Supply Chain Management MBA 8452 Systems and Operations Management Supply Chain Management

Introduction to Operations Management/ Operations Strategy Process Analysis and Design Project Management Planning for Production Process Control and Improvement Process Analysis Capacity Management Quality Management Aggregate Planning Job Design Statistical Process Control Just in Time Scheduling Manufacturing Layout/ Assembly Line Balancing Inventory Control Supply Chain Management Services Waiting Line Analysis

Objective: Supply Chain Management Explain the Purchasing Process Supplier Relationships Define Supply Chain Management Bullwhip Effect Discuss Outsourcing Decisions

The Purchasing Process Initiate a requisition proactive vs reactive purchasing Identify the source of materials internal vs external (outsourcing)l cost, strategic nature, available sources new buy vs rebuy new contract, old contract negotiation process Place, track and receive the order EDI, Bar Codes, EFT payment

Origins of Purchasing and Supply Management Types of Purchasing in Business resale consumption conversion Purchasing’s Role in Business department v/s function purchased materials as elements required for productive work purchasing as the manager for outside manufacturing

Transition to Supply Management Two shifts in focus Value-adding benefits Quality Technology Supply Time Costs Strategic focus Evolution of purchasing function

Four Stages of Purchasing and Supply Management Development Strategic Supply Management Stage 3 Proactive Stage 2 Mechanical Stage 1 Reactive

Purchasing/Supply Management Function The strategic role of purchasing/supply management in the firm high level of responsibility and accountability Professionalism in the field- Institute for Supply Management

What Is Supply Chain Management? A network of interrelated facilities and activities that create and deliver products and services to end customers Supply Chain Management (SCM) A total system approach to managing the entire flow of information, materials, and services from raw-material suppliers through factories and warehouses to the end customer

Supply Chain Illustration Downstream Upstream Warehouses & Distribution Centers Suppliers Manufactures Customers

The Supply Chain Flows Suppliers Manufacturers Distributors Retailers Capacity, promotion plans, delivery schedules Raw materials, Intermediate products, finished goods Credits, consignment, payment terms, invoice Information Material Finance Suppliers Manufacturers Distributors Retailers Customers Payments, consignment Returns, repairs, servicing, recycling, disposal Sales, orders, inventory, quality, promotion plans Information Material Finance

Information Distortion in Supply Chain The Bullwhip Effect Customer’s Demand to Retailers Retailer’s Orders to Wholesalers Order Quantity Order Quantity Time Time Wholesaler’s Orders to Manufacturers Manufacturer’s Orders to Suppliers Order Quantity Order Quantity Time Time Bullwhip Effect: The increasing variability in demand orders from downstream customers to upstream suppliers

The Bullwhip Effect Causes Uncertainty at every stage of supply chain Lack of information sharing and coordination among supply chain members

The Bullwhip Effect Consequences Inefficiency and/or irresponsiveness in the supply chain operations Excessive inventory Poor demand forecasts Insufficient or excessive capacities Poor customer services

Improve Supply Chain Performance Information and knowledge Sharing Coordination and Integration Right Supply Chain Choice Product/Process Postponement

Information Sharing Critical to supply chain success The key to reduce/eliminate the bullwhip effect The enabler for supply chain integration and coordination

Information Sharing What Information to Share? Category Examples

Coordination and Integration Trust Communication Shared performance measures Risk and reward sharing Example: Vendor Managed Inventory (VMI)

Supply Chain Performance Measures

Inventory Related Measures of Supply Chain Performance Inventory Turnover Inventory Turnover = Weeks of Supply Weeks of Supply = Cost of goods sold Average aggregate inventory value Average aggregate inventory value Cost of goods sold

Choosing the Right Supply Chain Know Your Products Functional vs. Innovative Products

Physically Efficient or Market-Responsive Supply Chain?

Matching Supply Chains with Products Innovative Products Functional Products Match Mismatch Efficient Supply-Chain Responsive Supply-Chain