CHAPTER 1: PowerPoint Presentation, PPT - DocSlides

CHAPTER 1: PowerPoint Presentation, PPT - DocSlides

2016-07-03 67K 67 0 0

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21st-Century Supply Chains. The supply chain revolution. Why integration creates value. Generalized supply chain model. Responsiveness. Financial sophistication. Globalization . Overview of 21. st. -century supply chains. ID: 388302

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Slide1

CHAPTER 1:

21st-Century Supply Chains

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The supply chain revolutionWhy integration creates valueGeneralized supply chain modelResponsivenessFinancial sophisticationGlobalization

Overview of 21

st

-century supply chains

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Supply Chain ManagementConsists of firms collaborating to leverage strategic positioning and to improve operating efficiencySupply Chain StrategyIs a channel and business organizational arrangement based on acknowledge dependency and collaborationLogisticsThe work required to move and geographically position inventory

The supply chain revolution has reshaped contemporary strategic thinking

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Successful supply chain strategies

Source: Supply Chain Management Review, March/ April 2000, p. 29.

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The total integration of the overall business process creates value

Table 1.1 Integrative Management Value Proposition

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The integrated value-creation process must be managed across firms from end to end

Figure 1.1 The Integrated Supply Chain Framework

s

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Logistics activities and decisions at each level of functionality

Figure 1.2 Information Functionality

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Transaction system functionality consists of formalized rules and procedures

Standardized communications focus on tracking and regulating day-to day logistical transactionsFor example, Order entryOrder fulfillmentInventory adjustmentInvoicing

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Management control functionality focuses on performance management and reporting

Provides real time feedback on supply chain performance and resource utilizationCommon performance dimensions includeCost Customer serviceProductivityQuality

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Decision analysis functionality focuses on software tools to assist managers

Software tools help to identify, evaluate and compare alternatives to improve effectivenessE.g., Excel solverTypes of analysis includeSupply chain designInventory managementResource allocationRoutingSegmental profitabilityAlso called decision support software in MIS departments

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Strategic planning functionality transforms transactional data to assist in strategy evaluation

Organizes transaction and performance data into a relational database to assist in evaluating alternative business strategiesExamples includeStrategic alliance decisionsDevelopment of manufacturing capabilitiesCustomer responsiveness opportunities

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Figure 1.4 SCIS Usage, Decision Characteristics, and Justification

More opportunities exist for improvements at higher levels of functionality

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Supply chain information system modules

Enterprise integration and administration

Enterprise supply chain operations

Enterprise planning and monitoring

Communication technology

Consumer connectivity

Slide14

Application oriented perspective of SCIS modules

Figure 1.4 Application Oriented SCIS Framework

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Enterprise resource management (ERP)

The backbone of most firm’s logistical information systems

Maintains an integrated database of current and historical data

Processes most (if not all) transactions across all business functions

Example transactions include

Order entry and management

Inventory assignment

Shipping

Slide16

Enterprise integration and administration modules are not specific supply chain apps

Figure 1.5 Enterprise Integration and Administration Components

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Enterprise operations modules support day-to-day supply chain operations

Figure 1.6 Enterprise Operations Modules

Enterprise Operations

Customer

relationship

management

Logistics

Manufacturing

Purchasing

© Donald J. Bowersox, Ph.D. 2005

Inventory

Deployment

Customer Relationship

Management

(CRM)

Forecasting

Demand Management

(DMS)

Collaborative

Planning, Forecasting

and Replenishment(CPFR)Order Management(OMS)

Finished Inventory Management(FIM)Order Processing(OPS)WarehouseManagement (WMS)TransportationManagement (TMS)Yard Management(YMS)Accounts ReceivableInterface

ManufacturingResource Planning(MRP II)Capacity ManagementPlanning (CMP)Master ProductionSchedule (MPS)Production Executionand Control (Shop Floor)Quality Management (QM)

Purchase OrderAdministration(POA)Materials RequirementsPlanning (MRP)Supplier RelationshipManagement (SRM)Accounts PayableInterface

Integrated Inventory Planning

Advanced Planning and Scheduling\

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Enterprise planning and monitoring modules facilitate exchange of planning information

