l 05 supply chain management
DESCRIPTION
scmTRANSCRIPT
Supply Chain Management
Lecture 5
Week commencing 20th February, 2012
Process Design
Process Flow Chart
Introduction
Little’s law
Pareto’s law
Self-managed
Learning
SCM: Learning Outcomes
• Appreciate the importance of taking a total supply network perspective;
• Analyse the concepts of vertical integration versus outsourcing;
• Apply location analysis;
• Understand how supply chains are planned and controlled;
Process Design
Process Flow Chart
Introduction
Little’s law
Pareto’s law
Self-managed
Learning
SCM in practice
• “Supply chain versus supply chain” world
Dell
Disneyland Paris
Process Design
Process Flow Chart
Introduction
Little’s law
Pareto’s law
Self-managed
Learning
Extent – Narrow process span
Extent – Wide process span
Direction –Upstream vertical integration
Direction –Downstream vertical
integration
WholesalerComponent
makerAssembly operation
Retailer
Balance — should excess capacity be used to supply other companies?
Raw material suppliers
Decision of integration: Direction, extent and balance of vertical integration
Source: Slack et al (2010)
Process Design
Process Flow Chart
Introduction
Little’s law
Pareto’s law
Self-managed
Learning
Is activity of strategic
importance
Explore keeping this activity in-house
Yes
Explore outsourcing this activity
No
Yes
Does company
have specialized knowledge
NoIs company’s operations
performance superior?
Yes
No
Is significant operations
performance improvement
likely?
Yes
No
The decision logic of outsourcing
Slack et al (2010)
Process Design
Process Flow Chart
Introduction
Little’s law
Pareto’s law
Self-managed
Learning
Theoperation
Supply-side factorswhich vary to influence costs as location varies.
For example:•labour costs• land costs• energy costs• transportation costs• community factors
Demand-side factorswhich vary to influence customer service/revenue as location varies.
For example:•labour skills•suitability of site•Image•convenience for customers
Supply-side and demand-side factors in location decisions
Process Design
Process Flow Chart
Introduction
Little’s law
Pareto’s law
Self-managed
Learning
Labour
Transport
Fabric
Supplies
Customs duties
15.55€France
14.33€Portugal
11.43€Turkey
11.43€Thailand
11.13€Morocco
10.82€Romania
10.37€China
9.60€Myanmar
Cost in euros2 4 6 8 10 12 14 160
The cost breakdown of shirt
• Manufactured in various countries andsold in France
Process Design
Process Flow Chart
Introduction
Little’s law
Pareto’s law
Self-managed
Learning•Products and services•New products and services•Delivery information•Payment request/Credit.
‘Downstream’ flow of products and services for
customer
Fulfilment
‘Upstream’ flow of customer
Requirements
• Long-term plans and requirements• Market research information• Individual orders• Payment• Potential new products and services.
Flow between processes
Consumer
Flow between processes
Flow between processes
Operation 1 Operation 2 Operation 3
SCM: flow of materials; information and money
Process Design
Process Flow Chart
Introduction
Little’s law
Pareto’s law
Self-managed
Learning
The operationPurchasing functionSuppliers
Request for
products
and services
Demand from
customers
Supply to customers
Request
for
quotations
Prepare
purchase
order
Prepare quotation for specification,price, delivery,
etc.
Requests
Select
supplier(s)Quotations
Produce
products
and services
Order Receive
products
and services
Deliver
Liaison between
purchasing and the
operation
The purchasing function
Source: Slack et al (2010)
Process Design
Process Flow Chart
Introduction
Little’s law
Pareto’s law
Self-managed
Learning
Business to business (B2B)
• Most common, all but the last link in the supply chain• E-commerce examples:– EDI networks– Business information
exchanges.
Business to consumer (B2C)
• Retail operations• Catalogue operations, etc.•E-commerce examples:–Internet retailers–Amazon.com, etc.
Consumer to consumer (C2C) or ‘peer to peer (P2P)
• Consumers ‘offer’, business responds• E-commerce examples:– File sharing networks (legal & illegal)–Napster
• Trading ‘swap’ and auction transactions• E-commerce examples:– Specialist ‘collector’ sites– Ebay.com, etc.
Consumer to business (C2B)
Business ConsumerTo…
Business
Consumer
From…
Supply chain relationships
Process Design
Process Flow Chart
Introduction
Little’s law
Pareto’s law
Self-managed
Learning
‘Partnership’
supply
management
The
char
acte
r o
f in
tern
al o
per
atio
ns
acti
vity
Do
n
oth
ing
Do
ev
eryt
hin
g im
po
rtan
tD
o
ever
yth
ing
Transactional –many suppliers
Close –few suppliers
Type of inter-firm contact
Virtual spot
trading
Long-term virtual
operation
Vertically integrated operation
Traditional supply management
Types of supply relationship
Process Design
Process Flow Chart
Introduction
Little’s law
Pareto’s law
Self-managed
Learning
Nature of demand
Functional products Innovative products
Predictable – UnpredictableFew changes – Many changesLow variety – High varietyPrice stable – Price markdowns
Long lead-times – Short lead-timesLow margin – High margins
Sup
ply
ch
ain
ob
ject
ives
Res
po
nsi
veEf
fici
ent
Fast
res
po
nse
-Lo
w c
ost
Lo
w u
tiliz
atio
n
-
Hig
h u
tiliz
atio
nD
eplo
yed
inve
nto
ry
-
Min
imu
m in
ven
tory
Flex
ible
su
pp
liers
-
Low
co
st s
up
plie
rs
Mismatch
Mismatch
Agile supply
chain
management
Lean supply
chain
management
Fisher’s (1997) matrix
Process Design
Process Flow Chart
Introduction
Little’s law
Pareto’s law
Self-managed
Learning
Supplier Manufacturer
Depot
Outlets
Depot
Agility Customer responsive supply
Pro
du
cts
Info
rmat
ion
Lean versus agile
Supplier ManufacturerDepot
Outlets
Depot
Products
Information
LeanEfficient fast throughput supply
Process Design
Process Flow Chart
Introduction
Little’s law
Pareto’s law
Self-managed
Learning
Self-managed learning
Slack et al 2011 (white cover)
• Chapter 7 : Supply Network Management
• Chapter 9: Inventory Planning and Control
Slack et al 2010 (black cover):• Read Chapter 6. Supply
Network Design and Chapter 13. Supply Chain Planning and Control
• Complete the workshop task (if not complete in the class)
• Continue working on your assignment
Self-managed
learning
Process Design
Process Flow Chart
Introduction
Little’s law
Pareto’s law
Self-managed
Learning
Questions
Self-managed
Learning