Supply Chain Management
Lecture 5
Process Design Process Flow Chart
Introduction Little’s law Pareto’s law Self-managed Learning
SCM: Learning Outcomes
• Appreciate the importance of taking a
total supply network perspective;
• Analyse the concepts of vertical
integration versus outsourcing;
• Apply location analysis;
• Understand how supply chains are
planned and controlled;
Process Design Process Flow Chart
Introduction Little’s law Pareto’s law Self-managed Learning
SCM in practice
• “Supply chain versus supply chain”
world
Dell
Process Design Process Flow Chart
Introduction
Little’s law Pareto’s law Self-managed
Learning
Extent – Narrow process span Extent – Wide process span Direction – Upstream vertical integration Direction – Downstream vertical integration Wholesaler Component maker
Assembly
operation
RetailerBalance — should excess capacity be used to supply other companies? Raw
material suppliers
Decision of integration: Direction, extent and
balance of vertical integration
Process Design Process Flow Chart
Introduction Little’s law Pareto’s law Self-managed Learning Is activity of strategic importance
Explore keeping this activity in-house Yes Explore outsourcing this activity No Yes Does company have specialized knowledge No Is company’s operations performance superior? Yes No Is significant operations performance improvement likely? Yes No
The decision logic of outsourcing
Process Design Process Flow Chart
Introduction Little’s law Pareto’s law Self-managed Learning
The
operation
Supply-side factors
which vary to
influence costs as
location varies.
For example:
•
labour costs
•
land costs
•
energy costs
•
transportation
costs
•
community factors
Demand-side factors
which vary to
influence customer
service/revenue
as location varies.
For example:
•
labour skills
•
suitability of site
•
Image
•
convenience for
customers
Supply-side and demand-side factors in
location decisions
Process Design Process Flow Chart
Introduction Little’s law Pareto’s law Self-managed Learning
Labour
Transport
Fabric
Supplies
Customs duties
15.55€
France
14.33€
Portugal
11.43€
Turkey
11.43€
Thailand
11.13€
Morocco
10.82€
Romania
10.37€
China
9.60€
Myanmar
Cost in euros
2
4
6
8
10
12
14
16
0
The cost breakdown of shirt
• Manufactured in various countries and
sold in France
Process Design Process Flow Chart
Introduction
Little’s law Pareto’s law Self-managed
Learning
• Products and services
• New products and services • Delivery information
• Payment request/Credit.
‘Downstream’ flow of products and services for
customer
Fulfilment
‘Upstream’ flow of customer
Requirements
• Long-term plans and requirements • Market research information
• Individual orders • Payment
• Potential new products and services. Flow between processes Consumer Flow between processes Flow between processes
Operation 1 Operation 2 Operation 3
Process Design Process Flow Chart
Introduction Little’s law Pareto’s law Self-managed Learning The operation Purchasing function Suppliers Request for products and services Demand from customers Supply to customers Request for quotations Prepare purchase order Prepare quotation for specification, price, delivery, etc. Requests Select supplier(s) Quotations Produce products and services Order Receive products and services Deliver Liaison between purchasing and the operation
The purchasing function
Process Design Process Flow Chart
Introduction Little’s law Pareto’s law Self-managed Learning
Business to business (B2B)
•
Most common, all but the
last link in the supply chain
•
E-commerce examples:
– EDI networks – Business informationexchanges.
Business to consumer (B2C)
•
Retail operations
•
Catalogue operations,
etc.
•
E-commerce examples:
–Internet retailers –Amazon.com, etc.Consumer to consumer
(C2C) or ‘peer to peer (P2P)
•
Consumers ‘offer’,
business responds
•
E-commerce examples:
–
File sharing networks (legal & illegal)–Napster
•
Trading ‘swap’ and
auction transactions
•
E-commerce examples:
– Specialist ‘collector’ sites
– Ebay.com, etc.
Consumer to business (C2B)
Business
Consumer
To…
Business
Consumer
From…
Process Design Process Flow Chart
Introduction Little’s law Pareto’s law Self-managed Learning ‘Partnership’ supply management
The
ch
ar
act
er of
in
ternal
oper
ations activ
ity
Do nothing Do ev er ythi ng import an t Do ev er ythi ng Transactional – many suppliers Close – few suppliersType of inter-firm contact
Virtual spot trading Long-term virtual operation Vertically integrated operation Traditional supply management
Process Design Process Flow Chart
Introduction Little’s law Pareto’s law Self-managed Learning Nature of demand
Functional products Innovative products
Predictable – Unpredictable Few changes – Many changes
Low variety – High variety Price stable – Price markdowns Long lead-times – Short lead-times
Low margin – High margins
Supp ly c hain object iv es R es pons iv e Ef fic ien t Fas t resp onse -Low c os t Low u tiliz ation -High u tiliz ation Dep lo yed in ven tor y -Min im u m in ven tor y Fle xible su p p lier s -Low cos t su p p lier s Mismatch Mismatch Agile supply chain management Lean supply chain management
Fisher’s (1997) matrix
Process Design Process Flow Chart
Introduction Little’s law Pareto’s law Self-managed Learning Supplier Manufacturer Depot Outlets Depot
Agility
Customer responsive supply
P roducts In forma ti on
Lean versus agile
Supplier Manufacturer Depot Outlets Depot Products Information
Lean
Process Design Process Flow Chart
Introduction Little’s law Pareto’s law Self-managed Learning
Self-managed learning
Slack et al 2011 (white cover)
• Chapter 7 : Supply Network
Management
• Chapter 9: Inventory Planning
and Control
Slack et al 2010 (black cover):
• Read Chapter 6. Supply
Network Design and Chapter
13. Supply Chain Planning and
Control
• Complete the workshop task
(if not complete in the class)
• Continue working on your
assignment
Self-managed learning
Process Design Process Flow Chart
Introduction Little’s law Pareto’s law Self-managed Learning
