Supply Chain Management

Outline
What is Supply Chain Management Supply Chain Planning Process Supply Chain Planning Decisions Supply Chain Strategies Software Tools

WHAT IS SUPPLY CHAIN MANAGEMENT

Supply Chain is a set of activities (e.g. purchasing, manufacturing, logistics, distribution, marketing) that perform the function of delivering value to end customer

External Suppliers

Internal Functions

External Distributors

INFORMATION

Supply Chain Structure

SUPPLIER FACTORY DC WHOLESALER RETAILER

Raw Materials Finished Goods Information Flow

Dynamics of Material Flow

Supplier

Plant

Warehouse

Logistics

Retailer

Supply Chain Planning Processes

Material Requirement Planning Component Requirement Demand Forecasting Demand Planning

Production Plan

Supplier

Plant

Warehouse

Logistics

Retailer

Order Management

Supply Chain Planning Decisions

STRATEGIC TACTICAL OPERATIONAL

Procurement Manufacturing Distribution Logistics

SUPPLY CHAIN ELEMENTS

Strategic Supply Chain Design Resource Acquisition Long Term Planning (1 Year ++)

Tactical

Production/ Distribution Planning Resource Allocation Medium Term Planning (Qtrly,Mont

Operational

Shipment Scheduling Resource Scheduling Short Term Planning (Weekly,Daily)

Supply Chain Integration Push Strategies

Classical manufacturing supply chain strategy Manufacturing forecasts are long-range Longer response time to react to marketplace changes Increased variability (Bullwhip effect) leading to: Inefficient use of production facilities (factories) Examples: Auto industry, large appliances, others?

Supply Chain Integration Pull Strategies

Production and distribution are demand-driven None or little inventory held Fast information flow mechanisms Decreased lead times Decreased retailer inventory Decreased variability in the supply chain and especially at manufacturers Decreased manufacturer inventory More efficient use of resources More difficult to take advantage of scale opportunities Examples: Dell, Amazon

Choosing Between Push/Pull Strategies

Pull High
Customization is High Demand is uncertain Demand is uncertain Scale economies are Low Scale economies are High Low economies of scale

Where do the following industries fit in this model: Automobile? Aircraft? Fashion? Petroleum refining? Pharmaceuticals? Biotechnology? Medical Devices?

Demand Uncertainty

Computer equipment
Uncertainty is low Low economies of scale Push-pull supply chain

Furniture
Standard processes are the norm Demand is stable Scale economies are High

Push

Low Low Pull

Books, CDs

Grocery, Beverages High Push

Economies of Scale

Characteristics of Push, Pull and Push/Pull Strategies

PUSH Objective Complexity Focus Lead Time Processes
Minimize Cost

PULL
Maximize Service Level Low

High

Resource Allocation

Responsiveness

Long

Short

Supply Chain Planning

Order Fulfillment

Software Packages
i2 Six: A comprehensive solution suite for spend/
production/ revenue/ logistics/ fulfillment optimization

It helps companies driving down enterprise wide spend

ARIBA Spend Management:

mySAP SCM:
planning solution

A complete supply chain

A complete solution suite from demand collaboration to order management

iBann:

Conclusions
Supply Chain Planning: A critical factor in the success and profitability of a company Short Product Life Cycle: Improper planning can take the company out of business Bad News: Planning is an hard problem to formulate as well as solve Good News: Plethora of Commercially available software for supply chain planning

Thank You