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1、Supply Chain Engineering MN 799,1#,SUPPLY CHAIN ENGINEERINGMN 799,TEXT:SUPPLY CHAIN MANAGEMENT Chopra and Meindl Prentice HallCOURSE OUTLINE Description Book pages1/22 Introduction,curriculum,rules,exams,Infrastructure(1-27)1/27 Strategic Fit and Scope.Supply Chain Drivers(27-51)2/05 No Class2/12 De
2、mand Management(169-204)2/19 Aggregate Planning,Managing(205-225)2/26 Guest Lecture Network Operations(71-168)3/04 Managing Supply and Demand(121-144)3/11 Class trip to see Supply Chain in Operation3/18 No Class 3/25 Mid Term 4/01 Managing Inventory(249-295);4/08 Product Availability(297-384)4/15 So
3、urcing and Procurement(387-410)4/22 Transportation(411-219);Facility Decisions(109-133)4/29 Beer Game 5/06 Co-ordination Information Information Technology&E-Business(477-557)5/13 FINAL EXAMINATION,Supply Chain Engineering MN 799,2#,GUIDELINES,GRADING:HOMEWORK 20%BEER GAME 5%MID TERM 30%FINAL 45%HOM
4、EWORK MUST BE COMPLETED IN TIME.LATE SUBMISSIONS WILL START WITH A B GRADECLASSES WILL START AT 6.00PM AND GO STRAIGHT THRU TO 8.00PM,Supply Chain Engineering MN 799,3#,DEFINITION OF A SUPPLY CHAIN,WHAT IS A SUPPLY CHAIN?A SUPPLY CHAIN COVERS THE FLOW OF MATERIALS,INFORMATION AND CASH ACROSS THE ENT
5、IRE ENTERPRISESUPPLY CHAIN MANAGEMENT IS THE INTEGRATED PROCESS OF INTEGRATING,PLANNING,SOURCING,MAKING AND DELIVERING PRODUCT,FROM RAW MATERIAL TO END CUSTOMER,AND MEASURING THE RESULTS GLOBALLYTO SATISFY CUSTOMERS AND MAKE A PROFITWHY A SUPPLY CHAIN?,Supply Chain Engineering MN 799,4#,Traditional
6、View:Logistics in the Economy,199019962006Freight Transportation$352,$455$809 B%Freight57%62%Inventory Expense$221,$311$446 B%Inventory39%33%Administrative Expense$27,$31$50BLogistics related activity 11%,10.5%,9.9%of GNP.,Source:Cass Logistics,Homework:What are 2007 statistics?,Supply Chain Enginee
7、ring MN 799,5#,Traditional View:Logistics in the Manufacturing Firm,Profit4%Logistics Cost21%Marketing Cost27%Manufacturing Cost48%,Homework:What it the profile for Consumables;Pharamas and Computers,Supply Chain Engineering MN 799,6#,Supply Chain Management:The Magnitude in the Traditional View,Est
8、imated that the grocery industry could save$30 billion(10%of operating cost by using effective logistics and supply chain strategiesA typical box of cereal spends 104 days from factory to saleA typical car spends 15 days from factory to dealershipCompaq estimates it lost$0.5 billion to$1 billion in
9、sales in 1995 because laptops were not available when and where neededP&G estimates it saved retail customers$65 million by collaboration resulting in a better match of supply and demandLaura Ashley turns its inventory 10 times a year,five times faster than 3 years ago,Supply Chain Engineering MN 79
10、9,7#,HAMBURGERS AND FRIES,HAMBURGERS(4/LB)CATTLE FARM 50c/lbBUTCHERPACKAGINGDISTRIBUTION CENTERRETAILERCUSTOMERProvide Sales Price at each stage,FRIES(3Large/lb)POTATO FARM 25C/lbPOTATO PROCESSORDISTRIBUTION CENTERRETAILERCUSTOMERProvide Sales Price at each stage,Supply Chain Engineering MN 799,8#,W
