Supply Chain Management

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Operations Management UTCC

Supply Chain Management

11-1

อาจารย์ ดร.อัศวิณ ปสุธรรม Email: [email protected]

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Supply Chain

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the sequence of organizations (their facilities, functions, and activities)

that are involved in producing and delivering a product or service

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Facilities

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• Warehouses

• Factories

• Processing centers

• Distribution centers

• Retail outlets

• Offices

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Functions and Activities

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• Forecasting

• Purchasing

• Inventory management

• Information management

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Functions and Activities

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• Quality assurance

• Scheduling

• Production and delivery

• Customer service

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Typical Supply Chains

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Purchasing

Receiving Storage Operations Storage

Production Distribution

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Typical Manufacturing Supply Chain

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Supplier Supplier Supplier

Storage

}

^Mfg. ^Storage ^Dist. ^Retailer ^Customer

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Typical Service Supply Chain

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Supplier

Storage

}

^Service ^Customer

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Value Chains

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• SC are sometimes referred to as value chains.

• The concept that value is added as goods and services progress through the chain.

• Comprise of separate business organizations rather than just a single organization

• Two components for each organization:

supply component and demand component

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Value Chains

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Need for Supply Chain Management

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1. Improve operations

2. Increasing levels of outsourcing 3. Increasing transportation costs 4. Competitive pressures

5. Increasing globalization

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Need for Supply Chain Management

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6. Increasing importance of e-business 7. Complexity of supply chains

8. Manage inventories 9. Green supply chains

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Bullwhip Effect

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Final Customer Initial

Supplier

Demand

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Benefits of Supply Chain Management

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• Lower inventories

• Higher productivity

• Greater agility

• Shorter lead times

• Higher profits

• Greater customer loyalty

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Elements of Supply Chain Management

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Element Typical Issues

Customers Determining what customers want

Forecasting Predicting quantity and timing of demand

Design Incorporating customer wants, manufacturing, and time Processing Controlling quality, scheduling work

Inventory Meeting demand while managing inventory costs Purchasing Evaluating suppliers and supporting operations Suppliers Monitoring supplier quality, delivery, and relations Location Determining location of facilities

Logistics Deciding how to best move and store materials

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Logistics

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• The movement of materials, service, cash, and information in a supply chain

• Include movement within a facility,

incoming and outgoing shipments, and information flow throughout the supply chain

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Movement within a Facility

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Distribution Requirements Planning

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• A system for inventory management and distribution planning

• Extends the concepts of MRP

• Uses DRP to plan and coordinate

transportation, warehousing, workers, equipment, and financial flows

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Reverse Logistics

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• The backward flow of goods returned to the supply chain

• Processing returned goods includes sorting, examining/testing, restocking, repairing,

reconditioning, recycling, and disposing.

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Key Elements of Managing Returns

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• Gatekeeping

- Screening goods to prevent incorrect acceptance of goods

• Avoidance

- Finding ways to minimize the number of items that are returned

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e-Business

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• The use of electronic technology to facilitate business transactions

• Applications include

- Internet buying and selling - E-mail

- Order and shipment tracking - Electronic data interchange

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Advantages of e-Business

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• Have a global presence

• Improve competitiveness and quality

• Analyze customer interests

• Collect detailed information

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Advantages of e-Business

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• Shorten supply chain response times

• Realize substantial cost savings

• Create virtual companies

• Level the playing field for small companies

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Disadvantages of e-Business

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• Customer expectations

- Order quickly expects fast delivery

• Order fulfillment

- Order rate often exceeds ability to fulfill it

• Inventory holding

- Outsourcing loss of control - Internal holding costs

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Effective Supply Chain

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• Requires linking the market, distribution channels, processing, and suppliers

• Should enable members to:

- Share forecasts

- Determine the status of orders in real time - Access inventory data of partners

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Requirements for Successful Supply Chain

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• Trust among trading partners

• Effective communications

• Supply chain visibility

• Event-management capability

• Performance metrics

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RFID Technology

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• Used to track goods in supply chain

• RFID tag attached to object

• Similar to bar codes but uses radio frequency to transmit product information to receiver

• RFID eliminates need for manual counting and bar code scanning

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Creating an Effective Supply Chain

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1. Develop strategic objectives and tactics

2. Integrate and coordinate activities in the internal supply chain

3. Coordinate activities with suppliers and customers 4. Coordinate planning and execution across the

supply chain

5. Form strategic partnerships

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Supply Chain Performance Drivers

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1. Quality 2. Cost

3. Flexibility 4. Velocity

5. Customer service

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Velocity

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• Inventory velocity

- The rate at which inventory (material) goes through the supply chain

• Information velocity

- The rate at which information is communicated in a supply chain

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Challenges

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• Barriers to integration of organizations

• Getting top management on board

• Dealing with trade-offs

• Small businesses

• Variability and uncertainty

• Long lead times

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Purchasing

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• Responsible for obtaining the materials, parts, and supplies and services needed to produce a product or provide a service

• Purchasing cycle begins with a request for purchase and ends with notification of

shipment received in satisfactory condition.

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Duties of Purchasing

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• Identifying sources of supply

• Negotiating contracts

• Maintaining a database of suppliers

• Obtaining goods and services

• Managing supplies

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Purchasing Interfaces

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Purchasing Legal

Accounting Operations

Data processing Design

Receiving Suppliers

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Centralized vs. Decentralized Purchasing

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• Centralized purchasing

- Purchasing is handled by one department

• Decentralized purchasing

- Individual departments or separate locations handle their own purchasing requirements

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Suppliers Management

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• Choosing suppliers

• Evaluating sources of supply

• Supplier audits

• Supplier certification

• Supplier relationships

• Supplier partnerships