Scm lesson 1
- 1. Copyright © 2016 Pearson Education, Inc. 1 – 1Copyright © 2016 Pearson Education, Inc. 1 – 1 PowerPoint presentation to accompany Chopra and Meindl Supply Chain Management, 6e PowerPoint presentation to accompany Chopra and Meindl Supply Chain Management, 6e 1 Understanding the Supply Chain
- 2. Copyright © 2016 Pearson Education, Inc. 1 – 2Copyright © 2016 Pearson Education, Inc. 1 – 2 Learning Objectives 1. Discuss the goal of a supply chain and explain the impact of supply chain decisions on the success of a firm. 2. Identify the three key supply chain decision phases and explain the significance of each one. 3. Describe the cycle and push/pull views of a supply chain. 4. Classify the supply chain macro processes in a firm.
- 3. Copyright © 2016 Pearson Education, Inc. 1 – 3Copyright © 2016 Pearson Education, Inc. 1 – 3 What is a Supply Chain? • All stages involved, directly or indirectly, in fulfilling a customer request • Includes manufacturers, suppliers, transporters, warehouses, retailers, and customers • Within each company, the supply chain includes all functions involved in fulfilling a customer request (product development, marketing, operations, distribution, finance, customer service)
- 4. Copyright © 2016 Pearson Education, Inc. 1 – 4Copyright © 2016 Pearson Education, Inc. 1 – 4 What is a Supply Chain? • Customer is an integral part of the supply chain • Includes movement of products from suppliers to manufacturers to distributors and information, funds, and products in both directions • May be more accurate to use the term “supply network” or “supply web” • Typical supply chain stages: customers, retailers, wholesalers/distributors, manufacturers, component/raw material suppliers • All stages may not be present in all supply chains (e.g., no retailer or distributor for Dell)
- 5. Copyright © 2016 Pearson Education, Inc. 1 – 5Copyright © 2016 Pearson Education, Inc. 1 – 5 What is a Supply Chain? FIGURE 1-1
- 6. Copyright © 2016 Pearson Education, Inc. 1 – 6Copyright © 2016 Pearson Education, Inc. 1 – 6 Flows in a Supply Chain FIGURE 1-2
- 7. Copyright © 2016 Pearson Education, Inc. 1 – 7Copyright © 2016 Pearson Education, Inc. 1 – 7 The Objective of a Supply Chain • Maximize overall value generated Supply Chain Surplus = Customer Value – Supply Chain Cost
- 8. Copyright © 2016 Pearson Education, Inc. 1 – 8Copyright © 2016 Pearson Education, Inc. 1 – 8 The Objective of a Supply Chain • Customer the only source of revenue • Sources of cost include flows of information, products, or funds between stages of the supply chain • Effective supply chain management is the management of supply chain assets and product, information, and fund flows to grow the total supply chain surplus
- 9. Copyright © 2016 Pearson Education, Inc. 1 – 9Copyright © 2016 Pearson Education, Inc. 1 – 9 Importance of Supply Chain Decisions • Wal-Mart, $1 billion sales in 1980 to $469 billion in 2013 • Seven-Eleven Japan, ¥1 billion sales in 1974 to ¥1.9 trillion in 2013 • Webvan folded in two years • Borders, $4 billion in 2004 to $2.8 billion in 2009 • Dell, $56 billion in 2006, adopted new supply chain strategies
- 10. Copyright © 2016 Pearson Education, Inc. 1 – 10Copyright © 2016 Pearson Education, Inc. 1 – 10 Key Point Supply chain design, planning, and operation decisions play a significant role in the success or failure of a firm. To stay competitive, supply chains must adapt to changing technology and customer expectations.