Figure 1.7 Enterprise Planning and Monitoring Modules

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Integrative management requires simultaneous achievement of 8 processes

Table 1.2 Eight Supply Chain Processes

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Concepts necessary for achieving integrated management

Lowest total process cost

is the focus of integrated management

Differs from lowest cost of each function in the process

Collaboration

of operating information, technology and risk has been encouraged by national legislation to keep US-based firms competitive

Enterprise extension

includes expanded managerial influence and control beyond traditional ownership boundaries of a single enterprise

Integrated service providers (ISP)

provide a range of logistics services to accommodate customers, ranging from order entry to product delivery

Commonly known as third (or fourth) party service providers

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Enterprise extension

Information sharing paradigm – supply chain participants sharing operating information can achieve a high degree of collaboration and enhanced strategic planning.

Process specialization paradigm – the commitment to focus collaborative arrangements on planning joint operations with a goal of eliminating nonproductive or non-value adding redundancy by firms in a supply chain.

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Integrated service providers (ISPs)

Outsourcing

Transportation modes

Public warehouses

Value-added services

Third- and fourth-party service providers

Asset- or nonasset-based service providers

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Forces driving supply chain strategies

Information technologyIntegrative managementResponsivenessFinancial sophisticationGlobalization

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Responsiveness emerges as a competitive advantage

Figure 1.8 Anticipatory Business Model

Figure 1.9 Responsive Business Model

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Postponement strategies keep supply chains responsive

Types of Postponement

Manufacturing (or Form)

Geographic (or Logistics)

Combined

Manufacturing and geographic types are exact opposites in practice but have the same goal

Meeting customer demand quickly while minimizing inventories

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Manufacturing (or form) postponement

Manufacturing one order at a time

Base modular construction of product

No customization until the exact customer specs and financial commitment is received

Objective is to maintain products in an uncommitted status as long as possible

Balances economy of scale with responsiveness

Can build a sufficient quantity of “ready to customize” basic units

Requires a lot of forethought during product design

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Example of manufacturing postponement

Keeping all the car panels a base color (white or gray) until the order is received, then painting to the color ordered

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Geographic (or logistics) postponement

Build or stock a full-line inventory at one or a few strategic locations

Forward deployment of inventory is postponed until customer orders are received

Once orders received, specific item is expedited to the local distributor

Advantages are manufacturing economies of scale along with responsiveness to customer

Often used for critical, high cost parts and assemblies (e.g. engines)

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Example of geographic postponement

Keeping full inventory in a central warehouse and releasing customer orders to local distributors or direct shipping to customer

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Combined postponement

Keeping the basic products centralized and performing the customization at the destination distributor

Historical example - Autos

Installing dealer options like sound systems, GPS, sun roofs on new cars purchased

Contemporary example - Computers

Dell Computers, doing final assembly or packaging additional system options like printers, digital cameras at a distribution center

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Barriers to implementing responsive systems

Need for publicly held corporations to maintain planned quarterly profitsExpectations of continued financial results often drive promotional and pricing strategies to “load the channel” with inventory Need to establish collaborative relationshipsMost business managers do not have training or experience in development of collaborative arrangements

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Financial sophistication enables measurement of time-based supply chain

Cash-to-Cash Conversion—the time required to convert raw material or inventory purchases into sales revenueDwell Time Minimization—dwell time is the ratio of time that an assets sits idle to the time required to satisfy its supply chain missionCash Spin—reducing assets in the supply chain can “spin” cash for reinvestment in other projects

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Globalization offers firms several attractive opportunities

Demand exceeds local supply90% of global demand is not fully satisfied by local supplyStrategic sourcingIdentifying and matching the sources of raw materials and components to manufacturers and distributorsOffshoringMoving manufacturing and distribution operations to countries with favorable labor costs and tax laws

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Significant differences for global logistics

Distance

of typical order-to-delivery operations is significantly longer compared to domestic business

Documentation

requirements for business transactions is significantly more complex

Operations must be deal with significant

Diversity

in work practices and local operating environments

How consumers

Demand

products and services must accommodate cultural variations

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