After reading the material in this chapter, you should be able to: To define the essence of Supply Chain Management (SCM) and to discuss how does it relate to Advanced Planning, in which sense are the underlying planning concepts “advanced”?
Trang 2Advances in Supply Chain Management
Chapter 1: Advances in Supply Chain
Management: An Overview (Cont……)
Trang 44
Trang 6At the level where most of us work every day, there are vital relationships to build and nurture: between the company and its key suppliers; between the company and its customers; and among the company and academics,
consultants, software providers and other practitioners. This relationship
business keeps getting more and more complicated
6
Trang 7it is important to maintain hightrust, high communication, mutually beneficial relationships with key suppliers and customers, whether they're called
Trang 8n Demand management Matching demand to available capacity is a
crucial task in demand planning. Tasks of strategic sales planning (e.g. longterm demand estimates) and the midterm sales planning are usually supported by a module for Demand Planning. Most APS providers offer Demand Fulfillment & ATP components that
comprise the shortterm sales planning. Master Planning coordinates procurement, production, and distribution on the midterm planning level. The tasks distribution, capacity and midterm personnel
planning are often considered simultaneously. Furthermore, master production scheduling is supported. If there are two separate software modules for Production Planning and Scheduling, the first one is
responsible for lotsizing whereas the second one is used for machine scheduling and shop floor . Planning on such a detailed, shortterm planning level is particularly dependent on the organization of the production system. Therefore, all bottlenecks have to be considered
Trang 9n Linking buyers & suppliers via MRP and ERP systems
The planning tasks BOM explosion and ordering of materials are often left to the ERP system(s), which traditionally intend to supply these
functionalities and are needed as transaction systems, anyway. As far as nonbottle neck materials are concerned, the BOM explosion indeed can be
executed within an ERP system. However, an “advanced” purchasing
planning for materials and components, with respect to alternative suppliers, quantity discounts, and lower (midterm supply contracts) or upper (material constraints) bounds on supply quantities, is not supported by ERP systems. Not all APS providers launch a special software module Purchasing &
Material Requirements Planning that supports (mid to) shortterm
procurement decisions directly. Sometimes, at least a further Collaboration module helps to speed up the traditional interactive (collaborative)
procurement processes between a manufacturer (buyer) and its suppliers
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Trang 10n Use JIT to improve the “pull” of materials to reduce inventory
levels To gain and maintain a competitive advantage, firms are
using the justintime (JIT) philosophy, which is to eliminate waste
by cutting unnecessary inventory and removing delays in operations. The goals are to produce goods and services as needed and to
continuously improve the valueadded benefits of operations. A JIT system is the organization of resources, information flows, and
decision rules that can enable an organization to realize the benefits
of the JIT philosophy. Often a crisis (such as being faced with going out of business or closing a plant) galvanizes management and labor
to work together to change traditional operating practices. Converting from traditional manufacturing to a justintime system brings up not only inventory control issues, but also process management and
scheduling issues
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Trang 11n Employ TQM to improve quality compliance among suppliers
Total quality management (TQM) refers to management methods used to enhance quality and productivity in organizations,
particularly businesses. TQM is a comprehensive system approach that works horizontally across an organization, involving all
departments and employees and extending backward and forward to include both suppliers and clients/customers.
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Trang 12n Transportation management tradeoff decisions between cost &
timing of delivery/customer service via trucks, rail, water & air The
consolidation of transport flows decreases the transport cost. As the cost of a single trip of a certain vehicle on a certain route is nearly independent of the load, a high utilization of the loading capacity is advantageous. Moreover, the relative cost per loading capacity
decreases with increasing size of the vehicles. But even with a strong consolidation of shipments to full loads, e.g. by an LSP, the smaller shipments cause relatively higher costs, because the consolidation requires detours to different loading places, additional stops and transshipments (see Fleischmann 1998,p. 65).
