SUPPLY CHAIN/LOGISTICSPowerPoint PresentationIMPORTANCE OF SUPPLY CHAIN MANAGEMENT AND THE ART OF WARSlide 4Supply Chain Management DefinedAPICS DefinitionSUPPLY CHAIN – A BETTER DEFINITIONSlide 8Slide 9Supply Chain Activities ContinuedOVERVIEW OF SUPPLY CHAIN MANAGEMENTINFORMATION SHARING IN THE SUPPLY CHAINSupply Chain UncertaintyInformation in the Supply ChainSlide 15Bar CodesIT IssuesCustomer Service and Supply Chain ManagementPerfect Order FulfillmentPERFECT ORDER FULFILLMENTPROCUREMENTSuppliersSourcingSupply Chain Operations Reference Model and the Supply Chain CouncilSCOR IS STRUCTURED AROUND FIVE DISTINCT MANAGEMENT PROCESSESDISTRIBUTIONDistribution Centers and WarehousingRailroadsTRUCKINGAirPackage CarriersIntermodalWaterPipelinesGlobal Supply ChainGlobal Supply Chain ProblemsSummarySUPPLY CHAIN/LOGISTICSIMPORTANCE OF SUPPLY CHAIN MANAGEMENT AND THE ART OF WAR•“War is a matter of vital importance to the state; the province of life or death; the road to survival or ruin. It is mandatory that it be thoroughly studied.”•Supply Chain Management is a matter of vital importance to the company – the road to survival or ruin for the company. It is mandatory that it be thoroughly studied.4Business Logistics/Supply Chain—A Vital SubjectThe supply chain is simply another way of saying “the whole process of business.”Supply Chain Management DefinedAPICS Definition•Supply Chain Management: The design, planning, execution, control and monitoring of supply chain activities with the objective of creating net value•Supply Chain: The global network used to deliver products and services from raw materials to end customers through an engineered flow of information, physical distribution, and cash.SUPPLY CHAIN – A BETTER DEFINITIONSupply Chain Management: the right product, in the right quantity, in the right condition, at the right time, at the right place, and the right invoicing. The components of ________________________Evolution of Supply Chain ManagementCR (2004) Prentice Hall, Inc.Customer serviceDemand forecastingInventory managementLogistics communicationsMaterial handlingOrder processingParts and service supportSupply Chain ActivitiesSupply Chain Activities Continued•Plant & warehouse site selection•Procurement •Packaging•Reverse logistics•Traffic and transportation•Warehousing and storage•Security•Customs ClearanceOVERVIEW OF SUPPLY CHAIN MANAGEMENTOVERVIEW OF SUPPLY CHAIN MANAGEMENT•Several factors have emerged that now require companies to use supply chain management as part of their competitive strategy.1-Globalization2-Increased competition3-Information technology4-Shorter product life cyclesINFORMATION SHARING IN THE SUPPLY CHAININFORMATION SHARING IN THE SUPPLY CHAIN•Traditionally, information has been shared only between adjacent supply chain pairs, and that information has been very limited.•This limited approach to information sharing leads to “bullwhip effect.” •To reduce the bullwhip effect, supply chains use a hub and spoke approach to sharing information.Supply Chain UncertaintyForecasting, lead times, batch Forecasting, lead times, batch ordering, price fluctuations, and ordering, price fluctuations, and inflated orders contribute to inflated orders contribute to variabilityvariabilityInventory is a form of insuranceInventory is a form of insuranceInformation in the Supply ChainCentralized coordination of information Centralized coordination of information flowsflowsIntegration of transportation, Integration of transportation, distribution, ordering, and productiondistribution, ordering, and productionDirect access to domestic and global Direct access to domestic and global transportation and distribution channelstransportation and distribution channelsLocating and tracking the movement of Locating and tracking the movement of every item in the supply chain - RFIDevery item in the supply chain - RFIDInformation in the Supply Chain•Consolidation of purchasing from all suppliers•Intercompany and intra-company information access•Electronic Data Interchange•Data acquisition at the point of origin and point of sale•Instantaneous updating of inventory levels•VisibilityBar Codes•Computer readable codes attached to items flowing through the supply chain•Generates point-of-sale data which is useful for determining sales trends, ordering, production scheduling, and deliver plans1234 5678IT Issues•Increased benefits and sophistication come with increased costs•Efficient web sites do not necessarily mean the rest of the supply chain will be as efficient•Security problems are very real – camera phones, cell phones, thumb drives•Collaboration and trust are important elements that may be new to business relationshipsCustomer Service and Supply Chain ManagementPerfect Order Fulfillment•Right product•Right Place•Right Quantity•Right time•Right condition•Right billing/invoicing•Is 99% good enough?PERFECT ORDER FULFILLMENT•Right Product % x Right Place % x Right Quantity % x Right Time % x Right Condition % x Right Invoicing•Example: 99% x 99% x 99% x 99% x 99% x 99% = 94.1% Perfect Order Fulfillment•95% = 73.5% Perfect Order FulfillmentPROCUREMENT•Strategic plans of suppliers and company are aligned to focus resources on holding down costs and developing new products.•Supplier categorization and management is implemented on a corporate global basis, with purchasing in a strategic contracting role.•Purchase order transactions are integrated with the supply process to improve productivity and all areas of supplier performance.Suppliers•Purchased materials account for about half of manufacturing costs•Materials, parts, and service must be delivered on time, of high quality, and low cost•Suppliers should be integrated into their customers’ supply chains•Partnerships should be establishedSourcing•Relationship between customers and suppliers focuses on collaboration and cooperation•Outsourcing has become a long-term strategic decision•Organizations focus on core competencies•Single-sourcing is increasingly a part of supplier relationsHow doessingle sourcediffer from solesource?Supply Chain Operations Reference Modeland the Supply Chain CouncilSupplierPlanCustomerCustomer’sCustomerSuppliers’SupplierMakeDeliverSource MakeDeliverMakeSourceDeliverSourceDeliverInternal or ExternalInternal or ExternalYour CompanySourceSCOR IS STRUCTURED AROUND