Week 1 Understanding Supply Chain Management Concept
Learning Objectives
Discuss the goal of a supply chain and explain the impact of supply chain decisions on the success of a firm.
Understand the financial aspect of supply chain decisions
Look into relation of supply chain, logistics and customer
Discuss selected supply chain processes
Lookintosectoralsupplychainmodels
What is a Supply Chain?
All stages involved, directly or indirectly, in fulfilling a customer request
Includes manufacturers, suppliers, transporters, warehouses, retailers, and customers
Within each company, the supply chain includes all functions involved in fulfilling a customer request (product development, marketing, operations, distribution, finance, customer service)
SCM is based on the idea that nearly every product that comes to market results from the efforts of various organizations that make up a supply chain.
Supply chain management is the management of the flow of goods and services and includes all processes that transform raw materials into final products.
It involves the active streamlining of a business's supply-side activities to maximize customer value and gain a competitive advantage in the marketplace.
A supply chain is the connected network of individuals, organizations, resources, activities, and technologies involved in the manufacture and sale of a product or service.
suppliers(material costs)--transportation cost--manufacturers(manufacturing costs)--transportation costs--(warehouses&distribution centers)inventory costs--transportation costs--customers
The Objective of a Supply Chain
Maximize overall value created----------Supply Chain Surplus= Customer Value – Supply Chain Cost
upstream---information+product&service flow+fund---downstream
supplier's supplier--supplier--end product producer--distributor/wholesaler--retailer--end customer
third party companies-----information systems company, transportation firms, warehousing firms, clearing agents etc
Example: a customer purchases a wireless router from Teknosa for 300TL (revenue)----Supply chain incurs costs (information, storage, transportation, components, assembly, etc.)---Difference between 300TL and the sum of all of these costs is the supply chain profit
Supply chain profitability is total profit to be shared across all stages of the supply chain; Success should be measured by total supply chain profitability, not profits at an individual stage
Customer is the only source of revenue and the only target of satisfaction
Sources of cost include flows of information, products, or funds between stages of the supply chain
Looking ahead
Globalization has enabled companies to set up a global business network that necessitates complex transportation services. This, in turn, is expected to drive demand for outsourced logistics services over the coming years.
Technology has been transforming 3PL services and demand within the supply chain for digitalization, automation, and data collection capabilities has been increasing.
TRENDS
Robust macroeconomic growth rooted in a strong labor market and recent tax cuts will boost demand for logistics.
Rising interest rates, a tighter labor market, and higher fuel prices will raise logistics costs.
A fully digital, connected, and flexible supply chain optimized for e-commerce and last-mile, same-day delivery will become essential.
The next-generation supply chain will improve fulfillment and drive efficiency through technologies such as big data and predictive analytics, artificial intelligence, robotics, crowdsourcing, and electric and autonomous vehicles.
CX-New battle front
A Gartner Customer Experience (CX) study declares that “Customer experience is the new marketing battlefront. More than two-thirds of marketers participating in the sutdy say their companies compete mostly on the basis of CX.
And in two years’ time, 81% say they expect to be competing mostly or completely on the basis of CX.” A study by Vision Critical claims that by 2020, the customer experience will overtake price and product quality as the key brand differentiator.
in their 2020 report, PWC found that the number of companies investing in the omni-channel experience全方位体验 has jumped from 20% to more than 80%.
Blockchain Technology is Set to Transform the Supply Chain
Robots will navigate with the aid of lasers, radar, and other non-visual guidance systems, so things like windows and electric lighting will simply add costs and present unnecessary security risks.
Automation Will Close the Talent Gap
Autonomous Trucks, Trains, and Drones will reduce demand for drivers
Supply Chains will be Shorter with help of 3D printing(additive manufacturing)
Supply chain flows, models
supplier-producer-customer are connected by product,information &payment flows
flow of physical materials and services from suppliers through intermediate entities to customers
flow of cash from customer through intermediate entities to suppliers
flow of information back and forth along the chian
reverse flow of products returned for replacement, repairs, recycling, or disposal
types of supply chain
Horizontal(lateral) integration
vertical integration
integrated enterprise
the stages of SC(physical supply, manufacturing&physical) are carried out by different organizations--discussed earlier
bringing the SC inside one organization
suppliers ------ERP(purchasing+logistics+production&control+marketing/sales+distribution)----customers
SC strategy development
BUILD MARKETING STRATEGY
KNOW YOUR TARGET CUSTOMER
RESEARCH YOUR COMPETITORS
CHOOSE YOUR CHANNELS
BREAK DOWN YOUR SALES FUNNEL S
CREATE SMART MARKETING GOALS
the way to the market has many,around 7 types
role of supply chain strategy
business strategy
supply chain strategy
supply chain capabilities--------efficiency+ responsiveness
supply chain perfirmance-----logistical----facilities+inventory+transportation------cross functional-----information+sourcing+pricing
Supply Chain strategy
(role&responsibilities) in Corporate growth & profitability strategies
Inventory
Lead Time
Purchasing
Transportation
Phy.distribution
Customer Service
Competitive and Supply
Chain Strategies
Competitive strategy defines the set of customer needs a firm seeks to satisfy through its products and services
Product development strategy specifies the portfolio of new products that the company will try to develop
Marketing and sales strategy specifies how the market will be segmented and product positioned, priced, and promoted
Supply chain strategy determines the nature of material procurement, transportation of materials, manufacture of product or creation of service, distribution of product
All functional strategies must support one another and the competitive strategy
Decision Phases of a Supply Chain
Supply chain strategy or design----How to structure the supply chain over the next several years
Supply chain planning------Decisions over the next quarter or year
Supply chain operation----Daily or weekly operational decisions
Decisions about the structure of the supply chain and what processes each stage will perform
Strategic supply chain decisions
Locations and capacities of facilities
Products to be made or stored at various locations
Modes of transportation for inbound and outbound
Information systems set up and frame
Supply chain design must support strategic objectives
Supply chain design decisions are long-term and expensive to reverse – must take into account market uncertainty
Definition of a set of policies that govern short-term operations
Fixed by the supply configuration from previous phase
Starts with a forecast of demand in the coming year
Planning decisions:
Which markets will be supplied from which locations
Planned buildup of inventories
Subcontracting/outsourcing, backup locations
Inventory policies
Timing and size of market promotions
Must consider in planning decisions demand uncertainty, exchange rates, competition over the time horizon
Conventional planning (SILO planning)
supply plan----lack of material
mfg plan----capacity issues
stock plan----missing OTIF
which negative impacts does this model have ?
when could you implement thi s model without damage?
Negative impacts of SILO planning
The signs of Bullwhip effect is found in excess inventories, quality issues, higher manufacturing and over head costs, lost sales, lower levels of customer service ,high transportation costs, lead time variations etc.
For an ideal supply chain operations elimination of bullwhip effect is necessary .
Integrated planning model
Procurement cycle--supplier
Manufacturing cycle---manufactuer
Replenishment cycle----
customer order cycle
a cycle view of SC defines the processes involved and the process owners.
this view is useful for operational decisions as it shows the role&resp of each process owner and the clear outcome of the process