Supply Chain Management
, Decision Phases of a
Supply Chain
There’s a limit to how much efficiency can be gained by optimizing local processes.
Your supply chain will be as weak as the weakest link
What is a Supply Chain?
·
All the stages (echelon) involved, directly or indirectly, in fulfilling a customer
request (demand)
⑨
primarily concerned with the efficient integration of suppliers, factories, warehouses
and stores so that merchandise is produced and distributed in the right quantities,
to the right locations and at the right time, and so as to minimize total system cost
subject to satisfying service requirements.
Different perspective (Fortune Magazine):
Executives plucked this once dismal dicipline and places it near the top of the
corporate agenda; companies are trying to gain an edge through their ability to deliver
the right stuff in the right amount of time.
SCM looks at the problem of managing the flow of goods in an integrated manner
, >
&
L
W
2
As a decision-maker, you need to deal with:
·
a sales department who wants cheap, and infinite inventory of products available
immediately from the warehouse
⑧
the warehouse, who wants as little inventory as possible, replenished almost
immediately by manufacturing angeword
⑧
manufacturing, who wants to produce in long runs (LT), altering designs and
materials to achieve lower costs and higher quality
⑧
procurement, who wants stability from manufacturing and require fast lead times
from the suppliers
A Tea Supply Chain:
, Supply Network would be a better name
Customer is an integral part of the supply chain
The movement of the product is essential, but it also includes movement of
information and funds in BOTH DIRECTIONS
(Not all stages are present in every supply chain)
Objective of a supply chain:
⑨
maximize overall value created measured with supply chain profitability (revenue
>
for the customer - total cost)
⑨
SC success >
-
measured by total SC profitability (not sum of individual profits)
SCM:
O
manage SC flows and assets to maximize SC surplus
one source of revenue: the final customer
multiple sources of cost: all the different flows
&
close connection between design, planning, and operation of a SC and its success
(alignment)
Decision phases of a supply chain:
1) long-term, expensive, and difficult to reverse
must take uncertainty into account
1) decisions about the structure of the supply chain
what processes will each stage perform?
inhouse vs. Outsourcing
facility location and capacity
2)
where to produce and store
transportation and store
IT systems
2) constrained by the strategic decisions!
input: medium-term demand forecast
3) goal: exploit flexibility to optimize performance
policies for mid-term operations:
which markets from which location?
subcontracting part of our manufacturing?
inventory policy? Planned buildup?
marketing promotions?
3) constrained by the tactical decisions!
input: actual customer orders
goal: implement the policies as effectively as
you can
policies short-term operations:
almost NO UNCERTAINTY
allocate orders
set due dates
generate picking lists, etc.
, Decision Phases of a
Supply Chain
There’s a limit to how much efficiency can be gained by optimizing local processes.
Your supply chain will be as weak as the weakest link
What is a Supply Chain?
·
All the stages (echelon) involved, directly or indirectly, in fulfilling a customer
request (demand)
⑨
primarily concerned with the efficient integration of suppliers, factories, warehouses
and stores so that merchandise is produced and distributed in the right quantities,
to the right locations and at the right time, and so as to minimize total system cost
subject to satisfying service requirements.
Different perspective (Fortune Magazine):
Executives plucked this once dismal dicipline and places it near the top of the
corporate agenda; companies are trying to gain an edge through their ability to deliver
the right stuff in the right amount of time.
SCM looks at the problem of managing the flow of goods in an integrated manner
, >
&
L
W
2
As a decision-maker, you need to deal with:
·
a sales department who wants cheap, and infinite inventory of products available
immediately from the warehouse
⑧
the warehouse, who wants as little inventory as possible, replenished almost
immediately by manufacturing angeword
⑧
manufacturing, who wants to produce in long runs (LT), altering designs and
materials to achieve lower costs and higher quality
⑧
procurement, who wants stability from manufacturing and require fast lead times
from the suppliers
A Tea Supply Chain:
, Supply Network would be a better name
Customer is an integral part of the supply chain
The movement of the product is essential, but it also includes movement of
information and funds in BOTH DIRECTIONS
(Not all stages are present in every supply chain)
Objective of a supply chain:
⑨
maximize overall value created measured with supply chain profitability (revenue
>
for the customer - total cost)
⑨
SC success >
-
measured by total SC profitability (not sum of individual profits)
SCM:
O
manage SC flows and assets to maximize SC surplus
one source of revenue: the final customer
multiple sources of cost: all the different flows
&
close connection between design, planning, and operation of a SC and its success
(alignment)
Decision phases of a supply chain:
1) long-term, expensive, and difficult to reverse
must take uncertainty into account
1) decisions about the structure of the supply chain
what processes will each stage perform?
inhouse vs. Outsourcing
facility location and capacity
2)
where to produce and store
transportation and store
IT systems
2) constrained by the strategic decisions!
input: medium-term demand forecast
3) goal: exploit flexibility to optimize performance
policies for mid-term operations:
which markets from which location?
subcontracting part of our manufacturing?
inventory policy? Planned buildup?
marketing promotions?
3) constrained by the tactical decisions!
input: actual customer orders
goal: implement the policies as effectively as
you can
policies short-term operations:
almost NO UNCERTAINTY
allocate orders
set due dates
generate picking lists, etc.
