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Ω
Lectures 1&2: Lectures 1&2: Introduction to Introduction to
Supply Chain ManagementSupply Chain Management
Quality Assurance in Supply Chain
Management (INSE 6300/4-UU)
Winter 20112
Ω OverviewOverview
Course Outline
Preliminary Notions
Objective and Importance of Supply
Chain
Supply Chain Activity Levels
Process Views
3
Ω Course OutlineCourse Outline
Instructor: Dr. J. Bentahar
Office: EV7.630
Lectures: Monday, 17h45 – 20h15
Office Hours: Thursday, 10h00 – 12h00
Phone: 848-2424 ext. 5382
E-Mail: bentahar@ciise.concordia.ca
4
Ω Course OutlineCourse Outline
Course Web:
http://www.ciise.concordia.ca/~bentahar/inse6300.html
Lecture notes
Assignment
Useful links
Useful information
Printed with FinePrint - purchase at www.fineprint.com
5
Ω
Software Systems Procurement 6
Ω INSE 6300/4INSE 6300/4--UUUU
Quality Assurance in Supply Chain Management: Supply chain operations, activities, and processes Quality assurance in these processes Engineering vs. business perspective
Objectives: To discover and learn various concepts and
techniques related to supply chain and quality assurance
To learn to apply these techniques To develop critical thinking skills
7
Ω INSE 6300/4INSE 6300/4--UUUU
Quality Assurance In Supply Chain
Management
Supply Chain Engineering
Performance,Metrics,
and Quality Attributes
Quality Assurance System
Designing theSupply Chain
Network
Inventory Management
Supply Chain Coordination
InformationTechnology in
a Supply Chain
Decision SupportSystems
Managing Uncertainty
8
Ω TextbooksTextbooks
1) Supply Chain Management: Strategy,
Planning, and Operation. (4th Edition), 2009
Supply chain management and quality assurance principals: supply chain performance, drivers, and metrics, supply chain network design, planning demand, managing inventories, managing uncertainty, and coordination
Printed with FinePrint - purchase at www.fineprint.com
9
Ω TextbooksTextbooks
2) Designing & Managing the Supply
Chain: Concepts, Strategies, and Case Studies. 2006
Supply chain principals and challenging issues: inventory management, supply chain integration, Managing uncertainty, information technology and decision support systems for supply chain management
10
Ω TextbooksTextbooks
3) Research Papers
Challenging and open problems
Verification and Validation
New developments within information technology:
Intelligent Agents
Simulations
Decision Support Systems
11
Ω Requirements and Grading Requirements and Grading
One individual/group assignment 15%
One in-class mid-term exam (closed book) 25%
One in-class final exam (closed book) 35%
One team project (2~3 members, presentation + report) 25%
12
Ω Important datesImportant dates
April 11, 2011Project report
April 04, 2011Final exam
March 28, 2011 Project presentation
February 14, 2011Mid-term
February 07, 2011Assignment
January 31, 2011Project proposal
Printed with FinePrint - purchase at www.fineprint.com
13
Ω ProjectProject
Project proposal
Deadline: January 31, 2011
Team members
Topic and title
Abstract
Main references
14
Ω QuestionQuestion
Please describe briefly about yourself:
Academic background
Industry experience
Research domains you are interested in
15
Ω OverviewOverview
Course Outline
Preliminary Notions
Objective and Importance of Supply
Chain
Supply Chain Activity Levels
Process Views
16
Ω DefinitionsDefinitions
A supply chain consists of all partiesinvolved, directly or indirectly, in fulfilling a customer request
The supply chain includes all functionsinvolved in receiving and filling a customer request
(Supply Chain Management)
Printed with FinePrint - purchase at www.fineprint.com
17
Ω DefinitionsDefinitions
Supply Chain management is a set of approaches utilized to efficiently integratesuppliers, manufacturers, warehouses, and stores, so that merchandise is produced and distributed at the right quantities, to the right locations, and at the right time, in order to minimize “systemwide” costs while satisfying service level requirements
(Designing & Managing the Supply Chain)
18
Ω DefinitionsDefinitions
Supply chain management deals with
the control of materials, information, and
financial flows in a network consisting of
suppliers, manufacturers, distributors,
and customers
(Stanford Supply Chain Forum Website)
19
Ω
The Supply Chain The Supply Chain
20
ΩThe Supply Chain NetworkThe Supply Chain Network
Printed with FinePrint - purchase at www.fineprint.com
21
