Understanding The Supply Chain PDF

UNDERSTANDING THE SUPPLY CHAIN WEEK 2 ASST. PROF. SARAH C. VANGUARDIA  2 DISCUSSION OUTLINE Definition Porter’s Value Chain SCM Drivers  3 INTENDED LEARNING OUTCOMES (ILO) Describe the compon...

UNDERSTANDING THE SUPPLY CHAIN WEEK 2 ASST. PROF. SARAH C. VANGUARDIA  2 DISCUSSION OUTLINE Definition Porter’s Value Chain SCM Drivers  3 INTENDED LEARNING OUTCOMES (ILO) Describe the components and stages of a supply chain and articulate the importance of coordination among these stages. Outline the primary and support activities in Porter’s Value Chain Define how facilities, inventory, transportation, information, sourcing, and pricing influence the efficiency and effectiveness of a supply chain.  THE SUPPLY CHAIN Source:https://www.google.com/search?sca_esv=c8cd053ed182659e&sca_upv=1&rlz=1C1CHBF_enPH1081PH1082&sxsrf=ADLYWIKp7KYhsxmuhaSlpNzqaqMhpg91Fg:1723985181506&q=supply+chain+icon&uds=ADvngMjDJRvCoZLRNaARKvvM3D8nB0O9gIMJM DShc5ZFkND3YHv-SACQ4YMqTpVApviQEuIn_csQv8W3yqMd17sUVTLXCktHlHaVDs5fZnGj0JJO_ZBMzoipCO7V8YLRd-2UwLQCyn- N&udm=2&sa=X&ved=2ahUKEwjyut2iyf6HAxUjqVYBHQXhBU8QxKsJegQIChAB&ictx=0&biw=1293&bih=681&dpr=1.49#vhid=tLyjpeBj6hUcbM&vssid=mosaic  5 WHAT IS A SUPPLY CHAIN? Flow of products and services from Suppliers Raw materials manufacturers Intermediate goods manufacturers Finished goods manufacturers Distributors and wholesalers Retailers Customers Connected through transportation, information, and exchanges of funds Supplier Manufacturer Distributor Retailer Customer  6 KEY OBSERVATIONS In order to maximize supply chain surplus Every facility that impacts costs needs to be considered Suppliers’ suppliers Customers’ customers Efficiency throughout the supply chain network is required using a network level approach  7 NETWORK LEVEL APPROACH The Networked Enterprise is the new business model for the 21st century. It requires a supply chain training partner operating model that supports the interoperability and visibility with reduced complexity. - Ann Grackin, ChainLink Research  9 INTEROPERABILITY can involve the integration of various information systems, processes, and technologies across different companies or Source: https://www.google.com/search?sca_es v=e1fec5d00f2 68d5e &sca_upv=1&rlz=1C1 CHBF_ enPH1 081PH1082&s xsrf=ADLYWI JcI779 mfTx33 ett8YVHbcm0 TPP1 w:17241 147417 37&q=interoperabilit y+icon &udm= 2&fbs =AEQNm0DP vcmG_ nCbm wtBO9j6YBzM68Zan C7g01S kprhw 5JoufUv28nkH7BlZuPSVPZEeFf4zEs ryEwMB77hX ASo0G X6k-t8o-ZW9 DI4OVv 3_4hs mtvv4w JeJFE- FsZTv76l11JrE03pHlia2Z0BSyd8hEJszevzI2w UPL1_ 8dIlon 9YzSOs zw37ot Qo0etlzoNFrY Cc9aO 0FjPFj4 yaVH9 D1PwD hy9XFYQ&sa =X&ve d=2ah UKEwjTyu71q4KIAxX 2p1YB HTeYFocQtKg LegQI DRAB &biw=1 293&bih=681 &dpr=1. 49#vhid=BcS HIDWcXRTrbM&vssid=mosa ic departments within the supply chain Example: A supplier’s inventory management system can automatically update the manufacturer’s production schedule, ensuring that there are no delays in the supply chain due to miscommunication or incompatible systems  10 VISIBILITY ability to track and monitor all components of the supply chain, from raw materials to finished goods, Source: https://www.google.com/search?q=VIS IBILIT Y+icon &sca_e sv=e1f ec5d00f 268d5e &sca_ upv=1& rlz=1C 1CHBF_enPH1081P H1082 &udm= 2&biw= 1293& bih=68 1&sxsr f=ADL YWIJMFPbSm _8Vg2lNefff-0 MwcVkW0A%3A1724 114743 084&e i=N- fDZq7nBPOk2roPvambiQI&ved=0ah UKEwju3sD2q4KIAx VzklYB Hb3UJiEQ4dU DCBA&uact= 5&oq= VISIBI LITY+icon&gs _lp=Eg xnd3Mtd2l6L XNlcnAiD1ZJ U0lCSU xJVFkg aWNv bjIFEAAYgAQ yBRAAGIAEMgUQABiABDI FEAAY gAQyB RAAGI AEMg YQABg HGB4y BhAAGAcYHjIGEAAYBxge MgYQABgHG B4yBh AAGAcYHkiYD 1AAW PcLcAB 4AJAB AJgBsg OgAZ MNqgEJ MC44 LjEuMC4xuAE DyAEA-AEBmAIGoAKhBpgDAJIHAzAuNqAH7DU& sclient =gws-w iz-serp# vhid=zOb0wu hMJk3 3JM&v ssid=m osaic as they move through the supply chain Example: A company can track a shipment in real-time from the supplier to the distribution center and ultimately to the customer, ensuring that any delays or issues are immediately visible and can be addressed promptly.  