Supply Chain Supply Chain ManagementManagement

To Accompany Russell and Taylor, Operations Management, 4th Edition, 2003 Prentice-Hall, Inc. All rights reserved.

Jossey MenswearJossey MenswearByBy

• Gunawan ASGunawan AS• Endang KusnandarEndang Kusnandar• DyahDyah• MahardhikaMahardhika

OutlineOutline• The management of supply chains

• Key Element Of Supply Chain

• Jossey Menswear Supply Chain

• Conclusion

WHAT IS SUPPLY CHAIN MANAGEMENT

" Is the strategic management of activities involved in

the acquisition and conversion of materials to finished

products delivered to the customer"

SupplierManagement

Schedule /Resources Conversion

Stock Deployment Delivery

CustomerManagement

Leads to Business Process Integration

Material Flow

Information Flow

• Supply chain is the system by which organizations source, make and deliver their products or services according to market demand.

• Supply chain management operations and decisions are ultimately triggered by demand signals at the ultimate consumer level.

• Supply chain as defined by experienced practitioners extends from suppliers to customers.

The Supply ChainThe Supply Chain

Information

Cash

Products and Services

Products and Services

Products and Services

CustomersCustomers

Total satisfaction with quality, price, delivery, and service

DistributorsDistributors

Package and delivery

Inventory

ProducersProducers

Finished goods, end products and services

Inventory

SuppliersSuppliers

Inventory

Materials, parts, sub-assemblies, and services

Losing Sight of the Common Losing Sight of the Common ObjectiveObjective

I'm glad that the hole is not on our side!

Typical Supply Chain for a Typical Supply Chain for a ManufacturerManufacturer

Supplier

Supplier

Supplier

Storage} Mfg. Storage Dist. Retailer Customer

Supplier

Supplier

} Storage Service Customer

Typical Supply Chain for a ServiceTypical Supply Chain for a Service

Supply Chain IllustrationSupply Chain Illustration10-9

Supply chain IlustrationSupply chain Ilustration

Supply Chain ManagementSupply Chain Management

A total system approach to managing the entire flow of information, materials, and services from raw-material suppliers through factories and warehouses to the end user (planning, organizing, directing and controlling flows of materials)

Encompasses all activities associated with the flow and transformation of goods and services from raw materials to the end user, the customer

Goals of Goals of Supply Chain ManagementSupply Chain Management (1 of 2) (1 of 2)

Synchronization of activities required to achieve maximum competitive benefits

Coordination, cooperation, and communication and timing among SC members

Ensuring rapid flow of information among members

Goals of Goals of Supply Chain ManagementSupply Chain Management(2 of 2) (2 of 2)

Linking the market, distribution channels, processes and suppliers so that market demand is met as efficiently as possible across the chain

Matching supply and demand at each stage of the chainUltimate goal: Achieving customer satisfaction

..

The steps involvedThe steps involved

• Step1- Designing the supply chain– Determine the supply chain network– Identify the levels of service required

Step 2 - Optimizing the supply chain• Determine pathways from suppliers to

the end customer– Customer markets to Distribution centers– Distribution centers to production plants– Raw material sources to production plants– Identify constraints at vendors, plants and

distribution centers– Get the big picture– Plan the procurement, production and

distribution of product groups rather than individual products in large time periods- quarters or years

Step 3- Material flow planning

• Determine the exact flow and timing of materials

• Arrive at decisions by working back from the projected demand through the supply chain to the raw material resources

• Techniques• ERP

Step 4 - Transaction processing and

short term scheduling

• Customer orders arrive at random• This is a day to day accounting system which

tracks and schedules every order to meet customer demand

• Order entry, order fulfillment and physical replenishment

Strategic or OperationalStrategic or Operational

• Two types of decisions in supply chain management– Strategic – design and policy– Operational – day-to-day activities

Functions and ActivitiesFunctions and Activities Involved in SCM Involved in SCM ForecastingSchedulingPurchasingInventory managementInformation managementQuality assuranceProduction and delivery LogisticsCustomer service

Key Elements of SCMKey Elements of SCM

• Strategic Issues

• Tactical Issues

• Operating Issues

Strategic IssuesStrategic Issues

• Design of Supply Chain– Selection of supply chain members,

locations, outsourcing decisions, etc• Strategic Alliance

– Alliance conceptualization– Alliance pursuance– Alliance confirmation– Alliance implementation

Tactical IssuesTactical Issues

• Strategies and policies on inventories,

purchasing, transportation, quality, etc.

• Design of supply chain information systems

– Inter-organizational information systems

– Intra-organizational information system

What Are the Inter-Organizational What Are the Inter-Organizational Information Systems?Information Systems?

What Are the Inter-Organizational What Are the Inter-Organizational Information Systems?Information Systems?

• Internet

• Extranet

• Electronic Data Interchange

(EDI)

• Satellite systems

• SCM software systems

What Are the Intra-Organizational What Are the Intra-Organizational Information Systems?Information Systems?

What Are the Intra-Organizational What Are the Intra-Organizational Information Systems?Information Systems?

