Presentation

SCMN 7700/7706SCMN 7700/7706

Demand Demand FulfillmentFulfillment

Segment 01Segment 01

SC&L OverviewSC&L Overview

Course Introduction

SCMN 7700-06

“Execution across our supply chain is the key to maintaining our growth. Otherwise, we’re just another retailer on the Web.”

Jeff Bezos, Amazon.com

Course Overview

Introductions

Course and syllabus highlights

Instructor information

SCMN 7700 – Focus and Fit

SCMN 7800

AMLG 7600 AMLG 7700

INTERNSHIP + ELECTIVE

MBA

CORE

MBA

PROJECT

Primary Responsibilities Logistics Opportunity Analysis

PEC Team Project Class Activities Case Analysis

Earthbound Farm Final Exam

Take home, open book

Instructor Information Professor Brian Gibson

(334) 844-2460 [email protected]

14+

Supply Chain & Logistics Overview

Supply Chain Overview- Some Caveats

SCM is like art Everyone has their own

interpretation SCM involves strategy

It’s more than moving stuff

SCM is not a department It crosses organizations

and functions SCM is not rocket science

Or is it?

What is Supply Chain Management?

Supply Chain Management - is the “art” of managing the flow of materials and products, information, and financial resources from source to user.

Integrated Supply Chain Management - refers to the integrated set of processes completed by supply chain participants where technology is used to seamlessly share information from end-to-end.

Three key items flow between the supply chain participants

There are five key participants in a supply chain

What does SCM involve?

SCM includes all the activities that take place to get a product in your hands – from the time of raw materials extraction to the minute you pull out your credit card and take the final product home.

SCM focuses on:

• Planning and forecasting

• Supply management and purchasing

• Operations management and product assembly

• Logistics, inventory, and transportation

Is SCM important?A well-designed and executed supply chain

Promotes efficiency and effectiveness Provides customers with access to the products that

they want, when they want them, at a reasonable price Provides excellent career and employment

opportunities Provides basic necessities such as food and water

Any breakdown of these logistics pipelines quickly threatens human life. Recall 2005 when Hurricane Katrina flooded New Orleans, LA leaving the residents without a way to get food or clean water. As a result, a massive rescue of the inhabitants had to be made. During the first weekend of the rescue effort, 1.9 million meals and 6.7 million liters of water were delivered.

SCM – strategy or activity?

A recent survey asked 750+ logistics professionals: How do you primarily view the role of Supply Chain Management within an organization? %9.1 As a corporate function or activity within the organization15.6 As a strategy that transcends individual functions in the organization72.8 As a combination of strategy and activity within the organization2.5 As something else.

Supply Chain Participants

SCM promotes competitive advantage in the marketplace…

Simply stated, SCM can help an organization move materials, product, and information BETTER, FASTER, and CHEAPER than their competition.

SCM provides valuable opportunities to… …develop collaborative, trusting relationships…rationalize product touch points…drive out costs and achieve tremendous efficiencies…improve customer satisfaction

…if it is properly implemented…

…and obstacles are overcome

1. Inefficient process design2. Uncoordinated/ ineffective network operations 3. Inadequate or wrong information 4. Inappropriate performance measurements

1. Inefficient process design2. Uncoordinated/ ineffective network operations 3. Inadequate or wrong information 4. Inappropriate performance measurements

1. Network complexity 2. Incompatible goals among SC members 3. Unsynchronized supply and demand 4. Lack of history and relationships

1. Network complexity 2. Incompatible goals among SC members 3. Unsynchronized supply and demand 4. Lack of history and relationships

Challenges Pitfalls

1. Segment Customers Based on Service Needs 2. Customize the Logistics Network 3. Drive Operations From Demand 4. Differentiate Product Closer to the Customer 5. Source Strategically 6. Develop Supply Chain-Wide Technology Strategy 7. Use Supply Chain Spanning Performance Measures

1. Segment Customers Based on Service Needs 2. Customize the Logistics Network 3. Drive Operations From Demand 4. Differentiate Product Closer to the Customer 5. Source Strategically 6. Develop Supply Chain-Wide Technology Strategy 7. Use Supply Chain Spanning Performance Measures

Product visibilityProduct visibility

Control and consistencyControl and consistency

Total cost reductionTotal cost reduction

Customer satisfactionCustomer satisfaction

Multiple SCM benefits…Multiple SCM benefits…

Properly implemented SCM promotes….

…can be accomplished simultaneously

Review the results for a supply chain that we’ve seen

Key Metrics Before SCM

With SCM

Inventory in system 75 days 21 days

Order cycle time 14-35 days

3-8 days

Inventory turns (plant)

10 per year

52 per year

On time deliveries 78% 95%

Forecast accuracy 35-45% 65-75%

Cash conversion +23 days -21 days

Reduced costQuicker delivery

Less product waste

Happier customersBetter planningFaster payment

SCM: In Summary

What It Is Not ... “Silver Bullet” “Flavor of the Month” Applicable to everything Simple replacement or

modified version of pre-existing, interfirm relationships

What It Is ... A customer focused

framework Facilitating strategy to

integrate logistics, manufacturing, and customer service

Challenging Time consuming

Source: Adapted from Coopers and Lybrand

20

Logistics: A Key SC Process

Logistics is so critical to Wal-Mart, and the fact that David Glass has that background is a plus -- logistics is one of the biggest competitive advantages they have." Securities Analyst

Logistics Defined Frazelle text

The flow of material, information, and money between consumers and suppliers

Council of Supply Chain Mgt Professionals Logistics is that part of the supply chain

process that plans, implements, and controls the efficient, effective flow and storage of goods, services, and related information from point of origin to point of consumption in order to meet customers’ requirements.

What does logistics involve? …the coordination and management of interdependent functions

LOGISTICS

Customer ResponseFulfillment

Transp

ortation

SupplyIn

vent

ory

Where did logistics come from?

Integrated logistics

What’s the logistics-SCM link?

Sco

pe a

nd

Influen

ce

1950’s 1960’s 1970’s 1980’s 1990’s

WorkplaceLogistics

FacilityLogistics

CorporateLogistics

Supply ChainLogistics

GlobalLogistics

Why has logistics gained importance?

Provides value through time and place utility Time utility – products are available when needed by

customers (e.g., plywood before hurricanes) Place utility – products are available where needed by

customers (e.g., bathing suits in Miami, not Anchorage)

Promotes activity integration within & across firms Serves as the link between corporate departments Requires cross-company cooperation

Generates demand Superior service can result in increased sales

Promotes efficiency and profitability Reducing cost while increasing service

Serv

ice Im

pact

sS

erv

ice Im

pact

s

Why has logistics gained importance?

Fin

an

cial Im

pact

: Fi

nan

cial Im

pact

: Lo

gis

tics

co

sts

have r

isen

to t

he p

oin

t w

here

com

pan

ies

can

no

long

er

aff

ord

to ig

nore

th

em

Why has logistics gained importance?

Past Large manufacturers conceived of and

implemented innovations Today

Retailers and consumers hold the power Increased demands which translate into logistics

requirements for manufacturers Innovation brought about by retailers but

implemented by manufacturers

Logistics departments must provide top quality service AND control costs

Key P

layers

= N

ew

Focu

sK

ey P

layers

= N

ew

Focu

s

The Role of Logistics in SCM Facilitate the “flows” Provide inventory visibility Promote supply chain efficiency

Lower landed cost of goods Eliminate duplication

Create customer satisfaction On-time, every time