scm
DESCRIPTION
TRANSCRIPT
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Definitions “SUPPLY CHAIN is defined as a set of three
or more entities (organizational or individual) directly involved in the upstream and downstream flow of product, services, finances and information from a source to customer”
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It is the process of planning and controlling
the efficient ,cost-effective flow and storage of raw materials, finished goods and related information from point of origin to point of consumption for the purpose of conforming to customer requirement
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.
Example: A detergent supply chain:
Customer
ChemicalManufacturer
Manufacturer(P&G)
Wal-MartDC
Wal-MartStore
Plastic Producer
TennecoPackaging
PaperManufacturer
TimberIndustry
OilIndustry
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Printer Supplier
MonitorSupplier
Sub-component
Supplier
Dell Assembly
Plant
CustomerMaterial Flow
Information Flow
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Customer
Retailer
Retailer
Retailer
Distributor
Distributor
Distributor
Manufactu-rer
Manufactu-rer
Manufactu-rer
Supplier
Supplier
Supplier
Customer
Customer
Carriers
MaterialInformationFunds
Goals and Purpose of SCM
Supply chain is to maximize the overall value generated
Reduce uncertainty & risks, inventory, cycle time
Improve business processes, customer service
Increased profits & competitiveness
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Decision phases in supply chainSupply chain strategy or designSupply chain planningSupply chain operation
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Process view of supply chainCycle view
- Customer order cycle- Replenishment cycle- Manufacturing cycle- Procurement cycle
Push / pull view
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Supply chain activitiesForecasting demandSelecting suppliersOrdering materialManaging inventoryScheduling productionShipping and deliveryOrganizing information exchange
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Selecting a SupplierIn selecting a supplier, a number of factors
must be analyzed:pricequalityreliabilitycredit termsshipping costs.
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Forecasting demandDemand planning and sales forecasting is critical
function for Manufacturers, distributors, retailers, & other supply chain members
Effective demand planning and sales forecasting across the supply chain can bring a host of benefits in SCM
It can help improve labor productivity, reduce the head count, cut inventories, speed up product flow and increase revenues and profits
Forecasts can be long term , short term or aggregate
Forecasts methods vary depending on type of Industry vertical
Accurate forecasts is essential for FMCG type of Industry, while for other types like made to order heavy Engg Industry this is planned with simple techniques
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Purchasing and procurementPurchasing: implies the monetary transaction.Procurement: the responsibility for acquiring
the goods and services the organization needs:goods:
raw materials production parts maintenance, repair and operating supplies (MRO)
services: consulting services utilities workers health care benefits
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Production planning and controlNumber of units of a specific product to be
producedTime intervals over which production will
occurAvailability of equipment, materials and work
forceCost effective inventory and resource
management.
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Material HandlingMoving of goods between incoming transport,
storage, processes and outgoing transportThe set of activities that move production
inputs and other goods within plants, warehouses and transportation terminals.
The task for the materials handling manager is to find the methods, the routes, the layouts and the right components to minimize handling.
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Inventory managementObjectives of inventory management:
minimize costs: working capital carrying costs scrap and rework
highest level of customer service.Inventory management tasks:
make decisions about: safety stock replenishment production runs excess stock.
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Inventory management continued..Inventory must be managed differently for:
independent demand: influenced by market conditions
dependent demand: derived from the production of parent items.
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A
B C
D E
Independent demand
Dependentdemand
Distribution Distribution is the activity that is concerned with receiving
parts or finished goods, storing them until they are required and then delivering them to the customer.
Functions of distribution: inventory management order processing warehousing: materials handling Transportation
Methods of transport: trucks railroads water airways pipelines
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Customer serviceCustomer service issues include:
accurate understanding of customer’s needs and wants
the ability to deliver necessary customer service levels
variations between plans and their actual implementation
effective communications with the customer’s
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Key Issues in Supply Chain Mgt.Supply Chain Integration and Strategic
Partnering – information sharing and operational planning are keys to successfully integrated supply chain. But what info. will be shared? How will it be used? What level of integration is needed? What partnerships can be implemented?
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Key Issues in Supply Chain Mgt.Customer Value – the measure of a
company’s performance to its customer, based upon the entire range of products, services, and intangibles that constitute the company’s offerings. Effective supply chain mgt. is critical if company’s objective is to fulfill the ultimate consumer needs and provide value.
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Key Issues in Supply Chain Mgt.Information Technology and Decision-
Support Systems – much of the current interest in supply chain mgt. is motivated by the opportunities that appeared due to the abundance of data and the savings that can be achieved by sophisticated analysis of these data.
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Supply chain best practices Retain only core work (products, services & solutions) Improve Supplier Selection process Reduce the number of suppliers Improve demand forecast accuracy Increase inventory turns (velocity) Decrease outsourcing costs per/unit by leveraging major suppliers for
lower prices Increase standardization of products, as much as possible and
appropriate Increase global sourcing, especially in geographic areas of lower
labor costs Maximize economies of scale Seek global demand for products & services Increase automation and database integration between business
partners using Enterprise Resource Planning (ERP) software tools and web-based trade exchanges.
Use technology tools to increase speed to market, reduce costs, and obtain real-time accurate information.
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