scm seminar

8/8/2019 SCM Seminar

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The McGraw-Hill Companies, Inc., 2006

1

McGraw-Hill/Irwin

POLTEK POS INDONESIASATURDAY, 3 APRIL 2010

BY DIAR FACHMI

ANYTHING IS POSSIBLE

SHARING IMPLEMENTATION OF SUPPLY CHAIN MANAGEMENTAT

PT. HONDA PRECISION PARTS MANUFACTURING


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Supply chainmanagementdeals with themanagement ofmaterials,information andfinancial flowsin a networkconsisting of

suppliers,manufacturers,distributors, andcustomers(StanfordSupply ChainForum, 1999)

Supply chainmanagement is a setof approachesutilized efficiently to

integrate suppliers,manufacturers,warehouses, andstores so thatmerchandise isdistributed at theright quantities, to

the right locations,and at the righttime, in order tominimize system-wide costs whilesatisfying servicelevel requirements

(Simchi-Levi et al)

WHAT IS SUPPLY CHAIN MANAGEMENT


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SUPPLY CHAIN PROCESS


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Customer could be an internal customer or an

external customer

Supply Chain Management is the management of the

entire value-added chain, from the supplier tomanufacturer right through to the retailer and the finalcustomer.

SCM has three primary goals: Reduce inventory,increase the transaction speed by exchanging data inreal-time, and increase sales by implementing customerrequirements more efficiently

A supply chain is a network of supplier, manufacturing,

assembly, distribution, and logistics facilities thatperform the functions of procurement of materials,transformation of these materials into intermediate andfinished products, and the distribution of these productsto customers

Supply chain management (SCM) is a systematicapproach to manage the entire flow of information,

materials, and services from raw material suppliersthrough factories and warehouses to the end customer


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Service &

Maintain

DevelopDevelop

Market

Sell & Manage

OrdersProcure

Fulfill

Plan

Manufacture

Supply Chain Management Processes Overview

Planning is the strategic portion ofSCM. You need a strategy formanaging all the resources that gotoward meeting customer demand foryour product or service.

Choose the suppliers that will deliver thegoods and services you need to create yourproduct. Develop a set of pricing, deliveryand payment processes with suppliers andcreate metrics for monitoring and improvingthe relationships.

Coordinate the receipt of orders fromcustomers, develop a network ofwarehouses, pick carriers to get products tocustomers and set up an invoicing system toreceive payments.

Schedule the manufacturingactivities necessary for production,testing, packaging and preparationfor delivery.

Create a network for receivingdefective and excess products back

from customers and supportingcustomers who have problems withdelivered products.

Developing new products is thestarting point of a supply-chain cyclewhere Product specifications are

created.

Marketing and Sales generates demandfor the Product by publicizing its featuresand how it would address customerpriorities. In the process, Marketing alsogets customer feedback andcommunicates to Product developmentgroup.

Maintain and manage the customerorders, order holds, notes and releasethe orders to warehouse for fulfillmentbased on requested date, productavailability and customer credit limit.


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Demand& Supply

Planning

Sourcing& Supplier

Management

ManufacturingStorage &

Transportation

Customer& Order

Management

PLAN BUY MAKE MOVE SELLPLAN BUY MAKE MOVE SELL

COMPONENTS OF SUPPLY CHAIN


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Suppliers Manufacturers Warehouses &Distribution Centers

Customers

Material Costs

TransportationCosts

TransportationCosts Transportation

CostsInventory CostsManufacturing Costs

Plan Source Make Deliver Buy

THE SUPPLY CHAIN ANOTHER VIEW


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6060--70s: Marketing strategy focus on creating & capturing70s: Marketing strategy focus on creating & capturingcustomer loyalty, strong engineering designcustomer loyalty, strong engineering design

80s: Manufacturing become more flexible & responsive,80s: Manufacturing become more flexible & responsive,new product & processes developed in order to meetnew product & processes developed in order to meetever changing customer needsever changing customer needs

90s: Increasing focus on supply base & sourcing90s: Increasing focus on supply base & sourcingstrategy, new challenge: getting product to customers:strategy, new challenge: getting product to customers:whenwhen--where & how, sharing information between alliancewhere & how, sharing information between alliance

members of supply chain, organization involved inmembers of supply chain, organization involved inmanagement of upstream & downstream firmsmanagement of upstream & downstream firms

BRIEF HISTORY OF SCM


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Supply Chain is a critical element of thecompanies as well as countrysperformance in any economy

What can be done to improve the global

logistics & SC performance of companies

& of the country?


