Learning outcome :
10.1. list and describe the components of a typical supply chain.
10.2. Define the relationship between decision making and supply chain management
10.3. Describe the four changes resulting from advance in IT that are driving supply chains.
10.4. Summarize the best practices for implementing a successful supply chain management system.
Supply chain management.
l The average company spends nearly half of every dollar that it earns on production.
l In the past, companies focused primarily on manufacturing and quality improvements to influence their supply chains.
Basic of supply Chain.
l the supply chain has three main links which are :-
1. Materials flow from supplier and their “upstream” suppliers at all levels.
2. Transformation of materials into semi-finished and finished products through organization’s own production process.
3. Distribution of products to customer and their “downstream” customers at all levels.
l Organization must embrace the technologies that can effectively manage supply chain.
l There are five basics of supply chain which are :-
a. Plan
- A company must have a plan for managing all the resources that go toward meeting customer demand for products or services.
b. Source
- Companies must carefully choose reliable suppliers that will deliver goods and services required for making a products.
c. Make
- this is the step where companies manufacture their products or services.
- this can include scheduling the activities necessary for procduction, testing, packaging, and preparing for delivery.
d. Deliver (logistic)
- companies must be able to receive orders from customers, fulfill the orders via a network of warehouses, pick transportation companies to deliver the products and implement a billing and invoicing system to facilitate payments.
e. Return
- this is typically the most problematic step in the supply chain.
- companies must create network for receiving defective and excess products and support customers who have problems with delivered products.
Information Technology’s Role in the Supply Chain.
- The factors that driving the Supply chain management (SCM) are :-
l Visibility
- more visible models of different ways to do things in the supply chain have emerged.
- high visibility in the supply chain is changing industries as Wal-Mart demonstrate.
- Supply chain visibility is the ability to view all areas up and down the supply chain.
- Bullwhip effect occurs when distorted product demand information passes from one entity to the next through the supply chain.
- Supply chain visibility allows organization to eliminate the bullwhip effects.
l Consumer behaviour
- companies can respond faster and more effectively to consumer demands through supply chain enhances.
- once an organization understand customer demand and its effect on the supply chain it can begin to estimate the impact that its supply chain will have on its customer and ultimately the organizations performance.
- Demand planning software - generates demand forecasts using statistical tools and forecasting techniques.
- Demand planning software can detect demand from customer and detect the customer behaviour.
- by using the demand planning software we can predict the future.
- it also can help the organization to fulfil the demand.
- Competition
- Supply chain management software can be broke down into Supply chain Planning software and Supply chain execution software.
- Both of it can increase a company ability to compete.
- Supply Chain Planning (SCP) software uses advanced mathematical algorithms to improve the flow and efficiency of the supply chain while reducing inventory.
- Supply chain Execution (SCE) software automates the different steps and stages of the supply chain.
-SCP depends entirely on information for its accuracy.
- SCE can be as simple as electronically routing orders from a manufacturer to a supplier.
l Speed
- The aspect of speed is the company ability to satisfy continually changing customer requirements efficiently, accurately, and quickly.
- there are three factors fostering speed which are:-
l Pleasing customer has become something of a corporate obsession. Serving the customer in the best, most efficient, and most effective manner has become critical, and information about issues such as order status, product, availability, delivery schedules, and invoices has become a necessary part of the total customer service experience.
l Information is crucial to managers’ abilities to reduce inventory and human resource requirements to a competitive level.
l Information flows are essential to strategic planning for and deployment of resources.
- Seven principles of supply chain management are:
l Segment customer by service needs, regardless of industry, and then tailor service to those particular segments.
l Customize the logistics network and focus intensively on the service requirements and on the profitability if the preidentified customer segments.
l Listen to signals of market demand and plan accordingly. Planning must span the entire chain to detect signals of changing demand.
l Differentiate products closer to the customer, since companies can no longer afford to hold inventory to compensate for poor demand forecasting.
l Strategically manage sources of supply, by working with key suppliers to reduce overall costs of owning materials and services.
l Develop a supply chain information technology strategy that supports different levels of decision making and provides a clear view (visibility) of the flow products, services, and information.
l Adopt performance evaluation measures that apply to every link in the supply chain and measure true profitability at every stage.
- SCM best practices include :-
l Make the sale to suppliers
l Wean employees of traditional business practices
l Ensure the SCM system supports the organizational goals.
l Deploy in incremental phases and measure and communicate success.
l Be future oriented where can predict what will happened in the future.
- Top reasons why more and more executives are turning to SCM to manage their extended enterprises.
l Cost control
l Productivity improvement
l Inventory reductions/improvement
l Improved visibility into demand/supply
l Process cycle time reductions
l Quality improvements
l Maintain/gain competitive advantages
- numerous decision support system (DSS) are being built to assist decision making efforts in the design and operation of integrated supply chain.
- DSS allows managers to examine performance and relationships over the supply chain and among :
l Suppliers
l Manufacturers
l Distributors
l Other factors that optimize supply chain performance
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