supply chain management unit 5
TRANSCRIPT
Supply Chain Management
Saravanan J
For MASTER FOR BUSINESS ADMINISTRATION
Presentation outline
• IT in supply chain• Agile supply chain • Reverse supply chain• Agro supply chain
Supply chain• Supply chains are principally concerned with the flow of
products and information between supply chain member organizations—– procurement of materials, – transformation of materials into finished products,– distribution of those products to end customers.
• Today’s information-driven, integrated supply chains are enabling organizations– To reduce inventory and costs, – add product value, – extend resources, – accelerate time to market, and retain customers.
17-4
Topics to be Discussed In IT Supply Chain
• The Role of Information Technology in the Supply Chain
• The Supply Chain IT Framework• Customer Relationship Management• Internal Supply Chain Management• Supplier Relationship Management• The Transaction Management Foundation• The Future of IT in the Supply Chain• Supply Chain Information Technology in Practice
IT in Supply Chain• Supply chain management (SCM) is concerned with the
flow of products and information between supply chain members' organizations.
• Recent development in technologies enables the organization to avail information easily in their premises.
• These technologies are helpful to coordinates the activities to manage the supply chain.
• The cost of information is decreased due to the increasing rate of technologies. In the integrated supply chain model
IT in Supply Chain(Fig.1) bi-directional arrow reflect the accommodation of reverse materials and information feedback flows.
17-7
Role of Information Technologyin a Supply Chain
• Information is the driver that serves as the “glue” to create a coordinated supply chain
• Information must have the following characteristics to be useful:– Accurate– Accessible in a timely manner– Information must be of the right kind
• Information provides the basis for supply chain management decisions– Inventory– Transportation– Facility
17-8
Characteristics of UsefulSupply Chain Information
• Accurate• Accessible in a timely manner• The right kind• Provides supply chain visibility
17-9
Use of Information in a Supply Chain
• Information used at all phases of decision making: strategic, planning, operational
• Examples:– Strategic: location decisions– Operational: what products will be produced
during today’s production run
17-10
Use of Information in a Supply Chain
• Inventory: demand patterns, carrying costs, stockout costs, ordering costs
• Transportation: costs, customer locations, shipment sizes
• Facility: location, capacity, schedules of a facility; need information about trade-offs between flexibility and efficiency, demand, exchange rates, taxes, etc.
17-11
Role of Information Technologyin a Supply Chain
• Information technology (IT)– Hardware and software used throughout the
supply chain to gather and analyze information– Captures and delivers information needed to
make good decisions• Effective use of IT in the supply chain can
have a significant impact on supply chain performance
17-12
The Importance of Informationin a Supply Chain
• Relevant information available throughout the supply chain allows managers to make decisions that take into account all stages of the supply chain
• Allows performance to be optimized for the entire supply chain, not just for one stage – leads to higher performance for each individual firm in the supply chain
17-13
The Supply Chain IT Framework
• The Supply Chain Macro Processes– Customer Relationship Management (CRM)– Internal Supply Chain Management (ISCM)– Supplier Relationship Management (SRM)– Plus: Transaction Management Foundation
• Macro Processes Applied to the Evolution of Software
17-14
Macro Processes in a Supply Chain
Supplier Relationship Management
(SRM)
Internal Supply Chain Management
(ISCM)
Customer Relationship Management
(CRM)
Transaction Management Foundation (TFM)
17-15
Customer Relationship Management
• The processes that take place between an enterprise and its customers downstream in the supply chain
• Key processes:– Marketing– Selling– Order management– Call/Service center
17-16
Internal Supply Chain Management
• Includes all processes involved in planning for and fulfilling a customer order
• ISCM processes:– Strategic Planning– Demand Planning– Supply Planning– Fulfillment– Field Service
• There must be strong integration between the ISCM and CRM macro processes
17-17
Supplier Relationship Management
• Those processes focused on the interaction between the enterprise and suppliers that are upstream in the supply chain
• Key processes:– Design Collaboration– Source– Negotiate– Buy– Supply Collaboration
• There is a natural fit between ISCM and SRM processes
17-18
The Transaction Management Foundation
• Enterprise software systems (ERP)• Earlier systems focused on automation of simple
transactions and the creation of an integrated method of storing and viewing data across the enterprise
• Real value of the TMF exists only if decision making is improved
• The extent to which the TMF enables integration across the three macro processes determines its value
17-19
The Future of IT in the Supply Chain
• At the highest level, the three SCM macro processes will continue to drive the evolution of enterprise software
• Software focused on the macro processes will become a larger share of the total enterprise software market and the firms producing this software will become more successful
• Functionality, the ability to integrate across macro processes, and the strength of their ecosystems, will be keys to success
Information and Technology - Application of SCM
• In the development and maintenance of Supply chain's information systems both software and hardware must be addressed.
• Hardware includes computer's input/output devices and storage media.• Software includes the entire system and application programme used for
processing transactions management control, decision-making and strategic planning. – Recent development in Supply chain management software are:
1. A new software programme developed by Ross systems Inc. called Supply Chain planning which is used for demand forecasting, replenishment & manufacturing tools for accurate planning and scheduling of activities.