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SUPPLY CHAIN FUNDAMENTAL


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y Top reasons why more and more executives are turning to SCM tomanage their extended enterprises

WHY SUPPLY CHAIN MANAGEMENT


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In 1997, American companies spent $862 billion,or about 10% of GNP on supply chain relatedactivities which include the cost of movement,storage and control of products across the supplychain.

Most of these costs include unnecessary costcomponents due to redundant stock, inefficient

transportation strategies, and other wastefulstrategies in the supply chain

WHY SUPPLY CHAIN MANAGEMENT


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A 1997 PRTM Integrated SupplyChain BenchmarkingSurvey of 331 firms found significant benefits tointegrating the supply chain

20%-30% ImprovementFill Rates

10%-20% ImprovementImproved Capacity

Realization

25%-50% ImprovementLower Supply-Chain Costs

10%-16% ImprovementOverall Productivity

25%-80% ImprovementForecast Accuracy

30%-50% ImprovementFulfillment Cycle Time

25%-60% ImprovementInventory Reduction

16%-28% ImprovementDelivery Performance

Source: Cohen & Roussel

SCM BENEFITS


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y Four basic components of supply chainmanagement include:

Supply chain strategy strategy for managing all

resources to meet customer demand Supply chain partner partners throughout the

supply chain. It is important to develop commonobjectives and measures, because they could improve

partner relationships.

Supply chain operation schedule for productionactivities

Supply chain logistics product delivery process

SUPPLY CHAIN COMPNENT


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ITS ROLE IN THE SUPPLY CHAIN

FACTOR DRIVING SCM


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Global Optimization

Global and complex supply chains

Different, conflicting objectives Supply chain is dynamic

System variations over time

Managing Uncertainty

Matching supply and demand

Bullwhip effect

Forecasts are inaccurate

Uncertainties in suppliers, logistics

WHY IS SCM DIFFICULT


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y Segment customers

y Customize the logistics network

y Listen to signals of market demand and planaccordingly

y Differentiate products closer to the customer

y Strategically manage sources of supply

y Develop a supply chain IT strategy

yAdopt performance evaluation measures

SCM SUCCES FACTORS


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One goal in SCM:

respond to uncertainty in

customer demand without

creating costly excess inventory

Negative effects of uncertainty

lateness

incomplete orders

Inventory

insurance against supply chainuncertainty

Factors that contribute to

uncertainty

inaccurate demand forecasting

long variable lead times

late deliveries

incomplete shipments

product changes

batch ordering

price fluctuations and discounts inflated orders

SUPPLY CHAIN UNCERTAINTY & INVENTORY


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Focus on markets & creation ofcustomer value

From productsto customers

Focusonkeyperformance driversofprofit

Fromprofittoperformance

SCpartnershipsFromtransactionstorelationships

Demand based replenishment&quickresponse systems

Frominventorytoinformation

Integralmanagementofmaterials & goodsflow

Fromfunctionstoprocesses

Leading toChanges

THE SUPPLY CHAIN OF THE FUTURE


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SCM SHARING IMPLEMENTATION AT HPPM

PT. HPPM

(A GROUP OF HONDA JAPAN


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Establish 6 JUNE 2002

Business AT/Mission ; Engine Valve

4WD; PDG

Space Land 370,000m2 , Build 163,000m2

(2nd-60,000m2

Capacity AT/M Engine Valve

1,500/D 42,500/D

PDG Gear 4 WD

7,500/D 645/D

Capital 64 Million USD

Sales 370 Million USD (2007Y)

Production September 2003Y started

Associate 1797 persons (Including 15 Japanese) Oct 2008

Establish 6 JUNE 2002

Business AT/Mission ; Engine Valve

4WD; PDG

Space Land 370,000m2 , Build 163,000m2

(2nd-60,000m2

Capacity AT/M Engine Valve

1,500/D 42,500/D

PDG Gear 4 WD

7,500/D 645/D

Capital 64 Million USD

Sales 370 Million USD (2007Y)

