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