Ω Supply Chain Stages or PartsSupply Chain Stages or Parts
22
Ω Supply Chain Example: PrinterSupply Chain Example: Printer
23
Ω Supply Chain ConsiderationsSupply Chain Considerations
Supply Chain
Management
Design Planning Product Development
Inventory Control
TransportationMarketing
Customer Request
Service Levels
24
Ω Supply Chain Management: A Supply Chain Management: A
Systems Engineering ApproachSystems Engineering Approach
Systems engineering: the art and science of creating a product or service based on phased efforts: Definition, design, development, production
and maintenance activities
Supply chain management and systems engineering have the same objective: Producing high quality products fulfilling
the customer requirements
Printed with FinePrint - purchase at www.fineprint.com
25
Ω Supply Chain Management: A Supply Chain Management: A
Systems Engineering ApproachSystems Engineering Approach
Systems engineering: a management technology that
controls a total system life cycle process
Systems engineering focuses on:
Defining customer needs and required functionality,
Documenting requirements,
Proceeding with design synthesis and system validation
Like systems engineering, Supply chain management
considers both the business and technical needs of
all customers
26
Ω The Systems Engineering Life The Systems Engineering Life
CycleCycle
Product Use, Phase-out, and
Disposal
Production and/or
Construction
Detail Design and
Development
Conceptual and Preliminary
Design
Acquisition Phase Utilization Phase
NEED
27
Ω Flows in a Supply ChainFlows in a Supply Chain
Customer
Information
Product
Funds
28
Ω Flows in a Supply ChainFlows in a Supply Chain
Three flows: material, information, financial
Downstream
Material
Parts and products
Information Production capacity, delivery schedule
Financial
Invoices, credit, funds
Printed with FinePrint - purchase at www.fineprint.com
29
Ω Challenges in Supply Chain Challenges in Supply Chain
ManagementManagement
Complex supply chain network Ex) worldwide suppliers
Complex product structure Ex) product contains many hardware and software components
Decentralized control Ex) functional teams focused on narrow functional goals
Increasing pressure for customer service
Multiple sources of uncertainty and variability Ex) demand, supply, and process variability
30
Ω Challenges in Supply Chain Challenges in Supply Chain
ManagementManagement
Uncertainty
31
Ω Challenges in Supply Chain Challenges in Supply Chain
ManagementManagement
Different stages in the supply chain have different
conflicting objectives:
Objective of suppliers: manufacturers purchase large
quantities with flexible delivery date
Manufacturers need to be flexible to their customers’ need
⇒⇒⇒⇒Suppliers goals are in direct conflict with the manufacturers
objectives
Manufacturers objectives of making large production
conflicts with the objective of warehouses and distribution
centers to reduce inventory
32
Ω Challenges in Supply Chain Challenges in Supply Chain
ManagementManagement
Uncertainty is the most significant threats to supply chain quality
Three main sources of uncertainty in supply chains: Demand variability
Ex) difficulty in forecasting sales
Process uncertainty Ex) unexpected downtimes and yield losses
Supply uncertainty Ex) supplier deliveries are late
Printed with FinePrint - purchase at www.fineprint.com
33
Ω Matching Supply with DemandMatching Supply with Demand
One of the most important issues in quality supply chain management
Matching supply with demand
Firms that are better at matching supply with demand enjoy a significant competitive advantage
34
Ω Order VariationsOrder Variations
35
Ω Quality Management in Supply Quality Management in Supply
ChainChain
Supply Chain Quality
Quality of Design Quality of Conformance
Product DesignSupply Chain
Process DesignSupply Chain
ControlSupply Chain
Monitoring
Quality Planning (Quality Assurance) Quality Control
Quality Improvement
36
Ω Quality Assurance: Supply Chain Quality Assurance: Supply Chain
Process DesignProcess Design
Quality issues
Quality attributes
Managing uncertainty
Managing inventory
Designing the supply chain network
Printed with FinePrint - purchase at www.fineprint.com
37
Ω Key Quality IssuesKey Quality Issues
Supply Chain Quality Issues
Network Planning
Inventory Control
Distribution Strategies
Product Design
Outsourcing Strategies
Integration & Partnering
Information Technology
Decision-
Support Sys.
