1. Supply Chain 4BMFB-1 PRESENT BY : NG SI LING B050810253
Suppliers
Manufacturers
Warehouses &
Distribution Centers
Customers
Material Costs
Transportation
Costs
Inventory Costs
Manufacturing Costs
PRESENT BY :
NG SI LING B
LEE WEN HAU B
LIM WENG KEAT B
4BMFB-1

2. What is Supply Chain Management?
The sequence of organizations – their facilities, functions and activities- that are involving in producing and delivering a product or service.
SUPPLY CHAIN
Facilities,includes Suppliers, manufacturers, warehouses, distribution centers and retail outlets , and offices. Functions and activities include forecasting, purchasing , inventory management, information management, scheduling, distribution, delivery, and customer service.
So that the product is produced and distributed
In the right quantities
To the right locations
And at the right time
System-wide costs are minimized and
Service level requirements are satisfied
SUPPLY CHAIN
MANAGEMENT (SCM)
SCM is a strategic coordination of the supply chain for the purpose of integrating supply and demand management.

3. The Supply Chain Suppliers Manufacturers Warehouses &
Distribution Centers
Customers
Material Costs
Transportation
Costs
Inventory Costs
Manufacturing Costs

4. Information in SCM
Dependent on each instructor’s requirements

5. Information In The Supply Chain
Source
Make
Deliver
Return
Suppliers
Manufacturers
Warehouses &
Distribution Centers
Retailer
Plan
Order Lead Time
Delivery Lead Time
Production Lead Time

6. Plan Source Make Deliver Return 5 Importance Elements in SCM
Have a plan for managing all the resources that go toward meeting customer demand for products or services.
Plan
Choose reliable suppliers- deliver goods and services required for making products.
Source
Companies manufacture their products or services includes scheduling the activities necessary for product testing, packaging, and preparing for delivery.
Make
The set of processes that plans for and controls the efficient and effective transportation and storage or supplies from suppliers to customers.
Deliver
Companies must create a network for receiving defective and excess products and support customers who have problems with delivered products.
Return
Refer to the Company;
Source-Choose reliable suppliers- deliver goods and services required for making products. They must also develop a set of pricing, delivery, and payment processes with suppliers
Make-This portion of the supply chain measures quality levels, production output and worker productivity.
Return-This is typically the most problematic step in the supply chain.

7. Why We need Supply Chain Management???
Large Oscillations of Inventory
Inventory Stock out
Late Deliveries
Quality Problems

8. Supply Chain Management and Uncertainty
Inventory and back-order levels fluctuate considerably across the supply chain even when customer demand doesn’t vary
The variability worsens as we travel “up” the supply chain
Forecasting doesn’t help!
Manufacturer
Wholesale Distributors
Consumers
Multi-tier
Suppliers
Retailers
Time
Sales
Bullwhip Effect
Inventory Oscillations become progressively larger looking backward through supply chain

9. Factors Contributing to the Bullwhip
Demand forecasting practices
Min-max inventory management (reorder points to bring inventory up to predicted levels)
Lead time
Longer lead times lead to greater variability in estimates of average demand, thus increasing variability and safety stock costs
Batch ordering
Peaks and valleys in orders
Fixed ordering costs
Impact of transportation costs (e.g., fuel costs)
Sales quotas
Price fluctuations
Promotion and discount policies
Lack of centralized information

10. Inventory Hides the ProblemsA
Inventory B
Volatile
Demand
Inaccurate
Forecasts
Unreliable
Suppliers
Quality
Problems
Bottlenecks

11. Why is inventory a waste?
Cost of holding inventory - globally companies are beginning to use 25% of inventory value:
Cost of capital
Opportunity cost (what we could have done with the money if we had it in our hands)
Obsolescence
Storage and handling costs
Management and overhead
Potential: losses/theft

