Date post: | 06-May-2015 |
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Presented By-
Shahidul Asif 06
Shabib Raihan 13
Tanjil Amin 31
Sadman Prodhan 47
Salman Hossain Khan 56
Supply Chain Management
Supply Chain is the flow of materials from supplier to customer through- • Procurement• Manufacturing• Distribution• Sales & Disposal
Supply chain activities transform raw materials and components into a finished product that is delivered to the end customer.
•Developed in 1980s.
•Supply chain management (SCM) is the process of-
-Planning,-Implementing,-Controlling
the operations of the supply chain as efficiently as possible.
Supply Chain Management
Dynamics of Material Flow
Supplier Plant RS Logistics Retailer
SCM FLOWS
MATERIAL
MONEY
INFORMATION
Procurement Manufacturing Distribution Customer
Supply Chain RelationshipSupply Chain Relationship
What is SCM ?What is SCM ?
BuyingBuying
SellingSelling
MakingMakingMovingMoving
Warehousing
Warehousing
SCM is a business network covering from buying, making, moving, warehousing to selling
Traditional SCM
Supply Chain Decisions
OPERATIONAL
TACTICAL
STRATEGIC
Procurement DistributionManufacturing Logistics
Cost
Reduced inventories
Reduced waste
Reduced total system costs Service
Establishment of a collaborative framework
Near real time information flow
Reduced variation and increased quality
Business growth opportunities
Preferred source for new opportunities
Expanded benefits to other customers
Supply Chain Benefits
The 3 Ts
Key IngredientsFor ImprovingSupply ChainEfficiencies
TimelinessVelocity
Acceleration
Trust
Collaboration
Empowerment
SharingInformation(eg. open schedules)
Accountability
Understanding the process
Transparency Ability to see the real situation
The Three T’s
Transactional Efficiency
Critical Data to improve:
Multiple handling
Transit damageProcess delays
Excess freight
DelaysEnd-to-end cycle-time
Warehouse fees Inventory turns
Yield
Late Deliveries
Perceived Value
Intrinsic Value
The Supply Chain “Iceberg”
SCM FOCUS / LEARNINGS
• SERVICE COST
• FLOW OF INFORMATION, MATERIAL AND CASH
• INPUTS AND OUTPUTS
ELEMENTS OF SCM
• INVENTORY MANAGEMENT
• WAREHOUSING
• TRANSPORTATION
ShortageExcess
1. The stock of material lying with producer for which payments are made but which are yet to be delivered to the customers and paid for by them.
2. Material stocked to meet the expected demand in the market.
3. An idle resource which locks the capital.
What is inventory
ShortageExcess
Why inventories are necessary
1. To satisfy the customer demands without time lag.
2. To cover time required for procurement of material.
3. To cater to fluctuations in demand.
4. Seasonal demand of products.
5. Production constraints of suppliers.
6. To retain supplier goodwill.
FSN AnalysisBased on speed of movement of material.
1. Some materials have regular and high volume demand and move
‘Fast’ (F),
2. some material have intermittent and unpredictable demand and
hence move ‘Slow’ (S)
3. and a few items have practically no takers and hence keep on lying
in stores for long period of time and categorized as ‘Non moving’
(N).
FAST MOVING SLOW MOVING NON MOVING
ELEMENTS OF SCM
• INVENTORY MANAGEMENT
• WAREHOUSING
• TRANSPORTATION
ELEMENTS OF WAREHOUSING
• LOCATION
• LAYOUT
• IDENTIFICATION
• MATERIAL HANDLING
Warehousing principles
• Ease of receipts, storage and issues.
• Uninterrupted movement of material,
men and equipment.
• Optimum utilization of space.
• Ease of locating the material.
• Safety. & Security.
• Better supervision.
• Flexibility
• Building. : Preferably single storied,
enough height, proper lighting and
ventilation, protection against
hazards like fire and lightening.
ELEMENTS OF SCM
• INVENTORY MANAGEMENT
• WAREHOUSING
• TRANSPORTATION
Logistics Management
'Logistics is the process of strategically managing
the procurement, movement and storage of materials
(and related information flows) through the
organization and its marketing channels
Objectives of Transport Management
1. Cost Optimization
2. Improved service
3. Transportation/logistics as a competitive
differentiator.
4. Time to market
CARRIER SELECTION
OUTSOURCING Vs. OWN VEHICLE
VEHICLE TYPE ( SIZE )
CUSTOMERS PER VEHICLE & TRIPS
PER VEHICLE( ROUTING )
Carrier Selection and Routing
• The practical meaning of the 4 C’s of selecting transportation services
1. Competition2. Cost3. Comparison4. Compromise
Sources Destinations
SCM Key Performance Measures
FMFO Deliveries during the month FMFO Adherence % = ---------------------------------------------------------- Total deliveries made during the month.
