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Slide1
Supply Chain Management
BCOR1010Slide2
From Boeing’s 787…Slide3
To Topper the Trick Terrier…
Voice Recognition Requirements:
(San Francisco)
Voice Recognition Programming:
(Taiwan)
Plastic Eyes:
(Shenzhen, China)
Plastic Body: (Malaysia)
Motors for legs:
(
Shaoguan
, China)
Microfiber for Coat: (Korea)
Plastic legs: (Taiwan)
Speaker for voice:(Dongguan, China)
Transistors:(Shenzhen, China)
IC chips: (Taiwan)
Wiring: (Dongguan, China)
Packaging: (Hong Kong)Slide4
Supply Chain Management…
Makes Business Work!
Wal-Mart, Dell, Seven-Eleven Japan, Amazon, Toyota, IBM, Apple…
Or Stumble…
Hershey’s Halloween Nightmare:
New order management and shipping systems don’t start right, as Hershey can’t fulfill critical Halloween orders; $150 million in revenue lost as stock drops 30%
Cisco’s Inventory Disaster
: Lack of demand and inventory visibility as market slows leads to $2.2 billion inventory write-off and stock price cut in half Nike’s Planning System Perplexity
: New planning system causes inventory and order woes, blamed for $100 revenue miss as stock loses 20% Slide5
But, What is a Supply Chain?
A supply chain consists of
all stages
involved,
directly or indirectly, in fulfilling customer requests
The
entire process
from point of origin (raw materials) to
point of consumption (final products bought by customers)
A
network
(interdependent system) of facilities including materials supply from suppliers transformation of materials to (inventories of)
semi-finished and finished products distribution of finished products to customersSlide6
Stages of a Detergent Supply Chain
Customer
Wal-Mart
Store
Wal-Mart
or Third
Party DC
P&G or Other
Manufacturer
Tenneco
Packaging
Paper
Manufacturer
Timber
Company
Plastic
Producer
Chemical
ManufacturerSlide7
Example: Wal-Mart
Customers Request:
Buying detergent,
clothes, TV, …...
Wal-Mart
Stores
Wal-Mart
or third-party
distribution
centers
Procter & Gamble
Plastic Producer
Fabric Producer
Da-Fa Clothing, Inc. (China)
SONY Factory (Malaysia)
Electronics Components Producer
Chemical Producer
Zipper Producer
Thread Producer
Plastic ProducerSlide8
Example: HP
Subassembly
Suppliers
FAT
USA
DCs
Europe DCs
Asian
DCs
Suppliers
FAT = Final assembly & test
IC Mfg = Integrated circuit manufacturing
PC Board = Printed circuit board
Suppliers
Suppliers
PC Board
IC Mfg
Retailer
Consumer
Retailer
Consumer
Retailer
Consumer Slide9
Example: Dell
Customers order
computers on
Dell’s website
Dell Assembly Plant
Monitors by SONY (Mexico)
Keyboards by Acer (Taiwan)
CPU by Intel (USA)
Other components
Dell is significantly revamping its entire supply chain strategy and, in large measure, abandoning its make-to-order model [April, 2008] Slide10
A Typical Supply Chain
Manufacturer
Distributor
Retailer
Customer
Supplier
Material/Product Flow
Value-Added Services
Funds Flow
Information FlowSlide11
Now, What is a Supply Chain!
Flow of products and services from
Suppliers
Raw materials manufacturers
Intermediate products manufacturers
End product manufacturers
Distributors and wholesalers
RetailersCustomer
Connected through transportation, information, and exchanges of funds
Manufacturer
Distributor
Retailer
Customer
SupplierSlide12
Key Observations
Every facility that impacts costs need to be consideredSuppliers’ suppliers
Customers’
customers
Efficiency and cost-effectiveness throughout the system is required
System level
approachSlide13
13
Supply
Chain Management
is the
coordination and integration
of the
activities so as to maximize profitability across the
entire
chain
Procure services and materialsTransform
them into intermediate and final productsDeliver them to the
customerWhere is a supply chain’s revenue generated?And where are costs incurred?
So, What is Supply Chain Management?Slide14
The Challenge
UncertaintyCan cripple the supply chain
Forecasting is not the Solution!
Conflicting Objectives
Think Global, not Local
Competition is between supply chains, not single
companies
Evolving Nature of BusinessShortening Product Lifecycles
Off-shoring, OutsourcingSlide15
Uncertainty
Volumes
Time
Source: Tom Mc
Guffry
, Electronic Commerce and Value Chain Management, 1998
Actual
Consumer
Demand
Retailer Orders
Warehouse Orders
Production Plan
Propagates through the network and distorts demandSlide16
What Management Gets...
Volumes
Time
Consumer
Demand
Production PlanSlide17
What Management Wants…
Volumes
Time
Consumer
Demand
Production PlanSlide18
18
What is Supply Chain Management?
Supply Chain
Management is
Risk
M
anagement
!
Peanut Butter Anyone?Slide19
Conflicting objectives across the supply chain
Convenience
Short lead time
Large variety of
products
Few stores
Low inventory
Little variety
Close to DCs
Low inventoryFew DCs
Large shipments
Large production batches
Manufacturer
Distributor
Retailer
CustomerSlide20
Extended Scope (Remember Topper…)
Source: line56.comSlide21
21
What is Supply Chain Management?
Supply Chain
Management is
P
rocess Management
!
Inter-organizational
Cross-functional
Slide22
The Evolving Nature of Business
Trends in U.S. Employment
Tangible
Intangible
Uniform, efficient processes
Customized, less efficient pr.
Uniform output
Specialized output
Mnfctrd
before purchase
Performed after purchase
Customer not involved
Customer participates
“Low or No-touch”
“High-touch”…
Output can be stored
Output is perishable
Easier to measure
Harder to measure
Goods vs.
ServicesSlide23
23
What is Supply Chain Management?
Supply Chain
Management is
S
ervice
M
anagement
!
Quality Management
Queueing
Revenue ManagementSlide24
Intermezzo
Sketch That Chain!
Celestial Seasonings
Interceptor body armor
NetflixSlide25
Then, What is Supply Chain Management!
From Execution
:
Production scheduling
Distribution scheduling and
routing
Customs Brokerage
From The Sunday times
november
23, 2002
“
Can suppliers bring down your firm? A thunderstorm put Ericsson out of the mobile-phone industry. Could such a disaster happen to you? ” Slide26
Then, What is Supply Chain Management!
To Planning
:
Workforce & Production planning
Inventory policies
S
upply Allocation
From CNNMONEY.COM
February 26, 2009
“Macy’s reined in
inventories and offered exclusive merchandise from Martha Stewart and Tommy Hilfiger in the period to keep sales from declining as much as at Kohl’s Corp. and J.C. Penney Co.” Slide27
Then, What is Supply Chain Management!
And Strategy:
Network design
Sell direct or through retailers?
Outsource or in-house?
Consider The IMPACT:
Walmart
: “Every Day Low Prices”
Hyundai: “10-year warranty program”
Costco: “90-day return program