Introduction to Supply Chain Management TEI, Larissa 2012

Why Supply Chain Management? Turbulent and dynamic markets, where the customers requirement change rapidly and unforeseeably. Strongly segmented markets, where various customers have varying requirements for products and services. Market requirements for multiple product varieties and customisation of both products and services. Increasing customer demand for “experiences” and not only physical products Global competition, which forces companies to become faster, better and cheaper. Introduction

“Supply chain management is the integration of key business processes from end user through original suppliers that provides products, services, and information that add value for customers and other stakeholders.” The Ohio State university Definition: Introduction

From cow to customer Simple Supply Chain Introduction

Order processing Product development Purchasing Manufacturing Distribution Supply Chain Supplier Order processing Product development Purchasing Manufacturing Distribution Customer Order processing Product development Purchasing Manufacturing Distribution Information's Materials or Services Introduction

A BC EDFG Bill Of Material kj i h Supply Chain A B C E D F G k j i h Customers Suppliers Introduction

Cooperation June 20097

Supply Chain Network Structure Cooperation

Portfolio analysis of relations Too few resources used on the relation Match Too many resources used on the relation Low High Current integration level Optimal integration level Cooperation

Planning and Control Methods Work Flow/ Activity Structure Organizational Structure Product Flow Structure Information Flow Structure Physical and Technical Management Components Management Methods Power and Leadership Structure Risk and reward Structure Culture and Attitude Managerial and Behavioral Managements Components Easy to change components Hard to change components The Management Components of Supply Chain Management Cooperation

Integration levels in SCM cooperation Integration of functions within the company Closer cooperation with suppliers and customers Relationship management Integrated business processes Increasing competence Increasing payoff Supply chain complexity Supply chain relations Functional Supply Chain Network Virtual Network Internal integrationCooperationSynchronisation Cooperation

Products / items  Strategic items Buyer has strength but few available suppliers  Bottleneck items Buyer has little power and few alternatives  Non-critical items Many suppliers of standard items  Leverage items Buyer has high strength and many suppliers Cooperation

Products / items Choosing the right relationship Bottleneck Items Strategic items Non-critical items Leverage items Buyer strength High Low Supplier strength Low High

Type of relationship Arm's length Partnership Strategic alliance Joint venture Vertical integration Cooperation

Choosing the right relationship Bottleneck items Strategic items Non-critical items Leverage items Buyer strength High Low Supplier strength Arm's length Partnership Strategic alliance Joint venture Vertical integration High Cooperation

The objective of purchasing is to get all the right things together! Sourcing: 1.Solo sourcing: only one supplier is available 2.Multiple sourcing: use more than one supplier 3.Single sourcing: long term relationship Cooperation

Purchasing is to satisfy these objectives: Determining purchasing specifications: Right quality Right quantity Right delivery Selecting supplier Negotiating terms and conditions og purchase Issuing and administration of purchase orders Cooperation

Economy June

This model places a focal firm in the context of the supply chain. Economy From the SCOR model

Fixed/Variable costs: Fixed costs: Stays at the same level even if the sales volume change. - Warehouse rental Variable costs: Change as the volume of activity change. - Direct materials which are ordered in line with demand Economy

Direct/indirect costs: Direct costs, can be tied to specific products - direct labour and direct material Indirect costs, all the rest! (also called “overheads”) - include salary to the managing director and rent for the warehouse Economy

Engineered/discretionary: Engineered costs have a clear input output relationship Discretionary costs do not have a clear input output relationship Discretionary costsEngineered costs Economy

Using tree drivers from quality costs: Prevention: The costs to prevent defects, such as training and process capability studies Appraisal: The costs to find the defects, such as testing and inspection Internal and external failure - Internal: scrap, rework - External: warranty claims, returns and repairs Economy

PAF cost model: Economy

Return of Investments (ROI) is an important measure that is widely used to assess shareholder value Basically if you have more money at the end of the year than at the beginning so the management has been successful in improving the productivity of capital. ROI % = 100 x profit / capital employed Economy

Dupont UK.xls Economy Dupont model

That’s why ….!! Sum up Benefits of the SCM Concept: Increasing flexibility towards the customers wishes Quicker and more precise delivery time Greater loyalty and resulting increase in sales Fewer backorders/sold out situations Reduced total costs Motivated and focused vendors

The Supply Chain consist of many different part and participants, the objectives are to construct and run the Chain so effective as possible. Conclusion