Supply Chain Management Supply Chain Management Chang by ewghwehws


									Supply Chain Management

  Chang-Yang Lin, PhD
  Professor and Coordinator of CIS
  Eastern Kentucky University
SCM and Inaccuracy Problems
 On a typical day in a U.S. supermarket, 8.2%
  of the items are out of stock.
 33% of out-of-stock items are located in the
  store, just not in the correct location.
 The cost of stockouts in U.S. supermarkets are
  estimated at $7 to $12 billion of sales.
 Before being stored on store shelves, items
  pass through several processes, including
  order processing, fulfillment, staging, shipment,
  receiving, short-term storage, and finally
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a coordinated system of entities, activities,
information and resources involved in moving
a product or service from supplier to customer
a network of organizations and facilities
that transforms raw materials into
products delivered to customers

also includes transportation companies,
warehouses, & inventories and some
means for transmitting messages &
Dell’s own channel for
manufacturing and selling
• distributors and
• retailers
Supply Chain Management
 SCM is the process of planning,
  implementing, and controlling the
  operations of the supply chain with the
  purpose to satisfy customer requirements
  as efficiently as possible

 SCM spans all movement and storage of
  raw materials, work-in-process inventory,
  and finished goods from point-of-origin to

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SCM Problems
 Distribution network configuration: Number and
  location of suppliers, production facilities,
  distribution centers, warehouses and customers.
 Distribution strategy: Centralized versus
  decentralized, direct shipment, pull or push
  strategies, third party logistics.
 Information: Integrate systems and processes
  through the supply chain to share valuable
  information, including demand signals, forecasts,
  inventory and transportation.
 Inventory management: Quantity and location of
  inventory including raw materials, work-in-process
  and finished goods.
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SCM Activities/Functions
 The purpose of SCM is to improve trust and
  collaboration among supply chain partners,
  thus improving inventory visibility and
  improving inventory velocity

 SCM activities can be grouped into strategic,
  tactical, and operational level of activities

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The Bullwhip Effect
 An observed phenomenon in forecast-driven
  distribution channels
 Because forecast errors are a given, companies
  often carry "safety stock"
 Moving up the supply chain from end-
  consumer to raw materials supplier, each
  supply chain participant has greater observed
  variation in demand and thus greater need for
  safety stock
 The effect is that variations are amplified the
  farther you get from the end-consumer
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The bullwhip effect is a phenomenon in which the variability
in the size and timing of orders increase at each stage up
the supply chain, from customer to supplier
The Bullwhip Effect (continued)
 One way to eliminate the bullwhip effect is to
  give all participants in the supply chain access
  to consumer-demand information from the
 Each organization can thus plan its inventory
  or manufacturing based on true demand and
  not on the observed demand from the next
  organization up in the supply chain.
    An interorganizational information system is
     necessary to share such data.

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Stabilizing the Bullwhip Effect:
A Demand-Driven Supply Chain
 Individual Wal-Mart stores transmit POS data from
  the cash register back to corporate headquarters
  several times a day
 This demand information is used to queue
  shipments from the Wal-Mart distribution center to
  the store and from the supplier to the Wal-Mart
  distribution center
 The result is near-perfect visibility of customer
  demand and inventory movement throughout the
  supply chain
 A demand-driven supply chain which reacts to
  actual customer orders. In manufacturing, this
  concept is called Kanban (カンバン 看板)
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B2B One Section of the Supply Chain
Supplier Relationship Management
 SRM is a business process for managing all
  contacts between an organizational and its
 SRM applications support three basic
  processes: source, purchase, and settle.
 SRM examines inventory, determines that
  items are required, and automatically
  creates the order via its connection to the
  supplier’s CRM

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SRM Process
Definition of Key Terms
 Inventory consists of a list of goods and
  materials held available in stock
 Manufacturing organizations usually divide
  their "goods for sale" inventory into:
   Materials and components (or Raw materials)
    scheduled for use in making a product
   Materials and components that have begun their
    transformation to finished goods (or Work in
   Finished goods - goods ready for sale to
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