11 REDUCED COMPLEXITY simplifying processes, reducing the number of steps Source: https://www.google.com/search?q=RE DUCED +COMPLEXI TY+icon&sca_ esv=e1 fec5d00 f268d5 e&sca_ upv=1 &rlz=1 C1CHB F_enP H1081P H1082 &udm =2&biw =1293 &bih=6 81&sxs rf=AD LYWIIi- mH1t h- eUpsJAvg2zvQT3HQaIA%3A17241151 50948 &ei=zujDZpnD OYen2 roP_Z aH0Qc&ved=0 ahUKEwiZ4v 64rYKI AxWHk1YBHX3LIXoQ4dU DCBA&uact=5 &oq= REDUC ED+C OMPL EXITY+ icon&g s_lp=E gxnd3 Mtd2l6L XNlcn AiF1JFRFVDR UQgQ0 9NUE xFWElUWSB pY29uMgUQABiABEiMBlAAWABwAHgAkAE AmAG eAaAB ngGqAQMwLjG4AQ PIAQD 4AQL4 AQGY AgGgAqcBmAMAkgcDMC4x oAdQ& sclient =gws-w iz-serp# vhid=7 o_79qI MCem _nM& vssid=m osaic or intermediaries, and eliminating unnecessary or redundant operations Example: Standardizing packaging across different products to streamline the packing and shipping process, thereby reducing the number of variations that need to be managed.  12 WHAT IS A SUPPLY CHAIN MANAGEMENT? It involves the management of supply chain assets and products, information, and fund flows to maximize total supply chain surplus. Getting the right things to the right places at the right times for profit  13 WHAT IS A SUPPLY CHAIN 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 “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  14 WHAT IS A SUPPLY CHAIN MANAGEMENT? Supply chain management is all about relationships Management of relationships in order to enhance value and reduce cost Collaboration is an important part of effective supply chain management  15 EVOLUTION OF SCM 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 EVOLUTION OF SCM 16 Mass production era (1900s – 1970s) In the early 1900s, Henry Ford created the first moving assembly line reducing the time to build a Model T from 728 hours to 1.5 hours. Lean manufacturing era (1970s –1995) In the early 1970s, Japanese manufacturers like Toyota changed the rules of production from mass to lean. Lean manufacturing focuses on flexibility and quality more than on efficiency and quantity. Mass customization era (1995 – 2010) Beginning around 1995 and coinciding with the commercial application of the Internet, manufacturers started to mass-produce customized products. Henry Ford’s famous statement “You can have any color Model T as long as it’s black” no longer applies.  PORTER’S VALUE CHAIN Source:https://www.google.com/search?sca_esv=c8cd053ed182659e&sca_upv=1&rlz=1C1CHBF_enPH1081PH1082&sxsrf=ADLYWIKp7KYhsxmuhaSlpNzqaqMhpg91Fg:1723985181506&q=supply+chain+icon&uds=ADvngMjDJRvCoZLRNaARKvvM3D8nB0O9gIMJM DShc5ZFkND3YHv-SACQ4YMqTpVApviQEuIn_csQv8W3yqMd17sUVTLXCktHlHaVDs5fZnGj0JJO_ZBMzoipCO7V8YLRd-2UwLQCyn- N&udm=2&sa=X&ved=2ahUKEwjyut2iyf6HAxUjqVYBHQXhBU8QxKsJegQIChAB&ictx=0&biw=1293&bih=681&dpr=1.49#vhid=tLyjpeBj6hUcbM&vssid=mosaic  18 PORTER’S FIVE FORCES MODEL  19 PORTER’S FIVE FORCES MODEL Porter’s five forces model show the major forces that shape the competitive environment of the firm. Threat of New Entrants new firms that may enter a companies market Bargaining Power of Buyers the ability of buyers to use their market power to decrease a firm’s competitive position  20 PORTER’S FIVE FORCES MODEL Bargaining Power of Suppliers the ability suppliers of the inputs of a product or service to lower a firm’s competitive position Threat of Substitutes providers of equivalent or superior alternative products Industry Competitors current competitors for the same product  21 PORTER’S FIVE FORCES MODEL AND IT Competitive Force IT Influence on Competitive Force Threat of New Entrants Can be lowered if there are barriers to entry. Sometimes IS can be used to create barriers to entry Bargaining Power of Buyers Can be high if it’s easy to switch. Switching costs are increased by giving buyers things they value in exchange such as lower costs or useful information Bargaining Power of Suppliers Forces is strongest when there are few firms to choose from, quality is inputs is crucial or the volume of purchases is insignificant to the supplier Threat of Substitute Products Depends on buyers’ willingness to substitute and the level of switching costs buyer’s face Industrial Competitors Rivalry is high when it is expensive to leave and the industry’s growth rate is declining, or products have lost differentiation  22 PORTER’S VALUE CHAIN MODEL Value chain model addresses the activities that create, deliver, and support a company’s product or service. Broad Categories Primary activities – relate directly to the value created in a product or service Support activities – make it possible for the primary activities to exist and remain coordinated  23 Source: https://fourweekmba.com/porters-value-chain-model/  24 ALTERING THE VALUE CHAIN Sources of Competition  25 THE VALUE CHAIN SYSTEM THE VALUE CHAIN SYSTEM: 26 HOW IT WORKS THE VALUE CHAIN SYSTEM: 27 HOW IT WORKS (CONTINUED)  SCM DRIVERS Source:https://www.google.com/search?sca_esv=c8cd053ed182659e&sca_upv=1&rlz=1C1CHBF_enPH1081PH1082&sxsrf=ADLYWIKp7KYhsxmuhaSlpNzqaqMhpg91Fg:1723985181506&q=supply+chain+icon&uds=ADvngMjDJRvCoZLRNaARKvvM3D8nB0O9gIMJM DShc5ZFkND3YHv-SACQ4YMqTpVApviQEuIn_csQv8W3yqMd17sUVTLXCktHlHaVDs5fZnGj0JJO_ZBMzoipCO7V8YLRd-2UwLQCyn- N&udm=2&sa=X&ved=2ahUKEwjyut2iyf6HAxUjqVYBHQXhBU8QxKsJegQIChAB&ictx=0&biw=1293&bih=681&dpr=1.49#vhid=tLyjpeBj6hUcbM&vssid=mosaic  29 Source: https://www.linkedin.com/pulse/drivers-supply-chain-manish-jain  30 DRIVERS OF SCM The locations where products are manufactured, stored, or assembled. The number, size, and location of facilities significantly impact the supply chain's efficiency. Examples: factories, warehouses, and distribution centers Key Decisions: location, capacity, and operations management  31 DRIVERS OF SCM Data and analysis that support supply chain operations. Accurate, timely information enables better decision- making and coordination across the supply chain. Examples: demand forecasting, order tracking, and inventory management systems Key Decisions: information technology systems and data management strategies  32 DRIVERS OF SCM The process of selecting suppliers and managing supplier relationships. Effective sourcing ensures the supply chain has access to high-quality materials at the right cost. Examples: supplier selection, contract negotiation, and supplier performance management Key Decisions: which suppliers to use, terms of contracts, and supplier collaboration strategies  33 DRIVERS OF SCM The raw materials, work-in-progress, and finished goods that a company holds. Inventory management balances the costs of holding inventory against the need to meet customer demand. Examples: safety stock, cycle inventory, seasonal inventory Key Decisions: How much inventory to hold and where to store it?  34 DRIVERS OF SCM The movement of products between different stages in the supply chain. The choice of transportation mode affects cost, speed, and flexibility. Examples: shipping, trucking, rail, and air freight Key Decisions: mode of transportation, routing, and scheduling  35 DRIVERS OF SCM The strategies used to price products and services in the market. Pricing decisions can influence demand and the efficiency of the supply chain. Examples: discounts, rebates, and dynamic pricing models Key Decisions: pricing strategies, discount policies, and payment terms  36 DISCLAIMER Every reasonable effort is made to ensure the accuracy of the information used in the creation of this reference material, without prejudice to the existing copyrights of the authors. As an off-shoot of the innumerable difficulties encountered during these trying times, the authors endeavored to ensure proper attribution of the esteemed original works, by way of footnotes or bibliography, to their best abilities and based on available resources, despite the limited access and mobility due to quarantine restrictions imposed by the duly constituted authorities. We make no warranties, guarantees or representations concerning the accuracy or suitability of the information contained in this material or any references and links provided here. 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