Lecture Operations management: Creating value along the supply chain (Canadian edition) - Chapter 10

Chapter 10 - Supply chain management: Strategy and design. This chapter includes contents: The management of supply chains, green supply chains, information technology: a supply chain enabler, supply chain integration, supply chain management (SCM) software, measuring supply chain performance.

§ 1

§ Robert S Russell, Bernard W Taylor III, Ignacio Castillo, Navneet Vidyarthi

CHAPTER 10

Supply Chain Management:

Strategy and Design

OPERATIONS MANAGEMENT:

Creating Value Along the Supply Chain,

Canadian Edition

Learning Objectives

manufacturing and services

the modern supply chain

they relate to quality management

for supply chain management

information technology assists with supply chain

integration

and calculate key performance indicators

§ 10-2

Lecture Outline

—The Management of Supply Chains

—Green Supply Chains

—Information Technology: A Supply Chain Enabler

—Supply Chain Integration

—Supply Chain Management (SCM)

Software

—Measuring Supply Chain Performance

§ 10-3

Supply Chains

§ 10-4

• All facilities, functions, and activities associated with flow and transformation of goods and

services from raw materials to customer, as well

as the associated information flows

• An integrated group of processes to “source,”

“make,” and “deliver” products

The Supply Chain – Figure10.1

§ 10-5

Supply Chain for Denim Jeans

Figure 10.2a

§ 10-6

Supply Chain for Denim Jeans (cont.)

Figure 10.2b

§ 10-7

Supply Chain Processes

§ 10-8

Supply Chain for Service Providers

—More difficult than manufacturing

—Does not focus on the flow of physical goods

—Focuses on human resources and support

services

—More compact and less extended

§ 10-9

Value Chains

—Value chain

— every step from raw materials to the eventual end user

— ultimate goal is delivery of maximum value to the end user

Value Chains

—Demand chain

— increase value for any part or all of chain

—Terms are used interchangeably

—Value

— creation of value for customer is important aspect of supply chain management

§ 10-11

Supply Chain Management (SCM)

—Managing flow of information through supply chain

in order to attain the level of synchronization that will make it more responsive to customer needs

while lowering costs

Supply Chain Uncertainty and Inventory

Supply Chain Uncertainty and Inventory

—Factors that contribute to uncertainty

— inaccurate demand forecasting

— long variable lead times

Bullwhip Effect

—Occurs when slight demand variability is magnified

as information moves back upstream

§ 10-15

Risk Pooling

—Risks are aggregated to reduce the impact of

individual risks

— Combine inventories from multiple locations into one

— Reduce parts and product variability, thereby reducing the number of product components

— Create flexible capacity

§ 10-16

“Green” Supply Chains

—Sustainability

—Meeting present needs without compromising the ability of future generations to meet their needs

—Sustaining human and social resources

—It can be cost effective and profitable

—Can provide impetus for product and process

innovations

—Impetus comes from downstream in the supply chain and moves upstream to suppliers

§ 10-17

Sustainability and Quality Management

—Reducing waste through quality programs helps achieve sustainability goals

—Improving fuel efficiency of vehicles

—Telecommuting

—Eco-friendly packing materials

—Energy-efficient facilities

§ 10-18

Information Technology:

A Supply Chain Enabler

—Information links all aspects of supply chain

—E-business

— replacement of physical business processes with

electronic ones

—Electronic data interchange (EDI)

— a computer-to-computer exchange of business

documents

—Bar code and point-of-sale

— data creates an instantaneous computer record of a sale

§ 10-19

IT: Supply Chain Enabler

—Radio frequency identification (RFID)

— technology can send product data from an item to a

reader via radio waves

—Internet

— allows companies to communicate with suppliers,

customers, shippers and other businesses around the world instantaneously

—Build-to-order (BTO)

— direct-sell-to-customers model via the Internet; extensive communication with suppliers and customer

§ 10-20

Supply Chain Enablers

§ 10-21

E-Business & Supply Chain

Management

—Savings due to lower transaction costs

—Reduction of intermediary roles

—Shorter supply chain response times

—Wider presence and increased visibility

—Greater choices & more info for customers

Electronic Data Interchange

—Computer-to-computer exchange of documents in

a standard format

—Purchasing, shipping and receiving

—Improve customer service

—Reduce paperwork

—Increase productivity

—Improve billing and cost efficiency

—Reduce bullwhip effect through information sharing

§ 10-23

Bar Codes

—Automated data collection system

—Bar code contains identifying information

—Provide instantaneous tracking information

—Checkout scanners create point-of-sale data

— Update inventory records

Radio Frequency Identification (RFID)

—Use radio waves to transfer data from chip to a reader

—Provides complete visibility of product location

—Continuous inventory monitoring

—Reduce labor to manage inventory

—Reduce inventory costs

—RFID is not standardized yet

—Difficult to track between systems

§ 10-25

RFID Capabilities

§ 10-26

RFID Capabilities

§ 10-27

Supply Chain Integration

—Share information among supply chain members

— Reduced bullwhip effect

— Early problem detection

— Faster response

— Builds trust and confidence

—Collaborative planning, forecasting, replenishment, and design

— Reduced bullwhip effect

— Lower costs (material, logistics, operating, etc.)

— Higher capacity utilization

— Improved customer service levels

§ 10-28

Supply Chain Integration

—Coordinated workflow, production and operations, procurement

— Production efficiencies

— Fast response

— Improved service

— Quicker to market

—Adopt new business models and technologies

— Penetration of new markets

— Creation of new products

— Improved efficiency

— Mass customization

§ 10-29

Collaborative Planning, Forecasting, and

Replenishment (CPFR)

—Two or more companies in a supply chain to

synchronize their demand forecasts into a single plan to meet customer demand

—Parties electronically exchange

— past sales trends

SCM Software

—Enterprise resource planning (ERP)

— software that integrates the components of a company by sharing and organizing information and data

§ 10-31

Measuring Supply Chain Performance

of    value aggregate

  Average

sold  

goods  

of Cost 

turns Inventory 

)   item  

e (unit valu )

  item for 

inventory   

(average

inventory  

of    value aggregate

Average

i i

Measuring Supply Chain Performance

sold)/(365  

goods  

of (Cost 

inventory  

of    value aggregate

Average  

supply  

of   Days

Computing Key Performance Indicators

§ 10-34

Process Control and SCOR

—Process Control

— not only for manufacturing operations

— can be used in any processes of supply chain

—Supply Chain Operations Reference (SCOR)

— a cross industry supply chain diagnostic tool maintained

by the Supply Chain Council

§ 10-35

SCOR Model Processes

§ 10-36

SCOR Performance Metrics

§ 10-37

Copyright © 2014 John Wiley & Sons Canada, Ltd All rights reserved Reproduction or translation of this work beyond that permitted by Access Copyright (The Canadian Copyright Licensing Agency) is unlawful Requests for further information should be addressed to the Permissions Department, John Wiley & Sons Canada, Ltd The purchaser may make back-up copies for his or her own use only and not for distribution or resale The author and the publisher assume no responsibility for errors, omissions, or damages caused by the use of these programs or from the use of the information contained herein.

COPYRIGHT