FMFO= First manufactured first out
Orders Delivered On Time & FullCommitment % ( OTIF ) = ----------------------------------------------------- Orders Received in a month
OTIF= On time in full delivery Transport cost + Labor Cost + storage costSCM COST / TN = --------------------------------------------------------------------- Total sales
• Product Attributes
• Planning
• Request ForQuotation
• Availability• Purchase Order• Order Confirmation
• Call-Off• Order Status• Inventory Status
• ProductQuality
• Usage• InventoryChange
• ProductPerformance
• Delivery Message
• Goods Receipt• Invoice
• Credit/Debit Note• Business Acknowledgement
• Information Request• Complaint• Complaint Request
Plan Make Deliver Source Utility
SCM Process categorized according to the Supply-Chain Council’s, Supply-Chain Operations Reference (SCOR) model
Supply Chain Model Foundation
Bullwhip Effect
Occurs when slight demand variability is magnified as information moves back upstream
Bullwhip Effect
Factors contributing to the Bullwhip Effect:
• Forecast Errors • Lead Time Variability • Batch Ordering • Price Fluctuations • Product Promotions • Inflated Orders
Methods intended to reduce uncertainty, variability, and lead time:
• Vendor Managed Inventory (VMI) • Just In Time replenishment (JIT) • Strategic partnership
Causes of Bullwhip Effect
• Demand Signal Processing (frequent updates of forecasts; only next echelon orders considered)
• Order Batching (to realise logistic Economies of scale + Reducing order processing costs)
• Price Fluctuations (resulting in over-reactions)
• Supply Rationing (Proportionate rationing; unrestricted order acceptance + free return policy)
Counter-Measures for BWE
• Avoid multiple demand forecasts– Order based on ultimate customer
demand– Use EDI+POS+VMI– Choose a good forecasting method (PLC
has a major say)– Move from decentralized DM to
centralized planning (visibility+control is better)
– Remove layers in channel if possible
• Eg: HP, Apple, IBM, P&G/Walmart
Counter-Measures for BWE
• Break order batchesIncrease frequency of ordering (OP costs reduced by EDI)Resort to standardization to minmize OP costsUse 3PL to make small batch replenishments economicalAggregate across retail outlets to utilize FTL EoSReduce safety stocks by cutting lead times
Eg: 3PL using Fedex, P&GStabilize pricesEDLP (P&G)Special purchase contracts
• Eliminate shortage gamingAllocate based on past sales (Sun)Share capacity and information (HP, Motorola)Limit flexibility wrt time (HP, Seagate)
SCM and Information System
Data warehousing:-
• copying of data from various sources, both inside and outside the enterprise, into an environment ready for analytical and informational processing
Electronic Data Interchange
• EDI is the computer-to-computer exchange of business documents between retailers and vendors
• Merchandise sales, Inventory On Hand, Orders• Advanced shipping notices, • Receipt of merchandise, Invoices for payment
Standards:
UCS (Uniform Communication Standard)VICS (Voluntary Inter-industry Commerce Solutions)
Transmission system:
Intranet: local area network (LAN) that employs Internet technologyExtranet: collaborative network that uses Internet technology to link businesses with suppliers, customers, etc.
Electronic Data Interchange
EDI Security
• There are implications of security failures (loss of data, loss of public confidence), but retailers have security policy objectives:
Authentication – system assures person on other end of session is who it claims to be
Authorization - that person has permission to carry out request
Integrity – info arriving is the same that was sent
SAP Business Suite (A SCM software)
Supply Chain Management
● The SAP® SCM application is a part of the SAP® Business Suite. It
functions with a technology platform called SAP® NetWeaver, which enables a company to reduce costs in IT while joining technologies into a single platform. This platform helps companies to process information and data in an organizational leveling order to monitor processes and generate coordination in the supply chain.
Planning with SAP ERP & SCM
SAPECCERP
SAP SCM(includes SAP BW)Core Interface (CIF)
• Demand Planning • Supply Network Planning and optimization• Production Planning with capacity considerations• ATP• CTP• Detailed Scheduling• Deployment• Transportation planning• Vehicle routing and scheduling
• Mater data•Materials•Locations•Partner•Plants•Info records
• Transactional data• Customer orders• Production orders• Purchasing orders
• Execution
Basic Components of SAP SCM
Planning at Supply Chain Level
SAPECC 1
SAPSCM
SAPECC 2
SAPECC n
- Each SAP ECC component covers one or more locations In the network
- Planning may be done centrally
SAP® SCM Functions
Substitute Technologies
Supply Chain Management
ply Chain Management ● Oracle® SCM is an open integrated solution that ensures companies’
efficiency by predicting demand fluctuation, organizing and planning operations on the supply chain, and providing industry-specific solutions. Some of the solutions that this program offers are: Advanced procurement, logistics and transportation management, order fulfillment, manufacturing operations management, product life-cycle management, supply chain planning, and optimization.
Oracle® SCM Benefits
Oracle® SCM Vs. SAP® SCM● Oracle
– Broad enterprise application
– Less services in package
– Certain services not provided
– Less customized
● SAP– Better technology
– More services in package
– More technical support
– More customized
Oracle® SCM Vs. SAP® SCM● Oracle
– Lower cost – Requires less time to
set up– Accommodates more
than 1000 users– Licensing and
updating is free– More user friendly
● SAP– Higher cost– Requires more time
to set up– Accommodates 25
to 1000 users– Licensing and
updating is not free– Less user friendly
Cost Comparison
Thanks to all