38
Ω Key Quality IssuesKey Quality Issues
Network Planning: optimization aspect
Inventory Control: minimizing inventory
ordering and holding cost
Distribution Strategies: relationships
between suppliers and manufacturers
39
Ω Key Quality IssuesKey Quality Issues
Supply Chain Integration and Strategic Partnering: global optimization, information sharing and operational planning
Outsourcing and Procurement Strategies: what to make internally and what to buy from outside sources
Information Technology and Decision-Support Systems: data transfer and analysis, efficiency in supply chain management
40
Ω OverviewOverview
Course Outline
Preliminary Notions
Objective and Importance of Supply
Chain
Supply Chain Activity Levels
Process Views
Printed with FinePrint - purchase at www.fineprint.com
41
Ω The Objective of a Supply ChainThe Objective of a Supply Chain
Maximize overall value created
Supply chain value: difference between what the final product is worth to the customer and the effort the supply chain expends in filling the customer’s request
Value is correlated to supply chain profitability (difference between revenue generated from the customer and the overall cost across the supply chain)
42
Ω The Objective of a Supply ChainThe Objective of a Supply Chain
Example: Dell receives $2000 from a customer for a computer (revenue)
Supply chain incurs costs (information, storage, transportation, components, assembly, etc.)
Difference between $2000 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
Supply chain success should be measured by total supply chain profitability, not profits at an individual stage
43
Ω The Objective of a Supply ChainThe Objective of a Supply Chain
Sources of supply chain revenue: the customer
Sources of supply chain cost: flows of information, products, or funds between stages of the supply chain
Supply chain management is the management of flows between and among supply chain stages to maximize total supply chain profitability
44
Ω OverviewOverview
Course Outline
Preliminary Notions
Objective and Importance of Supply
Chain
Supply Chain Activity Levels
Process Views
Printed with FinePrint - purchase at www.fineprint.com
45
Ω Activity LevelsActivity Levels
Strategic Level
Decisions about the number, locations, and capacity of
warehouses, plants
Tactical Level
Purchasing and production decisions, Inventory and transportation policies
Operational Level
Day-to-day decisions: scheduling, truck loading, …
Su
pp
ly C
ha
in In
teg
ratio
n
Global Plan
DetailSub-Plans
OperationalPlans
46
Ω Decision Phases of a Supply Decision Phases of a Supply
ChainChain
Supply chain strategy or design
Supply chain planning
Supply chain operation
47
Ω Supply Chain Strategy or DesignSupply Chain Strategy or Design
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 Information systems
Supply chain design must support strategic objectives
Supply chain design decisions are long-term and expensive to reverse – must take into account market uncertainty
48
Ω Supply Chain PlanningSupply Chain Planning
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
Printed with FinePrint - purchase at www.fineprint.com
49
Ω Supply Chain PlanningSupply Chain Planning
Planning decisions: Which markets will be supplied from which
locations
Planned buildup of inventories
Subcontracting, backup locations
Inventory policies
Timing and size of market promotions
Must consider in planning decisions demand uncertainty, exchange rates, competition over the time horizon
50
Ω Supply Chain OperationSupply Chain Operation
Time horizon is weekly or daily
Decisions regarding individual customer orders
Supply chain configuration is fixed and operating policies are determined
Goal is to implement the operating policies as effectively as possible
Allocate orders to inventory or production, set order due dates, generate pick lists at a warehouse, allocate an order to a particular shipment, set delivery schedules, place replenishment orders
Much less uncertainty (short time horizon)
51
Ω OverviewOverview
Course Outline
Preliminary Notions
Objective and Importance of Supply
Chain
Supply Chain Activity Levels
Process Views
52
Ω Process Views of a Supply ChainProcess Views of a Supply Chain
Cycle view: processes in a supply chain are divided into a series of cycles, each performed at the interfaces between two successive supply chain stages
