Supply Chain Management Dr Sherif Kamel The American University in Cairo

Outline Definitions Supply chain process Supply chain management fundamentals Constituencies Pull v push supply chain models Supply chain management elements Key elements for the CEO Transactional v analytical IT

Definitions Supply Chain Supply Chain Management Core business processes in an organization that create and deliver a product or service, from concept through development and manufacturing or conversion, and into a market for consumption Supply Chain Management Methods, systems and leadership that continuously improve an organization’s integrated processes for product and service design, purchasing, inventory management, logistics, distribution and customer satisfaction

Process view of the supply chain Supply Chain Planning Information Flows Product Flows Supplier Manufacturing Distribution Retailer Consumer Payment Flows Supply Chain Execution SCM is the coordination of material, information and financial flows between and among all the participating enterprises

Supply chain management Fundamentals Migration of control from manufacturers to customers Meeting customers demands becoming the cornerstone for global competitiveness Firms managing their supply chain will be more successful in the global market place, if they manage it efficiently and effectively

Constituencies Material suppliers Distributors Wholesalers Retailers Customers

Pull vs. Push supply-chain models Consumer need-based business model is forcing a fundamental shift from a traditional manufacturing push-based model (build-to-stock) to a pull-based model (build-to-order) The pull concept is both simple and compelling The customer is the driving force The pull model addresses a number of issues such as… Supporting increased variability (products variants) Reduced lead times Improved quality and lower unit cost Operational excellence Comprehensive performance measures for control purposes

Effective supply chain management requires Gather customer demand requirements quickly and accurately Make the best choices about how they can meet those requirements at the lowest possible cost Make informed decisions among the entire supply chain, from procuring to manufacturing/assembling products Distribute finished goods to the consumer and collect the requisite payment

Supply chain management Elements Planning systems Execution systems Performance management systems

Planning systems It is all about having the right product at the right place at the right time To facilitate order taking and information gathering from the customer and orchestrate the flow of information to the whole chain Raw Material Final Consumption Procurement

Elements of supply chain planning Advanced Scheduling Demand Planning Order Commitment Customer Order Transportation Planning Distribution Planning Enterprise Architecture

Planning systems Case: Using Point of Sale (POS), the data gathered at the retail terminal could be communicated through the chain directly from the Retailer to the Distributor to the Manufacturer to the Raw material supplier to the Transportation provider Planning systems involving demand forecasting and replenishment are moving from pushing a product to the market to pulling it by the customer To promote pull-bases models, planning systems should: Gather information about customer demand effectively Accommodate fluctuations in demand Use demand information for inventory investment

Execution systems It is about facilitating the physical movement of goods and services through a supply chain Focus on operational efficiency which depends on improving daily operations to reduce costs and improve productivity To introduce a fully integrated business application that runs the entire business process Optimization across functions leads to better results and enhances the supply chain coordination

Supply chain execution Forecasting Aggregate Inventory Planning Replenishing Process Capacity Planning MPS/Sourcing Order Entry and Processing Confirmation Fulfillment Planning Inventory Availability - Schedule Production Inventory Availability - Priority Order Production Process Order Planning Process Production Scheduling Distribution Scheduling Pick and Load Schedule Home Delivery Customer Service Distribution Process

Performance measurement systems It is important to make more informed decisions and responding to changing market conditions Utilization of data warehousing to allow for effective information auditing and analysis Use of web-based software agents to prioritize the information to which management must pay attention Software agents can help managers proactively monitor their business operations

Key Elements for the CEO How to keep up all the changes in vendors, applications, technologies, pricing and tools? How to sort through vendors and software to select the best fit? How to ensure a successful implementation and deployment?

Transactional v analytical IT To effectively apply IT in managing its supply chain, a company must distinguish between the form and function of transactional IT and analytical IT Transactional IT Concerned with acquiring, processing and communicating raw data about the company’s past and current supply chain operations POS systems, general ledger systems, quarterly sales reports, ERP and eCommerce applications Analytical IT Concerned with developing and applying systems for evaluating and disseminating decisions based on models constructed from supply chain decision databases Production scheduling systems, forecasting systems, supply chain network optimization systems