SCM Chapter 1-20 PDF

SCM CHAPTER 1 - A supply chain is a network of suppliers, manufacturers, assemblers, supply and delivery centers, and logistics installations that perform functions such as material sourcing, processing, and shipment to buyers of those materials of an intermediate or finished product. - A su...

SCM CHAPTER 1 - A supply chain is a network of suppliers, manufacturers, assemblers, supply and delivery centers, and logistics installations that perform functions such as material sourcing, processing, and shipment to buyers of those materials of an intermediate or finished product. - A supply chain is the lineup of companies that market goods or services - All stages, directly or indirectly, involved in the fulfillment of a consumer order have a supply chain. ESSENTIAL FEATURES OF SUPPLY CHAIN MANAGEMENT 1. Integrated Behavior – (SCM) integrates stakeholder integration between the client and the provider. 2. Mutually Sharing Information – an efficient SCM exchange of information between channel participants is needed. 3. Mutually Sharing Channel Risk and Rewards – Effective SCM often includes reciprocal channel risks and incentives to have a competitive benefit. 4. Cooperation – refers to the company’s coordinated, identical, or complementary operations in an enterprising relationship in order to achieve collectively reckoned, superior results. 5. Focus on Serving Customers – all supply chain members serve consumers with the same aim and focal point for supply chain members. 6. Integration Processes - Implementing SCM requires the convergence of systems from the supply chain to production and delivery. 7. Partners to Build and Maintain Long-term Relationship – The objective of successful partnerships is to merge channel policies to reduce duplication and overlap in the search for a degree of cooperation that makes partners more efficient at lower costs. BENEFITS OF SCM 1. Builds stronger partnerships and support with clients 2. Provides better distribution processes, with less delay, for demanded goods and services 3. Increase efficiently and functions for companies 4. Lower shipping and warehouse costs 5. Eliminates costs directly and implicity 6. Supports the shipping at the right spot with the right goods 7. Enhances asset management and encourages the effective implementation of just-in-time inventory models 8. Assists businesses in responding to global dynamics, economic upheavals, growing market preferences, and associated disparities 9. Assists businesses in the supply chain to reduce duplication, eliminate risks, and achieve efficiency FUNCTIONS OF SCM 1. STRATEGIC LEVEL  Strategic network optimization involving warehouse, fulfillment center, and facilities numbers, locations and scale Strategic relationships, contact networks for crucial details, and technological enhancements such as cross-docking, exporting directly, or logistics with third parties (with vendors, dealers, and consumers) Management of inventory life cycles to optimally combine new and current goods in the supply chain and capacity management Chain operations for information technology 2. TACTICAL LEVEL Sourcing and other procurement decisions Decisions on production including the concept of contracts, schedules and plans for the operation Purchasing choices including inventory size, location and consistency The strategy of transport including pace, routes and contracting Competition benchmarking of all processes including best practices around the business Fees with milestones Customer demand and customer habits focus 3. OPERATIONAL LEVEL The coordination of the allocation of daily output for each production plant in the supply chain (minute by minute) Preparation and forecasting of demand, alignment of all customers’ needs and prediction-and provision-sharing with all suppliers  In coordination with all vendors, the supply preparation, including existing inventories and forecast demands Inbound activities including retailer transport and shipment receipt Production processes involving materials use and finished products streaming FACTORS AFFECTING SUPPLY CHAIN IN HOSPITALITY INDUSTRY 1. The hotels CUSTOMER or GUESTS referred to as “GOD”. When it comes to strict uniformity, it may be difficult at times. CUSTOMER SATISFACTION is critical in the hotel industry. 2. MANAGEMENT systems of different types, such as hotel operators, franchisees, chain hotels, and so on, are various control systems that have varied implications on the supply chain management. These factors add to the specific difficulties with assets that are often disputed and handled differently. 3. CURRENT MARKET TRENDS indicate that computerized properly management systems are utilized but solely for front office administration. CHALLENGES OF HOSPITALITY INDUSTRY RELATED TO SUPPLY CHAIN 1. Raw Material Costs. The cost of purchasing raw materials on the hotel industry is prohibitive. The vast majority of the hotel’s consumables are organic. 2. Material Ordering Costs. Individual agencies often utilize handwritten indents and transactions independently. 