Supply Chain Ch 1 Intro
2 basic supply chain capability models
1. efficient: to minimize cost (predictable supply and low cost, low cost production and highly utilized capacity, high inventory turns, ideal for functional products aka staple products that are stable and never really fluctuate) 2. responsive: to respond quickly to market demand (fast response, minimal stock outs, need flexible volume, inventory of parts, minimize lead time, ideal for innovative products that change quick and have an unpredictable demand)
elements of operations management
1. forecasting/demand planning: match demand to available capacity 2. planning systems: linking supply to demand via MRP and ERP systems 3. process management: using LEAN manufacturing to improve the flow of materials to reduce inventory levels, and use six sigma to improve quality compliance across all internal and external suppliers
current trends in supply chain management
1. globalization: expanding the supply chain internationally to include mature and emerging markets 2. demand volatility and forecast inaccuracy: firms will increasingly need to be more flexible and responsive to customer needs, adapting to unexpected changes 3. supply chain cost optimization: reducing purchasing costs, waste, excess inventory, improving demand planning 4. risk management: shifting risks such as holding inventory, shipping finished products to customers immediately after prodution 5. sustainability and "greening" the supply chain: customers are shifting towards sustainable products that were made/sourced the right way
two goals of supply chain management
1. increase customer service 2. reduce inventory investment and operating expenses
4 foundations of supply chain management
1. operations management 2. supply management 3. logistics management 4. integration
each trading partner has 4 steps (SCOR model)
1. plan 2. source 3. make 4. deliver
elements of supply management
1. purchasing: responsibility for procuring materials, services, services 2. supplier relationship management: improve performance through supplier evaluation and certification 3. strategic partnerships: successful and trusting relationships with top-performing suppliers 4. ethics and sustainability: recognizing suppliers' impact on reputation and carbon footprint
general supply chain flow
1. starts w understanding the flow 2. integrates all partners within the end-to-end supply chain 3. is conducted thru defined processes
elements of integration
1. supply chain process integration: supply chain participants work for common goals 2. supply chain risk assessment and mitigation 3. supply chain performance measurement: shows firms if their procedures are working
elements of logistics management
1. transportation management: tradeoff decisions between cost/timing of delivery/customer service via truck, rail, air, pipeline, water 2. customer relationship management: strategies to ensure deliveries, resolve complaints, improve communications, and determine service requirements 3. network design: creating distribution networks based on tradeoff decisions between cost & sophistication of distribution system
total quality management (TQM)
1980s-2000s management approach to long-term success through customer satisfaction based on the participation of all members of an organization in improving processes, goods, services, and the culture in which they work; everyone in the organization has to take ownership for quality
business process reengineering
1980s-2000s procedure that involves the fundamental rethinking and RADICAL redesign of business processes to achieve dramatic organizational improvements in such a critical measures of performance as cost, quality, service, and speed
just-in-time
a philosophy of the 1980s-2000s of manufacturing based on the planned elimination of all waste and continuous productivity improvement
common methods of transportation
air, rail, water, truck, pipeline, NOT bus
SCOR model: deliver
aka logistics phase; overseeing of planning and execution of the forward flow of goods and related info between various points in the supply chain to meet customer requirements; companies coordinate the receipt of orders from customers, develop a network of warehouses, pick carriers to transport products to customers, and set up an invoicing system to receive payments, among other aspects
SCOR model: return
aka reverse logistics; deals w planning and controlling the process of moving goods from the point of consumption BACK to the point of origin for repair, reclamation, remanufacture, recycling, or disposal; this process goes AGAINST the normal outbound flow of products; requires a responsive and flexible network for receiving defective and excess products back from their customers and providing customer service
what is a supply chain
any organization offering a product OR a service has a supply chain; producing and delivering products and services requires suppliers, manufacturers, and customers - all make up a supply chain
current state of supply chain management
companies are focusing on their own core competencies, outsourcing those things that are not their core competencies, using the expertise of their trading partners; companies will continue building relationships, sustainability, CSR
origin/evolution of supply chain management: 1980s-2000s
companies started focusing on external collaboration; intense global competition led US manufacturers to adopt supply chain management
push business model/anticipatory business model (used by 95% of companies)
create forecast, create supply plan, buy materials, manufacture products, warehouse products, sell products, deliver products advantages: readily available product to ship to customer on demand, manufacturers can plan resources better disadvantages: high inventories, long lead-times, dependency on forecasting, forecasting error can be a big L
examples of measures of success
customer service, demand plan conformance, supply plan conformance, inventory plan conformance, cost of goods sold
tier 1