12. Demand Predictability and Lead-time+
Forecast
Error
The way we try to fill the lead time gap is with a forecast
And the further out you forecast the greater your error
A significant amount of inventory is tied up in safety stock due to forecast uncertainty
A key strategy therefore is to bring your time horizon down - time compression means less dependednce on forecast and inventory tn to -
Lead-Time

13. Methods for Improving Forecasts
Judgment Methods
Market Research Analysis
Panels of Experts
Internal experts
External experts
Domain experts
Delphi technique
Market testing
Market surveys
Focus groups
Time-Series Methods
Accurate
Forecasts
Causal Analysis
Moving average
Exponential smoothing
Trend analysis
Seasonality analysis
Relies on data other than that being predicted
Economic data, commodity data, etc.

14. Example of the Bullwhip Effect
First noticed by Procter & Gamble executives examining the order patterns for Pampers disposable diapers. They noticed that order variation increased dramatically as one moved from retailers to distributors to the factory.
Problem:
increases the difficulty of planning at the factory level

15. What is the SOLUTION?

16. Four critical methods for reducing the Bullwhip effect:
Reduce uncertainty in the supply chain
Centralize demand information
Keep each stage of the supply chain provided with up-to-date customer demand information
More frequent planning (continuous real-time planning the goal)
Reduce variability in the supply chain
Every-day-low-price strategies for stable demand patterns
Reduce lead times
Use cross-docking to reduce order lead times
Use EDI techniques to reduce information lead times
Eliminate the bullwhip through strategic partnerships
Vendor-managed inventory (VMI)
Collaborative planning, forecasting and replenishment (CPFR)

17. Why Is SCM Difficult? Barriers to integration of organizations
Plan
Source
Make
Deliver
Return
Uncertainty is inherent to every supply chain
Travel times
Breakdowns of machines and vehicles
Weather, natural catastrophe, war
Local politics, labor conditions, border issues
Barriers to integration of organizations
Getting top management on board
Dealing with trade-offs
Small businesses
Variability and uncertainty
Long lead times

18. The Importance of Supply Chain Management
Dealing with uncertain environments – matching supply and demand
Shorter product life cycles of high-technology products
Less opportunity to accumulate historical data on customer demand
Wide choice of competing products makes it difficult to predict demand
The growth of technologies such as the Internet enable greater collaboration between supply chain trading partners
If you don’t do it, your competitor will
Major buyers such as Wal-Mart demand a level of “supply chain maturity” of its suppliers
Availability of SCM technologies on the market
Firms have access to multiple products (e.g., SAP, Baan, Oracle, JD Edwards) with which to integrate internal processes
Boeing announced a $2.6 billion write-off in 1997 due to “raw materials shortages, internal and supplier parts shortages and productivity inefficiencies”
U.S Surgical Corporation announced a $22 million loss in 1993 due to “larger than anticipated inventories on the shelves of hospitals”
IBM sold out its supply of its new Aptiva PC in 1994 costing it millions in potential revenue
Hewlett-Packard and Dell found it difficult to obtain important components for its PC’s from Taiwanese suppliers in 1999 due to a massive earthquake
U.S. firms spent $898 billion (10% of GDP) on supply-chain related activities in 1998

19. Supply Chain Management Operations Strategies
STRATEGY
WHEN TO CHOOSE
BENEFITS
Make to Stock
standardized products, relatively predictable demand
Low manufacturing costs; meet customer demands quickly
Make to Order
customized products, many variations
Customization; reduced inventory; improved service levels
Configure to Order
many variations on finished product; infrequent demand
Low inventory levels; wide range of product offerings; simplified planning
Engineer to Order
complex products, unique customer specifications
Enables response to specific customer requirements
Source: Simchi-Levi

20. Benefits of Supply Chain Management
Lower inventories
Higher productivity
Greater agility
Shorter lead times
Higher profits
Greater customer loyalty

21. Strategy Formulation In the Supply Chain

22. There are two major step for strategy development in the SCM.
In the first step, managers should prepare the organization for move toward apply SCM strategically.
The second Step is related to the developing strategies and encompassed the following cases:

23. Preliminary steps in SCM strategy development
Step 1 – Energize the Organization
Establishment of SCM and e-Business educational courses.
Ensure top management that supply chain and e-Business strategies are integrated.
Pursue the executive team to act as a sponsor.
Enhance the ways in which people work.
Step 2 – Enterprise Vision
Defining the nature of the competitive competencies possessed within the current infrastructure and outside the supply chain network.

