Supply Chain Management: An introduction for Non Supply Chain Professionals
Post on 29-Mar-2023
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INTRODUCTIONThe series of slides is a basic introduction into Supply Chain Management and it should be used as such, to introduce to the staff of your organisation to the concepts, theories, working and advantages of having a fully functioning integrated Supply Chain.Successful introduction, training and acceptance of supply chain concepts throughout the whole organisation has been achieved in large and small organisation including SABIC in the middle east.
KEY CONCEPTS SUPPLY CHAINSUPPLY CHAIN IS:the sequence of suppliers that contribute to the creation and delivery of a good or service to end customers.
Logistics is:the management of the storage and flow of goods, services and information throughout your organisation.
Supply Chain Management is:organizing the cost effective flow and storage of materials, in-process inventory, finished goods and related information from point of origin to point of consumption to satisfy customer requirements.
A Business Philosophy
A way of doing business with your customers and suppliers.
KEY CONCEPTS: A PHILOSOPHY
PRINCIPAL ISSUES: SUPPLY CHAIN (1)Supply Chain
The supply chain of a company consists of different departments, ranging from procurement of materials to customer service.
The supply chain includes activities associated with inventory (materials) acquisition, storing, use in production, transit, and delivery to customers.
PRINCIPAL ISSUES: SUPPLY CHAIN (2)The activities are planned, executed, and monitored under the guidelines set by the company’s chosen customer service levels and in line with the company’s other operating goals.
PRINCIPAL ISSUES: ELEMENTS OF LOGISTICSElements of Logistics:
materials management: sourcing and receiving of raw materials or unfinished products for subsequent use
material flow system: the ability to locate and schedule material through to end production and disposition
physical distribution: the delivery of finished goods to customers
PRINCIPAL ISSUES:LOGISTIC GOALLogistic goal and objectives
The right products
The right quantity
The right moment
At minimalcost
Flexibility Deliveryreliability
Delivery time/lead time
Inventorylevel
PRINCIPAL ISSUES: LOGISTIC STEPSLogistic steps:
accepting a customer orderreceive and entercredit clearance / authorizedelivery commitment
supplier orderingforecasting demandscheduling manufacturinginventory managementdelivery to customer.
PRINCIPAL ISSUES . EVOLUTION
Quality productsLowest possible cost
Order fulfillment
Integration of supply chainsCustomer service
Preferred partnersCommunication
Supply chain communitiesCommon goals, objectives
PRINCIPAL ISSUES: THE GOALSupply Chain Management GoalTo evolve a company’s supply
chain into an optimally efficient, customer-satisfying process, where the effectiveness of the whole supply chain is more important than the effectiveness of each individual department.
PRINCIPAL ISSUES: FOCUSSupply Chain Management focuses on business processes:product designplanningorder managementstock management
instead of functions:salespurchasingproduction
PRINCIPAL ISSUES: DRIVERS OF CHANGE (1)
Drivers of change:outsourcing trendactual customer demand: speed, flexibility and competitive pricing
new software: ERP, sophisticated application software
new technologiesElectronic Data Interchange (EDI)
internet, intranet, extranet
wireless communicationsteleconferencing and telecommuting
bar coding.
PRINCIPAL ISSUES: DRIVERS OF CHANGE (2)
PRINCIPAL ISSUES: ACTIVITIESSupply chain management activities:Forecasting demandSelecting suppliersOrdering materialManaging inventoryScheduling productionShipping and deliveryOrganizing information exchange
ANALYSIS: DIAGRAM
Understand thecustomer
Understand theproduct
Understand theprocess
Understand the information flow
ANALYSIS :UNDERSTAND THE CUSTOMER (1)
Know and understand the customers:Your existing customers, i.e.,
demographicsexisting and potential numberincome levels?
Who are your potential customers?How might these customers be grouped?
For which percentage of sales is each group responsible?
ANALYSIS: UNDERSTAND THE CUSTOMER (2)
What is the effect of various methods of communications (i.e., telephone, fax, e-mail, internet telephone systems) in your relation with your customers?
What do your customers want from you?
How well do your competitors meet customers needs?
ANALYSIS: UNDERSTAND THE PRODUCTSUnderstand the products:
How many?Where are they?Which percentage of sales?What is the product life cycle?
What is the product mix?
ANALYSIS: UNDERSTAND THE PROCESS
Understand the production process:process flow
linear flowjob shop - batch flowassembly linecontinuous flowproject flow
order fulfillment strategymake-to-ordermake-to-stock.
ANALYSIS: UNDERSTAND THE INFORMATION FLOW
Understand the information flow:What information is required for effective decision-making at each stage in the supply chain?
What data has to flow between each part of the supply chain?
PERFORMANCE INDICATORS (1)
A total view must be taken in assessing performance.
Performance measurements need to be focused on what factors add to total performance, total value or total cost.
The principle performance indicator is customer service. Optimum service levels are necessary from each supplier to each customer throughout the supply chain.
PERFORMANCE INDICATORS (2)
Suppliers Inputs Addingvalue Outputs Customers Results
EffectivenessEfficiency
Productivity
Profitability
Customer Service + Quality
CustomerService
PERFORMANCE INDICATORS (3)Effectiveness:
accomplishment of the right things, on time, within the requirements specified.
Efficiency:resources expected to be consumed divided by resources actually consumed.
PERFORMANCE INDICATORS (4)Productivity:
measures of output divided by measures of input for a given period of time.
Profitability:relationship between revenues and costs.
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