11、hat problems do you foresee in this Supply Chain?Please write some down,Burger and Fries,Examine this process What do you observe?,Supply Chain Engineering MN 799,9#,Understanding the Supply Chain a chain is only as good as its weakest link Recall that saying?The saying applies to the principles of
12、building a competitive infrastructure:,Manufacturer,Wholesaler,Retailer,Customer,Supplier,there is a limit to the surplus or profit in a supply chain,We are all part of a Supply Chain in everything we buy,Supply Chain Engineering MN 799,10#,OBJECTIVES OF A SUPPLY CHAIN,MAXIMIZE OVERALL VALUE GENERAT
13、EDSATISFYING CUSTOMER NEEDS AT A PROFITVALUE STRONGLY CORRELATED TO PROFITABILITYSOURCE OF REVENUE CUSTOMERCOST GENERATED WITHIN SUPPLY CHAIN BY FLOWS OF INFORMATION,PRODUCT AND CASHFLOWS OCCUR ACROSS ALL STAGES CUSTOMER,RETAILER,WHOLESALER,DISTRIBUTOR,MANUFACTURER AND SUPPLIERMANAGEMENT OF FLOWS KE
14、Y TO SUPPLY CHAIN SUCCESS,UNDERSTAND EACH OBJECTIVE,Supply Chain Engineering MN 799,11#,DECISION PHASES IN A SUPPLY CHAIN,OVERALL STRATEGY OF COMPANY EFFICIENT OR RESPONSIVESUPPLY CHAIN STRATEGY OR DESIGN?LOCATION AND CAPACITY OF PRODUCTION AND WAREHOUSE FACILITIES?PRODUCTS TO BE MANUF,PURCHASED OR
15、STORED BY LOCATION?MODES OF TRANSPORTATION?INFORMATION SYSTEMS TO BE USED?CONFIGURATION MUST SUPPORT OVERALL STRAGEGYSUPPLY CHAIN PLANNING?OPERATING POLICIES MARKETS SERVED,INVENTORY HELD,SUBCONTRACTING,PROMOTIONS,?SUPPLY CHAIN OPERATION?DECISIONS AND EXECUTION OF ORDERS?,Supply Chain Engineering MN
16、 799,12#,Basic Supply Chain Architectures(Examples),1.Indirect Channel,2.Direct Channel,3.Virtual Channel,Supplier,Supplier,Supplier,Supplier,Supplier,Supplier,Supplier,Supplier,Customer,Customer,Customer,Customer,Customer,Factory,Factory,Factory,Wholesale,Wholesale,Integrator,ExpressFreight,Retaile
17、r,Retailer,Retailer,Virtual Store,Fabricator,Fabricator,CreditService,Supply Chain Engineering MN 799,13#,SOLE SOURCESINGLE SOURCEMULTI-SOURCE,INDIRECT CHANNELDIRECT CHANNELVIRTUAL CHANNEL,MAKEvs.BUY,Supply,Demand,Supply Chain Architecture,Strategic Issues.Demand Reach.Demand RiskCost Structure Asse
18、t Utilization Responsiveness Supply Risk,Supply Chain Engineering MN 799,14#,SUPPLY CHAIN FRAMEWORK AND INFRASTRUCTURE,PRINCIPLE:BUILD A COMPETITIVE INFRASTRUCTUREThis principle is about VELOCITY,Supply Chain Engineering MN 799,15#,Cycle View of Supply Chains DEFINES ROLES AND RESPONSIBILITIES OF ME
19、MBERS OF SUPPLY CHAIN,Customer Order Cycle,Replenishment Cycle,Manufacturing Cycle,Procurement Cycle,Customer,Retailer,Distributor,Manufacturer,Supplier,to,to,to,to,Supply Chain Engineering MN 799,16#,PROCESS VIEW OF A SUPPLY CHAIN,CUSTOMER ORDER CYCLETRIGGER:MAXIMIZE CONVERSION OF CUSTOMER ARRIVALS
20、 TO CUSTOMER ORDERSENTRY:ENSURE ORDER QUICKLY AND ACCURATELY COMMUNICATED TO ALL SUPPLY CHAIN PROCESSESFULFILLMENT:GET CORRECT AND COMPLETE ORDERS TO CUSTOMERS BY PROMISED DUE DATES AT LOWEST COSTRECEIVING:CUSTOMER GETS ORDER,Supply Chain Engineering MN 799,17#,PROCESS VIEW OF A SUPPLY CHAIN,REPLENI
