Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
Sources:
plants
vendors
ports
Regional
Warehouses:
stocking
points
Field
Warehouses:
stocking
points
Customers,
demand
centers
sinks
Supply
Inventory &
warehousing
costs
Production/
purchase
costs
Transportation
costs
Inventory &
warehousing
costs
Transportation
costs
Jewel or third
party DC
Plastic
Producer
Tenneco
Packaging
Chemical
manufacturer
(e.g. Oil Company)
Paper
Manufacturer
Jewel
Supermarket
Customer wants
detergent and goes
to Jewel
Chemical
manufacturer
(e.g. Oil Company)
Timber
Industry
Global Optimization
Managing Uncertainty
Global Optimization
What is it?
Why is it different/better than local
optimization?
What are conflicting supply chain
objectives?
What tools and approaches help with
global optimization?
Procurement
Planning
Manufacturing
Planning
Distribution
Planning
Demand
Planning
Global Optimization
Supply Contracts/Collaboration/Information Systems and DSS
Procurement
Planning
Manufacturing
Planning
Distribution
Planning
Demand
Planning
Conflicting Objectives
in the Supply Chain
1. Purchasing
Stable volume requirements
Flexible delivery time
Little variation in mix
Large quantities
2. Manufacturing
Long run production
High quality
High productivity
Low production cost
Conflicting Objectives
in the Supply Chain
3. Warehousing
Low inventory
Reduced transportation costs
Quick replenishment capability
4. Customers
Short order lead time
High in stock
Enormous variety of products
Low prices
Uncertainty
What is variation?
What is randomness?
What tools and approaches
help us to deal with these
issues?
Lead times
Yields
Transportation times
Natural Disasters
Component Availability
Volumes
Manufacturer Forecast
of Sales
Retailer Orders
Retailer Warehouse
to Shop
Actual
Consumer
Demand
Production Plan
Time
Source: Tom Mc Guffry, Electronic Commerce and Value Chain Management, 1998
Volumes
Consumer
Demand
Production Plan
Time
Source: Tom Mc Guffry, Electronic Commerce and Value Chain Management, 1998
Volumes
Production Plan
Consumer
Demand
Time
Source: Tom Mc Guffry, Electronic Commerce and Value Chain Management, 1998
Pull Systems
Risk Pooling
Centralization
Postponement
Strategic Alliances
Collaborative Forecasting
4%
21%
Marketing Cost
27%
Manufacturing Cost
48%
Profit
Logistics
Cost
Marketing
Cost
Manufacturing
Cost
Distribution
The final product is shipped to hundreds of facilities all over the
world
20,000 different routes
12 different airlines are involved
95% of the products are delivered within 45 days
5% are delivered within 90 days.
Whats New?
Global competition
Shorter product life cycle
New, low-cost distribution channels
More powerful well-informed
customers
Internet and E-Business strategies
New Concepts
Push-Pull strategies
Direct-to-Consumer
Strategic alliances
Manufacturing postponement
Dynamic Pricing
E-Procurement
Retailer
Replenishment Cycle
Distributor
Manufacturing Cycle
Manufacturer
Procurement Cycle
Supplier
PUSH PROCESSES
Customer Order
Cycle
PULL PROCESSES
Customer
Order Arrives
Push/Pull View of
Supply Chain Processes
Supply chain processes fall into one of two
categories depending on the timing of their
execution relative to customer demand
Pull: execution is initiated in response to a
customer order (reactive)
Push: execution is initiated in anticipation
of customer orders (speculative)
Push/pull boundary separates push
processes from pull processes
New
Product
Development
Marketing
and
Operations Distribution
Sales
Service
Low
Cost
High
Low
Demand Characteristics
Functional
Low demand variability
Easy forecasting
Long life cycle
Low inventory cost
Low margins
Low product variety
Low stockout cost
Low obsolescence
Innovative
High
Difficult
Short
High
High
High
High
High
Responsiveness Spectrum
Highly
efficient
Integrated
steel mill
Somewhat
efficient
Hanes
apparel
Somewhat
responsive
Most
automotive
production
Highly
responsive
Dell
Responsiveness
spectrum
Efficient
supply chain
Certain
demand
Implied
uncertainty
spectrum
Uncertain
demand
Responsive
Primary goal
Lowest cost
Quick response
Modularity to allow
postponement
Pricing strategy
Lower margins
Higher margins
Mfg strategy
High utilization
Capacity flexibility
Inventory strategy
Minimize inventory
Buffer inventory
Transportation strategy
Greater reliance on
responsive (fast) modes
A Framework for
Structuring Drivers
Efficiency
Responsiveness
Supply chain structure
Facilities
Transportation
Inventory
Drivers
Information
Information: Role in
the Supply Chain
The connection between the various
stages in the supply chain allows
coordination between stages
Crucial to daily operation of each stage in
a supply chain e.g., production
scheduling, inventory levels
Components of Information
Decisions
Push (MRP) versus pull (demand information transmitted quickly
throughout the supply chain)
Coordination and information sharing
Forecasting and aggregate planning
Enabling technologies
EDI
Internet
ERP systems
Supply Chain Management software
Overall trade-off: Responsiveness versus efficiency
Considerations for
Supply Chain Drivers
Driver
Efficiency
Responsiveness
Inventory
Cost of holding
Availability
Transportation
Consolidation
Speed
Facilities
Consolidation /
Proximity /
Dedicated
Flexibility
What information is best suited for
each objective
Information
Obstacles to Achieving
Strategic Fit
Summary
What are the major drivers of supply chain performance?
What is the role of each driver in creating strategic fit
between supply chain strategy and competitive strategy (or
between implied demand uncertainty and supply chain
responsiveness)?
What are the major obstacles to achieving strategic fit?
In the remainder of the course, we will learn how to make
decisions with respect to these drivers in order to achieve
strategic fit and surmount these obstacles
Low Implied
Uncertainty
Low
High Implied
Uncertainty
High
10%
40%-100%
1%-2%
10%-40%
0%
10%-25%