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Ω

Lectures 1&2: Lectures 1&2: Introduction to Introduction to

Supply Chain ManagementSupply Chain Management

Quality Assurance in Supply Chain

Management (INSE 6300/4-UU)

Winter 2011

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Ω OverviewOverview

Course Outline

Preliminary Notions

Objective and Importance of Supply

Chain

Supply Chain Activity Levels

Process Views

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Ω Course OutlineCourse Outline

Instructor: Dr. J. Bentahar

Office: EV7.630

Lectures: Monday, 17h45 – 20h15

Office Hours: Thursday, 10h00 – 12h00

Phone: 848-2424 ext. 5382

E-Mail: [email protected]

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Ω Course OutlineCourse Outline

Course Web:

http://www.ciise.concordia.ca/~bentahar/inse6300.html

Lecture notes

Assignment

Useful links

Useful information


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Ω

Software Systems Procurement

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Ω INSE 6300/4INSE 6300/4--UUUU

Quality Assurance in Supply Chain Management: Supply chain operations, activities, and processes Quality assurance in these processes Engineering vs. business perspective

Objectives: To discover and learn various concepts and

techniques related to supply chain and quality assurance

To learn to apply these techniques To develop critical thinking skills


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Ω INSE 6300/4INSE 6300/4--UUUU

Quality Assurance In Supply Chain

Management

Supply Chain Engineering

Performance,Metrics,

and Quality Attributes

Quality Assurance System

Designing theSupply Chain

Network

Inventory Management

Supply Chain Coordination

InformationTechnology in

a Supply Chain

Decision SupportSystems

Managing Uncertainty

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Ω TextbooksTextbooks

1) Supply Chain Management: Strategy, Planning, and Operation. (4th Edition), 2009

Supply chain management and quality assurance principals: supply chain performance, drivers, and metrics, supply chain network design, planning demand, managing inventories, managing uncertainty, and coordination


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2) Designing & Managing the Supply Chain: Concepts, Strategies, and Case Studies. 2006

Supply chain principals and challenging issues: inventory management, supply chain integration, Managing uncertainty, information technology and decision support systems for supply chain management

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3) Research Papers

Challenging and open problems

Verification and Validation

New developments within information technology:

Intelligent Agents

Simulations

Decision Support Systems


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Ω Requirements and Grading Requirements and Grading

One individual/group assignment 15%

One in-class mid-term exam (closed book) 25%

One in-class final exam (closed book) 35%

One team project (2~3 members, presentation + report) 25%

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Ω Important datesImportant dates

April 11, 2011Project report

April 04, 2011Final exam

March 28, 2011 Project presentation

February 14, 2011Mid-term

February 07, 2011Assignment

January 31, 2011Project proposal


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Ω ProjectProject

Project proposal

Deadline: January 31, 2011

Team members

Topic and title

Abstract

Main references

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Ω QuestionQuestion

Please describe briefly about yourself:

Academic background

Industry experience

Research domains you are interested in


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Ω OverviewOverview

Course Outline

Preliminary Notions


Chain


Process Views

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Ω DefinitionsDefinitions

A supply chain consists of all partiesinvolved, directly or indirectly, in fulfilling a customer request

The supply chain includes all functionsinvolved in receiving and filling a customer request

(Supply Chain Management)


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Supply Chain management is a set of approaches utilized to efficiently integratesuppliers, manufacturers, warehouses, and stores, so that merchandise is produced and distributed at the right quantities, to the right locations, and at the right time, in order to minimize “systemwide” costs while satisfying service level requirements

(Designing & Managing the Supply Chain)

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Supply chain management deals with

the control of materials, information, and financial flows in a network consisting of

suppliers, manufacturers, distributors,

and customers

(Stanford Supply Chain Forum Website)


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Ω

The Supply Chain The Supply Chain

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ΩThe Supply Chain NetworkThe Supply Chain Network


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Ω Supply Chain Stages or PartsSupply Chain Stages or Parts

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Ω Supply Chain Example: PrinterSupply Chain Example: Printer


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Ω Supply Chain ConsiderationsSupply Chain Considerations

Supply Chain

Management

Design Planning Product Development

Inventory Control

TransportationMarketing

Customer Request

Service Levels

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Ω Supply Chain Management: A Supply Chain Management: A

Systems Engineering ApproachSystems Engineering Approach

Systems engineering: the art and science of creating a product or service based on phased efforts: Definition, design, development, production

and maintenance activities

Supply chain management and systems engineering have the same objective: Producing high quality products fulfilling

the customer requirements


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Ω Supply Chain Management: A Supply Chain Management: A