24. Step 3 – Supply Chain Value Assessment
Identify and then prioritize which supply chain values should be undertaken that would provide the greatest enterprise and trading partner benefits.
Focused on improving core business functions and sustaining the competitive advantages they drive.
Step 4 – Opportunity identification
Provide the collaborative with a map of possible choices for the application of SCM strategies.
Detailing and prioritizing the possible supply chain solution and alternatives

25. Step 5 – Strategy Decision Focus on expected advantages whether on:
automating and integrating processes
reducing costs
increasing the flow of information through the supply chain
to amplify existing market
realize new ways of providing value to customer

26. Developing the SCM strategy
Constructing the Business Value Proposition
An effective value proposition must be ready to respond to three possible service values expected by customer:
Super Service (speed and reliable delivery)
Variety of Product and Service solutions
Mass Customization

27. Defining the Value Portfolio
The following process development need to be structured to support the business value proposition:
Design (product and services)
Effective cost management (able to squeeze the time it takes from idea conception to sales)
Services (accompanied with a matrix of value added services)
Quality (standard dimensions of performance and reliability)
Structuring the Scope of Collaboration
Decide the scope of the firm’s processes and activities and level of collaboration with trading partners to supply missing resources and competencies.

28. Ensuring Effective Resource Management
The enterprise’s resources can be divided into three major areas:
Human knowledge (creation of products, technologies, systems, processes and relationships)
The capital invested in physical assets (warehouses, offices, information systems, and transportation equipment)
The value found in physical assets and human knowledge of customers, suppliers, and business partners (synchronized delivery and production, outsourcing, and creating collaborative solutions)
SCM Implementation
Puts the new strategies, processes and systems to work according to the project plan in SCM strategy report.

29. Pursuing Growth Management
Structuring a set of meaningful and focused performance measurements that allow corporate planners to gauge the effectiveness of their supply chain solutions.
Reviews business context, strategies and current supply chain
Identify whether current setup is helping or hurting your business and to determine how to improve it.

30. Distribution and Warehouse Management

31. Distribution Often called logistics.
Movement of materials, services, cash, and information in a supply chain.
Two types of logistics:
Forward logistics
Reverse logistics

32. Distribution (cont…)
Forward  Raw materials, parts and finished goods flowing from suppliers to producers, distributors and, finally, to consumers.
Reverse  Wastes, packages, and defective/obsolete products are "climbing back" the supply chain.
Goal: Recapture/create value in returned goods/to properly dispose of goods that cannot be sold.

34. Warehouse Management
Warehouse:  Commercial building for storage of goods.
Warehouse management to optimize:
Inventory
Labor
Physical Space
Time
Costs

35. Warehouse Management System
To control the movement and storage of materials within an operation and process the associated transactions.
Utilize technology (Barcode scanner, mobile computer,  Radio-frequency identification (RFID) )

36. Warehouse Management System (Cont…)
RFID: Uses radio waves to identify objects in supply chains.
RFID tag is attached to an object.
Provide unique identification, enabling businesses to identify, track, monitor, or locate practically any object in the supply chain that is within range of a tag reader.

38. Case Study
Yodobashi Camera is one of the largest Japanese retailers of electronic goods.
Challenge: Managing An Inventory Of More Than 850,000 different Items.
Solution: RFID Warehouse Management Solution From Motorola And Mighty Card.
Result:
Improved Yodobashi Camera’s efficiency and real-time stock visibility.
Dramatically reduced workloads in the warehouse.
Reduced operational costs and helped the company to move towards its ‘zero-inventory’ goal.

39. The End