direct supplier/customer (tiers 2 to beyond are all indirect suppliers/customers but SOMETIMES tier 1 and 2 can be the same supplier/customer)
SCOR mode: plan
establishes the parameters within which the supply chain will operate; includes the determination of marketing and distribution channels, promotions, quantities, timing, inventory and replenishment policies, and production policies
who benefits the most from supply chain management
firms with large inventories, large number of suppliers, complex products, large number of products, large purchasing budgets
supply chain flow of materials and products
from suppliers (raw material, intermediate, and/or finished material suppliers) to manufacturers (finished product manufacturers) to customers (wholesalers, distributors, retailers and/or consumers)
supply chains in the service industry
intangible products still have supply chains for the labor and intellectual property of the service provider (ex: healthcare, education, phone bills, uber); customers are more directly involved bc they usually need to be there or provide something in order for the intangible product will come into effect (ex: must supply your car for auto repair services)
logistics vs supply chain management
logistics: refers to activities that occur within the purview of a single organization; focused on activities such as inventory management, warehousing, distribution, transportation SCM: refers to a NETWORK of independent companies that work together and coordinate their actions to deliver a product/service that benefits all companies in the network (collaboration); acknowledges all traditional logistics activities and also includes aspects of marketing, new product development, finance, customer service
4 foundations of supply chain management: integration
managing all of the enabling systems necessary to facilitate the complete integration of the operations, supply, and logistics functions outlined above
4 foundations of supply chain management: logistics management
managing all of the movement and storage of products and materials within the supply chain, whether the flow is forward or reverse
4 foundations of supply chain management: supply management
managing all of the supplies and suppliers that are needed to run the business
4 foundations of supply chain management: operations management
managing internal resources
origin/evolution of supply chain management: 1950s-60s
manufacturers had large inventories and focused on how to produce the most at the lowest cost (BIG INTERNAL FOCUS on mass production & cost reduction); external collaboration was not a thing yet advantages: higher output/productivity, reduced cycle times, lower in-process inventories drawbacks: high investment in facilities, overall cycle time limited by the slowest operation, breakdown of one machine wrecks the whole production line
MRP II
manufacturing resource planning - helps to improve internal communication and operations
MRP
materials requirements planning - method of determining what materials are needed and when they are needed to support the production plan
origin/evolution of supply chain management: 1960s-70s
new computer technologies = development of MRP (materials requirements planning) and MRPII (manufacturing resource planning)
old vs new paradigm
old: companies were vertically integrated and emphasized short term, company focused performance new: companies focus on activities in its own area of specialization and enters into voluntary & trust-based relationships w supplier and customer firms
external customers
pharmacies, hospitals, wholesalers, normal consumers
SCOR model: enable (not a stage but an overarching aspect of the model)
processes facilitate a company's ability to manage the supply chain and are spread throughout every stage
pull or make-to-order
producing stock in response to actual demand
push or make-to-stock
producing stock on the basis of anticipated demand
internal operations
production centers, warehouses
pull business model/responsive business model (used by 5% of companies)
sell products to customer, create supply plan, buy materials, manufacture products, deliver products advantages: high levels of customer service through responsiveness and flexibility to meet uncertain customer demand, short lead times, reduced dependency on forecasting, low inventories, reduced waste, opportunities for customization disadvantages: every order is a basically a rush order, highly dependent on customer relationship
SCOR model: make
series of operations performed to convert materials into a finished product; finished product is manufactured, tested, packaged, and scheduled for delivery; quality management is very important; most metric-intensive portion of the supply chain where companies can measure quality levels, production output, and worker productivity
end to end supply chain management
spans from your suppliers' suppliers on one end through your internal operations and out to your customers' customers on the other end
external suppliers
suppliers of raw materials, package components, chemical manufacturing organization
3 trading partners
suppliers, manufacturers, customers
SCOR model stands for
supply chain operations research model
supply chain management
the coordination of a network of otherwise independent trading partners creating a desired product or service, and moving it from suppliers, through manufacturing, and out to customers when and where they want it; the execution process of any business
if theres a shortage in any part of the supply chain
the entire chain gets messed up bc the product cannot continue to be produced which eventually causes a total market stockout when all of the remaining inventory gets sold
SCOR model: source
the process of identifying the suppliers that provide the materials and services needed for the supply chain to deliver the finished products desired by the customers; building strong relationships w reliable suppliers is important; must also develop pricing, shipping, delivery, and payment processes with suppliers and create metrics for monitoring and improving the performance