Systems Engineering ApproachSystems Engineering Approach

Systems engineering: a management technology that

controls a total system life cycle process

Systems engineering focuses on:

Defining customer needs and required functionality,

Documenting requirements,

Proceeding with design synthesis and system validation

Like systems engineering, Supply chain management

considers both the business and technical needs of

all customers

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Ω The Systems Engineering Life The Systems Engineering Life

CycleCycle

Product Use, Phase-out, and

Disposal

Production and/or

Construction

Detail Design and

Development

Conceptual and Preliminary

Design

Acquisition Phase Utilization Phase

NEED


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Ω Flows in a Supply ChainFlows in a Supply Chain

Customer

Information

Product

Funds

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Ω Flows in a Supply ChainFlows in a Supply Chain

Three flows: material, information, financial

Downstream

Material Parts and products

Information

Production capacity, delivery schedule

Financial

Invoices, credit, funds


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Ω Challenges in Supply Chain Challenges in Supply Chain

ManagementManagement

Complex supply chain network Ex) worldwide suppliers

Complex product structure Ex) product contains many hardware and software components

Decentralized control Ex) functional teams focused on narrow functional goals

Increasing pressure for customer service

Multiple sources of uncertainty and variability Ex) demand, supply, and process variability

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Uncertainty


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Different stages in the supply chain have different

conflicting objectives:

Objective of suppliers: manufacturers purchase large

quantities with flexible delivery date

Manufacturers need to be flexible to their customers’ need

⇒⇒⇒⇒Suppliers goals are in direct conflict with the manufacturers

objectives

Manufacturers objectives of making large production

conflicts with the objective of warehouses and distribution

centers to reduce inventory

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Uncertainty is the most significant threats to supply chain quality

Three main sources of uncertainty in supply chains: Demand variability

Ex) difficulty in forecasting sales

Process uncertainty Ex) unexpected downtimes and yield losses

Supply uncertainty Ex) supplier deliveries are late


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Ω Matching Supply with DemandMatching Supply with Demand

One of the most important issues in quality supply chain management

Matching supply with demand

Firms that are better at matching supply with demand enjoy a significant competitive advantage

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Ω Order VariationsOrder Variations


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Ω Quality Management in Supply Quality Management in Supply

ChainChain

Supply Chain Quality

Quality of Design Quality of Conformance

Product DesignSupply Chain

Process DesignSupply Chain

ControlSupply Chain

Monitoring

Quality Planning (Quality Assurance) Quality Control

Quality Improvement

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Ω Quality Assurance: Supply Chain Quality Assurance: Supply Chain

Process DesignProcess Design

Quality issues

Quality attributes

Managing uncertainty

Managing inventory

Designing the supply chain network


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Ω Key Quality IssuesKey Quality Issues

Supply Chain

Quality Issues

Network Planning

Inventory Control

Distribution Strategies

Product Design

Outsourcing Strategies

Integration & Partnering

Information Technology

Decision-

Support Sys.

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Network Planning: optimization aspect

Inventory Control: minimizing inventory

ordering and holding cost

Distribution Strategies: relationships

between suppliers and manufacturers


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Supply Chain Integration and Strategic Partnering: global optimization, information sharing and operational planning

Outsourcing and Procurement Strategies: what to make internally and what to buy from outside sources

Information Technology and Decision-Support Systems: data transfer and analysis, efficiency in supply chain management

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Ω OverviewOverview

Course Outline

Preliminary Notions


Chain


Process Views


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Ω The Objective of a Supply ChainThe Objective of a Supply Chain

Maximize overall value created

Supply chain value: difference between what the final product is worth to the customer and the effort the supply chain expends in filling the customer’s request

Value is correlated to supply chain profitability (difference between revenue generated from the customer and the overall cost across the supply chain)

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Example: Dell receives $2000 from a customer for a computer (revenue)

Supply chain incurs costs (information, storage, transportation, components, assembly, etc.)

