Supply Chain Management PDF

Session Five Supply Chain Management in Project  BASIC C ONCEPT IN S U P P LY C H A I N  Supply chain is the process of moving goods from the customer order through the raw material stage, supply, production and distribution of products to the customers. ...

Session Five Supply Chain Management in Project  BASIC C ONCEPT IN S U P P LY C H A I N  Supply chain is the process of moving goods from the customer order through the raw material stage, supply, production and distribution of products to the customers.  Cont..  Supply chain is a network of facilities and distribution options that performs the functions of procurement of materials, transformation of these materials into intermediate and finished products, and the distribution of these finished products to customers.  Cont..  A supply chain is basically a group of independent organizations connected together through the products and services that they separately and/or jointly add value on in order to deliver them to the end consumer - becomes ever more interdependent  Project Managers must therefore understand that their businesses are only part of the supply chains that they participated and it is the supply chain that wins or loses the competition. Cont..  Cont..  The survival of any project/business today is no longer solely dependent on its own ability to compete but rather on the ability to cooperate within the supply chain.  You “sink or swim with the supply chain.” It is for this reason that gives rise to the need for supply chain management.  Cont..  What’s more practical and indeed more assured way of better managing a project/business is to managing it along with the supply chain through appropriate strategic positioning, adequate structural configuration, collaboration, integration and leadership.  Therefore, ―Business value creation is always a collective contribution from the whole involved supply chain.‖  T H E S U P P LY C HAIN M O D E L ( PROJECT )  One can imagine a supply chain as something resembles a ―chain, in which the ―links are the participating companies that are inter-connected in the value adding process.  Cont..  In Supply Chain there is:- Value Delivery/Chain (Upstream) and Demand Chain (Downstream).  T H E O B J EC T I V E OF A S UPPLY C HAIN  The objective of every supply chain should be to maximize the overall value generated.  The value (also known as supply chain surplus) a supply chain generates is the difference between what the value of the final product is to the customer and the costs the supply chain incurs in filling the customer’s request.  Participants in the supply chain  Projects - Producers or manufacturers are organizations that make a product.  Distributors are companies that take inventory in bulk from producers and deliver a bundle of related product lines to customers. Distributors are also known as wholesalers.  Retailers: Retailers stock inventory and sell in smaller quantities to the general public.  Customers: Customers or consumers are any organization that purchases and uses a product.  Service providers: organizations that provide services to producers, distributors, retailers, and customers.  Cont..  In its simplest form, a supply chain is composed of a company and the suppliers and customers of that company. Cont..  MODEL OF S U P P LY C H A I N O PERATIONS  The Supply Chain Operations Reference – model (SCOR) has been developed and endorsed by the Supply–Chain Council (SCC) as the cross-industry standard for supply chain management.  It is a management tool used to address, improve, and communicate supply chain management decisions within a company and with suppliers and customers of a company.  The model describes the business processes required to satisfy a customer’s demands. It also helps to explain the processes along the entire supply chain and provides a basis for how to improve those processes  Cont..  The model integrates business concepts of process re- engineering, benchmarking, and measurement into its framework.  The simplified model identifies four categories of operations: plan, source, make, and deliver. Cont..  Cont.. 1. Plan  This refers to all the operations needed to plan and organize the operations in the other three categories. 2. Source  Operations in this category include the activities necessary to acquire the inputs to create products or services.  Cont.. 3. Make  This category includes the operations required to develop and build the products and services that a supply chain provides. 4. Deliver  These operations encompass the activities that are part of receiving customer orders and delivering products to customers.  I N T R I N S I C F LO W S O F A S U P P LY C H A I N 1. Material Flow: from the raw materials at the beginning of the supply chain to the finished products at the end of the supply chain. 2. Information Flow: All supply chains have and make use of information flows. Throughout a supply chain there are multitude of information flows such as demand information flow, forecasting information flow, production and scheduling information flows …etc 3. Finance Flow: For any supply chain, there is only one single source of such finance flow – the end-consumer. This understanding of single source of finance has led to a concept of ―single entity‖ perspective of a supply chain, which is a very useful foundation for supply chain integration and collaboration.  