Production September 2003Y started

Associate 1797 persons (Including 15 Japanese) Oct 2008


Main Products :Engine Car for CRV ( T/M 2.0 L & 2.4 L)Engine Car for New ccord ( T/M 2.4 L)Engine Car for Jazz ( T/M 1.5 L)


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Mission Assembly Engine Valve

Primary Driven Gear 4 Wheel Drive



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AT/Mission Assembly

1.500/day

ENGINE /VALVE

42.500 /day

P.D.GEAR

7.500/day

4WD DPS/TRF

645/day

THE SUPPLY CHAIN OF IMPLEMENTAION


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88

5 DIVISIONS LEAD BY BLSI(3RD PARTY) LEAD BY HONDAHQJAPAN &

USED BY 15

FACTORY IN 13COUNTRIES


SCM at HPPM

SUPPLIER

MANUFACTURERDISTRIBUTOR

Storage &

Transportation

Customer

& Order

Management

545 SUPPLIER

(BIG & SMALLCOMPANY)TIER 1,2 & 3

ASHASH


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upstream

downstream

AICHIKIKI FURUKAWA ATSUMI

HPPM INDONESIA

HONDA JAPAN

OTHERS HONDA FACTORY

HONDA TRADING

Best Buy


1 ST TIER

(12 COMPANIES)


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Service &

Maintain

DevelopDevelop

Market

Sell & Manage

OrdersProcure

Fulfill

Plan

Manufacture

WMS

CMS

TMS DIFOT

MILK RUN

GSR

CSI

Trade Management

Incentive Compensation Partners On line

TPM

TSGAutonomous Program

OEE

LTPP

Global Logistics Order

CIP

TQM

KAIZEN

Project Manufacturing

PIT

TOC

VMS

SRM

VPI

BEAM

. Global Core Catia

Supply Chain Management Solutions at HPPM



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HABHAB

CRCR--VVACCORDACCORD CIVICCIVIC

HUMHUM

HPPMHPPM

HATCHATC

HCPIHCPI

HMSBHMSB

HPMHPM

PARTS SCHEME DISTRIBUTIONPARTS SCHEME DISTRIBUTION

HACPLHACPL

HSCIHSCI

HTWHTW

HTRHTR

HVNHVN

ValveValve

AHMAHM

PDG GearPDG Gear

HDMHDM

Direct operationOperation thru RHQ

ASHASH

JAZZJAZZ CITYCITY



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MANUFACTURER

PLAN TO EXPAN

North America

South America

Europe

Africa

Asia

Oceania

Global HUB

GLOBAL PRODUCTION NETWORKGLOBAL PRODUCTION NETWORK

PRODUCT EXPORT TOPRODUCT EXPORT TO 1313 COUNTRIESCOUNTRIES



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KeyChallenges of GlobalAuto makersKeyChallenges of GlobalAuto makers

Enhance Global Brand Image

- Increase global marketing activities & costs

- Secure globalCRMcapability

A just Global Production Capacity- Increase market share through localproduction

- Achieve profitabilityunder fierce competition

Invest on Technology for Future Market & Sustainability

- Develop ergonomicengines & next-generation power units

- Comply with globalsafety and environment regulations

Reduce Platforms & Increase PartsCommonality

- Increase usage of standard & common parts

- Reduce product development and materialcosts



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Products

Long product development lead time, wide range of consumer tastes

and rapidly changing market demands make an auto mobile a complex

and highly engineered product in various types, models, options and

colours

Parts

An auto mobile is made up of more than 20,000 parts (steel, non ferrous

metals, rubber, synthetic resins, glass, fiber, etc.) that go thru separate

production processes

SupplyChain

Supply chain consists of multi-tier suppliers that provide 2,000 parts,

sub-assembled parts and imported parts with lead time for material

procurement ranging from 7 hour to 5 months

Characteristics of SCM inAuto IndustryCharacteristics of SCM inAuto Industry



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Major Issues of SCM inAuto IndustryMajor Issues of SCM inAuto IndustryMostlyrelatedto demandforecasting,salesplanning,productionplanning,orderfulfilment, collaboration

withsuppliersandlogisticspartners.

