1. Introduction to Operations Management
Supply Chain Management (Ch.11)
Hansoo Kim (金翰秀)
Dept. of Management Information Systems, YUST

2. Supply Chain Management
OM Overview
Class Overview (Ch. 0) X
Operations, Productivity, and Strategy (Ch. 1, 2) X
Project Management (Ch. 17)
Strategic Capacity Planning (Ch. 5, 5S)
Process Selection/ Facility Layout; LP (Ch. 6, 6S) X X X
Mgmt of Quality/ Six Sigma Quality (Ch. 9, 10) X X
Queueing/ Simulation (Ch. 18)
Supply Chain Management
(Ch 11)
Location Planning and Analysis (Ch. 8)
JIT & Lean Mfg System (Ch. 15)
Demand Mgmt Forecasting (Ch 3)
Aggregated Planning (Ch. 13)
Inventory Management (Ch. 12)
MRP & ERP (Ch 14)
Term Project

3. Today’s Outline Explain what a supply chain is.
Explain the need to manage a supply chain and the potential benefits of doing so.
Explain the increasing importance of outsourcing.
State the objective of supply chain management.
List the elements of supply chain management.
Identify the strategic, tactical, and operations issues in supply chain management.
Describe the bullwhip effect and the reasons why it occurs.

4. Today’s Outline Explain the value of strategic partnering.
Discuss the critical importance of information exchange across a supply chain.
Outline the key steps, and potential challenges, in creating an effective supply chain.
Explain the importance of the purchasing function in business organizations.
Describe the responsibilities of purchasing.
Explain the term value analysis.
Identify several guidelines for ethical behavior in purchasing.

5. Supply Chain Management
Supply Chain: the sequence of organizations - their facilities, functions, and activities - that are involved in producing and delivering a product or service.
Supply chain management: is the strategic coordination of business functions within a business organization and throughout its supply chain for the purpose of integrating supply and demand management.
Sometimes referred to as value chains

6. Functions /Activities
Facilities
Forecasting
Purchasing
Inventory management
Information management
Quality assurance
Scheduling
Production and delivery
Customer service
Warehouses
Factories
Processing centers
Distribution centers
Retail outlets
Offices

7. Typical Supply Chain

8. Need for Supply Chain Management
The need to improve operations
Increasing levels of outsourcing
Increasing transportation costs
Competitive pressures
Increasing globalization
Increasing importance of e-commerce
Complexity of supply chains
Manage inventories

9. Bullwhip Effect
The bullwhip effect: demand variations begin at the customer end of the chain and become increasingly large as they radiate backwards through the chain
Why?
Inventory oscillations become progressively larger looking backward through the supply chain

10. Global Supply Chain and Outsourcing
Producing in China -> Selling in USA
Supply Chains linked in global pattern
Made in USA? => Assembled in USA with China Components! => or Designed in USA but made in China!!!
Increasing more complex
Language, Culture, Currency fluctuations, Political, Transportation costs, Local capabilities, Finance and economics, Environmental
Outsourcing
Producing? ->Buying
More Concentrate on what we can do better!

11. Benefits of Effective Supply Chain Management
Organization
Benefit
Campbell Soup
Doubled inventory turnover rate
Hewlett-Packard
Cut supply costs 75%
Sport Obermeyer
Doubled profits and increased sales 60%
National Bicycle
Increased market share from 5% to 29%
Wal-Mart
Largest and most profitable retailer in the world
Benefits of effective supply chain management include lower inventories, lower costs, higher productivity, greater agility, shorter lead times, higher profits, and greater customer loyalty.

12. Elements of Supply Chain Management
Table 11.1

13. Strategic or Operational
Two types of decisions in supply chain management
Strategic – design and policy
Operational – day-today activities
Major decisions areas
Location
Production
Inventory
Distribution

14. Logistics
Logistics
Refers to the movement of materials and information within a facility and to incoming and outgoing shipments of goods and materials in a supply chain
관련내용
Movement within the facility
Incoming and outgoing shipments
Bar coding
EDI
Distribution
JIT Deliveries

15. Distribution Requirements Planning (DRP)
Distribution requirements planning (DRP) is a system for inventory management and distribution planning
Extends the concepts of MRPII
Management uses DRP to plan and coordinate:
Transportation
Warehousing
Workers
Equipment
Financial flows

16. Ryder delivers (in trucks labeled “Saturn”) bins of speedometers and odometers to Saturn’s Spring Hill, Tennessee, plant. Thursday, 9:00 a.m.: A Ryder truck arrives at a Saturn supplier in Winchester, Virginia.
Drivers check the onboard computer, which provides destination and routing information, along with e stimated travel times.
Spring Hill, Tennessee, Friday, 3:00 a.m.: After parking the trailer in a computer-assigned spot in Ryder’s switching yard two miles from the Saturn plant, the driver downloads a key-shaped floppy disk from the onboard computer into Ryder’s mainframe.
The mainframe generates performance reports for Saturn.
12:53 p.m.: The trailer arrives at one of Saturn’s 56 receiving docks just in time for Saturn workers to unload the bins and unwrap the pre-inspected instruments to ready them for the production line.
12:50 p.m.: The trailer approaches the Saturn plant.

