1. Supply Chain Management & Operations Management
Management Development Programme

2. Programme 08:30 – 10:30 Introduction 10:30 – 11:00 Tea
Origins of SCM
Components of SCM
10:30 – 11:00 Tea
11: :00 Operations Management
13: :00 Lunch
14: :00 Government and SCM
15: :15 Tea
15: :30 Public Sector SCM

3. What is a Supply Chain?
A supply chain consists of the flow of products and services from:
Raw materials manufacturers
Intermediate products manufacturers
End product manufacturers
Wholesalers and distributors and
Retailers
Connected by transportation and storage activities, and
Integrated through information, planning, and integration activities

4. What is Supply Chain Management?
Here are two definitions:
The design and management of seamless, value-added process across organizational boundaries to meet the real needs of the end customer
Institute for Supply Management
Managing supply and demand, sourcing raw materials and parts, manufacturing and assembly, warehousing and inventory tracking, order entry and order management, distribution across all channels, and delivery to the customer
The Supply Chain Council

5. Traditional Scope of the Supply Chain
Physical distribution
Physical supply
(Materials management)
Business logistics
Sources of
supply
Plants/
operations
Customers •
Transportation
Inventory maintenance
Order processing
Acquisition
Protective packaging
Warehousing
Materials handling
Information maintenance
Product scheduling
Internal supply chain

6. Logistics vs Supply Chain Management
Council of Logistics Management
“Logistics is the process of planning, implementing and controlling the efficient, cost-effective flow and storage of raw materials, in-process inventory, finished goods and related information from the point of origin to point of consumption for the purpose of conforming to customer requirements.”
Handfield and Nichols
SCM is the integration of all activities associated with the flow and transformation of goods from raw materials through to end user, as well as information flows, through improved supply chain relationships, to achieve a sustainable competitive advantage.

8. Supply Chain is Multi-Enterprise
Conventional Scope
Focus
Company
Suppliers
Customers
Customers/
Supplier’s
End users
suppliers
Acquire
Convert
Distribute
Product and information flow

9. Important Elements of Supply Chain Management
Purchasing- Supplier alliances, supplier management, strategic sourcing
Operations- Demand management, MRP, ERP, JIT, TQM
Logistics- Transportation management, customer relationship management, network design, service response logistics
Integration- Coordination/Integration activities, global integration problems, performance measurement

10. Elements / Components of SCM
Purchasing- Trends:
Long term relationships
Supplier management- improve performance through-
Supplier evaluation (determining supplier capabilities)
Supplier certification (third party or internal certification to assure product quality and service requirements)
Strategic partnerships- successful and trusting relationships with top-performing suppliers

11. Elements / Components of SCM
Operations- Trends:
Demand management- match demand to available capacity
Linking buyers & suppliers via MRP and ERP systems
Use JIT to improve the “pull” of materials to reduce inventory levels
Employ TQM to improve quality compliance among suppliers

12. Elements / Components of SCM
Distribution- Trends:
Transportation management- tradeoff decisions between cost & timing of delivery/customer service via trucks, rail, water & air
Customer relationship management- strategies to ensure deliveries, resolve complaints, improve communications, & determine service requirements
Network design- creating distribution networks based on tradeoff decisions between cost & sophistication of distribution system

13. Elements / Components of SCM
Integration Trends:
Supply Chain Integration- when supply chain participants work for common goals. Requires intrafirm functional integration. Based on efforts to change attitudes & adversarial relationships
Global Supply Chains- advantages that accrue from sourcing from larger global market e.g., lower cost & higher quality suppliers. May involve operating exposure, which is risk found in foreign settings
Supply Chain Performance Measurement- Crucial for firms to know if procedures are working

14. Importance of Supply Chain Management
Cost savings and better coordination of resources are reasons to employ Supply Chain Management
Reduced Bullwhip Effect- the magnified reduction of safety stock costs based on coordinated planning and sharing of information
Process Integration- Interdependent activities can lead to improved quality, reduced cycle time, better production methods, etc.

