Module 1 Supply Chain SCM 301 Exam I Everything transaction exchange of money service requires someone to provide resources suppliers to make things also needs companies to mediate between the market and the company Market Mediation organization must make a product that someone values likes Supply chain is more of a web like structure instead of a chain that resembles the human body Supply Chain Flow bi directional Information o o Monetary Flow mostly upstream while rebate refunds are downstream o Product Flow mostly upstream while recycling is downstream In supply chain either you adapt or you fall behind Kodak In India traditional trading is dominant role of distributor wholesaler is strong in emerging markets Objectives of SCM Make customers happy Effective flow of information product money Objective Maximize total SC profitability Determines revenue Determines costs o A need to ensure when established guidelines need to think about how my decision betters them so they have more and invest in more efficient technology o Profit maximization of SC surplus hopefully leads to maximization of SC profits Effective management of processes throughout the various stages of the supply chain to maximize customer value and achieve a sustainable competitive advantage Processes Inputs raw materials PROCESS transformation outputs finished good Logically related sets of tasks or activities geared toward transforming inputs into some outcome SC Processes sourcing processes designed to make create things o Source Raw material producer make manufacturing plant deliver distributor wholesaler deliver retailer customer SCOR Supply Chain Operations Reference Model for assessing charting and describing SC processes and their performance customers vs suppliers Customer Value Clif Bar Video customers are expecting something against your competitions Customers WANTS NEEDS Order qualifiers minimum standards to be met Order losers why customers avoid your firm Order winners why customers choose your firm Performance dimensions trade offs pursuit of one may detriment the other MAX customer Value Quality flavor fitness for consumption or use in terms of meeting customer needs desires Timeliness right thing at right place at right time delivery or availability of customer wants Cost mentioned a lot expenses incurred in producing distributing and selling the product Flexibility ability to respond efficiently to changes in products processes and competitive environment how order can maintain value of raw material without affecting the flavor SCOR Basic Levels of Performance Competitiveness External customer facing o Delivery reliability right product in the right time at the right place o Responsiveness supply chain velocity to customer o Flexibility agility to respond to change adapt 1 SCM 301 Exam I o Costs operational costs of the SC o Asset management effectiveness of assets in supporting demand satisfaction Internal Decision Phases of a Supply Chain Duration of Impact Capital Investment Senior Mmgt Involvement Strategic Planning long term decisions defining the objectives and capabilities Tactical Planning intermediate term decisions defining how capacity is used to meet demand Operational planning short term priorities and schedules for resource allocation SC Strategic Planning Design Examples Long High Significant Short Low Negligible Locations and capacities of the facilities Long term effect 10 to 15 years of fixed capacity decisions strategic capacity Products to be made or stored at various locations Ford invested 1B in India in new production market to sell to Asian emerging market choice as emerging economy is rising from lower socioeconomic levels to middle class Outsourcing decisions choice of supplier is important Strategic partnerships goals aligned trust Choice of key suppliers Samsung was a key supplier to Apple Models of Transportation Samsung flies cellphones from Asia to America for faster speed cellphone is a fast moving industry must adapt to flexibility its importance trumps the freight cost more competitive strategy to them than cutting down cost Outsourcing logistics Technology adoptions Make vs Buy New Era Fits Baseball caps invested millions of into SAP technology to help integrate cross function teams SC Tactical Planning Examples currency change Which markets will be supplied from which location source from Mexico or China How will Subcontracting backup locations do we have enough operational capacity Timing and size of market promotions Inventory policies SC Operational Planning Allocate orders to inventory or production Set order due dates when they can be shipped based on current inventory level Generate pick lists at a warehouse Amazon Allocate an order to a particular shipment Amazon Set delivery schedules Place replenishment orders 2 SCM Challenges Cost Efficiency vs Responsiveness Diagram SCM 301 Exam I Competitive strategy what sets them apart Dollar tree low cost they way they manage transportation strategy has to be congruent with their low cost strategy o Always comes first You cannot have a SC strategy if the competitive strategy isn t clear Cross functional many departments needed pricing Balance cost efficiency and responsiveness o More inventory makes higher responsiveness but lower efficiency o Less facilities more efficient less responsiveness SCM Challenges The Business Environment Diagram 7 sets of limits quota set by international traders RISK Mitigation and management SC risk management problems regarding how safe producers are When increasing sources subject to more volatility Transportation Infrastructure US ports problem California ports are too congested and Mexico is trying to cut away revenue from CA Tiers of Suppliers 1st tier 2nd tier 3rd tier Module 2 Cost Efficiency being able to lower cost per unit Responsiveness how well we respond to customer needs Relevant Points 1 Supply chain performance affects the profitability of all its links 2 Effectively managing the flows of the supply chain is essential for survival 3 Supply chain strategy must be clearly aligned with the competitive strategy 3 Process Analysis SCM 301 Exam I Cost vs Quality vs Time vs Flexibility Total Cost Productivity Capability Capacity Efficiency Cycle Time Process Cycle Time The lower the better Smaller cycle time more use of resources and more value Cycle time measure of total time required to complete a process throughput time Domino s delivers in 30 min Process Productivity