OUTLINE Questions? Comments? Quiz Assignments reminders Remember to put your name in the document Only submit one document per homework Give sources of material you use Keep Excel file names short Chapter 3 Supply chain drivers and metrics (Chopra)

Transportation Role: move material Role in competitive strategy: match required responsiveness Components of decisions: Mode (rail, truck, air, ship, pipeline, electronic) Route and network selection Sourcing Who provides transportation services?

Information Role: connects the members of the chain and supports daily operations Role in strategy: most important underpinning Components of decisions: Push/pull What to share Forecasting and planning Pricing Enabling technologies: Software (EDI, ERP, SCM)

Obstacles Increasing variety Shorter life cycles Demanding customers Decreasing vertical integration Globalization

Benefits of collaboration Establishing contacts Gaining Insight Joint projects

Definition Benchmarking Identifying, understanding and adapting outstanding practices from other organizations to improve performance

International Chains – what is different?

International Chains – what is different? Greater geographic and time distances Diversity of demand and supply conditions Wage rates Taxes Incentives Political climates Exchange rates Special laws

Cycle time Definition – the total elapsed time required to complete a process (e.g. 4 years to get an engineering degree, one month to build an airplane) Little’s Law: Cycle time = Work in process/Throughput Causes of long cycle times: Waiting Old processes that don’t add value Serial vs. parallel, external vs. internal Repeated activities Batching Excessive controls

Measuring Performance What should measuring performance accomplish?

Measuring Performance What should measuring performance accomplish? Basis for understanding the system Influence behavior in the system Provide information about results Provide information that will initiate actions to improve the system Create accountability in individual operations The concept of Supply Chain Management requires that overall performance be measured, but intermediate points must also be measured to insure accountability

Measuring Performance (continued) Typical internal measures % orders on time Inventory turns Cycle time Costs/Goods sold Aging of orders

Measuring Performance (continued) Typical supply chain measurements Cycle time % orders on time (service level) or fill rate Order aging Comparisons to competitors (Bench marking) Responsiveness to changes in demand End items sold/Total costs Market Share