SUPPLY CHAIN
MANAGEMENT – IMM
GRADUATE SCHOOL
K MELVILLE
,Table of Contents
UNIT 1: INTRODUCTION TO LOGISTICS AND SUPPLY CHAIN MANAGEMENT .......................................... 12
Background ..................................................................................................................................... 12
Outcomes and Terminology............................................................................................................. 12
Introduction .................................................................................................................................... 14
Logistics........................................................................................................................................... 14
Development of Logistics ....................................................................................................................................................................... 15
Logistics and Supply Chain Management Boundaries and Relationships ....................................... 15
Supply Chain Management: Boundaries and Relationships...................................................................................................... 15
Logistics Management: Boundaries and Relationships .............................................................................................................. 15
Supply Chain Management.............................................................................................................. 16
What is a Supply Chain? .......................................................................................................................................................................... 16
Improving Supply Chain Operations ...................................................................................................................................................18
Outsourcing ..................................................................................................................................... 19
Benefits of Outsourcing .......................................................................................................................................................................... 20
Third and Fourth Party Logistics ..................................................................................................... 21
Third-Party (3PL) Logistics ...................................................................................................................................................................... 21
Fourth-Party (4PL) Logistics ...................................................................................................................................................................22
Logistics and Supply Chain as Competitive Advantage ................................................................... 24
Summary ......................................................................................................................................... 24
UNIT 2: INTRODUCTION TO CUSTOMER SERVICE ................................................................................... 25
Background ..................................................................................................................................... 25
Outcomes and Terminology............................................................................................................. 25
Introduction .................................................................................................................................... 27
The Meaning of the Customer ......................................................................................................... 27
Critical Components of Customer Service ....................................................................................................................................... 28
Assessing Customer Needs ............................................................................................................. 29
Enhancing Customer Service Levels .................................................................................................................................................. 29
Measures of Customer Service........................................................................................................ 30
Quantitative Measure of Customer Service .................................................................................... 32
Percentage Type Measures .....................................................................................................................................................................32
Absolute Measures ....................................................................................................................................................................................33
Customer Service and the Customer............................................................................................... 34
Alternative Key Measurements ........................................................................................................................................................... 34
Steps to Increase Customer Service Levels .................................................................................... 35
Summary ......................................................................................................................................... 36
UNIT 3: INTRODUCTION TO DEMAND AND ORDER MANAGEMENT ........................................................ 37
1
, Background ..................................................................................................................................... 37
Outcomes and Terminology............................................................................................................. 37
Introduction .................................................................................................................................... 39
Demand and Supply......................................................................................................................... 39
Dependent and Independent Demand .............................................................................................................................................. 40
Demand Patterns ....................................................................................................................................................................................... 40
Demand Management and Forecasting........................................................................................... 41
Types of Forecasting ................................................................................................................................................................................. 41
Causal Forecasting Techniques ....................................................................................................... 42
Qualitative Forecasting Techniques ................................................................................................ 42
Quantitative Forecasting Techniques .............................................................................................. 43
Measures of Forecast Error ............................................................................................................. 44
Collaborative Planning, Forecasting and Replenishment (CPFR) .................................................... 45
Order Management ......................................................................................................................... 47
Order Management Process ................................................................................................................................................................... 47
Summary ......................................................................................................................................... 48
UNIT 4: INTRODUCTION TO SUPPLY MANAGEMENT .............................................................................. 49
Background ..................................................................................................................................... 49
Outcomes and Terminology............................................................................................................. 49
Introduction .................................................................................................................................... 51
Sourcing and Supply Chain Management ......................................................................................................................................... 51
Strategic Sourcing ........................................................................................................................... 52
Process .......................................................................................................................................................................................................... 53
Supplier Selection and Performance............................................................................................... 54
Measuring Supplier Performance ................................................................................................... 55
Purchasing Cycle ............................................................................................................................. 57
Operations Management ....................................................................................................................................................................... 58
Purchasing ................................................................................................................................................................................................... 58
Inventory Management .......................................................................................................................................................................... 59
Finance .......................................................................................................................................................................................................... 59
Information Supply and Procurement............................................................................................. 59
Ethical and Responsible Sourcing ................................................................................................... 61
Ethics in international sourcing ........................................................................................................................................................... 61
Fairtrade Standards ......................................................................................................................... 62
Summary ......................................................................................................................................... 62
UNIT 5: INTRODUCTION TO INVENTORY MANAGEMENT ....................................................................... 64
Background ..................................................................................................................................... 64
2
, Outcomes and Terminology............................................................................................................. 64
Introduction .................................................................................................................................... 66
Types and Functions of Inventory ................................................................................................... 66
Types of Inventory...................................................................................................................................................................................... 67
Functions of Inventory ............................................................................................................................................................................. 67
Inventory Costs ............................................................................................................................... 68