Push/Pull (Speculate/React) view: processes in a supply chain are divided into two categories depending on whether they are executed in response to a customer order (pull) or in anticipation of a customer order (push)
Printed with FinePrint - purchase at www.fineprint.com
53
Ω
Process Views of a Supply Chain: Process Views of a Supply Chain:
Cycle ViewCycle View
Customer Order Cycle
Replenishment Cycle
Manufacturing Cycle
Procurement Cycle
Customer
Retailer
Distributor
Manufacturer
Supplier
54
Ω Process Views of a Supply Chain: Process Views of a Supply Chain:
Cycle ViewCycle View
Each cycle occurs at the interface between two successive stages
Customer order cycle (customer-retailer)
Replenishment cycle (retailer-distributor)
Manufacturing cycle (distributor-manufacturer)
Procurement cycle (manufacturer-supplier)
Cycle view clearly defines processes involved and the owners of each process. Specifies the roles and responsibilities of each member and the desired outcome of each process
55
Ω Push/Pull View of Supply ChainsPush/Pull View of Supply Chains
Procurement,Manufacturing andReplenishment cycles
Customer OrderCycle
CustomerOrder Arrives
PUSH PROCESSES PULL PROCESSES
56
Ω Push/Pull View of Push/Pull View of
Supply Chain ProcessesSupply Chain Processes
Supply chain processes fall into one of two categories depending on the timing of their execution relative to customer demand
Pull: execution is initiated in response to a customer order (reactive)
Push: execution is initiated in anticipation of customer orders (speculative)
Push/pull boundary separates push processes from pull processes
Printed with FinePrint - purchase at www.fineprint.com
57
Ω Push/Pull View of Push/Pull View of
Supply Chain ProcessesSupply Chain Processes
Useful in considering strategic decisions relating to supply chain design – more global view of how supply chain processes relate to customer orders
Can combine the push/pull and cycle views Dell (build-to-order strategy)
The relative proportion of push and pull processes can have an impact on supply chain performance
58
Ω Dell Supply ChainDell Supply Chain
59
ΩSupply Chain Macro ProcessesSupply Chain Macro Processes
Customer Relationship Management (CRM): Interface between the firm and its customers
Internal Supply Chain Management (ISCM): Internal processes to the firm
Supplier Relationship Management (SRM): Interface between the firm and its suppliers
60
ΩSupply Chain Macro ProcessesSupply Chain Macro Processes
CRM: Market analysis; pricing strategies;
selling strategies; order management; …
ISCM: Strategic planning; Demand planning
(forecasting); Supply planning; strategic
fit;…
SRM: Negotiation strategies; design
collaboration; supply collaboration
Printed with FinePrint - purchase at www.fineprint.com
61
Ω ReadingsReadings
Lectures 1&2:
Chapter 1 of Supply Chain Management
Chapter 1 of Designing & Managing the
Supply Chain
Lecture 3:
Chapter 2 of Supply Chain Management
Ω
Lectures 1&2: Lectures 1&2: Introduction to Introduction to
Supply Chain ManagementSupply Chain Management
Quality Assurance in Supply Chain
Management (INSE 6300/4-UU)
Winter 2011
2
Ω OverviewOverview
Course Outline
Preliminary Notions
Objective and Importance of Supply
Chain
Supply Chain Activity Levels
Process Views
3
Ω Course OutlineCourse Outline
Instructor: Dr. J. Bentahar
Office: EV7.630
Lectures: Monday, 17h45 – 20h15
Office Hours: Thursday, 10h00 – 12h00
Phone: 848-2424 ext. 5382
E-Mail: bentahar@ciise.concordia.ca
Printed with FinePrint - purchase at www.fineprint.com
4
Ω Course OutlineCourse Outline
Course Web:
http://www.ciise.concordia.ca/~bentahar/inse6300.html
Lecture notes
Assignment
Useful links
Useful information
5
Ω
Software Systems Procurement
6
Ω INSE 6300/4INSE 6300/4--UUUU
Quality Assurance in Supply Chain Management: Supply chain operations, activities, and processes Quality assurance in these processes Engineering vs. business perspective
Objectives: To discover and learn various concepts and
techniques related to supply chain and quality assurance
To learn to apply these techniques To develop critical thinking skills
7
Ω INSE 6300/4INSE 6300/4--UUUU
Quality Assurance In Supply Chain
Management
Supply Chain Engineering
Performance,Metrics,
and Quality Attributes
Quality Assurance System
Designing theSupply Chain
Network
Inventory Management
Supply Chain Coordination
InformationTechnology in
a Supply Chain
Decision SupportSystems
