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.