Chapter Ten Process Analysis and Improvement Application: Supply Chain Management McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc. All rights reserved.

Chapter Ten Learning Objectives Learn how to view a product supply chain from process perspective Develop a consumer product supply chain flow model using Visio Develop and test various what-if business decision scenarios using Beer Game simulation models

Chapter Ten Worksheet Menu

Chapter Ten Files

Chapter Ten Outline Learn how to view a product supply chain from process perspective Develop a consumer product supply chain flow model using Visio Develop and test various what-if business decision scenarios using Beer Game simulation models

Supply Chain Perspective Exhibit 10-1 p. 280 Page: Primis Custom Publishing

Integrated Supply Chain Management A Historical Perspective on Supply Chain Supply Chain Management Philosophy Strategies for Solving Supply Chain Problems

Integrated Supply Chain Management An arrangement of suppliers of products and services A network for efficient management of demand and flow of products and services A philosophy of conducting business A strategy to gain competitive advantage through coordination and synchronization of actions of its members

Supply Chain Historical Perspective 1960 to 1975 corporations had vertical organization structures and optimization of activities was focused on functions Relationships with vendors were win-lose interactions and were many times adversarial Manufacturing systems were focused on Materials Requirements Planning (MRP) 1975 to 1990 corporations were still vertically aligned, but several were involved in process mapping and analysis to evaluate their operations There was realization by organizations of the benefit of integration of functions such as, product design and manufacturing. Manufacturing systems were focused on MRP II Onwards corporations all over the world have been experiencing increasing national and international competition Strategic alliances among organizations have been growing Organization structures are starting to align with processes Manufacturing systems in organizations have been enhanced with information technology tools such as, Enterprise Resource Planning Distribution Requirements Planning Electronic Commerce Product Data Management Collaborative Engineering

Supply Chain - Channel Integration Organizational structures and associated relationships Supply chain coordination Inter and intra enterprise communication Sourcing Manufacturing orientation Inventory and cost management

Supply Chain Management Issues Flexible Organizations Organizational Relationships Total supply chain coordination Improved Communications Outsourcing non-core competencies Build to Order Manufacturing Strategy Inventory Management Cost Control

Solving Supply Chain Problems The Acceleration Principle Lead Time/Safety Stock Inventory Reduction Syndromes Implementing Effective Supply Chain Management Strategies A Framework for Analysis

Acceleration Principle: Lead Time/Safety Stock Exhibit 10-2 p. 285 Page: Lead Time Syndrome

Acceleration Principle: Inventory Reduction Syndromes Exhibit 10-3 p. 286 Page: Inventory Reduction Syndrome

Implementing Effective Supply Chain Management Strategies Manage inventory investment in the chain Establish supplier relationships Increase customer responsiveness Build a competitive advantage for the channel Introduce supply chain management solutions and enabling information technology

A Framework for Analysis Exhibit 10-4 p. 288 Page: Supply Chain Network

A Framework for Analysis Building blocks Production Operations Management Systems (POMS) Integrated Production Planning and Control (IPPC)

A Framework for Analysis Exhibit 10-5 p. 289 Page: Manufacturing Supply Chain

Supply Chain Framework Elements Goals Objectives Increase throughput Reduce cycle time Reduce stage inventory Modeling Principles Developing Coordinated strategies Implementation

Reducing the influence of lead-time variability in the productive process inventory variability at different supply chain stages and locations batching effects variability in the productive process variability due to supply chain bottleneck operations

Productive Process Lead-time Variability Set-up time can be alleviated by ensuring constant demand in the system Process time variations can be reduced / and or eliminated by standardizing methods and procedures Queue time can be eliminated by coordinating schedules between servers so that elapsed time for service can be minimized and server efficiency improved, and Idle time can be eliminated or alleviated by scheduling maintenance of productive resources

Supply Chain Inventory Variability Exhibit 10-6 p. 292 Sheet: Textile Sector

Batching Effects Variability Batching Effect Saturation Effect

Developing Coordinated Strategies Maintaining effective inventories while realizing production efficiencies Achieving integration through synchronization and coordination of various system components Potential of increase in supply chain payoffs

Developing Coordinated Strategies Exhibit 10-7 p. 293 Page: Marketing Strategies

Developing Coordinated Strategies Exhibit 10-8 p. 293 Page: Production Strategies

Developing Coordinated Strategies Exhibit 10-9 p. 294 Page: Coordinating Strategies

Implementation Exhibit p. 295 Page: Food Production Process

Implementation Exhibit p. 295 Page: Steel Production Process

Supply Chain Simulation: Beer Game Beer Game Description Beer Game Arena Simulation Model Two Unit Beer Game Model

Beer Game Description Exhibit p. 297 Page: Beer Game Process Model

Beer Game Description Exhibit p. 297 Page: Beer Game Flow Model

Beer Game Description Exhibit p. 298 Page: Beer Game Node Model

Beer Game Simulation Model Input Variables Network Logic Flow Display Crystal Reports Output Files Optimization Analysis

Input Variables Exhibit p. 299 Sheet: Variables Beer Game.xls

Beer Game.doe Exhibit p. 300 Network Logic Flow

Beer Game.doe Exhibit p. 301 Route Order Module Exhibit p. 301 Generate Demand Costs Assign Module

Beer Game.doe Exhibit p. 301 Order Inventory Update Assign Module Exhibit p. 302 Retail Sale Assign Module

Beer Game.doe Exhibit p. 302 Reorder Assign Module Exhibit p. 302 Retailer Lost Sale Assign Module

Beer Game.doe Exhibit p. 303 Update Inventory Assign Module Exhibit p. 303 Factory Order Assign Module

Beer Game.doe Exhibit p. 303 Fill BackOrders Assign Module Exhibit p. 303 Ship Order Assign Module Exhibit p. 304 Route Kegs Spreadsheet

Beer Game.doe Exhibit p. 304 Plot Displays

Beer Game.doe Crystal Reports Exhibit p. 305 Time Persistent Statistics

Beer Game.doe Crystal Reports Exhibit p. 305 Output Statistics

Beer Game.doe Output Files Exhibit p. 306 Sheet Beer Game Output Files

Beer Game.doe Output Files Exhibit p. 306 Beer Game Output Files InventoryRetailer.dat KegsOnOrderRetailer.dat

Optimization Analysis (PAN) Exhibit p. 307 Beer Game PAN.doe Process ANalyzer (PAN) Display

Optimization Analysis (PAN) Exhibit p. 307 Sheet PAN 1 Exhibit p. 309 Sheet PAN 5

Two Unit Beer Game Model Exhibit p. 309 Page Two Unit Beer Game

Two Unit Beer Game Model Exhibit p. 310 Sheet Variables Two Units.xls

Two Unit Beer Game Model Exhibit p. 310 Two Units.doe Display

Two Unit Beer Game Model Exhibit p. 311 Two Units.doe Output Statistics

Summary Supply Chain Management Process Improvement, a Supply Chain Perspective Integrated Supply Chain Management Supply Chain Simulation: Beer Game Next: Student Projects