15. Origins of Logistics Mngt

16. Key Activities/Processes
Primary
Setting customer service goals
Transportation
Inventory management
Location
Secondary, or supporting
Warehousing
Materials handling
Acquisition (purchasing)
Protective packaging
Product scheduling
Order processing

17. Logistics Strategy and Planning
The objectives of logistics strategy
Minimize cost
Minimize investment
Maximize customer service
Levels of logistical planning
Strategic
Tactical
Operational

18. The Logistics Strategy Triangle (4 problem areas)
Customer
service goals
The product
Logistics service
Information sys.

19. LEAN PRODUCTION
"A team-based approach to continuous improvement focused on eliminating non-value added activities or “waste” from the viewpoint of the customer.”
“...a system for organising and managing product development, operations, suppliers, and customer relations.”

20. LEAN PRODUCTION – KAIZEN
Kaizen ... rapid improvement processes - the "building block" of all lean production methods.
Kai – Change Zen - Good
"CHANGE FOR THE BETTER"
Big results come through routinely applying small, incremental changes....continuous improvement....

21. 2
GOVERNMENT AND
PROCUREMENT

22. Government and Procurement
Procurement by the state serves two broad purposes:
Primary – Efficient acquisition of goods & services
Secondary – Socio-economic transformation
Constitutional imperative (Section 217)
South African public sector spent R500 billion on goods and services in 2013/14

23. Government and Procurement
Procurement – a key developmental tool
S217(3) of the Constitution prescribes the framework within which preference and socio-economic objectives are to be achieved.
Local Economic Development
“Set asides”
Procurement should talk to broader macro-economic strategy:
National Growth Plan and the NDP
The need to create jobs thus eliminating poverty.
In essence, need to strengthen basic service delivery whilst promoting labour intensive programmes
EVERYONE’s RESPONSIBILITY

24. Legislative Environment
CONSTITUTION
PFMA
PPPFA
BBBEE Act
PAJA & PAIA
Preferential Procurement Regulations 2011
Revised BBBEE Scorecard & Codes of Good Practice
Relative to other developing countries, South Africa has a strategically developed infrastructure and established world class capability. Several construction and design companies undertake as much as 50% of their work in the global environment.
A period of declining demand, volatility, and associated fierce competition has led to the shedding of capacity and declining skills with consequences for quality, productivity, health and safety.
We have inherited an outmoded delivery and contractual system that separates professionals and constructors, stifles innovation and delivers increasing levels of adversity into the system. Failure to adapt to changes taking place in the developed world are the result of decades of Isolation
Our history has shaped an industry characterised by racially skewed ownership and participation.
Instructions
Circulars
Guidelines
The Organisation’s SCM Policy
Capacitation Workshop - Procument Managers

25. The Public Sector SCM System
“Demand”
Needs Assessment
Planning
Specification
Pre-Bid
“Acquisitions”
Invitation to bid
Evaluation of bids
Adjudication
Bidding
“Logistics and Disposal”
Contract Mangt
Ordering & Paying
Disposing of items
Post-Bid

26. Roles and Responsibilities of Bid Committees
Appointment of Bid Committees
‘The cornerstone of the successful implementation of Supply Chain Management is the establishment of well functioning Bid Structures’
According section 44 & 56 of PFMA:
The Accounting Officer must appoint the following:
Bid Specification Committee
Bid Evaluation Committee
Bid Adjudication (Award) Committee

27. Specific Evaluation Matters
Four (4) broad steps to the evaluation process:
STEP 1: Compulsory Statutory Requirements
STEP 2: Minimum Mandatory Bid Requirements
STEP 3: Functionality against pre-set criteria
STEP 4: Price and Preference Points
NB: SCM Policy can indicate who will evaluate steps 2 & 3 (Both for quotations and bids)......SCM to first issue an evaluation guideline...

28. The End