Cont.. 4. Commercial flow: All supply chain represents a transactional commercial flow. This means that the material flow that run through the supply chain changes its ownership from one company to another, from supplier to buyer.  DRIVERS OF SUPPLY CHAIN ( H OW T H E S U P P LY C H A I N W ORKS )  Supply chain capabilities are guided by the decisions you make regarding the five supply chain drivers. Each of these drivers can be developed and managed to emphasize responsiveness or efficiency depending on changing business requirements.  Companies in any supply chain must make decisions individually and collectively regarding their actions in five areas.  Cont.. 1. Production— ⚫ What products does the market want? ⚫ How much of which products should be produced and by when? This activity includes the creation of master production schedules that take into account plant capacities, workload balancing, quality control, and equipment maintenance. Can be very responsive by building factories that have a lot of excess capacity and use flexible manufacturing techniques to produce a wide range of items.  Cont.. 2. Inventory— ⚫ What inventory should be stocked at each stage in a supply chain? ⚫ How much inventory should be held as raw materials, semi finished, or finished goods? The primary purpose of inventory is to act as a safeguard against uncertainty in the supply chain. However, holding inventory can be expensive, so what are the optimal inventory levels and reorder points? – Responsiveness can be achieved.  Cont.. 3. Location—  Where should facilities for production and inventory storage be located?  Where are the most cost efficient locations for production and for storage of inventory?  Should existing facilities be used or new ones built? Once these decisions are made they determine the possible paths available for product to flow through for delivery to the final consumer. A location decision that emphasizes responsiveness would be one where a company establishes many locations that are close to its customer base.  Cont.. 4. Transportation—  How should inventory be moved from one supply chain location to another?  When is it better to use which mode of transportation?: Air-freight, truck delivery, shipping by sea or rail …etc. Responsiveness can be achieved by a transportation mode that is fast and flexible  Cont.. 5. Information—  How much data should be collected and how much information should be shared?  Timely and accurate information holds the promise of better coordination and better decision making. With good information, people can make effective decisions about what to produce and how much, about where to locate inventory, and how best to transport it.  The sum of these decisions will define the capabilities and effectiveness of a company’s supply chain which ultimately make the project successful.  S U P P LY C H A I N P R OJ E C T MANAGEMENT  Supply chain Project management is: a process that allows you to coordinate resources and activities in order to deliver a defined goal within a set timeframe, budget and scope.  ―Managing supply and demand, sourcing raw materials and parts, manufacturing and assembly, warehousing and inventory tracking, order entry and order management, distribution across all channels, and delivery to the customer‖ Cont..  Cont..  Therefore, Supply chain management is the coordination of production, inventory, location, transportation and information among participants in a supply chain.  Supply chain management involves managerial decision making across strategic, tactic and operational levels.  Supply chain management involves coordinating activities across the supply chain. OLD VERSUS NEW SUPPLY CHAIN MANAGEMENT – FOR PROJECT  Vertically integrated companies serving slow- moving mass markets once attempted to own much of their supply chains – Vertical Integration  Today’s fast moving markets require more flexible and responsive supply chains – Virtual Integration Cont.. A LI G NI NG THE S U P P LY C H A I N W ITH B U S I N E S S S TRATEGY  A company whose supply chain allows it to more efficiently meet the needs of its customers will gain market share at the expense of other companies in that market and also will be more profitable.  There are three steps to use in aligning supply chain with business strategy.  Cont.. 1. Understand the Markets the Company Serves – Customer Requirement  Quantities of the product needed in each lot  Response time that customers are willing to tolerate  Variety of products needed  Service level required  Price of the product  Desired rate of innovation in the product  Cont.. 2. Define Core Competencies of the Company  Define the role that the company plays or wants to play in these supply chains.  What kind of supply chain participant is the company? Is the company a producer, a distributor, a retailer, or a service provider?  What does your company do to enable the supply chains that it is part of?  What are the core competencies of your company?  How does your company make money?  Cont.. 3. Develop Needed Supply C h a i n Capabilities Once what kind of markets the company serves known and the role the company does or will play in the supply chains of these markets, then take this last step, which is to develop the supply chain capabilities needed to support the roles the company plays. This development is guided by the decisions made about the five supply chain drivers. Each drivers can be developed and managed to emphasize responsiveness or efficiency depending on the project requirements. E XAMPLE  P R OJ E C T MANAGE ME NT COMPETENCY DEVELOPMENT FRAMEWORK Cont.. Thank you