HM 313 unit 1.pdf

HM 313 –Introduction to (SCM) Supply Chain Management  SCM Defined as the management of flow of products and services which begins from the origin of products and ends at the product’s consumption. It also comprises movement and storage of raw mate...

HM 313 –Introduction to (SCM) Supply Chain Management  SCM Defined as the management of flow of products and services which begins from the origin of products and ends at the product’s consumption. It also comprises movement and storage of raw materials that are involved in work in progress , inventory and fully furnished goods  A full variety of processes such as system management, operations and assembly, procurement, production plan, , order processing, inventory management, transport, warehousing and customer support are therefore included in the supply chain.  The main objective of supply chain management is to monitor and relate production, distribution, and shipment of products and services. This can be done by companies with a very good and tight hold over internal inventories, production, distribution, internal productions and sales.  Importance of SCM SCM is important since it can help meet many company goals. For example, it can increase product quality by regulating production processes, minimizing the possibility of recalls and litigation while helping to create a strong customer brand. At the same time, by avoiding expensive shortages or cycles of product oversupply, restrictions over shipping procedures will enhance customer support.  As collaboration has increased, additional data from supply chain partners has allowed companies to use advanced analytic tool to further improve results. Examples includes: 1. Identifying potential problem before they occur. 2. Optimizing price dynamically 3. Improving the allocation of available to promise inventory  SCM- Advantages The key benefits of supply chain management Assist companies in adapting to the challenges of globalization, economic upheaval, expanding consumer expectations and related differences. Assists companies in minimizing waste, driving out costs, and achieving efficiencies throughout the supply chain process.  Assist in achieving shipping of right products to the right place at the right time. Creates better delivery mechanisms for products and services in demand with minimum delay. Develops better customer relationship and service Enhances inventory management, supporting the successful execution of just-in-time stock models.  Improvises productivity and business function Minimizes direct and indirect costs Minimizes warehouse and transportation costs  The overall goal of supply chain management The goal of SCM software is to improve supply chain performance. Timely and accurate supply chain information allows manufacturers to make and ship only as much product as can be sold.  Three main goals of supply chain management Improving efficiency Improving quality Improving stability  Two Other Formal Definitions The design and management of seamless, value-added process across organizational boundaries to meet the real needs of the end customer Institute for Supply Management 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 The Supply Chain Council  SCM Definition Material Flow Converter Supplier Retailer Distributor Source Converter Consumers Distributor End-User Supplier Value-Added Services Funds/Demand Flow Information Flow Reuse/Maintenance/After Sales Service Flow  Evolution of Supply Chain Management Further Refinement of SCM Capabilities SCM Formation/ Extensions JIT, TQM, BPR, Alliances Inventory Management/Cost Optimization Traditional Mass Manufacturing 1950s 1960s 1970s 1980s 1990s 2000s Beyond  What Is the Goal of Supply Chain Management?. Supply chain management is concerned with the efficient integration of suppliers, factories, warehouses and stores so that merchandise is produced and distributed: In the right quantities To the right locations At the right time In order to Minimize total system cost Satisfy customer service requirements  Importance of Supply Chain Management * Firms have discovered value-enhancing and long term benefits: * Who benefits most? Firms with: - Large inventories - Large number of suppliers - Complex products - Customers with large purchasing budgets * Benefits - Lower purchasing/inventory costs, higher quality/customer service Importance of Supply Chain Mgt. –Cont. Firms practicing Supply Chain Management: 1. Start with key suppliers 2. Move on to other suppliers, customers, and shippers 3. Integrate second tier suppliers and customers (second tier refers to the customer’s customers and the supplier’s suppliers)  Importance of Supply Chain Mgt. –Cont. * Cost savings and better coordination of resources are reasons to employ Supply Chain Management -- Bullwhip Effect- the magnification of safety stocks and costs based on separate forecasts and uncoordinated planning and sharing of information along the supply chain.  Importance of Supply Chain Mgt. –Cont. *Reducing the bullwhip effect occurs through: -- Process integration- Interdependent activities can lead to improved quality, reduced cycle time, better production methods, better forecasts, less safety stock, etc.  Important Elements of SCM Purchasing- Supplier alliances, supplier management, strategic sourcing Operations- Demand management, MRP, ERP, JIT, TQM Distribution- Transportation management, customer relationship management, network design, service response logistics Integration- Coordination/Integration activities, global integration problems, performance measurement  Important Elements of SCM-Cont. Purchasing: Long term relationships Supplier management - improved performance through- - Supplier evaluation (determining supplier capabilities and performance) - Supplier certification (third party or internal certification to assure product quality and service compliance) Strategic partnerships- successful and trusting, long-term relationships with top-performing suppliers  Important Elements of Supply Chain Management-Cont. Operations: -- Demand management- match demand to available capacity -- Linking buyers & suppliers via MRP and ERP systems -- Use JIT to improve the “pull” of materials to reduce inventory levels -- Employ TQM to improve quality compliance among buyers and suppliers  Important Elements of Supply Chain Management-Cont. Distribution: -- Transportation management- tradeoff decisions between cost & timing of delivery/customer service via trucks, rail, water & air -- Customer relationship management- strategies to ensure deliveries, resolve complaints, improve communications, & determine service requirements -- Network design- creating distribution networks based on tradeoff decisions between cost & sophistication of distribution system  Important Elements of Supply Chain Management-Cont. Integration: -- Supply Chain Integration- when supply chain participants work for common goals. Requires intrafirm functional integration. Based on efforts to change attitudes & adversarial relationships -- Global Supply Chains- advantages that accrue from sourcing from larger global market e.g., lower cost & higher quality suppliers. May involve operating exposure, which is risk found in foreign settings -- Supply Chain Performance Measurement- Crucial for firms to know if procedures are working  Key benefits of SCM Assists companies in adapting to the challenges of globalization, economic upheaval, expanding consumer expectations, related differences. Assists companies in minimizing waste, driving out costs and achieving efficiencies throughout the supply chain process Assists in achieving shipping of right products to the right place at the right time  Creates better delivery mechanisms for products and services in demand with minimum delay Develops better customer relationships and service Enhances inventory management, supporting the successful execution of just in time stock models Improvises productivity and business functions Minimizes direct and indirect costs Minimizes warehouse and transportation costs  Three main goal of SCM Improving Efficiency Improving Quality Improving stability  Six components of SCM Planning Sourcing Making Delivering Returning Enabling  Competitive and supply chain strategies Competitive strategy defines the set of customer needs a firm seeks to satisfy through its products and services Product development strategy specifies the portfolio of new products that the company will try to develop. Marketing and sales strategy specifies how the market will be segmented and product positioned, priced, and promoted.  Competitive and supply chain strategies Supply chain strategy determines the nature of material procurement, transportation of materials, manufacture of product or creation of service, distribution of product. All functional strategies must support one another and the competitive strategy.  Supply Chain Management in the Hospitality Industry In the service industry, the hospitality industry is a wide group of industries including accommodation, restaurant, event planning, theme parks, shipping, cruise ship and additional fields within the tourism industry. The supply chain is an important element within the hotel and catering industry.  The supply chain is an important element within the hotel and catering industry. For staff in this industry, it is crucial to build steady relationships with suppliers and work with a good ordering system in order to improve the service level towards customers. The creation of supply chain leads to a better understanding of the whole chain and thus implementation of common standards becomes easier.