- 11. Copyright © 2016 Pearson Education, Inc. 1 – 11Copyright © 2016 Pearson Education, Inc. 1 – 11 Decision Phases in a Supply Chain 1. Supply chain strategy or design How to structure the supply chain over the next several years 2. Supply chain planning Decisions over the next quarter or year 3. Supply chain operation Daily or weekly operational decisions
- 12. Copyright © 2016 Pearson Education, Inc. 1 – 12Copyright © 2016 Pearson Education, Inc. 1 – 12 Supply Chain Strategy or Design • Decisions about the configuration of the supply chain, allocation of resources, and what processes each stage will perform • Strategic supply chain decisions – Outsource supply chain functions – Locations and capacities of facilities – Products to be made or stored at various locations – Modes of transportation – Information systems • Supply chain design must support strategic objectives • Supply chain design decisions are long-term and expensive to reverse – must take into account market uncertainty
- 13. Copyright © 2016 Pearson Education, Inc. 1 – 13Copyright © 2016 Pearson Education, Inc. 1 – 13 Supply Chain Planning • Definition of a set of policies that govern short-term operations • Fixed by the supply configuration from strategic phase • Goal is to maximize supply chain surplus given established constraints • Starts with a forecast of demand in the coming year
- 14. Copyright © 2016 Pearson Education, Inc. 1 – 14Copyright © 2016 Pearson Education, Inc. 1 – 14 Supply Chain Planning • Planning decisions: – Which markets will be supplied from which locations – Planned buildup of inventories – Subcontracting – Inventory policies – Timing and size of market promotions • Must consider demand uncertainty, exchange rates, competition over the time horizon in planning decisions
- 15. Copyright © 2016 Pearson Education, Inc. 1 – 15Copyright © 2016 Pearson Education, Inc. 1 – 15 Supply Chain Operation • Time horizon is weekly or daily • Decisions regarding individual customer orders • Supply chain configuration is fixed and planning policies are defined • Goal is to handle incoming customer orders as effectively as possible • Allocate orders to inventory or production, set order due dates, generate pick lists at a warehouse, allocate an order to a particular shipment, set delivery schedules, place replenishment orders • Much less uncertainty (short time horizon)
- 16. Copyright © 2016 Pearson Education, Inc. 1 – 16Copyright © 2016 Pearson Education, Inc. 1 – 16 Key Point Supply chain decision phases may be categorized as design, planning, or operational, depending on the time frame during which the decisions made apply. Design decisions constrain or enable good planning, which in turn constrains or enables effective operation.
- 17. Copyright © 2016 Pearson Education, Inc. 1 – 17Copyright © 2016 Pearson Education, Inc. 1 – 17 Process Views of a Supply Chain 1. Cycle View: The processes in a supply chain are divided into a series of cycles, each performed at the interface between two successive stages of the supply chain. 2. Push/Pull View: The processes in a supply chain are divided into two categories, depending on whether they are executed in response to a customer order or in anticipation of customer orders. Pull processes are initiated by a customer order, whereas push processes are initiated and performed in anticipation of customer orders.
- 18. Copyright © 2016 Pearson Education, Inc. 1 – 18Copyright © 2016 Pearson Education, Inc. 1 – 18 Cycle View of Supply Chain Processes FIGURE 1-3
- 19. Copyright © 2016 Pearson Education, Inc. 1 – 19Copyright © 2016 Pearson Education, Inc. 1 – 19 Cycle View of Supply Chain Processes FIGURE 1-4
- 20. Copyright © 2016 Pearson Education, Inc. 1 – 20Copyright © 2016 Pearson Education, Inc. 1 – 20 Key Point A cycle view of the supply chain clearly defines the processes involved and the owners of each process. This view is useful when considering operational decisions because it specifies the roles and responsibilities of each member of the supply chain and the desired outcome for each process.
- 21. Copyright © 2016 Pearson Education, Inc. 1 – 21Copyright © 2016 Pearson Education, Inc. 1 – 21 Push/Pull View of Supply Chains FIGURE 1-5
- 22. Copyright © 2016 Pearson Education, Inc. 1 – 22Copyright © 2016 Pearson Education, Inc. 1 – 22 Push/Pull View of Supply Chain Processes • Supply chain processes fall into one of two categories depending on the timing of their execution relative to customer demand • Pull: execution is initiated in response to a customer order (reactive) • Push: execution is initiated in anticipation of customer orders (speculative) • Push/pull boundary separates push processes from pull processes
- 23. Copyright © 2016 Pearson Education, Inc. 1 – 23Copyright © 2016 Pearson Education, Inc. 1 – 23 Key Point A push/pull view of the supply chain categorizes processes based on whether they are initiated in response to a customer order (pull) or in anticipation of a customer order (push). This view is useful when considering strategic decisions relating to supply chain design.
- 24. Copyright © 2016 Pearson Education, Inc. 1 – 24Copyright © 2016 Pearson Education, Inc. 1 – 24 Supply Chain Macro Processes Supply chain processes discussed in the two views can be classified into 1. Customer Relationship Management (CRM): all processes at the interface between the firm and its customers 2. Internal Supply Chain Management (ISCM): all processes that are internal to the firm 3. Supplier Relationship Management (SRM): all processes at the interface between the firm and its suppliers
- 25. Copyright © 2016 Pearson Education, Inc. 1 – 25Copyright © 2016 Pearson Education, Inc. 1 – 25 Key Point Within a firm, all supply chain activities belong to one of three macro processes: CRM, ISCM, and SRM. Integration among the three macro processes is crucial for successful supply chain management.
- 26. Copyright © 2016 Pearson Education, Inc. 1 – 26Copyright © 2016 Pearson Education, Inc. 1 – 26 Supply Chain Macro Processes FIGURE 1-8