17. E-Business
E-Business: the use of electronic technology to facilitate business transactions
Applications include
Internet buying and selling
Order and shipment tracking
Electronic data interchange

18. Advantages E-Business
Companies can:
Have a global presence
Improve competitiveness and quality
Analyze customer interests
Collect detailed information
Shorten supply chain response times
Realize substantial cost savings
Create virtual companies
Level the playing field for small companies

19. Disadvantages of E-Business
Customer expectations
Order quickly -> fast delivery
Order fulfillment
Order rate often exceeds ability to fulfill it
Inventory holding
Outsourcing loss of control
Internal holding costs

20. Source: As seen in Business 2. 0 Copyright © 2002, Xplane Corp
Source: As seen in Business 2.0 Copyright © 2002, Xplane Corp. Used with permission.
RFID

21. CPFR
CPFR
Collaborative Planning, Forecasting, and Replenishment
Focuses on information sharing among trading partners
Forecasts can be frozen and then converted into a shipping plan
Eliminates typical order processing
CPFR Process
Step 1 – Front-end agreement
Step 2 – Joint business plan
Steps 3-5 – Sales forecast
Steps 6-8 – Order forecast collaboration
Step 9 – Order generation/delivery execution

22. CPFR Results Nabisco and Wegmans Wal-mart and Sara Lee
50% increase in category sales
Wal-mart and Sara Lee
14% reduction in store-level inventory
32% increase in sales
Kimberly-Clark and Kmart
Increased category sales that exceeded market growth

23. Purchasing (구매)
Purchasing is responsible for obtaining the materials, parts, and supplies and services needed to produce a product or provide a service.
Purchasing cycle: Series of steps that begin with a request for purchase and end with notification of shipment received in satisfactory condition.
Goal of Purchasing is to develop and implement purchasing plans for products and services that support operations strategies
Duty of Purchasing
Identifying sources of supply, Negotiating contracts, Maintaining a database of suppliers, Obtaining goods and services, Managing supplies

24. Purchasing Interfaces
Purchasing Cycle
Requisition received
Supplier selected
Order is placed
Monitor orders
Receive orders
Figure 11.5

25. Centralized vs Decentralized Purchasing
Purchasing is handled by one special department
Decentralized purchasing
Individual departments or separate locations handle their own purchasing requirements

26. Guidelines for ethical behavior in purchasing
Principles
Loyalty to employer.
Justice to those you deal with
Faith in your profession
Standards of purchasing practice
Avoid appearance of unethical or compromising practice.
Follow the lawful instructions of your employer.
Refrain from private activity that might conflict with the interests of your employer.
Refrain from soliciting or accepting gifts, favors, or services from present or potential suppliers.
Handle confidential or proprietary employer or supplier information with due care.

27. Guidelines for ethical behavior in purchasing
Standards of purchasing practice
Practice courtesy and impartiality in all aspects of your job.
Refrain from reciprocal agreements that constrain competition.
Know and obey the letter and spirit of laws governing purchasing.
Demonstrate support for small, disadvantaged, and minority owned businesses.
Discourage involvement in employer sponsored programs of nonbusiness, personal purchases.
Enhance the profession by maintaining current knowledge and the highest ethical standards.
Conduct international purchasing in accordance with the laws, customs, and practices of foreign countries, but consistent with the laws of the United States, your organization’s policies, and these guidelines.

28. Supplier Management Choosing suppliers Evaluating sources of supply
Supplier audits
Supplier certification
Supplier relationships
Supplier partnerships

29. Factors in Choosing a Supplier

30. Evaluating Sources of Supply
Vendor analysis - evaluating the sources of supply in terms of
Price
Quality
Services
Location
Inventory policy
Flexibility

31. Supplier as adversary versus supplier as partner

32. Supplier Partnerships
Ideas from suppliers could lead to improved competitiveness
Reduce cost of making the purchase
Reduce transportation costs
Reduce production costs
Improve product quality
Improve product design
Reduce time to market
Improve customer satisfaction
Reduce inventory costs
Introduce new products or services

33. Announcement
HW:
No Homework!!! – Are you happy? ㅋㅋㅋ

34. Good Bye!