IE 158 Module 1B (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  The Supply Chain Design Module 1B Framework, Drivers, and Flows  The functioning of a supply chain involves three key flows – information, product, and funds. Supply Chain Flows A reverse product flow is also identified for product returns within the supply chain. Suppliers Manufacturer Distributors Retailers Consumers (end-users) Information Flow Product Flow Supplier Customer Stage Reverse Product Flow Stage Cash Flow  The functioning of a supply chain involves three key flows – information, product, and funds. Supply Chain Flows A reverse product flow is also identified for product returns within the supply chain. Information Flow Supplier Customer Product / Reverse Product Flow Stage Stage Cash Flow Information Flow Cash Flow Product Flow Reverse Product Flow Invoices, Receipts, & Orders Payment for Products Materials Returns for Repair or Sales Records & Forecasts Supplies Components Replacements Specifications (Product and Supplies Recycling Process) Services Disposals Rules and Regulations Finished Goods Schedules  Supply Chain Decision Phases Successful supply chain management requires many decisions relating to the flow of information, product, and funds. Each decision should be made to raise the supply chain surplus. Hyundai Motor’s decision to build a Decisions related to the structure & configuration of the supply Supply Chain chain for the next several years, as well as the allocation of second manufacturing plant in India to support the growing Indian market Design resources and the processes each component will perform and global demand for small cars. Decisions on how to maximize the supply chain surplus that Hyundai’s decisions regarding Supply Chain can be generated over the planning horizon (quarter or a year) markets supplied by its two Indian Planning given the constraints established during the design phase. plants and target production quantities at each plant. Hyundai’s decisions regarding the Weekly or Daily decisions regarding individual customer order Supply Chain and the best possible way to handle and fulfill them given the schedule of production for specific Operation fixed supply chain design and defined planning policies. car models to support the demands in different dealerships in India  Supply Chain Decision Making Framework Competitive Strategy Supply Chain Strategy Efficiency Supply Chain Structure Responsiveness (Cost) Logistical Drivers Cross-Functional Drivers  Supply Chain Decision Making Framework defines, relative to its competitors, the set of customer needs Competitive Strategy that it seeks to satisfy through its products and services Supply Chain Strategy Efficiency Supply Chain Structure Responsiveness (Cost) Logistical Drivers Cross-Functional Drivers  Supply Chain Decision Making Framework Competitive Strategy determines the nature of procurement, transportation of materials, Supply Chain Strategy manufacture of the product or operation to provide the service, and distribution of the product to the customer. Efficiency Supply Chain Structure Responsiveness (Cost) Logistical Drivers Cross-Functional Drivers  Supply Chain Decision Making Framework Competitive Strategy Cost Low Supply Chain Strategy Efficiency Supply Chain Structure Responsiveness (Cost) High Responsiveness Low High Cost- Responsiveness Efficient Frontier Logistical Drivers Cross-Functional Drivers  Supply Chain Decision Making Framework Competitive Strategy Responsiveness Responsive t Fi SC c gi Supply Chain Strategy te ra St of ne Zo Efficient Efficiency Supply Chain Structure Responsiveness Implied SC (Cost) Uncertainty Certain Uncertain Demand Demand Finding the Zone of Strategic Fit Logistical Drivers Cross-Functional Drivers  Supply Chain Decision Making Framework Competitive Strategy Supply Chain Strategy Efficiency Supply Chain Structure Responsiveness (Cost) Drivers that are responsible for the effective production, storage, and movement of Logistical Drivers Cross-Functional Drivers goods and services in the SC. Supply Chain Decision Making Framework Competitive Strategy Supply Chain Strategy Efficiency Supply Chain Structure Responsiveness (Cost) Factors that influence and align multiple components and Logistical Drivers Cross-Functional Drivers processes within an SC to optimize overall performance.  