Title: A Strategic Framework for Supply Chain Design, Planning, and Operation
1 A Strategic Framework for Supply Chain
Design, Planning, and Operation
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2 Outline
- What is supply chain management?Understanding
the Supply Chain A supply chain strategy
framework Achieving Strategic Fit and Scope
Supply Chain Drivers and Obstacles
Trade-off Efficiency and Responsiveness -
3Traditional View Logistics in the Economy
(1990, 1996)
Freight Transportation352, 455
Billion Inventory Expense221, 311
Billion Administrative Expense27, 31
Billion Logistics related activity 11, 10.5 of
GNP. Source Cass Logistics
4Traditional View Logistics in the Manufacturing
Firm
5Supply Chain Management The Magnitude in the
Traditional View
- Estimated that the grocery industry could save
30 billion (10 of operating cost) by using
effective logistics and supply chain strategies - A typical box of cereal spends 104 days from
factory to sale - A typical car spends 15 days from factory to
dealership -
- Laura Ashley turns its inventory 10 times a
year, five times faster than 3 years ago
6Supply Chain Management The True Magnitude
- Compaq estimates it lost 0.5 billion to 1
billion in sales in 1995 because laptops were not
available when and where needed - When the 1 gig processor was introduced by AMD,
the price of the 800 meg processor dropped by 30 - PG estimates it saved retail customers 65
million by collaboration resulting in a better
match of supply and demand
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SourceWilliam C. Copacino,Logistics
Management,April, 1997?
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8Overview of Supply Chain Management
- Factors require companies to use supply chain
management as part of their competitive strategy. - -Globalization
- -Increased competition
- -Information technology
- -Shorter product life cycles
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- 1963 ????????NCPDM ??
- National Council of
PhysicalDistribution Management - 1970s ?????? ILSIntegrated
Logistics Support - 1980 ??????????
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- 1990 ???????????
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10What is a supply chain?
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13Flows in a Supply Chain
14Information Sharing in the Supply Chain
- Traditionally, information has been shared only
between adjacent supply chain pairs, and that
information has been very limited. - This limited approach to information sharing
leads to bullwhip effect. - ????????????????????????????????,????????????,????
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hains use a hub and spoke approach to sharing
information.
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16 Process View of A Supply Chain
- 1.Cycle View
- -Divide into (order) four cycles
- -Order Cycle (in general)
- order transmission
- order processing
- order preparation
- order shipping
17Cycle View of Supply Chains
18Supply Chain Cycle
192. Push/Pull View
Sharman (1984) introduced the term order
penetration point in alogistics context. He
defines the OPP as the point where product
specificationstypically get frozen, and as the
last point at which inventory is held. He argues
...
- Divide by OP (Order Penetration) point Sharman
OP Points - Push Process (Speculation)
- Before OP point
- Process in anticipation of customer orders
- Pull Process (Postponement)
- After OP point
- Process in response of customer orders
- Push/Pull View is good for strategic planning
20OPP and Product Delivery Strategies
21The Importance of Supply Chain
Dells Success Quaker OatsLesson 1.7B
bought Snapple in 1994.12. Two distinct supply
chains Cant create synergy and SC value Sold
to Triarc about 300M 1997.4.
22Examples of Supply Chains
Micro Electronics Direct Sales
Manufacturing 7-Eleven Convenience Store W.W.
Grainger / McMaster-Carr MRO Toyota Global
Auto Manufacturer Amazon / Borders / Barnes and
Noble
Micro Electronics Corporation or MEC is an
electronic-components manufacturer and
distributor serving various industries. products
mainly include LCD LED transistors and
other micro-electronic related components. WW
Grainger and McMaster-Carr selling maintenance,
repair, and operations (MRO)supplies to other
companies over the Internet.
23What is Supply Chain Management?
Managing supply chain flows and assets, to
maximize supply chain surplus (profitability). W
hat is supply chain surplus?
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- - Eliyahu M , Goldratt
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- 1. ???????(Total Cost)??
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- 2. ?????????(Avoid Suboptimum)
- 3. ??????(Best Trade-off)
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26Supply Chain performance Achieving Strategic
Fit and Scope
- Company Strategy (mission/vision)
- Define target customers to satisfy through its
products and services - Supply Chain Strategy MUST support
Company/Corporate Strategy
27Business (Competitive) Strategy
- Examples
- Wal-Mart Everyday Low Price Product
Variety - McMaster Carr Next-day Delivery Product
Variety - Dell Customization
- Compaq Availability
- 7-Eleven Convenience (Time/Place Utility)
28The Value Chain Linking Supply Chain and
Business Strategy
29How to Achieve Strategic Fit
- 1.Understanding the Customer
- 2.Understanding the Supply Chain
- 3.Make Strategic Fit
30Understanding the Customer
31Levels of Implied Demand Uncertainty
Impact of Customer Needs on Implied Demand
Uncertainty
32Understanding the Supply Chain
33Supply Chain Cost-Responsiveness Efficient
Frontier
34Types of Supply Chains
- Responsive Supply Chains respond quickly as
new products are introduced and as demand
changes. - Efficient Supply Chains focus on operating
efficiently to minimize costs.
35Types of Supply Chains -- Continued
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37Expanding Strategic Scope
38Supply Chain Strategies
- Quick Response Programs
- Vendor Managed Inventory (VMI)/???????.
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- Efficient Consumer Response
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- Postponement????????,????????
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- Revenue Sharing???????,????.
- Cross Docking?????????????????(Cross-docking)????
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39Postponement
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- Buy from Origin
- Sell to Destination
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41Changing Distribution Patterns
- ??????? ?????????????.(Value Webs)
- Dispersed manufacturing
- ??????Merge-in-transit assembly
- ????Build-to-order
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42Changing Distribution Patterns
- Trends in Logistics ????????????
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- Requires 95 Service Reliability
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- Favors air and expedited ground delivery
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43????????????????(Reference Model for a Logistics
Management System)
44Supply Chain Drivers and Obstacles
- Supply Chain Drivers
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45INVENTORY
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- Impact
- More inventory higher costs, better
responsiveness
46TRANSPORTATION
- Components of Transportation Decisions
- Mode Air, Truck, Rail, Ship, Pipeline,
Internet - ??????????.
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- Trade-off
- Speed vs. Cost
- Responsive (Customize) vs. Efficiency
47FACILITIES
- Production/Storage Facilities
- Components of Facility Decisions
- Location
- Capacity (Efficiency vs. Flexibility)
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- Manufacturing/Warehousing Methodology
- SKU Storage, Job Lot Storage
- Cross docking
48INFORMATION
- Key to connect SC stages
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- EDI, Internet, ERP, SCM Software,
49Components of Information Decisions
- Push vs Pull
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50Drivers of Supply Chain Performance
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53Supply Chain Strategy-Edward Frazelle
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54Supply Chain Strategy-Edward Frazelle
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