21、SHMENT CYCLEREPLENISH INVENTORIES AT RETAILER AT MINIMUM COST WHILE PROVIDING NECESSARY PRODUCT AVAILABILITY TO CUSTOMERRETAIL ORDER:TRIGGER REPLENISHMENT POINT BALANCE SERVICE AND INVENTORYENTRY ACCURATE AND QUICK TO ALL SUPPLY CHAINFULFILLMENT BY DISTRIBUTOR OR MFG.ON TIMERECEIVING BY RETAILER,UPD
22、ATE RECORDSMANUFACTURING CYCLEINCLUDES ALL PROCESSES INVOLVED IN REPLENISHING DISTRIBUTOR(RETAILER)INVENTORY,ON TIME OPTIMUM COSTORDER ARRIVAL PRODUCTION SCHEDULINGMANUFACTURING AND SHIPPINGRECEIVING,Supply Chain Engineering MN 799,18#,PROCESS VIEW OF A SUPPLY CHAIN,PROCUREMENT CYCLESEVERAL TIERS OF
23、 SUPPLIERSINCLUDES ALL PROCESSES INVOLVED IN ENSURING MATERIAL AVAILABLE WHEN REQUIREDSUPPLY CHAIN MACRO PROCESSESCRM All processes focusing on interface between firm and customersISCM A processes internal to firmSRM All processes focusing on interface between firm and suppliers,Supply Chain Enginee
24、ring MN 799,19#,A Customers View of the Supply Chain,Order the product.with configuration complexity on-line,Pay for the product.in a foreign currency by credit card,Service the product.anywhere in the world,Take delivery.the next day at home,and get started without a hassle,Ex.-Travel arrangements
25、on line,FRONT OFFICE,Supply Chain Engineering MN 799,20#,Push/Pull View of Supply Chains PULL PROCESSES IN RESPONSE TO A CUSTOMER ORDERPUSH PROCESSES IN ANTICIPATION OF A CUSTOMER ORDER,Procurement,Manufacturing and,Replenishment cycles,Customer Order,Cycle,CustomerOrder arrives,PUSH PROCESSES,PULL
26、PROCESSES,Supply Chain Engineering MN 799,21#,UNDERSTANDING THE SUPPLY CHAIN,HomeworkEXAMPLES:EXAMPLES OF SUPPLY CHAINS 1.5 pp 20-25WHAT ARE SOME OF THE KEY ISSUES IN THESE SUPPLY CHAINSANALYSE AND COMMENT ON 7-Eleven and Amazon ANSWER QUESTIONS 1TO 6 FOR EACH,Supply Chain Engineering MN 799,22#,SUP
27、PLY CHAIN PERFORMANCE STRATEGIC FIT AND SCOPE(Lesson 2),NewProductDevelopment,MarketingandSales,Operations,Distribution,Service,Finance,Accounting,Information Technology,Human Resources,Business Strategy,New ProductStrategy,MarketingStrategy,Supply Chain Strategy,Supply and Manufacture,FILM CHAIN RE
28、ACTION,EXAMPLES?,Supply Chain Engineering MN 799,23#,ACHIEVING STRATEGIC FIT,Step 1.Understanding the Customer and DemandQuantity-Lot sizeResponse timeProduct varietyService levelPriceInnovation,ImpliedDemand UncertaintySee Table 2.1Regular Demand Uncertainty due to customers demand and Implied Dema
29、nd Uncertainty due to uncertainty in Supply Chain,Supply Chain Engineering MN 799,24#,Levels of Implied Demand Uncertainty,Low,High,Price,Responsiveness,Customer Need,Implied Demand Uncertainty Attributes(Table 2-2)Low Implied Uncertainty High Implied UncertaintyProduct Margin Low High Aver.Forecast
30、 Error 10%40-100%;Aver.Stockout rate 1-2%10-40%;Aver.markdown 0%10-25%,DetergentLong lead time steel,High FashionEmergency steel,Supply Chain Engineering MN 799,25#,SUPPLY SOURCE UNCERTAINTY,TABLE 2.3 SUPPLY UNCERTAINTYFREQUENT BREAKDOWNSUNPREDICTABLE AND/OR LOW YIELDSPOOR QUALITYLIMITED SUPPLIER CA
