Main Function of SCM (Part II)

Main Functions  Procurement (supplier selection, optimal procurement policies, etc.)  Manufacturing (plant location, product line selection, capacity planning, production scheduling, etc.)  Distribution (warehouse location, customer allocation, demand forecasting, inventory management, etc.)  Logistics (selection of logistics mode, selection of ports, direct delivery, vehicle scheduling, etc.)  Global Decisions (product and process selection, planning under uncertainty, real-time monitoring and control, integrated scheduling)

Logistics  To manage the supply chain and science of managing and controlling the flow of goods, information and other resources like energy and people between the point of origin and the point of consumption in order to meet customers' requirements  To involve the integration of information, transportation, inventory, warehousing, material handling, and packaging

Design Options for Facility Decision Making  Manufacturer Storage with Direct Shipping  Manufacturer Storage with Direct Shipping and In-Transit Merge  Distributor Storage with Carrier Delivery  Distributor Storage with Last Mile Delivery  Manufacturer or Distributor Storage with Consumer Pickup  Retail Storage with Consumer Pickup  Selecting a Distribution Network Design

Response Time Variation in Logistics Costs and Response Time with Number of Facilities Number of Facilities Total Logistics Costs

Manufacturer or Distributor Storage with Customer Pickup Factories Retailer Pickup Sites Product Flow Information Flow Cross Dock DC Customer Flow Customers

Global Decisions  Strategic network optimization, including the number, location, and size of warehouses, distribution centers and facilities.  Strategic partnership with suppliers, distributors, and customers, creating communication channels for critical information and operational improvements.

Global Decisions  Product design coordination, so that new and existing products can be optimally integrated into the supply chain, load management  Information Technology infrastructure, to support supply chain operations.  Where-to-make and what-to-make-or-buy decisions

Case Study : UPS’s Global Supply Chain Solution for Cisco  Cisco asked UPS Supply Chain Solutions to re- engineer and manage its European supply chain  “The key for us was integrating a solution that was seamless to both the customer and Cisco,” stated Edwin de Boer, Manager of EMEA Logistics, Cisco Systems

UPS’s Challenges  Cisco’s shipping area suffered congestion, with more than 150 different transportation providers picking up finished goods.  Cisco had limited control or visibility of finished goods in the shipping area.  Customer service opportunities were limited.  Transportation costs for European customers were higher than they would have been for a coordinated distribution system

UPS Supply Chain Solution Create an integrated solution to manage transportation from manufacturer to Cisco customers. Crossdocking, fulfillment and VAS occur at a centralized distribution center

How did technology help UPS and Cisco ?  To integrate UPS supply chain solution with Cisco ERP system  Every logistics movement registered in the UPS Supply Chain Solutions system is also registered immediately in the Cisco system  To allow the customers to compile and send their own shipping reports via the Internet

The Outcome  Consolidated transportation carriers from 150 to 6 total  Achieved online visibility of the supply chain  Enabled time-definite deliveries and consistent rates  Handled customs clearance, documentation, billing and carrier selection

Discuss the following questions: What problems do UPS address? How does UPS supply chain solution help solve these problems? What issues and challenges do Cisco present? What can be done to address these issues? What are the business as well as the technology issues that should be addressed when UPS and Cisco integrate global supply chain solution?