2. P&G distributing company and Saber decision Technologies resulted in a software system called Transportation Network optimization for streamlining the bidding and award process.
3. Logitility planning solution was recently introduced to provide a programme capable managing the entire supply chain.
Information and Technology - Application of SCM
• Electronic Data Interchange:– Electronic Data Interchange (EDI) refers to computer-to-computer exchange of business
documents in a standard format. EDI describe both the capability and practice of communicating information between two organizations electronically instead of traditional form of mail, courier, & fax. The benefits of EDI are:
1. Quick process to information. 2. Better customer service. 3. Reduced paper work. 4. Increased productivity. 5. Improved tracing and expediting. 6. Cost efficiency. 7. Competitive advantage. 8. Improved billing.
– Though the use of EDI supply chain partners can overcome the distortions and exaggeration in supply and demand information by improving technologies to facilitate real time sharing of actual demand and supply information.
Bar coding and Scanner:– Bar code scanners are most visible in the check out counter of super market. This code specifies
name of product and its manufacturer. Other applications are tracking the moving items such as components in PC assembly operations, automobiles in assembly plants.
Information and Technology - Application of SCM
Data warehouse:Data warehouse is a consolidated database maintained separately from an
organization's production system database. Many organizations have multiple databases. A data warehouse is organized around informational subjects rather than specific business processes. Data held in data warehouses are time dependent, historical data may also be aggregated.
Enterprise Resource planning (ERP) tools:Many companies now view ERP system (eg. Baan, SAP, People soft, etc.) as the core
of their IT infrastructure. ERP system have become enterprise wide transaction processing tools which capture the data and reduce the manual activities and task associated with processing financial, inventory and customer order information. ERP system achieve a high level of integration by utilizing a single data model, developing a common understanding of what the shared data represents and establishing a set of rules for accessing data.
Information and Technology - Application of SCM
• Electronic Commerce:– It is the term used to describe the wide range of tools
and techniques utilized to conduct business in a paperless environment.
– Electronic commerce therefore includes electronic data interchange, e-mail, electronic fund transfers, electronic publishing, image processing, electronic bulletin boards, shared databases and magnetic/optical data capture.
– Companies are able to automate the process of moving documents electronically between suppliers and customers.
Agile supply chain
Content
The concept of agility1.
Agile practices2.
The concept of Agility
• Market sensitive– Supply chain is capable of
reading and responding to real demand
• Virtual – Information-based supply
chain, rather than inventory-based.
Agile supply chain
The concept of Agility
• Network based– EDI and internet enable
partners in the supply chain to act upon the real demand
• Process integration– Collaborative working
between buyers and suppliers, joint product development, common systems and shared information
Agile supply chain
The concept of Agility
• Demand characteristics and supply capabilities
end-customers become more knowledgeable about product
Lean supply chain
Agile supply chain
1980’s
1990’s
Efficiency, cost
Responsiveness
Focus
The concept of Agility• Demand characteristics and supply capabilities
Distinguishing attributes
Lean supply Agile supply
Typical products Commodities Fashion goodsMarketplace demand Predictable VolatileProduct variety Low HighProduct life cycle Long ShortCustomer drivers Cost AvailabilityProfit margin Low HighDominant costs Physical costs Marketability costsStockout penalties Long-term
contractualImmediate and volatile
Purchasing policy Buy materials Assign capacityInformation enrichment
Highly desirable Obligatory
Forecasting mechanism
Algorithmic(基于算法 )
Consultative(基于咨询 )
The concept of Agility
Characteristic Lean Agile
Logistics focus Eliminate waste Customers and markets
Partnerships Long-term, stable Fluid clusters
Key measureOutput measure such as productivity and cost
Measure capabilities, and focus on customer satisfaction
Process focusWork standardization, conformance to standards
Focus on operator self-management to maximize autonomy
Logistics planning Stable, fixed period Instantaneous
response
Comparison of characteristics of lean and agile supply
The concept of Agility
Source: Mason-Jones, Naylor and Towill (2000), Engineering the leagile supply chain
The concept of Agility
Long lead time
Short lead time
Supply characteristics
Demand characteristicsPredictable
marketUnpredictable
markets
Plan and control
JIT: pull scheduling
React and execute: agile
capabilities
Hold inventory: hedge and deploy
Source: Martin, Christopher and Denis Towill, An integrated model for the design of agile supply chains
• Application of leagility: the Pareto curve approach
• Application of leagility: the de-coupling point approach
The concept of Agility
• Preconditions for successful agile practice– Enterprise-level reality check– Cost of complexity sanity check– Lowering the cost of complexity: avoiding overly
expensive agility– Forecasting: reduce the need for last minutes crises• External: demand forecast• Internal: financial forecast, asset forecast
Agile practices
• Key issue
1How can we use agile practices to benefit from turbulence in the marketplace?
Agile practices
• Three characteristics of supply chain operations related to agile– Mastering and benefiting from variation in
demand;– Very fast response to market opportunities;– Unique or low volume response.
