ops management lecture 7 supply chain management
DESCRIPTION
Ops M/ment - Lecture 7TRANSCRIPT
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Chapter seven
Supply chain
management
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Learning objectives
• Explain what a supply chain is
• Appreciate the role and importance of the supply chain
• Define supply chain management
• Understand what management of the supply chain entails
• Understand the benefits of integrating all the functions in the supply chain
• Explain outsourcing, and discuss its advantages and disadvantages
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Learning objectives (cont.)
• Determine whether products should be made or bought
• Discuss materials management
• Understand the nature and role of a purchasing or procurement department
• Explain the JIT philosophy and its impact on supply chain management
• Appreciate new trends in supply chain management, including e-commerce, online catalogues, and e-business.
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7.1 Introduction
• Supply chain = series of steps between
raw material and purchase
• Supply chain management:
– Planning, design and control
– Of all the information and material
– Flowing along the supply chain
– To ensure customer needs are met
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7.1 Introduction (cont.)
– Class discussion
– Wal-mart
– See Figure 7.1.
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7.2 Types of chain
• Value chain
• Customer tiers
• Demand chain.
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7.3 Various elements of SCM
• Class discussion – see Table 7.1 on
page 159 of the textbook.
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7.4 Why is there a need to manage
supply chains? • Improvement of operations
• Increasing transport costs
• Pressure from competitors
• Influence of globalisation
• E-commerce
• Inventory management.
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7.5 Ineffective management of the
supply chains • The bullwhip effect
• Causes:
– Updating of the demand forecast
– Playing the shortage and rationing game
– Batching of orders
– Fluctuating process
• Cannot be eliminated entirely.
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7.6 Integrated materials
management • Class discussion – see Table 7.2 on
page 163 of the textbook.
• Centralisation vs. decentralisation.
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7.7 Performance measurements of
the supply chain • Inventory turnover
• Weeks of supply
• Class discussion – LG Electronics
(applied example).
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7.8 How to improve the performance of
the supply chain
• Quick orders, communications, transportation,
and re-supply
• Receive smaller, more frequent deliveries
• Simplify products
• Purchase sub-systems or complete modules
instead of components
• Postpone product configuration
• Reduce suppliers of a particular item
• Create close relationships with supplier partners.
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7.9 How do relationships change
with buyer-supplier partnerships?
• Class discussion (see Table 7.5 on page
170 of the textbook).
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7.10 Decisions to be made
regarding make or buy
• Retain core technologies
• Strategy
• Impact on span of process?
• Volume of product/service
• World trade and globalisation.
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7.11 Realities of the make or buy
decision • History
• Cost and technology.
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7.12 Configuration strategies for
the supply chain
• Backward vertical integration
• Forward vertical integration
• Benefits of integration
• Advantages and disadvantages of
outsourcing.
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7.13 Procurement
• Reasons:
– High cost of raw materials
– Automated manufacturing
– Growth of online procurement
– Globalisation
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7.13 Procurement (cont.)
• Duties of procurement department:
– Develop a supplier base
– Evaluate suppliers as part of supplier
selection
– Evaluation of specific capabilities
– Selection of the supplier
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7.13 Procurement (cont.)
• Procurement is cyclical
• JIT and procurement.
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7.14 The distribution function
• The final link in the supply chain
• Goods reach the marketplace
• Physical distribution management.
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Summary
• Defined a supply chain and SCM
• Types
• Why SCM is a priority?
• Integrated materials management
• Make or buy?
• Integration and outsourcing
• Procurement
• Distribution.