3. Inventory Handling. The required product forecast is very uncertain. The purchasing department stockpiles large quantities of goods and does not deliver the best items to the user departments on time. This is a common problem that leads to higher expenses. 4. Emergency Purchases. Due to lack of preparation, emergency purchases are the norm rather than the exception. Purchases are made on the spur of the moment at the request of user departments. SCM CHAPTER 2 PLAN: Categories of Supply Chain Operations By routine or continuous processes, a supply chain carries out the job. These are processes at the center of every supply chain called “nuts and pins”. To explain these operations at a high level and how they are linked, the simplified model identifies four types of operations: 1. Plan – demand forecasting, product pricing, inventory management 2. Source – procurement, credit and collections 3. Make – product design, production scheduling, facility management 4. Deliver – order management, delivery scheduling, process returns The PREPARATION PHASE is the beginning of the supply chain operation. We need to build a road map or approach to deal with how goods and services meet consumers’ requirements and needs. In this phase, the key goal of the program will be the development of a method to maximize benefit. A policy must be developed by organizations to manage all the tools necessary to design goods and deliver services. The core focus in supply chain management is on the preparation and development of several indicators. The PLANNING PHASE applies to all activities required in the other three categories to plan and coordinate the operations. In this group, we will examine three operations in some detail: forecasting, aggregate planning, product pricing planning, and inventory management plan. FORECASTING Decisions of the supply chain management are dependent upon estimates defining which goods are required, what quantity, and when these products are required. The demand prediction is the foundation of any business toward proper planning to satisfy consumer demand. Both predictions are made up of four primary factors to assess the market conditions. 1. Supply. This refers to the total demand for goods on the market. 2. Demand. This refers to the amount of product available. 3. Product Characteristics. This refers to the product features that influence demand. 4. Competitive Environment. This refers to the actions of product suppliers in the market. When making predictions, there are four simple approaches to use. The bulk of predictions are made using variations of the four processes. Listed below are the methods: 1. Qualitative. It is founded on an individual’s intuition or beliefs 2. Casual. It assumes that there are many conditions in connection with demand. 3. Time Series. It is based on trends of traditional demand. 4. Simulation. It combines cause and time series procedures. AGGREGATE PLANNING The next step is to establish an overall supply strategy to satisfy the demand for the commodity, as demand prediction is established. In designing an aggregate supply plan, three fundamental approaches are required: 1. Use production capacity to meet demand Align production capacity to satisfy demand by adding/removing production capacity to use 100% of its capacity. 2. Use varying levels of total production capacity As appropriate, intend to retain increased production capacity as required to satisfy projected demand.  3. Use inventory and work-in-progress inventory Develop new inventories to support the projected potential demand to meet demand. PRODUCT PRICING PLANNING The use of prices can affect demand over time in businesses and whole supply chains. It tends to increase sales or gross profit depending on how the premium is used. Marketing and salespeople typically want to make price choices to boost demand in the peak seasons. PEAK cycles, where companies can differ rapidly between workforce and capability SLOW times, where businesses cannot shift staff and performance easily INVENTORY MANAGEMENT PLAN Inventory management is a group of strategies that are used to control inventory levels in various supply chain organizations. The objective is to decrease inventory costs while preserving the quality levels desired by consumers. THREE KINDS OF INVENTORY PLAN  1. Cycle Inventory. The inventory is necessary for fulfilling commodity requirements during the interval between ordering the product. 2. Safety Inventory. This happens when, in expectation of potential demand, an organization supply chain with manufacture and store goods. 3. Seasonal Inventory. The volatility in supply chain must be compensated. In general, the greater the degree of uncertainties, the higher the degree of protection required. SOURCE: Categories of Supply Chain Operations The next phase is creation or procurement after planning. At this point, we concentrate primarily maintaining a close partnership with suppliers of essential raw materials. Operations in this group provide the required operations gain feedback for the production of goods or services. We are looking at two activities here. First is sourcing, which is the goods and resources purchase. The second choice, credit and collections, can simply be considered the purchase of currency. A. Procurement Traditionally, the key duties of purchasing manager are to overcome the price of possible vendors and then purchase goods from the cheapest supplier. Five Procurement Activities  1. Purchasing The regular operations related ordering items for the required products these tasks. A business buys two categories of goods: (1) direct or strategic materials used to manufacture the products it provides to its clients, and (2) indirect and maintenance, repair, and service (MRO) supplies used by the company in everyday operations. 