pesa oil 101 may 21, 2015 - energy workforce
TRANSCRIPT
PESA ‐ Oil 101Supply Chain OverviewMay 21, 2015
Presentation by: Brad Wise ‐ Vice President Marketingdistributionnow.com
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Countries 20+Locations 300+Employees 5,000+ERP System SAPTM
Agenda – Supply Chain Overview
1. Overview of Supply Chain2. Supply Chain Scenario3. Discussion
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What is a Supply Chain?
A supply chain consists of the flow of products and services from:
• Raw materials manufacturers• Component and intermediate manufacturers• Final product manufacturers• Wholesalers and distributors• Retailers
Connected by transportation and storage activities, andIntegrated through information, planning, and integration activities
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Supply Chain ‐ A Graphical Representation
‐ A supply chain consists of
- aims to Match Supply and Demand, profitably for products and services
SUPPLY SIDE DEMAND SIDE
The rightProduct
HigherProfits
The rightTime
The rightCustomer
The rightQuantity
The rightStore
The rightPrice =++ ++ +
- achieves
Supplier Manufacturer Distributor Retailer Customer
UpstreamDownstream
Paradigm Shift
Old Paradigm for Firms: • Vertically integrated• Has ownership and coordination of supply chain activities• Culture emphasized short‐term, company focused performance.
New Paradigm: Firm is supply chain focused in areas of specialization, enters into voluntary and trust based relationships with supplier and customer firms.
• All participants in supply chain benefit• Boundaries are dynamic and extend from firm’s suppliers’
suppliers to its customers’ customers• Supply chains now deal with reverse logistics to handle returned
products, warranty repairs, and recycling
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Supply Chain Management
Firms using Supply Chain Management:1. Start with key suppliers2. Move on to other suppliers, customers, and
shippers3. Integrate second tier suppliers and customers
(second tier refers to the customers’ customer and suppliers’ suppliers)
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Why Employ Supply Chain Management?
Cost savings and better coordination of resources:• Reduced Bullwhip Effect: the magnified reduction
of safety stock costs based on coordinated planning and sharing of information
• Collaborative planning, forecasting and replenishment activities reduce the Bullwhip Effect.
• Leads to better customer service, lower inventory costs, improved quality, reduced cycle time, better production methods
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Origins of Supply Chain Management
1950s & 1960s: U.S. manufacturers focused on mass production techniques as their principal cost reduction and productivity improvement strategies
1960s‐1970s: Introduction of new computer technology lead to development of Materials Requirements Planning (MRP) and Manufacturing Resource Planning (MRPII) to coordinate inventory management and improve internal communication
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Origins of Supply Chain Management
1980s & 1990s: Intense global competition led U.S. manufacturers to adopt Supply Chain Management along with Just‐In‐Time (JIT), Total Quality Management (TQM), and Business Process Reengineering (BPR) practices
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Origins of Supply Chain Management
2000s and BeyondIndustrial buyers will rely more on third‐party service providers (3PLs) to improve purchasing and supply management
Wholesalers/retailers will focus on transportation and logistics more & refer to these as quick response, service response logistics, and integrated logistics
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Flows in a Supply Chain
Customer
Material
Information
FundsSupplier
SCM in a Supply Network
Supply Chain Management (SCM) is concerned with the management and control of the flows of material, information, and finances in supply chains.
Supply
Demand
Products and ServicesCash
Supply Side OEM Demand Side
CHINA KOREA MEXICO TEXAS USN-Tier Suppliers Suppliers Logistics Distributors Retailers
Information
The task of SCM is to design, plan, and execute the activities at the different stages so as to provide the desired levels of service to supply chain customers profitably
Importance of Supply Chain Management
In 2000, the US companies spent $1 trillion (10% of GNP) on supply‐related activities (movement, storage, and control of products across supply chains). Source: State of Logistics Report
Eliminating inefficiencies in supply chains can save millions of $.
Tier 1 Supplier
Manufacturer Distributor Retailer Customer
Inefficient logistics
High stockouts
Ineffective promotions
Frequent Supply shortages
High landed costs to the shelf
High inventories through the chain
Low order fill rates
Glitch-Wrong Material, Machine is Down –
effect snowballs
Foundations of Supply Chain Management
Supply Management: Supplier management, supplier evaluation, supplier certification, strategic partnerships
Operations: Demand management, MRP, ERP, inventory visibility, JIT, TQM
Distribution: Transportation management, CRM, distribution network, order fulfillment, logistics, service response
Integration:Process integration, performance measurement
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Purchasing Trends
Long term relationshipsSupplier management: improve performance through
• Supplier evaluation• Supplier certification
Strategic Partnerships
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Operations Trends
Demand Management – match demand to available capacityLinking buyers and suppliers via MRP and ERP systemsUse JIT to improve the pull of materials to reduce inventory levelsEmploy TQM to improve quality compliance among suppliers
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Distribution Trends
Transportation management‐ tradeoff decisions between cost & timing of delivery/customer service via trucks, rail, water & air
Customer relationship management‐ strategies to ensure deliveries, resolve complaints, improve communications, & determine service requirements
Network design‐ creating distribution networks based on tradeoff decisions between cost & sophistication of distribution system
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Integration Trends
Supply Chain Process Integration‐ when supply chain participants work for common goals. Requires intra‐firm functional integration. Based on efforts to change attitudes & adversarial relationships
Supply Chain Performance Measurement‐ Crucial for firms to know if procedures are working
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Reducing Supply Chain Costs
Cost reduction achieved through:• Reduced purchasing costs• Reducing waste• Reducing excess inventory, and• Reducing non‐value added activities
Continuous Improvement through• Benchmarking‐ improve over competitors’ performance• Trial & error• Increased knowledge of supply chain processes
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What Makes Supply Chain difficult?
• Supply chain strategies cannot be determined in isolation, they are affected by a development chain
• Product design phase• Global Optimization
• Complex network of facilities• Different facilities, different (conflicting) objectives• Dynamic system (customer wants vs supply)• System Variation over time
• Uncertainty and risk are inherent in every supply chain• Matching supply and demand• Inventory and back‐order levels fluctuate• Forecasting accuracy• Demand is not only source of uncertainty (lead times, mfg yields,
transportation times, component availability)• Lean manufacturing, outsourcing, offshoring that focus on cost reduction
increase risks significantly
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Supply Chain Management Structure
Supply Chain Management
SCM Strategy
Organization
Catalogue
Procurement Processes
Materials Management & Planning
Risk & Controls
• Strategic Management (goals, KPIs, key principals, segregation of duties)
• Function and Organization Structure, multi‐functional groups, centralization of major groups and services and materials
• Implementation of services and materials catalogue, matrix of accountability segregation due to category
• Demand planning, purchases, contract administration, management of commitments, materials management, etc.
• Supplier evaluation, supplier efficiency• Optimization of materials management
system, including liquid and non‐liquid assets• Risk matrix, control matrix, risk management
procedures• IT Component
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Discussion
Financial Impact• 26 hours of lost time, equates to lost revenue. $700,917• $15,000 in parts and freight expense• Crew and operating expense standby time
Where did the supply chain fail?• Gunslinger’s on board stock…• DBD’s Shorebase warehouse…• DBD regional inventory…• Replenishment systems with DBD• What about the consolidation of inventory by DBD?
The rig was suspended in a state of risk, what would have prevented it?• Spare mud pumps outfitted…• Proper inventory on board…• Forecasted demand…plan for the unanticipated
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