Difference between $2000 and the sum of all of these costs is the supply chain profit

Supply chain profitability is total profit to be shared across all stages of the supply chain

Supply chain success should be measured by total supply chain profitability, not profits at an individual stage


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Sources of supply chain revenue: the customer

Sources of supply chain cost: flows of information, products, or funds between stages of the supply chain

Supply chain management is the management of flows between and among supply chain stages to maximize total supply chain profitability

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Ω OverviewOverview

Course Outline

Preliminary Notions


Chain


Process Views


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Ω Activity LevelsActivity Levels

Strategic Level

Decisions about the number, locations, and capacity of

warehouses, plants

Tactical Level

Purchasing and production decisions, Inventory and transportation policies

Operational Level

Day-to-day decisions: scheduling, truck loading, …

Su

pp

ly C

ha

in I

nte

gra

tion

Global Plan

DetailSub-Plans

OperationalPlans

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Ω Decision Phases of a Supply Decision Phases of a Supply

ChainChain

Supply chain strategy or design

Supply chain planning

Supply chain operation


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Ω Supply Chain Strategy or DesignSupply Chain Strategy or Design

Decisions about the structure of the supply chain and what processes each stage will perform

Strategic supply chain decisions Locations and capacities of facilities Products to be made or stored at various locations Modes of transportation Information systems

Supply chain design must support strategic objectives

Supply chain design decisions are long-term and expensive to reverse – must take into account market uncertainty

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Ω Supply Chain PlanningSupply Chain Planning

Definition of a set of policies that govern

short-term operations

Fixed by the supply configuration from

previous phase

Starts with a forecast of demand in the

coming year


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Ω Supply Chain PlanningSupply Chain Planning

Planning decisions: Which markets will be supplied from which

locations

Planned buildup of inventories

Subcontracting, backup locations

Inventory policies

Timing and size of market promotions

Must consider in planning decisions demand uncertainty, exchange rates, competition over the time horizon

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Ω Supply Chain OperationSupply Chain Operation

Time horizon is weekly or daily

Decisions regarding individual customer orders

Supply chain configuration is fixed and operating policies are determined

Goal is to implement the operating policies as effectively as possible

Allocate orders to inventory or production, set order due dates, generate pick lists at a warehouse, allocate an order to a particular shipment, set delivery schedules, place replenishment orders

Much less uncertainty (short time horizon)


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Ω OverviewOverview

Course Outline

Preliminary Notions


Chain


Process Views

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Ω Process Views of a Supply ChainProcess Views of a Supply Chain

Cycle view: processes in a supply chain are divided into a series of cycles, each performed at the interfaces between two successive supply chain stages

Push/Pull (Speculate/React) view: processes in a supply chain are divided into two categories depending on whether they are executed in response to a customer order (pull) or in anticipation of a customer order (push)


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Ω

Process Views of a Supply Chain: Process Views of a Supply Chain:

Cycle ViewCycle View

Customer Order Cycle

Replenishment Cycle

Manufacturing Cycle

Procurement Cycle

Customer

Retailer

Distributor

Manufacturer

Supplier

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Ω Process Views of a Supply Chain: Process Views of a Supply Chain:

Cycle ViewCycle View

Each cycle occurs at the interface between two successive stages

Customer order cycle (customer-retailer)

Replenishment cycle (retailer-distributor)

Manufacturing cycle (distributor-manufacturer)

Procurement cycle (manufacturer-supplier)

Cycle view clearly defines processes involved and the owners of each process. Specifies the roles and responsibilities of each member and the desired outcome of each process


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Ω Push/Pull View of Supply ChainsPush/Pull View of Supply Chains

Procurement,Manufacturing andReplenishment cycles

Customer OrderCycle

CustomerOrder Arrives

PUSH PROCESSES PULL PROCESSES

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Ω Push/Pull View of Push/Pull View of

Supply Chain ProcessesSupply 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


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Ω Push/Pull View of Push/Pull View of

Supply Chain ProcessesSupply Chain Processes

Useful in considering strategic decisions relating to supply chain design – more global view of how supply chain processes relate to customer orders

Can combine the push/pull and cycle views Dell (build-to-order strategy)

The relative proportion of push and pull processes can have an impact on supply chain performance

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Ω Dell Supply ChainDell Supply Chain


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ΩSupply Chain Macro ProcessesSupply Chain Macro Processes

Customer Relationship Management (CRM): Interface between the firm and its customers

Internal Supply Chain Management (ISCM): Internal processes to the firm

Supplier Relationship Management (SRM): Interface between the firm and its suppliers

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ΩSupply Chain Macro ProcessesSupply Chain Macro Processes

CRM: Market analysis; pricing strategies;

selling strategies; order management; …

ISCM: Strategic planning; Demand planning

(forecasting); Supply planning; strategic

fit;…

SRM: Negotiation strategies; design

collaboration; supply collaboration


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Ω ReadingsReadings

Lectures 1&2:

Chapter 1 of Supply Chain Management

Chapter 1 of Designing & Managing the

Supply Chain

Lecture 3:

Chapter 2 of Supply Chain Management


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