Demand and Inventory ............................................................................................................................................................................ 69
ABC Analysis of Inventory ............................................................................................................... 69
The ABC Graph ............................................................................................................................................................................................ 70
Uses of ABC in Managing Inventory .................................................................................................................................................. 70
Inventory Ordering Systems............................................................................................................ 71
Materials Requirements Planning (MRP): ......................................................................................................................................... 71
Reorder Point (ROP): .................................................................................................................................................................................. 71
Time-phased Order Point (TPOP): ......................................................................................................................................................... 72
Periodic Review ............................................................................................................................... 72
Visual Review............................................................................................................................................................................................... 72
Two-bin System ........................................................................................................................................................................................... 73
Kanban System............................................................................................................................................................................................ 73
Lot-Sizing Techniques ..................................................................................................................... 73
Discrete Lot-sizing Techniques ............................................................................................................................................................. 74
Demand-based Lot-sizing Techniques ............................................................................................................................................... 74
Summary ......................................................................................................................................... 75
UNIT 6: INTRODUCTION TO OPERATIONS AND MANUFACTURING ......................................................... 76
Background ..................................................................................................................................... 76
Outcomes and Terminology............................................................................................................. 76
Introduction .................................................................................................................................... 78
Industry Sectors .............................................................................................................................. 78
Operations Management ........................................................................................................................................................................ 79
Developing an Operations and Manufacturing Strategy ................................................................. 80
Job Production ............................................................................................................................................................................................ 80
Batch Production ........................................................................................................................................................................................81
Repetitive production ...............................................................................................................................................................................81
Continuous Production .................................................................................................................... 81
Product life cycle ........................................................................................................................................................................................81
Product/Process Matrix ........................................................................................................................................................................... 83
Manufacturing Strategies ............................................................................................................... 84
Engineer-to-order ...................................................................................................................................................................................... 84
Make-to-order ............................................................................................................................................................................................. 85
Assemble-to-order .................................................................................................................................................................................... 85
Make-to-stock ............................................................................................................................................................................................. 85
Process Strategies ........................................................................................................................... 86
3
MANAGEMENT – IMM
GRADUATE SCHOOL
K MELVILLE
,Table of Contents
UNIT 1: INTRODUCTION TO LOGISTICS AND SUPPLY CHAIN MANAGEMENT .......................................... 12
Background ..................................................................................................................................... 12
Outcomes and Terminology............................................................................................................. 12
Introduction .................................................................................................................................... 14
Logistics........................................................................................................................................... 14
Development of Logistics ....................................................................................................................................................................... 15
Logistics and Supply Chain Management Boundaries and Relationships ....................................... 15
Supply Chain Management: Boundaries and Relationships...................................................................................................... 15
Logistics Management: Boundaries and Relationships .............................................................................................................. 15
Supply Chain Management.............................................................................................................. 16
What is a Supply Chain? .......................................................................................................................................................................... 16
Improving Supply Chain Operations ...................................................................................................................................................18
Outsourcing ..................................................................................................................................... 19
Benefits of Outsourcing .......................................................................................................................................................................... 20
Third and Fourth Party Logistics ..................................................................................................... 21
Third-Party (3PL) Logistics ...................................................................................................................................................................... 21
Fourth-Party (4PL) Logistics ...................................................................................................................................................................22
Logistics and Supply Chain as Competitive Advantage ................................................................... 24
Summary ......................................................................................................................................... 24
UNIT 2: INTRODUCTION TO CUSTOMER SERVICE ................................................................................... 25
Background ..................................................................................................................................... 25
Outcomes and Terminology............................................................................................................. 25
Introduction .................................................................................................................................... 27
The Meaning of the Customer ......................................................................................................... 27
Critical Components of Customer Service ....................................................................................................................................... 28
Assessing Customer Needs ............................................................................................................. 29
Enhancing Customer Service Levels .................................................................................................................................................. 29
Measures of Customer Service........................................................................................................ 30
Quantitative Measure of Customer Service .................................................................................... 32
Percentage Type Measures .....................................................................................................................................................................32
Absolute Measures ....................................................................................................................................................................................33
Customer Service and the Customer............................................................................................... 34
Alternative Key Measurements ........................................................................................................................................................... 34
Steps to Increase Customer Service Levels .................................................................................... 35
Summary ......................................................................................................................................... 36
UNIT 3: INTRODUCTION TO DEMAND AND ORDER MANAGEMENT ........................................................ 37
1
, Background ..................................................................................................................................... 37
Outcomes and Terminology............................................................................................................. 37
Introduction .................................................................................................................................... 39
Demand and Supply......................................................................................................................... 39