Managing Uncertainty
Printed with FinePrint - purchase at www.fineprint.com
8
Ω TextbooksTextbooks
1) Supply Chain Management: Strategy,
Planning, and Operation. (4th Edition), 2009
Supply chain management and quality assurance principals: supply chain performance, drivers, and metrics, supply chain network design, planning demand, managing inventories, managing uncertainty, and coordination
9
Ω TextbooksTextbooks
2) Designing & Managing the Supply
Chain: Concepts, Strategies, and Case Studies. 2006
Supply chain principals and challenging issues: inventory management, supply chain integration, Managing uncertainty, information technology and decision support systems for supply chain management
10
Ω TextbooksTextbooks
3) Research Papers
Challenging and open problems
Verification and Validation
New developments within information technology:
Intelligent Agents
Simulations
Decision Support Systems
11
Ω Requirements and Grading Requirements and Grading
One individual/group assignment 15%
One in-class mid-term exam (closed book) 25%
One in-class final exam (closed book) 35%
One team project (2~3 members, presentation + report) 25%
Printed with FinePrint - purchase at www.fineprint.com
12
Ω Important datesImportant dates
April 11, 2011Project report
April 04, 2011Final exam
March 28, 2011 Project presentation
February 14, 2011Mid-term
February 07, 2011Assignment
January 31, 2011Project proposal
13
Ω ProjectProject
Project proposal
Deadline: January 31, 2011
Team members
Topic and title
Abstract
Main references
14
Ω QuestionQuestion
Please describe briefly about yourself:
Academic background
Industry experience
Research domains you are interested in
15
Ω OverviewOverview
Course Outline
Preliminary Notions
Objective and Importance of Supply
Chain
Supply Chain Activity Levels
Process Views
Printed with FinePrint - purchase at www.fineprint.com
16
Ω DefinitionsDefinitions
A supply chain consists of all partiesinvolved, directly or indirectly, in fulfilling a customer request
The supply chain includes all functionsinvolved in receiving and filling a customer request
(Supply Chain Management)
17
Ω DefinitionsDefinitions
Supply Chain management is a set of approaches utilized to efficiently integratesuppliers, manufacturers, warehouses, and stores, so that merchandise is produced and distributed at the right quantities, to the right locations, and at the right time, in order to minimize “systemwide” costs while satisfying service level requirements
(Designing & Managing the Supply Chain)
18
Ω DefinitionsDefinitions
Supply chain management deals with
the control of materials, information, and
financial flows in a network consisting of
suppliers, manufacturers, distributors,
and customers
(Stanford Supply Chain Forum Website)
19
Ω
The Supply Chain The Supply Chain
Printed with FinePrint - purchase at www.fineprint.com
20
ΩThe Supply Chain NetworkThe Supply Chain Network
21
Ω Supply Chain Stages or PartsSupply Chain Stages or Parts
22
Ω Supply Chain Example: PrinterSupply Chain Example: Printer
23
Ω Supply Chain ConsiderationsSupply Chain Considerations
Supply Chain
Management
Design Planning Product Development
Inventory Control
TransportationMarketing
Customer Request
Service Levels
Printed with FinePrint - purchase at www.fineprint.com
24
Ω Supply Chain Management: A Supply Chain Management: A
Systems Engineering ApproachSystems Engineering Approach
Systems engineering: the art and science of creating a product or service based on phased efforts: Definition, design, development, production
and maintenance activities
Supply chain management and systems engineering have the same objective: Producing high quality products fulfilling
the customer requirements
25
Ω Supply Chain Management: A Supply Chain Management: A
Systems Engineering ApproachSystems Engineering Approach
Systems engineering: a management technology that
controls a total system life cycle process
Systems engineering focuses on:
Defining customer needs and required functionality,
Documenting requirements,
Proceeding with design synthesis and system validation
Like systems engineering, Supply chain management
considers both the business and technical needs of
all customers
26
Ω The Systems Engineering Life The Systems Engineering Life
CycleCycle
Product Use, Phase-out, and
Disposal
Production and/or
Construction
Detail Design and
Development
Conceptual and Preliminary
