Session08_MIS1_Y2024_SCM

Page 1: Introduction to Supply Chain Management

  • SCM: Supply Chain Management

  • Institute: laSalle UNIVERSITAT RAMON LLULL

Page 2: Learning Objectives

  • Understand how SCM works and its main functionalities.

  • Identify types of SCM.

  • Explore a case study on the use of SCM in a business setting.

  • Determine when and where to implement SCM.

Page 3: Supply Chain Management Systems

  • Definition of Supply Chain:

    • A network of organizations and business processes for:

      • Procuring raw materials.

      • Transforming them into intermediate and finished products.

      • Distributing finished products to customers.

    • Incorporates secondary and tertiary suppliers.

    • Upstream portion includes suppliers.

    • Downstream portion includes distributors.

Page 4: Nike's Supply Chain

  • Upstream Activities:

    • Capacity, inventory levels, delivery schedules, and payment terms.

  • Downstream Activities:

    • Contract suppliers, retailers, and customers.

  • Flow of orders and requests between various supply chain participants.

Page 5: Functions of Supply Chain Information Systems

  • Strategic Decision Making

  • Tactical Planning

  • Routine Decision Making

  • Execution and Transaction Processing

  • Network Design

  • Warehouse & Transportation Planning

  • Customer Relationship Management (CRM)

  • Supplier Relationship Management (SRM)

  • Enterprise Resource Planning (ERP)

Page 6: Traditional View of Supply Chains in the Economy

  • Freight Transportation Spending (1998):

    • $352B, $455B

    • Transportation manager in charge.

  • Inventory Expense (Early 2000s):

    • $221B, $311B.

  • Administrative Expense: $27B, $31B.

  • Logistics Activities Cost: 10.5% of GNP.

Page 7: Cost Breakdown of Manufactured Goods

  • Supply Chain Cost: 20%

  • Marketing Cost: 25%

  • Manufacturing Cost: 45%

  • Profit margin: 10%

  • Supply chain activities often invisible to customers.

Page 8: Benefits of SCM

  • Estimated savings of $30 billion in the grocery industry from effective logistics.

  • Turnaround time examples:

    • Cereal: 104 days to sale.

    • Car: 15 days to dealership.

  • Case Laura Ashley:

    • 10 inventory turns/year, relocated warehouse near FedEx, improved speed.

  • National Semiconductor: Used air transport, closed warehouses, increased sales and decreased delivery time.

Page 9: Magnitude of SCM Impact

  • Compaq: Lost up to $1 billion in laptop sales due to availability issues.

  • P&G: Saved $65 million over 18 months by better supply-demand alignment.

  • Price decrease of 30% for AMD processors following new product launch.

Page 10: Supply Chain Research and Reports

  • AMR Research:

    • Publishes reports on supply chains.

  • Top 25 Supply Chains Report: Released in November.

Page 11: Companies with Strong Supply Chains

  • Companies ranked based on ROA, growth, social responsibility

  • Top companies included Unilever, Inditex, Cisco, Colgate-Palmolive, Intel, Nike, and others.

Page 12: Supply Chain Goals

  • Aim: Match supply and demand profitably.

  • Key factors:

    • Right product, customer, time, quantity, price, store.

  • Balancing supplier and customer needs.

Page 13: Flows in a Supply Chain

  • Types of flows:

    • Customer, material, information, and funds.

  • Resemble a chain reaction within the system.

Page 14: SCM in a Supply Network

  • SCM manages material, information, and financial flows effectively in supply chains.

  • Tasks include design, planning, and execution to ensure service levels are met profitably.

Page 15: Economic Importance of SCM

  • In 2000, US companies spent $1 trillion on supply-related activities.

  • Potential to eliminate inefficiencies leading to millions in savings.

Page 16: Supply Chain Management Information

  • Bullwhip Effect: Demand distortion leads to excess inventory and costs.

  • Just-in-time strategy aims for perfect supply-demand alignment.

Page 17: The Bullwhip Effect Explained

  • Inaccurate information propagates demand fluctuations through the supply chain, causing excess inventory.

Page 18: Supply Chain Management Systems

  • Forecasting approaches to manage supply and demand effectively.

  • Distinction between actual customer demand and forecasted distributor orders.

Page 19: Categories of SCM Applications

  • Planning Systems: Demand planning, order planning, advanced scheduling.

  • Execution Systems: Manage product flow through warehouses and distribution centers.

Page 20: Demand Planning Software Example

  • Importance of intermittent demand forecasting using tools like Smart Forecasts.

Page 21: Managing Product Flow

  • Execution systems ensure efficient flow through logistics and distribution management.

Page 22: Role of the Internet in SCM

  • The internet aids in sharing information across incompatible systems and enhances coordination with supply chain partners.

Page 23: Motion of Various Products

  • Lists of products related to major brands, showcasing diversity in product offerings across supply chains.

Page 24: Intranets and Extranets for SCM

  • Intranets integrate internal processes, while extranets extend coordination to external partners.

Page 25: Supply Chain Models

  • Push-based: Build-to-stock based on forecasts.

  • Pull-based: Demand-driven, responding to actual customer orders.

Page 26: Push vs Pull System Characteristics

  • Push System: Inventory kept to meet anticipated demand.

  • Pull System: Relies on actual demand, potentially leading to longer lead times.

Page 27: Push/Pull Supply Chain Processes

  • Customer Order Cycle involves both push and pull processes across the supply chain.

Page 28: Summary of Push vs Pull Models

  • Push model: “Make what we sell.”

  • Pull model: “Sell what we make.”

Page 29: Internet-Driven Supply Chain

  • Digital infrastructure enables real-time adjustments in inventory and orders across the entire network.

Page 30: Value of SCM Systems

  • Key benefits include matching supply to demand, improving delivery services, reducing inventories, and increasing profitability.

Page 31: Case Study: Whirlpool

  • Challenges with outdated systems addressed through supply chain software to improve inventory allocation and demand forecasting.

Page 32: Addressing Performance Gaps in SCM

  • Cycle for improving information flows includes mapping processes, identifying gaps, and utilizing PDCA (Plan-Do-Check-Act) methods.

Page 33-38: Continuous Improvement Techniques

  • Reflection of process mapping:

    • Identify gaps and causes.

    • Continuous improvement leads to better efficiency and quality in SCM.

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