supply chain defnition - learn what supply chain management is

7/30/2019 Supply Chain Defnition - Learn what supply chain management is...

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Supply Chain DefinitionFind out What

s Supply Chain is

1SynerflexConsulting.com


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What Youll Learn

Challenges of Supply Chain Management

Value of Information and DemandDistortion

Utilizing performance metrics to drivesupply chain effectiveness

Transformation to Lean Supply Chain

Creative Supply Chain Partnership andDistribution Strategies



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CHALLENGES OF SUPPLY CHAIN

MANAGEMENT



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What is Supply Chain Mgmt?

SCM = Integration of the activitiesthat procure materials, transformthem into intermediate goods & finalproducts, and deliver them tocustomer.

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Suppliers Manufacturers Warehouses &

distribution centersCustomers

Material

Costs

Transportation

Costs

ManufacturingCosts

Inventory

Costs



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11%

31%

58%

Material

Dir Wages

Other

71%

16%13% COGS

Payroll

Other

83%

9%8% COGS

Payroll

Other

Manufacturing

Wholesale

Retail

Material Costs in Supply-Chain



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Objective of SCM

To build a chain of suppliers that

focus on both reducing waste &maximizing value to the ultimate

customer.



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SCM - Strategic Importance

How the Supply Chain can support the overall strategy?

Low-CostStrategy

ResponseStrategy

DifferentiationStrategy

Suppliers

GoalSupplydemand at

lowestpossible cost.

Respond quicklyto changing

requirements &demand to min.stockouts.

Share marketresearch; jointly

develop products &options.

PrimarySelectionCriteria

Selectprimarily forcost.

Select primarilyfor capacity,speed, &flexibility.

Select primarily forproductdevelopment skills.

ProcessCharacteristics

Maintain highaverageutilization.

Invest in excesscapacity &flexible process.

Modular processesthat lendthemselves to masscustomization.



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SCM - Strategic Importance (cont)

How the Supply Chain can support the overall strategy?

Low-CostStrategy

ResponseStrategy

DifferentiationStrategy

InventoryCharacteristics

Min inventorythroughout thechain to hold

down costs.

Developresponsivesystem, with

buffer stockspositioned toensure supply.

Min inventory in thechain to avoidobsolescence.

Lead-TimeCharacterist

ics

Shorten leadtime as long as

it does notincrease costs.

Investaggressively to

reduce productionlead time.

Invest aggressivelyto reduce

development leadtime.

Product-DesignCharacteristics

Maxperformance &min cost.

Use productdesigns that leadto low setup time& rapid productionramp-up.

Use modular designto postpone productdifferentiation for aslong as possible.


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VALUE OF INFORMATION AND

DEMAND DISTORTION



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Supply Chain Dynamics

Retailer

Wholesaler

Distributor

Factory

Order lead time

Order lead time

Order lead time

Delivery lead time

Delivery lead time

Delivery lead time

Production lead time

Example: Diapers distributionSynerflexConsulting.com


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Bull-Whip Effect



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The Bullwhip Effect

The ordering patterns share a common

recurring theme:

The variability of an upstream site are alwaysgreater than those of the downstream site



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Causes ofBullwhip Effect

Demand forecasting & Lead time

Order batching

Price fluctuation Shortage gaming / Inflated orders



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Order Variation in SCM



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Demand Forecasting & Lead

Time

Traditional inventory mgmt lead to bull-whip min/max inv policy

Forecasting difficulties based on historicaldata

Order change constantly increase variability

Safety stocks that depend on erratic varianceon demand & long lead time



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Batch Ordering

Economic of scale

MRP driven requirement

Lower transportation cost Push Ordering for short term performance

measures



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Price Fluctuation

Discounts & promotions

Quantity discounts

In anticipation of future price increase



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Shortage Gaming/ Inflated

Orders

Happen when demand > supply

Customers exaggerate real needs

When constraints removed, orders drop

Examples: Passive components in the 1999-2000



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To Counteract the Bullwhip

Information Sharing

Break Order Batches &Collaborative Planning

Stabilize Prices Eliminate Gaming in Shortage

Situations

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about these approaches

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UTILIZING PERFORMANCE

METRICS TO DRIVE SUPPLYCHAIN EFFECTIVENESS



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SCM Metrics

Biz performance measure: No longer focused on individual

company

Based on whole supply chain Ultimate goal = Customer Satisfaction

Focus on Two dimensions

One dimension single company Two dimension multi-functional &

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3 Key Dimensions Service

Anticipate & fulfill customer demand

Personalized products

On time delivery

Assets

Inventory & cash

Speed

Responsiveness & velocity of execution



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Service MetricsMeasure how well we are serving our customers

Make to Stock (MTS) Make to Order (MTO)

Line Item Fill Rate

Complete Order Fill Rate

Delivery Process On-Time

$Backorder/Lost Sales

No of Backorders

Aging of Backorders

Quoted Cust Response Time

% On-Time Completion

Delivery Process On-Time

$ of Late Orders

# of Late Orders

Aging of Late Orders



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out more Details about the other 2

dimensions of measurement

(assets & Speed)


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UTILIZING CREATIVE

APPROACHES TO EFFECTIVELY

MANAGING YOUR SUPPLY CHAIN



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Approaches CRP (Continuous Replenishment

Program)

VMI (Vendor Managed Inventory)

Risk Pooling

Transshipment

Cross Docking

Design for LogisticsSynerflexConsulting.com


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out more Details about these

approaches


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supply chain defnition - learn what supply chain management is

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