31、PACITYINFLEXIBLE SUPPLY CAPACITYEVOLVING PRODUCTION PROCESSESLIFE CYCLE POSITION OF PRODUCTNEW PRODUCTS HIGH UNCERTAINTYDEMAND AND SUPPLY UNCERTAINTY FIG 2.2,Supply Chain Engineering MN 799,26#,Step 2-Understanding the Supply Chain:Cost-Responsiveness Efficient Frontier(Table:2.4),High,Low,Low,High,
32、Exercise:Give examples of products that are:Highly efficient,Somewhat efficient,Somewhat responsive and highly responsive,Cost(efficient),Responsiveness,Responsiveness to Quantity,Time,Variety,Innovation,Service level,Fig 2.3,Supply Chain Engineering MN 799,27#,Step 3.Achieving Strategic Fit,Low Cos
33、t,High Cost,Companies try to move Zone of Strategic fit,Supply Chain Engineering MN 799,28#,SCOPE,Comparison of Efficient SUPPLIERTHERE IS A RIGHT SUPPLY CHAIN STRATEGY FOR A GIVEN COMPETITIVE STRATEGY(without a competitive strategy there is no right supply chain!)OTHER ISSUES AFFECTING STRATEGIC FI
34、TMULTIPLE PRODUCTS AND CUSTOMER SEGMENTSTAILOR SC TO MEET THE NEEDS OF EACH PRODUCTS DEMANDPRODUCT LIFE CYCLE Fig 2.8AS DEMAND CHARACTERISTICS CHANGE,SO MUST SC STRATEGY-EXAMPLESCOMPETITIVE CHANGES OVER TIME(COMPETITOR)EXPANDING STRATEGIC SCOPEINTERCOMPANY INTERFUNCTIONAL SCOPEMAXIMIZE SUPPLY CHAIN
35、SURPLUS VIEW EVALUATE ALL ACTIONS IN CONTEXT OF ENTIRE SUPPLY CHAIN(FIG 2.12)FLEXIBLE INTERCOMPANY INTERFUNCTIONAL SCOPEFLEXIBILITY CRITICAL AS ENVIRONMENT BECOMES DYNAMIC,Supply Chain Engineering MN 799,29#,Strategic Scope,Suppliers,Manufacturer,Distributor,Retailer,Customer,Competitive Strategy,Pr
36、oduct Dev.Strategy,Supply Chain Strategy,Marketing Strategy,Supply Chain Engineering MN 799,30#,Drivers of Supply Chain Performance,TRADE OFF FOR EACH DRIVER,Competitive Strategy,Supply Chain Strategy,Supply Chain Engineering MN 799,31#,INVENTORY,WHAT OF SUPPLY CHAINMISMATCH BETWEEN SUPPLY AND DEMAN
37、DMAJOR SOURCE OF COSTHUGE IMPACT ON RESP0NSIVENESSMATERIAL FLOW TIME I=R T(I Inventory,R Throughput,T Flow time)ROLE IN COMPETITIVE STRATEGYCOMPONENTSCYCLE INVENTORY AVERAGE INVENTORY BETWEEN REPLENISHMENTSSAFETY INVENTORY-TO COVER DEMAND AND SUPPLY UNCERTAINITYSEASONAL INVENTORY COUNTERS PREDICTABL
38、E VARIATIONOVERALL TRADE OFF:RESPONSIVENESS VS EFFICIENCY,Supply Chain Engineering MN 799,32#,TRANSPORTATION,HOW OF SUPPLY CHAINLARGE IMPACT ON RESPONSIVENESS AND EFFICIENCYROLE IN COMPETITIVE STRATEGYCOMPONENTSMODE AIR,TRUCK,RAIL,SHIP,PIPELINE,ELECTRONICROUTE SELECTIONIN HOUSE OR OUTSOURCEOVERALL T
39、RADE OFF:RESPONSIVENESS VS EFFICIENCY,Supply Chain Engineering MN 799,33#,FACILITIES,WHERE OF SUPPLY CHAINTRANSFORMED(FACTORY)OR STORED(WAREHOUSE)ROLE IN COMPETITIVE STRATEGYCOMPONENTSLOCATION-CENTRAL OR DECENTRALCAPACITY FLEXIBILITY VS EFFICIENCYMANUFACTURING METHODOLOGY PRODUCT OR PROCESS FOCUSWAR
40、EHOUSING METHODOLOGY STORAGE SKU,JOB LOT,CROSSDOCKINGOVERALL TRADE OFF:RESPONSIVENESS VS EFFICIENCY,Supply Chain Engineering MN 799,34#,INFORMATION,AFFECTS EVERY PART OF SUPPLY CHAINCONNECTS ALL STAGESESSENTIAL TO OPERATION OF ALL STAGESROLE IN COMPETITIVE STATEGYSUBSTITUTE FOR INVENTORYCOMPONENTSPU
