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OTM 18
Supply Chains Part 1
| Question | Answer |
|---|---|
| supply chain management | Supply chain management is a total system approach to managing the entire flow of information, materials, and services from raw-material suppliers through factories and warehouses to the end customer |
| the supply chain network (see slide 3 for diagram) | Notes: 1.supply chains are complex!!! To get anything done requires major effort 2.coordination is key 3.information is critical,if you don’t have it you can't compete 4.Walmart is excellent at this |
| Grainger Center for Supply Chain Management UW School of Business Board Member Responses What has been the biggest change in supply chain mgmt.? | 1.instant communication 2.increased collaboration 3.demand-side complexity 4.sustainability 5.Developing economies (BRICS)Brazil, Russia, India, China, South Africa |
| changes in supply chain management over the last 15 years - Brian Smith, Director of Logistics and Indirect Procurement, Harley-Davidson (see slide 5) | changed From: To: chart |
| supply chain management - objectives | 1.increased profit 2.reduced inventory levels 3.reduced order fulfillment times 4. improved customer service – time & place utility 5.smooth, timely flow of materials 6.flexibility to allow for response to change |
| supply chain management - tools/inputs | 1.demand forecasts 2.supplier-customer coordination mechanisms 3.material tracking systems 4.inventory levels and locations 5.facility location choices 6.supplier selection – How many? Which ones? |
| why the recent emphasis on supply chain management | 1.huge opportunity for cost savings and service improvement 2.globalization 3.electronic commerce |
| Case Study: Dell Computer (see slide 8) -gives graphics | 1.a faster business model 2.dominant model in the PC industry 3.Dell’s direct model: eliminate 3rd-party distribution Virtual integration: blur traditional roles and boundaries |
| Case Study: Dell Computer key issues in Dell’s success - Part 1 | 1.relationship with the customer 2.information+technology-virtual integration 3.focus on high margin activities–not vertically integrated 4. shared info with suppliers leads to quicker time to market 5.focus on inventory velocity not inventory levels |
| Case Study: Dell Computer key issues in Dell’s success - Part 2 | 6.outsource deliveries and follow-up service use e-commerce 7.substitute information for inventory 8.increasingly segmented market– better attention and focus 9.closer to the customer-better forecasting and more value to customer |
| supply chain strategy | 1.not a “one-size-fits-all” solution 2. meet customer needs 3.design depends on amount of uncertainty |
| Hau Lee on Supply Chain Strategy | Hau Lee’s approach to supply chain strategy is one of aligning supply chains with the uncertainties regarding demand and the supply process |
| stable supply process | has mature technologies |
| evolving supply process | has rapidly changing technologies |
| aligning supply chain strategies with product uncertainties | based on uncertainty in supply and demand |
| aligning supply chain strategies with product uncertainties like demand and supply (see slide 13) for chart | DEMAND UNCERTAINTY 1.low-functional products 2.high innovative products SUPPLY UNCERTAINTY 1.low-stable process 2.high- evolving process |
| decisions on inventory levels and locations | 1.How much inventory do we want? uncertainty = inventory 2.How “complete” is the inventory we hold?-postponement 3.Do we push inventory down toward the customers, or hold it back at higher levels? |
| How “complete” is the inventory we hold? postponement **Notes** | Postponement – keep products in the assembly process until orders are taken. It will increase manufacturing costs. This leads to risk pooling. Square root of n helps to inventory lower also. |
| Do we push inventory down toward the customers, or hold it back at higher levels? | 1.consider demand rate, demand variability – “risk-pooling” – square root of n rule 2.How difficult is transshipment? 3.How important is rapid delivery? |
| demand uncertainties | 1.low-functional products 2.high - technological products |
| supply uncertainties | 1.low-stable process 2.high-evolving process |
| tools for supply chain decisions: inventory positioning - buffering | 1.buffer before the high value-added steps 2.buffer after variable lead times 3. buffer before significant increases in product variety |
| inventory levels: cost-service trade-offs (see slide 17 for graph) **NOTES** - think more about the end points | 1.local finished goods 2.local and regional finished goods 3.regional finished goods 4.local work in process 5.central finished goods 6.central work in process 7. central raw materials 8.build-to-order |
| performance measurement in the supply chain #1 rule of performance measurement | "What gets measured (and rewarded) is what gets done!” |
| characteristics of good measures | A good measure: 1.is quantitative 2.is easy to understand 3.encourages appropriate behavior 4.is visible 5.is defined and mutually understood 6.measures only what is important |
| some typical supply chain performance measures | 1.time 2.quality 3.cost |
| time performance measures | 1.on-time delivery 2. order time cycle 3.order cycle time variability |
| quality performance measures | 1.overall customer satisfactions 2. perfect order fulfillment - on-time, complete, damage-free, accurate invoice 3.forecast accuracy |
| cost performance measure | 1.inventory turns, weeks of supply 2.cash-to-cash cycle time 3.costs of capacity -excess or shortfall |
| selecting measures for supply chain success | 1.make sure measures are in sync with strategy 2.truly understand customer need dates 3.understand your cost structure-How much service and at what price? 4.use information technology for data collection and analysis 5.focus on a few key measures |
Created by:
rainesv