• Intranet

• Bar coding and scanners

• RFID

• Cable and wireless systems

• ERP systems

• Database and data warehouse systems

Operating IssuesOperating Issues• External supply chain process mapping

and improvement– Business Process Reengineering– Benchmarking

• Integrated logistics– Third-party logistics– Disintermediation– Reverse logistics

SUPPLY CHAIN ELEMENTS

• Supply Chain Design• Resource Acquisition• Long Term Planning

(1 Year ++)

Strategic

• Production/ Distribution Planning

• Resource Allocation• Medium Term Planning

(Qtrly,Monthly)

Tactical

• Shipment Scheduling• Resource Scheduling• Short Term Planning

(Weekly,Daily)

Operational

Elements of Supply Chain Elements of Supply Chain ManagementManagement

Deciding how to best move and store materialsLogistics

Determining location of facilitiesLocation

Monitoring supplier quality, delivery, and relationsSuppliers

Evaluating suppliers and supporting operationsPurchasing

Meeting demand while managing inventory costsInventory

Controlling quality, scheduling workProcessing

Incorporating customer wants, mfg., and timeDesign

Predicting quantity and timing of demandForecasting

Determining what customers wantCustomers

Typical IssuesElement

Factors That Contribute to the Increased Factors That Contribute to the Increased Need for Effective Supply Chain Need for Effective Supply Chain

Management:Management:improve operations increased levels of outsourcingincreasing transportation costscompetitive pressuresincreasing globalizationincreasing importance of e-commerceincreasing complexity of supply chainsincreasing pressure to decrease inventories

Benefits of Supply Chain ManagementBenefits of Supply Chain Management

Lower inventoriesLower costs Higher productivityGreater agilityShorter lead timesHigher profitsGreater customer loyaltyIntegration of seperate organizations into a cohesive

operating system

What Are the Key Requirements for A What Are the Key Requirements for A Successful Supply Chain?Successful Supply Chain?

Requirements for A Requirements for A Successful Supply Successful Supply

ChainChain• Share goals and interests

• Trust

• Information sharing

• Long-term commitment

• Strong individual members

Global Supply Chain ProblemsGlobal Supply Chain Problems

National and regional differencesCustoms, business practices, and

regulationsForeign markets are

not homogeneousQuality can be a

major issue

Some Issues in Some Issues in Global Supply ChainsGlobal Supply Chains– Language– Culture– Currency fluctuations– Political– Transportation costs– Local capabilities– Finance and economics– Environmental

Infrastructure Obstacles to Global Infrastructure Obstacles to Global TradeTrade

Some emerging markets lack suitable distribution systems, i.e. roads, rail systems

Existing roads and ports may be inadequate

Market instability, political instability

Vertical integration is a common solution

1. Develop strategic objectives and tactics

2. Integrate and coordinate activities in the internal supply chain

3. Coordinate activities with suppliers & with customers

4. Coordinate planning and execution across the supply chain

5. Form strategic partnerships

Creating an Effective Supply ChainCreating an Effective Supply Chain

Supply Chain Performance DriversSupply Chain Performance Drivers

1. Quality

2. Cost

3. Flexibility

4. Velocity

5. Customer service

Barriers to integration of organizations

Getting top management on board

Small businesses

Variability and uncertainty

Long lead times

Dealing with trade-offs

ChallengesChallenges to Optimizing SCs to Optimizing SCs

ABOUT JOSSEY MENSWEARABOUT JOSSEY MENSWEAR

Founded more than a century ago, and now part of Amedox Fashion Retail division .Founded more than a century ago, and now part of Amedox Fashion Retail division .

Design, Manufacturing and Merchandising functions Design, Manufacturing and Merchandising functions

Operated in the mid-range fashion sectorOperated in the mid-range fashion sector

Tailored products – jackets, trousers and suits Tailored products – jackets, trousers and suits

David Jossey, Managing Director, Jossey Menswear.David Jossey, Managing Director, Jossey Menswear.

• Market, demand and products

• Supply chain management and quick response

• The Cornwall plant

• Forming the teams

• The payment system barrier

• Not everyone liked the changes

• Measuring supply chain performance

• The future

JOSSEY MENSWEAR OVERVIEWJOSSEY MENSWEAR OVERVIEW

• Market, demand and products

ProductsProducts

Supply chain for TrousersSupply chain for Trousers

Supply Chain Management StrategySupply Chain Management Strategy

Build Quick Response Team•The Quick Response (QR) approach improves the manufacturing of the jacket and trouser assembly in the plant•Payment system and supply chain performance•Individuals were moved towards team working system.•30 percent of the factory resources assembly was converted to quick response (QR)

Supply Chain StrategySupply Chain Strategy

Additional Plant ( Cornwall Plant ) •Production Increasing (from 1200 suit equivalents (SE) to 1900 suit equivalents (SE) per week•Improving limited factory space, a rigid payment system, limited skills flexibility and specialist machinery•Two QR teams were made, one for the jacket assembly and other for the trouser assembly

Supply Chain StrategySupply Chain Strategy

Collaboration With Supplier•Work on cloth development with suppliers.•Understanding which characteristics of a cloth make it more or less machinable•Improve lead times and Availabilty of cloth

Manpower •Payment Improvement ( Basis vs Competency )•Competency Development

Q and AQ and A