Supply Chain Mgt.

Supply Chain Management : 

Supply Chain Management Supply Chain: the sequence of organizations - their facilities, functions, and activities - that are involved in producing and delivering a product or service. Sometimes referred to as value chains

Facilities : 

Warehouses Factories Processing centers Distribution centers Retail outlets Offices Facilities

Functions and Activities : 

Functions and Activities Forecasting Purchasing Inventory management Information management Quality assurance Scheduling Production and delivery Customer service

Typical Supply Chains : 

Typical Supply Chains

Typical Supply Chain for a Manufacturer : 

Typical Supply Chain for a Manufacturer

Typical Supply Chain for a Service : 

Typical Supply Chain for a Service

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What is ‘Supply Chain Management’? ‘Supply Chain management’ is defined as the integration-oriented skills required for providing competitive advantage to the organization that are basis for successful supply chains. A typical supply chain may involve a variety of stages. These supply chain stages include: Customers Retailers Wholesalers/Distributors Manufactures Component/Raw material suppliers Cont….

Need for Supply Chain Management : 

Improve operations Increasing levels of outsourcing Increasing transportation costs Competitive pressures Increasing globalization Increasing importance of e-commerce Complexity of supply chains Manage inventories Need for Supply Chain Management

Bullwhip Effect : 

Bullwhip Effect Distortion of demand information within the supply chain, with different stages having very different estimates of what demand looks like. The result is a loss of supply chain coordination Tier 2 Suppliers Tier 1 Suppliers Producer Distributor Retailer FinalCustomer

Benefits of Supply Chain Management : 

Benefits of Supply Chain Management

Benefits of Supply Chain Management : 

Benefits of Supply Chain Management Lower inventories Higher productivity Greater agility Shorter lead times Higher profits Greater customer loyalty

Elements of Supply Chain Management : 

Elements of Supply Chain Management

Successful Supply Chain : 

Successful Supply Chain Trust among trading partners Effective communications Supply chain visibility Event-management capability The ability to detect and respond to unplanned events Performance metrics

SC Metrics : 

SC Metrics

MEASURES OF SUPPLY-CHAIN PERFORMANCE : 

MEASURES OF SUPPLY-CHAIN PERFORMANCE INVENTORY MEASURES – All methods of measuring inventory begin with a physical count of units, volume, or weight. However, measures of inventories are reported in three basic ways: average aggregate inventory value, weeks of supply and inventory turnover. Average aggregate inventory value= (Number of units of items A typically on hand) * (Value of each unit of item A) + (Number of units of item B typically on hand) *(Value of each unit of item B) Weeks of supply = Average aggregate inventory value Weekly sales (at cost) 3. Inventory turnover = Annual sales (at cost) Average aggregate inventory value

Example of Measuring Supply-Chain Performance : 

Example of Measuring Supply-Chain Performance Suppose a company’s new annual report claims their costs of goods sold for the year is $160 million and their total average inventory (production materials + work-in-process) is worth $35 million. This company normally has an inventory turn ratio of 10. What is this year’s Inventory Turnover ratio? What does it mean?

Example of Measuring Supply-Chain Performance (Continued) : 

Example of Measuring Supply-Chain Performance (Continued) = $160/$35 = 4.57 Since the company’s normal inventory turnover ration is 10, a drop to 4.57 means that the inventory is not turning over as quickly as it had in the past. Without knowing the industry average of turns for this company it is not possible to comment on how they are competitively doing in the industry, but they now have more inventory relative to their cost of goods sold than before.

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PROCESS MEASURES – Supply-chain managers monitor performance by measuring costs, time, and quality. Supply-chain process measures- Quality Cost Flexibility Velocity Customer service FINANCIAL MEASURES- return on assets (ROA), which is net income divided by total assets.

SUPPLY-CHAIN DYNAMICS : 

SUPPLY-CHAIN DYNAMICS What causes supply-chain dynamics? The causes are both external and internal. EXTERNAL SUPPLY-CHAIN CAUSES Typical disruptions include the following. 1. Volume changes: Customers may change the quantity of the product or service they had ordered for a specific data or unexpectedly demand more of a standard product or service. 2. Product and service Mix changes: Customers may change the mix of items in an order and cause a ripple effect throughout the supply chain. 3. Late delivers: Late delivers of materials or delays in essential services can force a firm to switch its schedule from production of one product model to another. 4. Underfilled shipments: Suppliers that send partial shipment do so because of disruptions at their own plants.

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INTERNAL SUPPLY-CHAIN CAUSES – 1. Internally generated shortages: There may be a shortage of parts manufactured by a firm because of machine breakdowns or inexperienced workers. 2. Engineering changes: Changes to the design of products or services can have a direct impact on suppliers. 3. New product or service introductions: New products or services always affect the supply chain. 4. Product or service promotions: A common practice of firms producing standardized products or services is to use price discounts to promote sales. 5. Information errors: Demand forecast errors can cause a firm to order too many, or too few, materials and services.

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the sequence of activities performed by people who are in direct customer contact that enables the supplier organization to meet or exceed customers requirements.

Order fulfillment : 

Order fulfillment In the most general sense, it is the complete process from the point of sales inquiry to delivery of a product to the customer. in the broader sense it refers to the way, firms respond to customer orders Sometimes Order fulfillment is used to describe the more narrow act of distribution or the logistics function

Order fulfillment process : 

Order fulfillment process the possible steps in the process are – Product Inquiry - Initial inquiry about offerings, visit to the web-site, catalog request Sales Quote - Budgetary or availability quote Order Configuration - Where ordered items need selection of options or order lines need to be compatible with each other Order Booking - The formal order placement or closing of the deal (issuing by the customer of a Purchase Order)

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Order Acknowledgment / Confirmation - Confirmation that the order is booked and/or received Order Sourcing / Planning - Determining the source / location of item (s) to be shipped Order Changes - Changes to orders, if needed Order Processing - Process step where the distribution center or warehouse is responsible to fill order (receive and stock inventory, pick, pack and ship orders). Shipment - The shipment and transportation of the goods

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Delivery - The delivery of the goods to the consignee / customer Invoicing / Billing - The presentment of the commercial invoice / bill to the customer Settlement - The payment of the charges for goods / services / delivery Returns - In case the goods are unacceptable / not required