2. Consumption Management Effective sourcing starts by recognizing the number of goods being acquired in each business unit and the whole enterprise. It must be understood how many items are purchased by where and at what cost. 3. Vendor Selection In addition to merely the price of a component of a retailer, the importance of these capacities must be considered. Just based on the strategic strategy and the operational model of the organization, the importance of product quality, service standards, fair-in-time distribution, and technical support can be calculated. 4. Contract Negotiation This is where the individual goods, pricing, and standards of service are created. Contracts to procure indirect goods are easiest negotiated where vendors are chosen at the lowest price. The most complicated agreements include arrangements for the procurement of direct facilities that follow high- quality expectations that require a high degree of operation and technological assistance. 5. Contract Management An organization has the opportunity to monitor its suppliers output and keep them responsible for meeting the quality of service negotiated in its contracts. Similarly, individuals in an enterprise need to gather information regularly about suppliers’ results. Any provider regularly falling behind standards should be informed of and asked to remedy the deficiencies. B.Credit and Collections Credit and collections are the means of obtaining the funds a business needs. The credit operation checks prospective clients to ensure that the firm is only dealing with customers that can afford their bills. The running of the collections gives the money the business has won. Three Credit and Collections Activities 1. Set Credit Policy Senior management such as the auditor, the chief financial officer, the treasurer, and the chief executive officer develop credit policies. The first phase is an analysis of the company’s debts’ results. The following move would be to set or adjust the conditions for approval of risks to satisfy the status of business claims. 2. Implement Credit and Collection Processes These operations include the implementation and operation of protocols to implement and implement the company’s credit policy. Collect payments for the goods sold by the corporation through salespeople and clients. 3. Manage Credit Risk This checks for opportunities to reduce the cost to potential buyers to sellers. Create credit systems and finance programs that meet consumer requirements. Analyze and review customer credit rating over time. SCM CHAPTER 3 MAKE: Categories of Supply Chain Operations The third stage in the supply chain management process is the production or production of goods requested by the consumer. The goods are developed, crafted, checked, packed, and synced for distribution at this level. The three activities in this division are product design, product scheduling, and facility management. a. Product Design Product designs and component specifications are dependent on the current technologies and product specification requirements. b. Product Scheduling When market dynamics adjust, product scheduling becomes a constant balancing act. Development managers must meet the often contrasting demands of offering high levels of customer care while keeping inventory down and plant productivity high.. The output scheduling operation is a method of finding the best possible compromise between many opposing goals. High Utilization Rates - Long runs in management, central production, and delivery systems High Levels of Customer Service - Many limited manufacturing runs with high levels of inventory Low Levels of Inventory - Short manufacturing processes and just-in-time raw material distribution c. Facility Management Both decisions on facilities management are taken under the limits imposed by decisions on the sites of the facility. 1. The Role Each Facility Will Play This includes actions that decide the operations in which services can be carried out. 2. How Capacity is Allocated in Each Facility Decisions on capacity utilization result in the equipment and labor that are employed at the facility. 3. The Allocation of Suppliers and Markets to Each Facility The first two decisions influence this. The facility needs different types of suppliers and the goods and quantities it can allow and accommodate can serve certain types of industries, depending on the position that the facility performs and the capability it has. DELIVER: Categories of Supply Chain Operations The fourth stage is the stage of delivery. In here, the goods are shipped by the retailer to the consumer at their destination. Rules of Order Management 1. Enter the Order Once and Only Once Capture the order as similar as possible to the original source remotely. Do not return the order manually. 