The following transport processes occur in a supply chain:
• The procurement of materials and their transportation from external suppliers
or from an own remote factory to a production site
• The distribution of products from a factory to the customers. 12
Trang 13distribution function of the supplier as well as part of the procurement
function of the receiver. The procurement system as well as the distribution system depend on the type of transported items:
• Investment goods, e.g. machines or equipment for industrial customers, are shipped only once or seldom on a certain transport link.
• Materials for production are also shipped to industrial customers, but
regularly and frequently on the same path.
• Consumer goods are shipped to wholesalers or retailers, often in very small order sizes (with an average below 100kg in some businesses), requiring a consolidation of the transports.
Transport planning is usually the responsibility of the supplier. But there are important exceptions, where the manufacturer has the power to control the transports from his suppliers, e.g. in the automotive industry. 13
Trang 14n Customer relationship management CRM is an important part of
distribution. It includes strategies to ensure deliveries, resolve complaints, improve communications, & determine service requirements
n Network design It involves creating distribution networks based on
trade off decisions between cost & sophistication of distribution system
Integration Trends:
n Supply Chain Process Integration when supply chain participants
work for common goals. It requires intra firm functional integration which is based on efforts to change attitudes & adversarial
relationships. A strong coordination (i.e. the configuration of data
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Trang 15existing ERP systems with the focus on planning tasks and not on
transactional tasks. In most cases an ERP system will be a kind of “leading system” where the main transactional data are kept and maintained. The data basis of APS is incrementally updated and major changes on master data are made in the ERP system. This task will be called integration of APS with ERP systems.
n Supply Chain Performance Measurement It is crucial for firms to
know if procedures are working
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Trang 18n Producing, packaging, moving, storing, delivering and
other supply chain activities can be harmful to the environment
Trang 20So, the above definition of a supply chain also incorporates the
Trang 2121
Trang 22n As Fig. 1.1 shows, a network usually will not only focus on
flows within a (single) chain, but will have to deal with
divergent and convergent flows within a complex network resulting from many different customer orders to be handled
in parallel. In order to ease complexity, a given organization may concentrate only on a portion of the overall supply
chain.
As an example, looking in the downstream direction the view of
an organization may be limited by the customers of its customers while it ends with the suppliers of its suppliers in the upstream direction. A supply chain in the broad sense is also called an
interorganizational supply chain, while the term intra
organizational relates to a supply chain in the narrow sense.
Trang 23Irrespective of this distinction, a close cooperation between the different functional units like marketing, production,
procurement, logistics and finance is mandatory—The objective governing all endeavors within a supply chain is seen as
increasing competitiveness. This is because no single
organizational unit now is solely responsible for the
competitiveness of its products and services in the eyes of the ultimate customer, but the supply chain as a whole. Hence,
competition has shifted from single companies to supply chains.
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Trang 2525
Trang 26The House of SCM (Fig.1.2) illustrates the many facets of SCM. The roof stands for the ultimate goal of SCM—competitiveness
—customer service indicates the means. Competitiveness can be improved in many ways, e.g. by reducing costs, increasing
flexibility with respect to changes in customer demands or by providing a superior quality of products and services.
The roof rests on two pillars representing the two main
components of SCM, namely the integration of a network of
organizations and the coordination of information, material and financial flows. The figure also shows that there are many
disciplines that formed the foundations of SCM. The two
26
Trang 28n The coordination of flows along the supply chain can be
executed efficiently by utilizing the latest developments in information and communication technology. These allow
processes formerly executed manually to be automated.
Above all, activities at the inter face of two entities can be scrutinized, while duplicate activities (like keying in the data
of a consignment) can be reduced to a single activity. Process orientation thus often incorporates a redesign followed by a standardization of the new process.
n For executing customer orders, the availability of materials,
personnel, machinery and tools has to be planned. Although production and distribution planning as well as purchasing
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Trang 29have been in use for several decades, these mostly have been isolated and limited in scope. Coordinating plans over several
sites and several legally separated organizations represents a new challenge that is taken up by Advanced Planning(Systems).