Design
Acquisition Phase Utilization Phase
NEED
27
Ω Flows in a Supply ChainFlows in a Supply Chain
Customer
Information
Product
Funds
Printed with FinePrint - purchase at www.fineprint.com
28
Ω Flows in a Supply ChainFlows in a Supply Chain
Three flows: material, information, financial
Downstream
Material
Parts and products
Information Production capacity, delivery schedule
Financial
Invoices, credit, funds
29
Ω Challenges in Supply Chain Challenges in Supply Chain
ManagementManagement
Complex supply chain network Ex) worldwide suppliers
Complex product structure Ex) product contains many hardware and software components
Decentralized control Ex) functional teams focused on narrow functional goals
Increasing pressure for customer service
Multiple sources of uncertainty and variability Ex) demand, supply, and process variability
30
Ω Challenges in Supply Chain Challenges in Supply Chain
ManagementManagement
Uncertainty
31
Ω Challenges in Supply Chain Challenges in Supply Chain
ManagementManagement
Different stages in the supply chain have different
conflicting objectives:
Objective of suppliers: manufacturers purchase large
quantities with flexible delivery date
Manufacturers need to be flexible to their customers’ need
⇒⇒⇒⇒Suppliers goals are in direct conflict with the manufacturers
objectives
Manufacturers objectives of making large production
conflicts with the objective of warehouses and distribution
centers to reduce inventory
Printed with FinePrint - purchase at www.fineprint.com
32
Ω Challenges in Supply Chain Challenges in Supply Chain
ManagementManagement
Uncertainty is the most significant threats to supply chain quality
Three main sources of uncertainty in supply chains: Demand variability
Ex) difficulty in forecasting sales
Process uncertainty Ex) unexpected downtimes and yield losses
Supply uncertainty Ex) supplier deliveries are late
33
Ω Matching Supply with DemandMatching Supply with Demand
One of the most important issues in quality supply chain management
Matching supply with demand
Firms that are better at matching supply with demand enjoy a significant competitive advantage
34
Ω Order VariationsOrder Variations
35
Ω Quality Management in Supply Quality Management in Supply
ChainChain
Supply Chain Quality
Quality of Design Quality of Conformance
Product DesignSupply Chain
Process DesignSupply Chain
ControlSupply Chain
Monitoring
Quality Planning (Quality Assurance) Quality Control
Quality Improvement
Printed with FinePrint - purchase at www.fineprint.com
36
Ω Quality Assurance: Supply Chain Quality Assurance: Supply Chain
Process DesignProcess Design
Quality issues
Quality attributes
Managing uncertainty
Managing inventory
Designing the supply chain network
37
Ω Key Quality IssuesKey Quality Issues
Supply Chain Quality Issues
Network Planning
Inventory Control
Distribution Strategies
Product Design
Outsourcing Strategies
Integration & Partnering
Information Technology
Decision-
Support Sys.
38
Ω Key Quality IssuesKey Quality Issues
Network Planning: optimization aspect
Inventory Control: minimizing inventory
ordering and holding cost
Distribution Strategies: relationships
between suppliers and manufacturers
39
Ω Key Quality IssuesKey Quality Issues
Supply Chain Integration and Strategic Partnering: global optimization, information sharing and operational planning
Outsourcing and Procurement Strategies: what to make internally and what to buy from outside sources
Information Technology and Decision-Support Systems: data transfer and analysis, efficiency in supply chain management
Printed with FinePrint - purchase at www.fineprint.com
40
Ω OverviewOverview
Course Outline
Preliminary Notions
Objective and Importance of Supply
Chain
Supply Chain Activity Levels
Process Views
41
Ω The Objective of a Supply ChainThe Objective of a Supply Chain
Maximize overall value created
Supply chain value: difference between what the final product is worth to the customer and the effort the supply chain expends in filling the customer’s request
Value is correlated to supply chain profitability (difference between revenue generated from the customer and the overall cost across the supply chain)
42
Ω The Objective of a Supply ChainThe Objective of a Supply Chain
Example: Dell receives $2000 from a customer for a computer (revenue)
Supply chain incurs costs (information, storage, transportation, components, assembly, etc.)
