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Individual companies no longer compete as autonomous entities but as supply-chain networks. Supply-chain management (SCM): cooperation of intra and intercompany integration and management. Supply Chain Networks

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3 DISTINCT QUALITIES Top Performing Supply Chains

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Sales forecasting Customer service Distribution Materials management Purchasing Production planning *These processes are critical to the success of manufacturers, wholesalers, or service providers alike. 6 Key Supply-Chain Activities

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New “Pull” model Traditional “Push” model Supply Chains: From Push to Pull

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From Push to Pull

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Supply Chains: From Push to Pull

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E xplosive growth worldwide 266 new Zara locations in first 9 months of 2009 (90 of which were in Asia) Zara’s Global Business Model

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Encourages occasional shortages to give its products an “air of exclusivity.” Prefers to follow trends : Fashion at an affordable price. Does not collaborate with big name designers or use multimillion-dollar advertising campaigns. Zara’s Global Business Model

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Balance between flexibility and cost: fashion items made by company-owned factories in Spain Concentrated activities in 11,000-square-foot hall where tightly synchronized teams work Managed to release one of hottest trends in just 4 weeks in 2006! Inditex headquarters Arteixo , Spain Centralized design, production, distribution Zara’s Global Business Model

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Mini-case: Zara

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1. Supply-chain network structure 2. Developing supply-chain business processes 3. Managing the supply-chain activities Three Principle Components Supply-Chain Management (SCM)

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Consists of the member firms and the links between these firms Primary members : carry out value-adding activities Supporting members : provide resources, knowledge etc for primary members ex. companies that supply production equipment, print marketing brochures, provide administrative assistance Supply-Chain Network Structure

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Horizontal Position: where a company lies between supply chain endpoints. Vertical: number of companies at each tier. Horizontal: number of tiers across the supply chain Supply-Chain Network Structure

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Three Structural Dimensions : Supply-Chain Network Structure

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Business processes: Activities that produce value. Management’s task: I ntegrate these business processes into value delivery network Supply-Chain Business Processes

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Supply-chain management function a Functional structure a Process structure The number of business processes that is critical or beneficial to integrate and manage between companies will likely vary. Managing the Supply-Chain Activities

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With the shift from “push” to “pull”, SCM has changed - the integration of e-commerce has produced: Greater cost efficiency Distribution flexibility Better customer service The ability to track and monitor shipments Managing the Supply-Chain Activities

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Differentiate best companies from rivals. More critical in recent years because sudden shocks to supply chains have become more frequent. Supply-Chain Agility and Resiliency

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Help supply chains recover more quickly from such sudden setbacks. Key to increasing agility and resilience is building flexibility into the supply-chain structure, processes, and management. Supply-Chain Agility and Resiliency

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Focus Competing basis Companies Operational excellence Creating supply chains that deliver goods and services to consumers as quickly and inexpensively as possible. Invest in state-of-the art technologies. Employ metrics and reward systems. Aimed at boosting supply-chain performance. Customer intimacy A focus on efficiency is not enough – agility is a key factor. Able to add and delete products and services as customer needs change. Product leadership Able to adapt their supply chains to changes in technology and capitalize on new ideas. A focus on efficiency is not enough – agility is a key factor. Focus Making Supply Chains Adaptable

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Making Supply Chains Adaptable All companies must align the interests of all the firms in the supply network so that companies optimize the chain’s performance when they maximize their interests.

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Needed to redesign distribution network. Decided to outsource this task to UPS Supply Chain Solutions. Nikon, with the help of UPS, focuses on Supply-Chain Innovation

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MANUFACTURING CENTRES South Korea Japan Indonesia Latin America Caribbean North America RETAILERS Products are shipped from manufacturing centres to UPS HQ in Louisville, Kentucky They are then “kitted” and distributed to retailers

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The Result… Digital cameras are Nikon’s fastest-growing product category Improved supply chain performance & customer service From manufacturing facility to retailer in as little as 2 days Accurate & timely information throughout supply chain

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Goal: Interests of all supply chain members should be aligned. Otherwise supply chain performance will be affected. Roles & responsibilities must be carefully defined. Supply-Chain Alignment

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Ways to Align Creating Supply-Chain Alignment

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Prerequisite: availability of information - so that all the companies in a supply chain have equal access to forecasts, sales data, and plans. Next: partner roles and responsibilities must be carefully defined – so that there is no scope for conflict. Finally: align incentives – so that when companies try to maximize returns, they also maximize the supply chain’s performance. Creating Supply-Chain Alignment

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World’s largest food company $70 billion in annual sales Operations in 200+ countries; 511 factories; 247,000 employees 127,000 different products In other words, thousands of supply chains! Nestlé

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Launched GLOBE (Global Business Excellence) Program aimed at a single set of procurement, distribution, and sales management systems Three baseline goals: harmonize processes standardize data standardize systems Nestlé Pieces Together its Global Supply Chain

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Goal: Single procurement, distribution, sales management system for all 200+ countries Before: 14 separate SAP systems Cost: $2-4 billion Timeline: 3.5 years A truly global firm: “the first company to operate in hundreds of countries in the same manner as if it operated in one.” Nestlé Pieces Together its Global Supply Chain

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Today, companies compete as Supply-Chain Networks instead of autonomous entities The switch from “push” to “ pull ” models Top-performing supply chains possess: agility, adaptability, alignment. Supply chain Management (SCM) has 3 principle components: Supply-chain network structure Developing supply-chain business processes Managing the supply chain activities Summary

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The best companies create supply chains that can respond to sudden and unexpected changes in markets = agility and flexibility are helpful qualities. Companies competing on the basis of operational effectiveness , customer intimacy , or product leadership have different focuses in order to adapt their supply networks. Leading companies aim to align the interests of all the firms in their supply chain with their own to maximize the chain’s performance. Summary

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Summary

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Recommended Reading

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Over 500,000 views from more than 95 countries http://www.slideshare.net/ProfessorMathur/ Sameer Mathur smathur.com http://www.facebook.com/ProfessorSameerMathur/

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