2. Automate Order Routing Send orders immediately to convenient delivery points. People only handle exceptions. 3. Make Order Status Visible Allow consumers and service agents to immediately view the details on the order status if they choose to. 4. Use Integrated Order Management Systems To protect data integrity, associate order management systems electronically with other similar systems. DELIVERY SCHEDULING Naturally, decisions taken surrounding the mode of transportation to be used have a significant impact on the distribution scheduling process. There are two categories of distribution strategies for most modes of transport: direct deliveries and milk run deliveries. 1. Direct Deliveries There are deliveries from one place to the reception place. The routing is essentially the fastest route between the two places using these types of distribution. Because this approach specifically transfers goods from where they are processed or deposited in warehouses to a place where the products are used, indirect operations 2. Milk Run Deliveries These are some deliveries that carry goods from a single place of origin to various receiving sites; and there are also deliveries that bring products from multiple places of origin to one receiving site. Sources of Delivery 1. Single-Product Locations These include plants or warehouses that are available for shipping in a particular commodity or a narrow selection of similar products. 2. Distribution Centers There are warehouses in which bulk commodities are transported from single- product locations. Return Processing This is often called the “reverse logistics” phase. The returns must be treated in all supply chains. SCM CHAPTER 4 Supply Chain Major Drivers Supply chain administration is the transfer of various practices and procedures of products from one location to another. The following are the major drivers of the supply chain:  1. Production Production refers to the ability and storage capability of a supply chain. In this operation, master planning of plant resources, workload balance, quality control, and maintenance are developed 2. Inventory What stock should be stored in a supply chain at each stage? What stock should be kept as untreated, semifinished, or finished products? The inventory’s main objective is to serve as an insecurity shield in the supply chain 3. Location/Facility Locations/facilities are the location of the stock, the fabrication, or the assembly. 4. Transportation The goods cannot be transported to the correct location at the right time without providing an appropriate transport system. 5. Information The decision-making and future plans play an important role not just in the supply chain, but also in other market intelligence functions. Information may be used specifically to improve other drivers’ efficiency The following are the participants in the supply chain: 1. Producers Manufacturers or producers are companies producing a commodity. Companies that manufacture raw materials, as well as companies that produce finished products, are included. 2. Distributors Distributors are companies that take stock of producers in bulk and provide customers with a package of related product lines. Wholesalers are mostly known as dealers. 3. Retailers Retailers store products and distribute them in limited amounts to the general public. 4. Customers Any company that buys and consumes a commodity is referred to as a buyer or a client. 5. Service Providers Some companies provide services to manufacturers, dealers, suppliers, and consumers. Transportation and warehousing service providers are two popular service providers of every supply chain. Aligning the Supply Chain with Business Strategy The supply chain of an organization is an essential component of its approach to the markets it represents. Below are six steps to align supply chain with business strategy: 1. Define and communicate a clear corporate strategy. One of the most important failure points in plan coordination is where the supply chain company does not know whom to partner with. 2. Identify the areas of corporate strategy that are enabled by the supply chain. The organization must draw the dots between corporate priorities and how those goals are reached 3. Align supply chain performance metrics with the corporate strategy. One of the more prevalent problems is the assumption that there are standard supply chain efficiency metrics and that the organization should aim to optimize both of them  4. Structure your supply chain to optimize the strategic goals. This is the stage at which the company addresses the following supply chain design elements: supply chain network, location, supplier range and business jargon, inventory and preparation strategy, and operational structure. 5. Keep refreshing the strategy and alignment process. Many businesses have one or three-year strategic preparation period, but certain companies go decades without realigning their supply chain strategy.