Dependent and Independent Demand .............................................................................................................................................. 40
Demand Patterns ....................................................................................................................................................................................... 40
Demand Management and Forecasting........................................................................................... 41
Types of Forecasting ................................................................................................................................................................................. 41
Causal Forecasting Techniques ....................................................................................................... 42
Qualitative Forecasting Techniques ................................................................................................ 42
Quantitative Forecasting Techniques .............................................................................................. 43
Measures of Forecast Error ............................................................................................................. 44
Collaborative Planning, Forecasting and Replenishment (CPFR) .................................................... 45
Order Management ......................................................................................................................... 47
Order Management Process ................................................................................................................................................................... 47
Summary ......................................................................................................................................... 48
UNIT 4: INTRODUCTION TO SUPPLY MANAGEMENT .............................................................................. 49
Background ..................................................................................................................................... 49
Outcomes and Terminology............................................................................................................. 49
Introduction .................................................................................................................................... 51
Sourcing and Supply Chain Management ......................................................................................................................................... 51
Strategic Sourcing ........................................................................................................................... 52
Process .......................................................................................................................................................................................................... 53
Supplier Selection and Performance............................................................................................... 54
Measuring Supplier Performance ................................................................................................... 55
Purchasing Cycle ............................................................................................................................. 57
Operations Management ....................................................................................................................................................................... 58
Purchasing ................................................................................................................................................................................................... 58
Inventory Management .......................................................................................................................................................................... 59
Finance .......................................................................................................................................................................................................... 59
Information Supply and Procurement............................................................................................. 59
Ethical and Responsible Sourcing ................................................................................................... 61
Ethics in international sourcing ........................................................................................................................................................... 61
Fairtrade Standards ......................................................................................................................... 62
Summary ......................................................................................................................................... 62
UNIT 5: INTRODUCTION TO INVENTORY MANAGEMENT ....................................................................... 64
Background ..................................................................................................................................... 64
2
, Outcomes and Terminology............................................................................................................. 64
Introduction .................................................................................................................................... 66
Types and Functions of Inventory ................................................................................................... 66
Types of Inventory...................................................................................................................................................................................... 67
Functions of Inventory ............................................................................................................................................................................. 67
Inventory Costs ............................................................................................................................... 68
Demand and Inventory ............................................................................................................................................................................ 69
ABC Analysis of Inventory ............................................................................................................... 69
The ABC Graph ............................................................................................................................................................................................ 70
Uses of ABC in Managing Inventory .................................................................................................................................................. 70
Inventory Ordering Systems............................................................................................................ 71
Materials Requirements Planning (MRP): ......................................................................................................................................... 71
Reorder Point (ROP): .................................................................................................................................................................................. 71
Time-phased Order Point (TPOP): ......................................................................................................................................................... 72
Periodic Review ............................................................................................................................... 72
Visual Review............................................................................................................................................................................................... 72
Two-bin System ........................................................................................................................................................................................... 73
Kanban System............................................................................................................................................................................................ 73
Lot-Sizing Techniques ..................................................................................................................... 73
Discrete Lot-sizing Techniques ............................................................................................................................................................. 74
Demand-based Lot-sizing Techniques ............................................................................................................................................... 74
Summary ......................................................................................................................................... 75
UNIT 6: INTRODUCTION TO OPERATIONS AND MANUFACTURING ......................................................... 76
Background ..................................................................................................................................... 76
Outcomes and Terminology............................................................................................................. 76
Introduction .................................................................................................................................... 78
Industry Sectors .............................................................................................................................. 78
Operations Management ........................................................................................................................................................................ 79
Developing an Operations and Manufacturing Strategy ................................................................. 80
Job Production ............................................................................................................................................................................................ 80
Batch Production ........................................................................................................................................................................................81
Repetitive production ...............................................................................................................................................................................81
Continuous Production .................................................................................................................... 81
Product life cycle ........................................................................................................................................................................................81
Product/Process Matrix ........................................................................................................................................................................... 83
Manufacturing Strategies ............................................................................................................... 84
Engineer-to-order ...................................................................................................................................................................................... 84
Make-to-order ............................................................................................................................................................................................. 85
Assemble-to-order .................................................................................................................................................................................... 85
Make-to-stock ............................................................................................................................................................................................. 85
Process Strategies ........................................................................................................................... 86
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