Difference between $2000 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
Supply chain success should be measured by total supply chain profitability, not profits at an individual stage
43
Ω The Objective of a Supply ChainThe Objective of a Supply Chain
Sources of supply chain revenue: the customer
Sources of supply chain cost: flows of information, products, or funds between stages of the supply chain
Supply chain management is the management of flows between and among supply chain stages to maximize total supply chain profitability
Printed with FinePrint - purchase at www.fineprint.com
44
Ω OverviewOverview
Course Outline
Preliminary Notions
Objective and Importance of Supply
Chain
Supply Chain Activity Levels
Process Views
45
Ω Activity LevelsActivity Levels
Strategic Level
Decisions about the number, locations, and capacity of
warehouses, plants
Tactical Level
Purchasing and production decisions, Inventory and transportation policies
Operational Level
Day-to-day decisions: scheduling, truck loading, …
Su
pp
ly C
ha
in In
teg
ratio
n
Global Plan
DetailSub-Plans
OperationalPlans
46
Ω Decision Phases of a Supply Decision Phases of a Supply
ChainChain
Supply chain strategy or design
Supply chain planning
Supply chain operation
47
Ω Supply Chain Strategy or DesignSupply Chain Strategy or Design
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 Information systems
Supply chain design must support strategic objectives
Supply chain design decisions are long-term and expensive to reverse – must take into account market uncertainty
Printed with FinePrint - purchase at www.fineprint.com
48
Ω Supply Chain PlanningSupply Chain Planning
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
49
Ω Supply Chain PlanningSupply Chain Planning
Planning decisions: Which markets will be supplied from which
locations
Planned buildup of inventories
Subcontracting, backup locations
Inventory policies
Timing and size of market promotions
Must consider in planning decisions demand uncertainty, exchange rates, competition over the time horizon
50
Ω Supply Chain OperationSupply Chain Operation
Time horizon is weekly or daily
Decisions regarding individual customer orders
Supply chain configuration is fixed and operating policies are determined
Goal is to implement the operating policies as effectively as possible
Allocate orders to inventory or production, set order due dates, generate pick lists at a warehouse, allocate an order to a particular shipment, set delivery schedules, place replenishment orders
Much less uncertainty (short time horizon)
51
Ω OverviewOverview
Course Outline
Preliminary Notions
Objective and Importance of Supply
Chain
Supply Chain Activity Levels
Process Views
Printed with FinePrint - purchase at www.fineprint.com
52
Ω Process Views of a Supply ChainProcess Views of a Supply Chain
Cycle view: processes in a supply chain are divided into a series of cycles, each performed at the interfaces between two successive supply chain stages
Push/Pull (Speculate/React) view: processes in a supply chain are divided into two categories depending on whether they are executed in response to a customer order (pull) or in anticipation of a customer order (push)
53
Ω
Process Views of a Supply Chain: Process Views of a Supply Chain:
Cycle ViewCycle View
Customer Order Cycle
Replenishment Cycle
Manufacturing Cycle
Procurement Cycle
Customer
Retailer
Distributor
Manufacturer
Supplier
54
Ω Process Views of a Supply Chain: Process Views of a Supply Chain:
Cycle ViewCycle View
Each cycle occurs at the interface between two successive stages
Customer order cycle (customer-retailer)
Replenishment cycle (retailer-distributor)
Manufacturing cycle (distributor-manufacturer)
Procurement cycle (manufacturer-supplier)
Cycle view clearly defines processes involved and the owners of each process. Specifies the roles and responsibilities of each member and the desired outcome of each process
55
Ω Push/Pull View of Supply ChainsPush/Pull View of Supply Chains
Procurement,Manufacturing andReplenishment cycles
Customer OrderCycle
CustomerOrder Arrives
PUSH PROCESSES PULL PROCESSES
Printed with FinePrint - purchase at www.fineprint.com
56
Ω Push/Pull View of Push/Pull View of
Supply Chain ProcessesSupply Chain Processes
Supply chain processes fall into one of two categories depending on the timing of their execution relative to customer demand
Pull: execution is initiated in response to a customer order (reactive)
Push: execution is initiated in anticipation of customer orders (speculative)
Push/pull boundary separates push processes from pull processes
57
Ω Push/Pull View of Push/Pull View of
Supply Chain ProcessesSupply Chain Processes
Useful in considering strategic decisions relating to supply chain design – more global view of how supply chain processes relate to customer orders
Can combine the push/pull and cycle views Dell (build-to-order strategy)
The relative proportion of push and pull processes can have an impact on supply chain performance
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Ω Dell Supply ChainDell Supply Chain
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ΩSupply Chain Macro ProcessesSupply Chain Macro Processes
Customer Relationship Management (CRM): Interface between the firm and its customers
Internal Supply Chain Management (ISCM): Internal processes to the firm
Supplier Relationship Management (SRM): Interface between the firm and its suppliers
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ΩSupply Chain Macro ProcessesSupply Chain Macro Processes
CRM: Market analysis; pricing strategies;
selling strategies; order management; …
ISCM: Strategic planning; Demand planning
(forecasting); Supply planning; strategic
fit;…
SRM: Negotiation strategies; design
collaboration; supply collaboration
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Ω ReadingsReadings
Lectures 1&2:
Chapter 1 of Supply Chain Management
Chapter 1 of Designing & Managing the
Supply Chain
Lecture 3:
Chapter 2 of Supply Chain Management
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