OrderManagement

SuppliersSuppliers CustomersCustomers

DemandForecast

FinishedGoodsLogistics

ProductionManagement

PartsDevelopment

PartsProcurement

SupplyChainGlobalOperationStrategy

ProductionPlanning

SupplierSelection

QualityQuality FacilitiesFacilities Finance/CostFinance/Cost

Supplier

Network

Customer

Network

R&DR&D CRMCRMPurchase Service

Unsystematic Demand

Forecast

Long OTD L/T

Low Delivery

Reliability

Low Visibility of Foreign

Suppliers / PartsInformation

Inconsistent Production

Planning

Insufficient Global Engine

Allocation & Vehicle

Distribution

Inflexible Production

Low Visibility in

Production/Procure-

ment Logistics



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InformationSystem

Managers : Needs for precise supply chain simulation and forecastingcapability

Executives : Needs for realExecutives : Needs for real--time global visibility for quick decision makingtime global visibility for quick decision making

Business

Needs for global SCM network that enables real-time information sharing

Limited integration with local optimization of unit systems and functions

Eliminate inefficient management of data resources (isolated, duplicated)

Key Drivers for SCM InnovationKey Drivers for SCM Innovation

Organization

Needs for coordination of global operations between Plants and HQ

Rapid increase of production/sales, globalization in a short period of time

Lack of cross-checking b/w divisions due to vertical business structure



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HPPM plans to realize Real-time Global Management of procurement, production and

sales through process innovation with Global Logistics Order (GLO) in the area ofSCM/OTD

Innovating procurementInnovating procurement--planningplanning--delivery process fordelivery process for

expanded lineexpanded line--upup

ecuringoptimizedglobal procurementcapability suitable toecuringoptimizedglobal procurementcapability suitable to

overseas plant expansionoverseas plant expansion

Innovatingorder/planning/delivery process for shortenedInnovatingorder/planning/delivery process for shortenedT leadtimeT leadtime

Buildingaclose collaborative system with suppliers/dealersBuildingaclose collaborative system with suppliers/dealers

ProcessInnovation& GLOSystemAdoptionProcessInnovation& GLOSystemAdoption

DirectionsforSCM InnovationDirectionsforSCM Innovation



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Metrics for SCM InnovationMetrics for SCM Innovation

1.Demand Forecast Management Innovation

2. Increased DeliveryReliability

3. Short OTD Lead Time4. Globally Optimized Operation System

5. Flexible Production System

6. Optimized Production/Procurement Logistics

Tasks Key Performance IndicesKey Performance Indices

On-time DeliveryRate

OTD Lead Time

Days of Inventory(Domestic)

ForecastAccuracy

75 % 90 %

45 days 22 days

30 days 14 days

57 % 80 %

:

:

:

:

Implementation Strategy

BuildingProcess& InformationSystemSuitabletoGlobalProduction/SalesSystem

OperationStrategy Process InformationSystem

Responsiveness

Global Logistics

Allocation /Adjustment

Accurate DemandForecast

Enhanced Delivery

Management

Global LogisticsOrder

GlobalCore Catia



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GLO for SCMInnovationGLO for SCMInnovation

Batch transactions between

planning and production actual

Estimation of profitability after

sales

Inconsistent performanceindices

and master data among

divisions

Inconsistent inventory between

system and actual

Legacy

Real-time data between

planning and

production actual

Estimation of profitability from

the point of delivery

Consistent performance indicesand master data among divisions

Synchronized inventory betweensystem and actual

GLO


Balance between Production & Sales

Profit-based Sales Activities

Enhanced Order Full filment

Reduced Finished Goods Inventory

Business

Requirement


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Implementation Status BEAMImplementation Status BEAM

BELGIUMENGLAND

China

BRAZILUSAAustralia

Europe IT HUB Asia-Pacific IT HUBNorth America

IT HUB

DENMARK

India

Korea

JapanPORTUGAL MEXICO

THAILAND

RealReal--timeGlobal Management SystemtimeGlobal Management System

GlobalStandard ProcessGlobalStandard Process

Fast Decision Making ProcessFast Decision Making Process

ITCapability:Best-in-classinAutomotiveIndustryby2020

TURKEY

CANADA


VIETNAMINDONESIA

42


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The McGraw-Hill Companies, Inc., 2006

42

McGraw-Hill/Irwin

There are twokindsoffailures.Those whothinkandneverdo,andthose whodo

andneverthink.

ANYTHING IS POSSIBLE

scm seminar

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