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Trang 30customer complaints are dealt with and product warranties (Christopher2005,
p. 50).
For measuring customer service and for setting targets, key performance
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Trang 31or the fill rate
Example: Assume a delivery time of 9 days has to be offered to customers. Now, following each activity upstream in the supply chain with its expected lead times for information and material flows, it becomes clear, where the
decoupling point between the two options productiontostock and productiontoorder currently can be located. Since the actual lead times for assembly
totals 11 days, this would require to assembletostock
If accumulated lead times of customer specific parts exceed expected delivery times, the supply chain as a whole—perhaps including key customers—has to look for either reducing lead times for material or for information flows (e.g. transferring orders by electronic means may save 1 day while an additional day may be saved by advanced scheduling techniques at the assembly plant, thereby allowing to assembletoorder while suppliers manufacturetostock)
Trang 32A supply chain in the broad sense consists of several legally separated firms collaborating in the generation of a product or service with the aim of improving the competitiveness of a supply chain as a whole. Integration refers
to the special building blocks that cause these firms to collaborate in the long term, namely:
culture and a commitment to contribute to the aims of the supply chain will be
of great importance. A possible partner may bring in
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Trang 33supply chain. A supply chain is regarded as a cross between a pure
market interaction and a hierarchy. It tries to combine the best features of the two. Ideally, each entity within a supply chain will concentrate on its core competencies and will be relieved from stringent decision
procedures and administrative routines attributed to a large hierarchy. Information and knowhow is shared openly among members.
Competition among members along the supply chain is substituted by the commitment to improve competitiveness of the supply chain as a whole.
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Trang 34economically dependent on each other. Obviously, the structure of a supply chain will remain stable, only if there is a winwin situation for each member
—at least in the long run. If this is not achieved in the short term by usual
price mechanisms, compensation schemes must be looked for.
Leadership, being the third building block of integration, is a delicate theme in light of the ideal of selforganizing, polycentric actors forming a supply
chain. At least some decisions should be made for the supply chain as a whole, like the cancellation of a partnership or the integration of a new partner.
Similarly, aligning strategies among partners may require some form of
leadership (as an example see Rockholdet al. 1998). In practice, leadership
may be executed either by a focal company or a steering committee. A focal company is usually a member having the largest (financial) power, the best
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Trang 35committee may be introduced, consisting of representatives of all members of
a supply chain. The rules of decisionmaking—like the number of votes per member—are subject to negotiations
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Trang 36The coordination of information, material and financial flows—the main component of SCM—comprises three building blocks:
as for more precise demand forecasts. Graphical user interfaces allow users to access and manipulate data more easily. Communication via electronic data interchange (EDI) can be established via private and public nets, the most
popular being
Trang 37instantaneously and cheaply. As an example, a sudden breakdown of a
productionline can be distributed to all members of a supply chain concerned
as a socalled alert. Rigid standards formerly introduced for communication in special lines of businesses (like ODETTE in the automotive industry) are now being substituted by more flexible metalanguages(like the extensible markup language (XML)). Communication links can be differentiated according to the parties involved (Corsten and Gössinger 2008): business (B), consumer (C) or administration (A)
The second building block, process orientation, aims at coordinating all the activities involved in customer order fulfillment in the most efficient way. It starts with an analysis of the existing supply chain, the current allocation of activities to its members. Key performance indicators can reveal weaknesses, bottlenecks and waste within a supply chain,
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Trang 38maybe reallocated. The building block “process orientation” has much in
common with business process reengineering (Hammer and Champy 1993); however, it will not necessarily result in a radical redesign. As Hammer
(2001,p.84) putsit, “streamlining crosscompany processes is the next great frontier for reducing costs, enhancing quality, and speeding operations.”
Advanced planning—the third building block—incorporates longterm, mid term and shortterm planning levels. Software products—called Advanced Planning Systems—are now available to support these planning tasks.
Although an Advanced Planning System (APS) is separated into several
modules, effective information flows between these modules should make it a coherent software suite.
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