Professional Documents
Culture Documents
and the Raw materials Work-in-process (WIP) inventory Finished products that flow between the facilities
2
Material Costs
Transportation Costs
Transportation Costs
Plan
Source
Make
Deliver
Buy
Suppliers
Manufacturers
Customers
Material Costs
Transportation Transportation Costs Transportation Costs Manufacturing Costs Inventory Costs Costs 4
System-wide costs are minimized and Service level requirements are satisfied
5
U.S. firms spent $898 billion (10% of GDP) on supply-chain related activities in 1998
8
The growth of technologies such as the Internet enable greater collaboration between supply chain trading partners
If you dont do it, your competitor will Major buyers such as Wal-Mart demand a level of supply chain maturity of its suppliers
Manufactur er
Wholesale Distributo rs
Retailer s
Consume rs
Sales
Time
Sales
Time
Time
Sales Time
Bullwhip Effect
10
Nevertheless, forecasts (or plans, if you prefer) are important management tools when some methods are applied to reduce uncertainty
11
Few changeovers
Stable schedules
Long run lengths MAKE
SELL
12
What are our core supply chain capabilities and which are not? Does our product design mandate different outsourcing approaches? Risk management How are inventory holding and transportation costs affected by product design? How does product design enable mass customization? 13
Source: Simchi-Levi
BENEFITS
Low manufacturing costs; meet customer demands quickly Customization; reduced inventory; improved service levels Low inventory levels; wide range of product offerings; simplified planning Enables response to specific customer requirements
Engineer to Order
Source: Simchi-Levi
14
16%-28% Improvement 25%-60% Improvement 30%-50% Improvement 25%-80% Improvement 10%-16% Improvement 25%-50% Improvement 20%-30% Improvement 10%-20% Improvement
15
Create unique supply chain configurations that align with your companys strategic objectives
Operations strategy Outsourcing strategy Channel strategy Customer service strategy Asset network
Reduce uncertainty
Forecasting Collaboration Integration
16
17
Final product assembly is done based on customer demand for specific product configurations Supply chain timeline determines push-pull boundary
PushPull Boundary
Industries where:
Demand is uncertain Scale economies are High Low economies of scale
Where do the following industries fit in this model: Automobile? Aircraft? Fashion? Petroleum refining? Pharmaceuticals? Biotechnology? Medical Devices?
Books, CDs
Push Low Low Pull
Grocery, Beverages
High Push
21 Source: Simchi-Levi
Economies of Scale
PUSH
PULL
Maximize Service Level
Objective
Complexity Focus Lead Time
Minimize Cost
High
Low
Resource Allocation
Responsiveness
Long
Short
Processes
Order Fulfillment
Source: Simchi-Levi
22
Integrated Logistics
Order Processing
Facility Network
Inventory
Transportation
Logistics Operations
Inventory Flow
Enterprise
Customers
Customer Service
Manufacturing Support
Procurement (Purchasing)
Suppliers
Information Flow
Logistics (according to CLM) is the process of planning, implementing and controlling the efficient, cost-effective flow and storage of raw materials, in- process inventory, finished goods and related information from point of origin to point of consumption for the purpose of conforming to customer requirements The mission of logistics is to get the right goods or services to the right place, at he right time, and in the desired condition and quantity in relation to customers order
Main logistics activities and decisions: cooperate with marketing to set customer service levels, facility location decisions, transportation activities (eg. transportation mode selection, vehicle scheduling, carrier routing), inventory management (inventory short -term forecasting, planning and control, cooperate with production to calculate EOQ, sequence and time production ), information collection and flows and order processing, warehousing and materials handling, packaging and packing.