IE 158 Module 1A (2024) PDF

IE 158 Module 1 Concepts and Principles of Supply Chain Engineering Engr. Alan Marco Mercado | Engr. Micah M. Punzalan UPLB Department of Industrial Engineering Learning Objectives 1. Define a supply chain, its components, and the concept of Supply Chain Engineering 2. Explain the differen...

IE 158 Module 1 Concepts and Principles of Supply Chain Engineering Engr. Alan Marco Mercado | Engr. Micah M. Punzalan UPLB Department of Industrial Engineering Learning Objectives 1. Define a supply chain, its components, and the concept of Supply Chain Engineering 2. Explain the difference between Supply Chain Management and Supply Chain engineering 3. Identify the different supply chain drivers and discuss their influence in the supply chain 4. Develop skills to visualize an organization's supply chain network Module 1A Introduction to Supply Chain Engineering Module 1B The Supply Chain Design Framework, Drivers, and Flows Module 1C Supply Chain Design and Mapping Module 1A Introduction to Supply Chain Engineering  What is a Supply Chain? The Supply Chain A network of organizations and activities involved in the creation and delivery of a product and/or service from raw materials to the consumer. - Association for Supply Chain Management (ASCM) Suppliers Manufacturer Distributors Retailers Consumers (end-users) Figure 1. Example of a Basic Supply Chain Network It can be viewed as a combination of different components that function to complete different processes involved in bringing products from suppliers to consumers.  Suppliers Manufacturer Distributors Retailers Consumers The Supply Chain encompass the various elements involved in the production and distribution of goods from raw materials to end consumers. These Components include the following: The Supply Chain Components Suppliers Manufacturers Distributors Retailers Consumers Role: provide raw materials, components, or services needed for production. In the supply chain, suppliers are determined by their tier level, where Tier 1 suppliers are known as primary suppliers who supply the manufacturers directly. A higher tier level indicates that a supplier is located further upstream in the supply chain. Raw material suppliers get raw materials from extractive industries and Suppliers provide the necessary pre-processing before proceeding to lower tier suppliers and/or manufacturing. The Supply Chain Components Suppliers Manufacturers Distributors Retailers Consumers Role: transforms raw materials into finished products. In the supply chain, there can also be multiple facilities or tiers of manufacturers, depending on the complexity of the product. The tier numbering also follows the same format as suppliers, where higher tier numbers mean that they are found further upstream in the Manufacturers supply chain. The Supply Chain Components Suppliers Manufacturers Distributors Retailers Consumers Role: provides a variety of logistics services to help manage the movement and storage of goods. Among the sub roles of distributors are the following 1) Warehousing – managing the storage of products 2) Transportation – facilitates the movement of products 3) Distribution – coordinates the delivery of products to customers and other supply chain components 4) Freight Forwarding – organizing the shipment of goods from origin Distributors to destination points within the supply chain. The Supply Chain Components Suppliers Manufacturers Distributors Retailers Consumers Role: facilitate the sales and distribution of products directly to customers. Since they interact directly with customers, they also handle the following sub roles: 1) Customer Service - provide after-sales support, handle returns and exchanges, and address customer inquiries and complaints 2) Marketing and Promotion 3) Merchandising – strategic planning and execution of product presentation Retailers 4) Product Assortment – the ability to provide a wide range and variety of products and services in one facility, location, or interface. The Supply Chain Components Suppliers Manufacturers Distributors Retailers Consumers Role: consumers are an integral part of the supply chain since the primary goal of this network is to fulfill their needs and wants. Aside from being the primary revenue source in supply chains, consumers also help drive demand and innovation, provide valuable feedback for market intelligence, and help drive strategies for supply chain resilience and sustainability through Consumers empowerment.  The Generalized Supply Chain Network Model Raw Material Tier 2 Tier 1 Manufacturer Distributors Retailers Consumers Suppliers Suppliers Suppliers 1 1 1 2 1 1 2 2 3 1 3 4 3 4 1 2 5 2 5 4 6 2 6 7 7 5 3 3 8 6 8 Raw Material Tier 2 Tier 1 Manufacturer Distributors Retailers Consumers Suppliers Suppliers Suppliers 1 1 1 2 1 1 2 2 3 1 3 4 3 4 1 2 5 2 5 4 6 2 6 7 7 5 3 3 8 6 8 Sourcing - The process of identifying, evaluating, and selecting suppliers to obtain Supply Chain Processes raw materials, components, or services (procurement) needed for production. Raw Material Tier 2 Tier 1 Manufacturer Distributors Retailers Consumers Suppliers Suppliers Suppliers 1 1 1 2 1 1 2 2 3 1 3 4 3 4 1 2 5 2 5 4 6 2 6 7 7 5 3 3 8 6 8 Manufacturing - The production process where raw materials are transformed Supply Chain Processes into finished products through various operations and assembly. Raw Material Tier 2 Tier 1 Manufacturer Distributors Retailers Consumers Suppliers Suppliers Suppliers 1 1 1 2 1 1 2 2 3 1 3 4 3 4 1 2 5 2 5 4 6 2 6 7 7 5 3 3 8 6 8 Distribution - involves the activities and logistics necessary to move finished Supply Chain Processes products from the manufacturer or supplier to the different customers. Raw Material Tier 2 Tier 1 Manufacturer Distributors Retailers Consumers Suppliers Suppliers Suppliers 1 1 1 2 1 1 2 2 3 1 3 4 3 4 1 2 5 2 5 4 6 2 6 7 7 5 3 3 8 6 8 Retail Operations - The sale of finished products directly to consumers through Supply Chain Processes physical stores or online platforms; includes after sales and customer relations.  