41、SH VS PULLCOORDINATION AND INFORMATION SHARINGFORECASTING AND AGGREGATE PLANNINGENABLING TECHNOLOGIESEDIINTERNETERPSCMOVERALL TRADE OFF:RESPONSIVENESS VS EFFICIENCY?,Supply Chain Engineering MN 799,35#,Considerations for Supply Chain Drivers,Supply Chain Engineering MN 799,36#,MAJOR OBSTACLES TO ACH
42、IEVING FIT,Multiple global owners/incentives in a supply chainInformation Coordination&Contractual CoordinationIncreasing product variety/shrinking life cycles/demanding customers/customer fragmentation,Increasing demand and supply uncertainty,Local optimization and lack of global fit,Supply Chain E
43、ngineering MN 799,37#,OBSTACLES TO ACHIEVING STRATEGIC FIT,INCREASING VARIETY OF PRODUCTSDECREASING PRODUCT LIFE CYCLESINCREASINGLY DEMANDING CUSTOMERSFRAGMENTATION OF SUPPLY CHAIN OWNERSHIPGLOBALIZATIONDIFFICULTY EXECUTING NEW STRATEGIESALL INCREASE UNCERTAINTY,Supply Chain Engineering MN 799,38#,D
44、ealing with Product Variety:Mass Customization,MassCustomization,Low,High,High,Low,Long,Short,Lead Time,Cost,Customization,Supply Chain Engineering MN 799,39#,Fragmentation of Markets and Product Variety,Are the requirements of all market segments served identical?Are the characteristics of all prod
45、ucts identical?Can a single supply chain structure be used for all products/customers?No!A single supply chain will fail different customers on efficiency or responsiveness or both.,Supply Chain Engineering MN 799,40#,HOMEWORK,Page 49 NordstromAnswer Questions 1 to 4Answer the above questions for AP
46、age 67Answer Questions 1 to 4,Supply Chain Engineering MN 799,41#,REVIEW QUESTIONS,WHAT IS STRATEGIC FIT?HOW IS IT ACHIEVED?COMPANYS APPROACH TO MATCH DEMAND REQUIREMENTS AND SUPPLY POSITIONINGMULTIPLE PRODUCTS AND CUSTOMER SEGMENTSPRODUCT LIFE CYCLEWHAT IS STRATEGIC SCOPE?INTERCOMPANY,INTERFUNCTION
47、AL EXTENSIONWHAT ARE THE SUPPLY CHAIN DRIVERS.WHAT ARE THEIR ROLES AND COMPONENTS?INVENTORY;FACILITIES;TRANSPORTATION;INFORMATIONOBSTACLES,Supply Chain Engineering MN 799,42#,Forecasting(uncertainty),Order service(certainty),Demand management,Demand-Management Activities,RULE:Do not forecast what yo
48、u can plan,calculate,or extract from supply chain feedback.,Source:Adapted from Plossl,“Getting the Most from Forecasts,”APICS 15th International Conference Proceedings,1972,Lesson 3,Supply Chain Engineering MN 799,43#,DETERMINING DEMAND,FORECASTINGTWO TYPES WRONG AND LUCKYTWO NUMBERS QUANTITY AND D
49、ATEELEMENTS of a GOOD FORECASTING SYSTEM:EQUAL CHANCE OF BEING OVER OR UNDERINCLUDES KNOWN FUTURE EVENTSHAS RANGE OR FORECAST ERROR ESTIMATEREVIEWED REGULARLY,Supply Chain Engineering MN 799,44#,FORECASTING,GENERAL PRINCIPLES:MORE ACCURATE AT THE AGGREGATE LEVELMORE ACCURATE FOR SHORTER PERIODS OF T
50、IME CLOSER TO PRESENTSET OF NUMBERS TO WORK FROM,NOT TO WORK TOMOSTLY ALWAYS WRONGEXAMPLE:MONTHLY vs DAILY EXPENDITURE,Supply Chain Engineering MN 799,45#,FORECASTING,MAIN TECHNIQUES:QUALITATIVE MANAGEMENT REVIEWDELPHI METHODMARKET RESEARCHQUANTITIVEMOVING AVERAGEWEIGHTED MOVING AVERAGEEXPONENTIAL S