SC Drivers 1. Facilities Logistical 2. Inventory Drivers 3. Transportation 4. Information Cross- 5. Pricing Functional Drivers 6. Sourcing  actual physical locations in the supply chain network where product is SC DRIVERS Facilities stored, fabricated, or assembled. There are two major types: production sites and storage sites. Decisions CAPABILITY LOCATION DEMAND CAPACITY Dedicated VS Flexible Centralized VS Decentralized ALLOCATION measures the maximum matching facilities to amount a facility can process Cross Docking VS Warehousing products & markets Metrics Capacity | Utilization | Standard Times | Quality losses | Production Cost per Unit | Cycle Time Product Variety | SKU Volume Contribution | Average Production Batch Size | Production Service Level SC DRIVERS encompasses all raw materials, work in process, and finished goods within a Inventory supply chain, whose primary role is to manage supply-demand variability. Decisions CYCLE INVENTORY SAFETY INVENTORY SEASONAL INVENTORY PRODUCT AVAILABILITY Average amount of inventory Inventory held in case Inventory that is built up to The “fraction of demand that used to satisfy demand demand exceeds counter predictable variability in is served on time from between receipt of supplier expectations demand product held in inventory” shipments. Metrics C2C Cycle Time | Average Inventory | Inventory Turns | Average Replenishment Batch Size| Average Safety Inventory | Seasonal Inventory | Fill Rate | Rate of Stockout | Obsolete Inventory SC DRIVERS Transportation entails moving inventory or products from point to point in the supply chain, through different modes, routes, and channels. Decisions NETWORK DESIGN MODE OF TRANSPORTATION Location, Route & Network Selection Land, Sea Freight, Railway, Air, Pipes; Consolidated Shipments Metrics Average Inbound/ Outbound Transportation Cost | Average Incoming Shipment Size | Average Transportation Cost per Shipment | Fraction Transported by Mode | Fraction Transported by Route SC DRIVERS consists of data and analysis concerning facilities, inventory, Information transportation, costs, prices, and customers throughout the supply chain, and potentially the biggest driver of performance. Decisions DEMAND PLANNING COORDINATION & SALES & OPERATIONS Best estimate of future INFORMATION SHARING PLANNING demand for products maximizing total supply chain creating an overall supply plan to meet profitability based on shared information the anticipated level of demand Metrics Forecast Horizon | Frequency of Update| Forecast Error | Variance from Plan Ratio of Demand Variability to Order Variability SC DRIVERS This determines how much a firm will charge for the goods and Pricing services that it makes available in the supply chain. Pricing affects the behavior of the buyer of the good or service. Decisions PRICING & ECONOMIES OF EDLP vs HLP FIXED PRICE vs MENU PRICING SCALE Every Day Low Pricing for steady charge a fixed price for its supply chain ensure that quantity discounts offered are demand or High-Low Pricing with activities or have a menu with prices that consistent with the economies of scale discounts to influence buying behavior vary with some attribute, such as the response time or location of delivery Metrics Profit Margin | Days Sales Outstanding | Fixed Cost per Order| Variable Cost per Unit Average Sale Price | Average Order Size | Range of Sale Price | Range of Periodic Sale SC DRIVERS This is the set of business processes required to purchase goods and Sourcing services. This determines who will perform a particular supply chain activity, and which functions a firm performs and outsources. Decisions IN-HOUSE or OUTSOURCE SUPPLIER SELECTION PROCUREMENT Based on the impact to supply chain the criteria along which suppliers will be the process of obtaining goods and surplus and level of risk evaluated and how they will be selected services within a supply chain Metrics Days Payable Outstanding | Average Purchase Price | Range of Purchase Price | Average Purchase Quantity | Supply Quality | Supply Lead Time | On-time Delivery Rate | Supplier Reliability  IE 158 Module 1 Concepts and Principles of Supply Chain Engineering Engr. Alan Marco Mercado | Engr. Micah M. Punzalan UPLB Department of Industrial Engineering