Supply Chain for Goods Supply Chain for a Personal Computer Metal Suppliers KEY CHARACTERISTICS Component 1 Supplier Plastic Computer 1. Tangible products Distributor Electronics Consumer Suppliers Manufacturer Shop 2. Segregated Component 2 Supplier Manufacturing and Semiconductor Retail are mostly done Suppliers in different facilities 3. Minimal variation within Supply Chain for Soap Oil Suppliers products 4. Requires minimal Water Suppliers interaction for the Soap Manufacturer Distributor Supermarket Consumer product to sell Modifiers & Stabilizers Suppliers Packaging Supplier Supply Chain for Services KEY CHARACTERISTICS Raw Material Supply Chain for a Vehicle Repair Service Supplier Spare Parts Manufacturer 1. Intangible, time Component Individual dependent products Service Center Customers Suppliers 2. Products require Fleets interactions with Manpower Agency customers 3. Products can be Supply Chain for an Electrical Utility Service manufactured, Fuel Supplier distributed, and retailed in the same facility Electric Transformers Commercial Customers 4. Product quality is Electrical Utility Provider subjective, and a certain Programming Services Home Consumers level of variation is expected Manpower Agency The Objective of a Supply Chain Value Chain Supply Chain Upstream focus: includes external interactions Downstream focus: creating value in the eyes of with different components, managing costs, and the consumer & internal in nature integrative in nature. Focus: optimize each internal process to add Focus: ensure the efficient and cost-effective flow value to the product and enhance competitive of materials and products from suppliers through advantage to end consumers. Metric: Consumer Surplus Metric: Supply Chain Surplus (Equation 1) Consumer Surplus = Customer Value - Price ECONOMIC BENEFIT! (Equation 2) Supply Chain Surplus = Customer Value – Supply Chain Cost SC PROFITABILITY! Raw Material Tier 2 Tier 1 Manufacturer Distributors Retailers Consumers Suppliers Suppliers Suppliers 1 1 1 2 1 1 2 2 3 1 3 4 3 4 1 2 5 2 5 4 6 2 6 7 7 5 3 3 8 6 8 The higher the supply chain profitability, the more successful the supply chain. Supply chain General Objective success should not be measured in terms of the profits of individual components/ stages.  Supply Chain Management the design, planning, execution, control, and monitoring of supply chain activities with the objective of creating net value, building a competitive infrastructure, leveraging worldwide logistics, synchronizing supply with demand, and measuring performance globally Effective SCM benefits the entire supply chain (all components and stages) and focuses on improving supply chain surplus At its core, supply chain management ensures companies are prepared to meet demand and that products and services arrive at the right place at the right time Then what is Supply Chain Engineering? Supply Chain Engineering Supply Chain Engineering Management Solutions (SCM) (SCE) GENERAL SPECIFIC It is the application of engineering principles into the management, analysis, and optimization of different supply chain components and processes to meet the goal of increasing supply chain surplus Source: https://thesupplychainengineer.com/supply-chain-engineering-2/  From SCM to SCE Supply Chain Supply Chain Problem Engineering Solution 01 High carrying costs and stockouts due to inefficient inventory levels. Use advanced inventory management algorithms and simulations to balance inventory levels, minimize carrying costs, and reduce stockouts 02 Lack of real-time visibility into the movement of goods leading to Deploy RFID (Radio-Frequency Identification) and GPS tracking technologies to monitor the location and status of delays and disruptions. shipments in real-time. 03 High transportation costs delivery delays due to suboptimal and Use network optimization models and supply simulations to design an optimal distribution network, chain distribution network design. including warehouse locations and transportation routes.  From SCM to SCE Supply Chain Supply Chain Problem Engineering Solution 04 Inaccurate demand forecasts leading to overstocking or stockouts. Apply predictive analytics and machine learning algorithms to analyze historical sales data, market trends, and external factors to improve forecast accuracy. 05 Inefficient production scheduling causing delays and increased Utilize short term scheduling optimization algorithms and simulation techniques to create efficient production costs. schedules that minimize downtime and align with demand. Think of SCE Solutions for the problems…  IE 158 Module 1 Concepts and Principles of Supply Chain Engineering Engr. Alan Marco Mercado | Engr. Micah M. Punzalan UPLB Department of Industrial Engineering