Supply Chain Management Course Code: BA 4116 Instructor: Sana Ullah Khan

www.itslearning.com/bth/sana/scm

Course Outline CORSE DESCRIPTION/OBJECTIVE Supply Chain Management involves the flows of materials and information among all of the firms that contribute value to a product, from the source of raw materials to end customers. Elements of supply chain management have been studied and practiced for some time in marketing, logistics, and operations management. This course will attempt to integrate these different perspectives to develop a broad understanding of how to manage a supply chain.

Course Outline INDENTED LEARNING OUTCOMES By the end of this course it is expected that the student will be able to: To develop an understanding of key drivers of supply chain performance and their inter-relationships with strategy and other functions of the company such as marketing, manufacturing and accounting. To impart analytical and problem solving skills necessary to develop solutions for a variety of supply chain management and design problems and develop an understanding for use of information technology in supply chain optimization. To understand the complexity of inter-firm and intra-firm coordination in implementing programs such as e-collaboration, quick response, jointly managed inventories and strategic alliances.

Course Outline INDENTED LEARNING OUTCOMES By the end of this course it is expected that the student will be able to: 4. To develop the ability to design logistics systems and formulate integrated supply chain strategy, so that all components are not only internally synchronized but also tuned to fit corporate strategy, competitive realities and market needs. 5. To understand which information should be exchanged in a supply chain and how it should be used to benefit the entire supply chain.

Cont.. 6. To identify improvement opportunities that exist within supply chains in different industries and to quantify the improvements that various supply chain strategies offer. 7. To understand which barriers companies face during the implementation of new supply chain strategies. 8. To developed knowledge and skills relating to Supply Chain management. 9. To developed modeling skills by using excel solver.

COURSE CONTENTS Week 01 Introduction to supply chain management. Supply chain strategy Week 03 SCM Decisions Week 04 SCM Drivers and obstacles Week 05 Facility location Week 06 Warehousing Week 07 Forecasting & Project Progress Presentation

Cont.. Week 08 Mid Term Week 09 Inventory Management Week 10 Transportation Week 11 Linear Programming – Excel Solver Beer Game Guidelines & Practical (Time bound) Week 12 Bullwhip effect

Cont.. Week 13 Job shop scheduling, ERP JIT and lean production Outsourcing and Supplier Relationships Week 15 IT and SCM Week 16 Project presentations Week 17 End Term

Books RECOMMENDED TEXT BOOKS 1. Sunil Chopra, Supply Chain management, 3rd Prentice Hall. 2. Martin Christopher, Logistics and Supply Chain management – Creating value added networks, FT – Prentice Hall.   RECOMMENDED REFERENCE BOOKS 1. W. Stevenson, Operations Management, 9th.

Readings & Assesments Core texts Assessment Method Operation Management by Richard B. Chase, ‎F. Robert Jacobs, ‎Nicholas J. Aquilano Supply Chain Management, 4th/e  By Sunil Chopra Assessment Method 5 Quizzes 10% 5 Assignment 10% Class Behavior & participation 05% Mid Term 20% Project/Report + Presentation 15% Final Exam 40%

Supply Chain Management Supply Chain: The sequence of organization’s facilities, functions, and activities that are involved in producing and delivering a product or service.

Need for Supply Chain Management Improve operations Increasing levels of outsourcing Increasing transportation costs Competitive pressures Increasing globalization Increasing importance of e-commerce Complexity of supply chains Manage inventories

Benefits of Supply Chain Management Lower inventories Higher productivity Greater agility Shorter lead times Higher profits Greater customer loyalty

What is Operations and Supply Chain Management? Operations and supply management (OSM): the design, operation, and improvement of the systems that create and deliver the firm’s primary products and services. Concerned with the management of the entire system that produces a good or delivers a service. OM is confused with operations research(OR), and management science(MS), and industrial engineering(IE). OM is a field of management where as OR & MS are application of quantitative methods to decision making in all fields and IE is an engineering discipline .