Agile practices
• Benefiting from variance– Three sources of demand uncertainty• Seasonality
• Product life cycles• End-customer demand
Demand variance
Time
Agile practices
• Benefiting from variance– Three sources of demand uncertainty• Seasonality• Product life cycles
• End-customer demand
variety
Volume
Start up Micro-markets
Organize Adjust
Agile capability is needed
Agile practices
• Benefiting from short time windows– Decreased D-time requires different levels of agility
(VMI & QR)• Speed of replenishment• Upstream time sensitivity• Information dissemination and alignment
Agile practices
• Benefiting from small volume– Small volume is a result of micro-markets,
customization and rapid responsiveness.– Three approaches of agile strategy related to small
volume• Changeover flexibility• Modularity at the network level• Service-based and information-based solutions
Agile practices
• Benefiting from small volumeVariety
decrease
Volume decrease
Mass production
Flexibility
Modular supply network
Craft production
An integrated model for enabling the Agile supply chain
Reverse Supply Chain [RSC]
• Reverse supply chain or reverse logistics is the series of activities required to retrieve a used product from a customer and dispose of it properly or reuse after processing .
• The chain connects end users with manufacturer in reverse direction.
Hierarchy of RSC
Manufacturer Distributor Customer Collection
Third party Recycling
Secondary Market
Open loop - RSC
Closed Loop - RSC
Typical collection methods in Close Loop [RSCM]
General Process In RSC
Product Recovery Strategy - RSC
Time value of product returns• Marginal Value of Time (MVT)
– The loss in value per unit of time spent awaiting
completion of the recovery process
– MVT (%)= Decrease in value of product
Time
– Example: Time sensitive consumer electronics products such as PCs
can lose value at rates in excess of 1% per week, and the rate increases
as the product nears the end of its life cycle
Time value of product returns
* evaluation of products at retailer or reseller
RSCM decisions• Efficient RSCM: A supply chain designed to
deliver product at low cost – Best for Functional products– Suitable for products with High MVT
• Responsive RSCM: A supply chain designed for speed of response – Best for Innovative products– Suitable for products with Low MVT
Evolution of Different Strategies in RSC
Table 4 : LEE strategy based on FISHER Matrix ,2002
Evolution of Different Strategies in RSC
Decoupling Point [D.P]
Important managerial issues in RSCM-Network Design
• Collection – Recovery channels its roles• Inspection of returned products-location of facilities• Reverse Supply Chain Network Design Options• Role of Forward Supply Chains• Integration of FSC and RSC• Role of 3PL• Most of the reverse supply chain activities takes
place in downstream forward supply chain of lead organisation.
GOME Electrical Appliance[china]
GOME Electrical Appliance[china]
GOME Electrical Appliance[china]
AGRO Supply Chain
• Agribusiness, supply chain management (SCM) implies,– Managing the relationships between the
businesses responsible for the efficient production and supply of products from the farm level to the consumers to meet consumers’ requirements reliably in terms of right quantity, right quality and right price.
Components of an Agro supply chain
Following are the components of an organised agri- supply chain:
1. Procurement or sourcing2. Logistic management
a. Transportationb. Material managementc. On the premise of supplying mostly from
production not stock d. Warehousinge. Logistics Network modeling
Components of an Agri supply chain
3. Organizational managementa. Contractingb. Strategic alliances and partnershipsc. Vertical integration
i. Long term storageii. Packaging technologyiii. Cold chain managementiv. Energy efficient transport v. Quality and safety
4. Application of Efficient Consumer Response (ECR) System a. Electronic scanning of price and product at the point of saleb. Streamline the entire distribution chain
Coordinated AGRO supply chain
• In the last few years there has been an emergence of more coordinated supply chains
for fruits and vegetables in India catering to the export market and to the high end domestic market.
• Several companies in India are beginning to invest in integrated supply chain management systems and infrastructure with emphasis on quality and, to a lesser extent, on safety.
• Initiatives are taken to establish more terminal markets based on modern infrastructure.
Modern Terminal Market / MTM
Coordinated AGRO supply chains
• Supermarket procurement regimes for sourcing of fruits, vegetables, dairy and meat
strongly influence the organization of the supply chains.
• The rising scale of organized retail in the Asian countries (like Metro Cash & Carry, Tata Chemicals and Field Fresh Foods,Bharti Enterprises, Reliance Fresh in India)
Companies involved in Agro supply chain
• DCM Shriram Consolidated Ltd (DSCL) is in the process of tying up with them to source fruits and vegetables from farmers and supply to the retail chains.
• DSCL is already doing this for Future Group's Food Bazaar, south based Subhiksha and RPG's Spencer.
Companies involved in Agro supply chain
Mahagrapes• One of the largest exporters of fresh Grapes (mainly
seedless grapes) from Maharastra India. • Mahagrapes is a partnership firm of sixteen grape
growers cooperatives.• It acts as– facilitator, – quality controller, – input supplier as well as service provider to its member
societies.