Supply Chain of a Manufacturer Dealer network Vehicle manufacturer Distribution Chain of Parts Manufacturer Manufacturing Chain Distribution Chain of V.M. Raw materials Stockist Sub-supplier Supplier Prime distributor Area distributor Local distributor

Supply Chain of a Manufacturer First tier suppliers Second tier customers Second tier suppliers First tier customers The Operation Purchasing & supply management Physical distribution management Logistics Materials management Supply chain management 17

Supply Chain Transformation Process System Input Resources Transformation Function Output Hospital Patient Drs, Nurses, medicines, equipments Health care ( Physiological) Healthy individuals Restaurant Hungry customers Food, chef, Staff Well-prepared, Well-served food, (Good environment. Physical & Exchange) Satisfied Customers College or University Graduates Teachers, Books, Classrooms Imparting Knowledge & skills (Informational) Educated Individuals. Automobile Factory Steel, engine parts Tools, Machines, Workers Fabrication & Assembly of Cars ( Physical) High-quality cars

Supply Chain Transformation Process Sourcing Process- How a firm purchases the raw material and other goods???? Logistics Process- the various ways that material can be moved. “ Inbound Logistics” and “Outbound Logistics”. Distribution Process- Relate to warehousing/ storing functions. Manufacturing & Servicing Process- Related with production of goods and services.

Differences between services and goods Manufacturing Organization Service Organization Physical, durable product Inventories (output) Low Customer Contact Long Response Time Local and international Market Large Facilities Capital Intensive Quality Easily Measured Intangible No Inventories High Customer Contact Short Response Time Local Markets Small Facilities Labor Intensive Quality not easily measured

Similarities between services and goods Customers expect the best quality and service Service providers must stock the input e.g. hospitals stock medicines- manufacturing can not stock short life cycle products . Restaurants, retail stores and wholesalers are considered by US department of commerce and labor as service providers. Customer Contact- (baggage handling area, back door diplomacy- backroom operations of a bank).

Servitization Strategies Servitization refers to a company building service activities into its product offerings for its current users Maintenance, spare parts, training, and so on Success starts by drawing together the service aspects of the business under one roof Manufacturers are adapting different service models e.g- Nokia Integrated service model, Coca cola and Dell Distribution Control Model

Growth of Services Until the mid of 20th century focus was on manufacturing organisations, and thus called “Industrial Management or Production Management”. Service Organisations were working at handicraft levels and were largely ignored. Now more than 80% of the jobs in modern word in business are services. Services were 25 % of GDP in 1951 & 45 % in 2002 and 55% in 2010 in developing countries.

Efficiency, Effectiveness, and Value Efficiency: Doing something at the lowest possible cost. Effectiveness: Doing the right things to create the most value for the company. Relationship between efficiency and effectiveness???? Value: quality divided by price.

Careers in Operations and Supply Management Plant manager Hospital administrator Branch manager Call center manager Supply chain manager Purchasing manager Business process improvement analyst Quality control manager Lean improvement manager Project manager Production control analyst Facilities manager

Historical Development of OSM JIT & TQC- A production system in which processing and movement of materials and goods occur just as they are needed, usually in small batches. JIT is coupled with TQC which eliminates causes of production defects.

Historical Development of OSM 2-Manufacturing strategy & paradigm- emphasis was on a focused strategy, focused factory that may perform a limited set of tasks well. 3- Service quality & productivity- McDonald’s introduced this approach. 4-TQM- Six sigma, ISO 9000

Historical Development of OSM 5- BPR- Emergence of LEAN philosophy led companies to reengineer their operations. Japanese automobile manufacturer, Toyota, started lean manufacturing in mid 1900’s Toyota's focus was on the elimination of all waste from every aspect of the process Elimination of non value adding processes. Widespread interest in lean manufacturing occurred after the book about automobile production “The Machine That Changed The World” published in 1991

Historical Development of OSM 6- SCM- A total system approach to manage the flow of information, materials & services from raw material suppliers to end customers. 7-E-Business- application of internet as an essential element of business activity. Amazon, E-buy,

Current issues in OSM Coordinating the relationships b/w organizations- Outsourcing has led companies to integrate information system, product development & design, packaging, testing & distribution Optimizing global suppliers, production & distribution networks- Global Supply Chains. Increased co-production of goods and services- Mass- customization, E-Business. Managing Customer touch points- Customer service level.

Elements of Supply Chain Management Deciding how to best move and store materials Logistics Determining location of facilities Location Monitoring supplier quality, delivery, and relations Suppliers Evaluating suppliers and supporting operations Purchasing Meeting demand while managing inventory costs Inventory Controlling quality, scheduling work Processing Incorporating customer wants, mfg., and time Design Predicting quantity and timing of demand Forecasting Determining what customers want Customers Typical Issues Element

Logistics The goal of logistic work is to manage the completion of project life cycles, supply chains and resultant efficiencies. Logistics is the art and science of managing and controlling the flow of goods, energy, information and other resources like products, services, and people, from the source of production to the marketplace. Refers to the movement of materials and information within a facility and to incoming and outgoing shipments of goods and materials in a supply chain.

Logistics Logistics is the time related positioning of resources." As such, logistics is commonly seen as a branch of engineering which creates "people systems" rather than "machine systems It involves the integration of information, transportation, inventory, warehousing, material handling, and packaging.

Logistics Movement within the facility Bar coding Incoming and outgoing shipments EDI (Electronic Data Interchange) Distribution JIT Deliveries

Logistics: Evaluating Shipping Alternatives A situation that arises frequently in some businesses in making a choice between quicker( expensive) shipping alternatives such as overnight or 2 day air and slower but cheaper alternatives. The decision in such cases often focuses on the cost savings of alternatives versus the increased holding cost that result from using slower alternative.

Distribution Requirements Planning Distribution requirements planning (DRP) is a system for inventory management and distribution planning.

Uses of DRP Management uses DRP to plan and coordinate: Transportation Warehousing Workers Equipment Financial flows

Electronic Data Interchange EDI – the direct transmission of inter-organizational transactions, computer-to-computer, including purchase orders, shipping notices, and debit or credit memos.

Electronic Data Interchange Increased productivity Reduction of paperwork Lead time and inventory reduction Facilitation of just-in-time systems Electronic transfer of funds Improved control of operations Reduction in clerical labor Increased accuracy

Efficient Consumer Response Efficient consumer response (ECR) is a supply chain management initiative specific to the food industry. Reflects companies’ efforts to achieve quick response using EDI and bar codes.

E-Commerce E-Commerce: the use of electronic technology to facilitate business transactions.

Successful Supply Chain Trust among trading partners Effective communications Supply chain visibility (Competitive ) Event-management capability The ability to detect and respond to unplanned events Performance metrics Value creation

Supply Chain Operational Reference (SCOR) Metrics Perspective Metrics Reliability On-time delivery Order fulfillment lead time Fill rate (fraction of demand met from stock) Perfect order fulfillment Flexibility Supply chain response time Upside production flexibility Agility to obtain competitiveness Expenses Supply chain management costs Warranty cost as a percent of revenue Value added per employee Assets/utilization Total inventory days of supply Cash-to-cash cycle time Net asset turns

CPFR Collaborative Planning, Forecasting and Replenishment. Focuses on information sharing among trading partners. Forecasts can be frozen and then converted into a shipping plan. Eliminates typical order processing.

Creating an Effective Supply Chain Develop strategic objectives and tactics. Integrate and coordinate activities in the internal supply chain. Coordinate activities with suppliers with customers. Coordinate planning and execution across the supply chain. Form strategic partnerships.

Supply Chain Performance Drivers Quality Cost Flexibility Velocity Customer service

Velocity Inventory velocity The rate at which inventory(material) goes through the supply chain. Information velocity The rate at which information is communicated in a supply chain.

Challenges Barriers to integration of organizations Getting top management on board Dealing with trade-offs Small businesses Variability and uncertainty Long lead times

Trade-offs Lot-size-inventory (order > demand) Bullwhip effect Inventory-transportation costs Cross-docking (direct unload & load) Lead time-transportation costs Product variety-inventory Delayed differentiation

Trade-offs Bullwhip effect Inventories are progressively larger moving backward through the supply chain. Cross-docking Goods arriving at a warehouse from a supplier are unloaded from the supplier’s truck and loaded onto outbound trucks. Avoids warehouse storage.

Trade-offs Delayed differentiation Production of standard components and subassemblies, which are held until late in the process to add differentiating features.

Supply Chain Issues Quality control Production planning and control Inventory policies Purchasing policies Production policies Transportation policies Quality policies Design of the supply chain, partnering Operating Issues Day Tactical Issues Moths Strategic Issues Years

Supplier Partnerships Ideas from suppliers could lead to improved competitiveness Reduce cost of making the purchase Increase Revenues Enhance Performance

Critical Issues Technology management Benefits Risks Strategic importance Quality Cost Agility Customer service Competitive advantage

Operations Strategy SCM creates value through changes in time, location and quantity. SCM creates competitive advantage by integrating and streamlining the diverse range of activities that involve purchasing, internal inventory, transfers and physical distribution.

The End

References Operation Management by Richard B. Chase, ‎F. Robert Jacobs, ‎Nicholas J. Aquilano Supply Chain Management, 4th/e  By Sunil Chopra