Supply Chain

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SCM: 供應 鏈 子管理

Introduction and Its Technology

Research Trends

2005. 11. 22.

Heung-Suk Hwang ( 黃 興 錫 )

Department of Business and Administration,

Kainan University, Taiwan

1

Characteristics of Consumer

Product Goods Industry

Global Supply Chain / Complex Distribution

Networks

High Volume - Low Margins

• Competitive Environment / Promotions

High Customer Service / Make to Stock

• Demand exceeds Supply / Product Mix

Optimization

• Seasonal Demands / Inventory Build Ups

Value Added Service for Customers (Retailers)

2

物流管理 發展的 段階

5 Steps of e-Business Progress Model

Contents Managing policy

Step 1 Internet Application, only for com. PR

Step 2

Step 3

Step 4

Step 5

Start to develop new product and services according to internet level

Implementing the internet technology into industry works

Using internet suppliers, co-relate customers and business partners

Customer’s information delivered in real time

Homepage Dev.

e-mail, Marketing

Co-invest with venture co.

Development of

Intra-net

Cooperation, networking

Data marketing 3

Change patterns of e-Business: Sales and circulation

Conventional Business e- Business

▶ For the customers, needs several

▶ Direct sales between producers steps between suppliers and customers and customers

▶ The cost of several steps distributed

▶ Cost down portion by on-line trade to the customers is returned to customers

▶ Generally the sales model is based on

▶ Producers transfer the sales cost sales commission into marketing cost

製造業者 消費者

4

Evolution to Logistics/SCM

2000 ’ s e-Logistics Integrate by Value Chain Management

1990 ’ s SCM Supply Chain Management

Between

Company

1980 ’ s ERP Enterprise Resource Planning Within

Company

1970 ’ s MRPII

Manufacturing Resource Planning

1960 ’ s MRP Materials Requirement Planning

5

New Wave of Net-centric Logistics

Order Inv. Checking

Production

Schedule Check

Distribution Customer service Suppliers Check

• By predetermined business rule, the logistics process system is completed within a few seconds

• Tracing and controls/confirms by order unit

• Shorter leadtime, fewer errors, inventory reduction

• Some obstacles, but inevitable move

6

Supply Chain : from Original

Supply to Final Consumption

INFORMATION FLOW

Supplier

Transfer Transfer

Manufacturing Distribution

CASH FLOW

Transfer

Retail Outlet

Transfer

Consumer

Supply Chain Optimization

Increase Customer Responsiveness at Least Cost

7

SCM

(Supply Chain Management)

Integration of key business processes from end user through original suppliers that provides products, services, and information that add value for customers and other stakeholders global optimum

The Global Supply Chain Forum(GSCF)

8

Logistics( 物流 )

Part of the supply chain process that plans, implements, and controls the efficient, effective flow and storage of goods, services, and related information from the point-of-origin to the point-ofconsumption in order to meet customers’ requirements local optimum

(Council of Logistics Management )

9

Key Objectives of Supply Chain

Maximize responsiveness to customer

Flexibility

– On time delivery

Minimize total supply chain costs

– Procurement

Manufacturing

– Transportation

Administrative

Optimize asset utilization

Raw material, WIP and finished goods

10

Strategic Objectives of SCM

Costs

Market Share Profits

Sales Volume

Time to Market

Growth Rate

Product Quality

Customer

Satisfaction

 Important drivers are customer satisfaction and profits .

11

Perceived Benefit of SCMrelated Investments

Demand

Forecasting

6

Manufacturing Marketing

4

2 Purchasing Sales

Inventory

Management

Transportation

Product

Development

Warehousing

12

Investment for SCM

 Survey of Fortune 1000 companies

(by Lockheed Martin and Penn State’s Center for Logistics Research)

 Approximately 33% of the respondents indicated they were engaging in SCM improvements in 1995 .

 64% were making improvements in 1997 .

 45% of respondents believe they will be making

SCM improvements in the each of the next three years

 “ Leading ” companies showed a pattern of continued investment in SCM Improvements

13

SCM Framework

Supply Chain

Business

Processes

What process should be linked with each of these key supply chain members ?

Supply Chain

Management

Components

What level of integration and management should be applied for each process link ?

Supply Chain

Network

Structure

Who are the key supply chain members with whom to link processes ?

14

Tier 3 to initial suppliers

Supply chain network structure

Tier 2 suppliers

Tier 3 to

Consumers/

End-Customers

Tier 1 suppliers

Tier 2

Customers

1

Tier 1

Customers

2

1

1 2 n n

1

1

2 n

2

1 n

1

1 n

2

2

3

3 n n n

1 n

Focal Company

Members of the Focal company’s Supply Chain

15

Primary Aspects of

Supply Chain Network Structure

Members of the supply chain

• structural Dimension of the Network

• different types of Process links across the supply chain

16

Members of supply chain

Primary members of a supply chain: autonomous companies or strategic business units who carry out Value-adding activities in the business processes designed to produce a specific output for a particular customer or market.

Supporting members: companies that Simply provide resources, knowledge, utilities, or assets for the primary members of the supply chain.

Ex) companies leasing trucks, banks, owner of warehouse space etc.

17

Structural dimension of network

horizontal structure : number of tiers across the supply chain.

Ex) the network structure for bulk cement is relatively short.

Raw materials are taken from the ground, combined with other materials, moved a short distance, and used to construct buildings

vertical structure : number of suppliers/customers represented within each tier . A company can have a narrow vertical structure, with few companies at each tier level, or a wide vertical structure with many suppliers and/or customers at each tier level.

• horizontal position within the supply chain: position of focal company at near the initial source of supply, or near to the ultimate customer.

18

Key

supply chain processes

• Customer relationship management

Customer service management

• Demand management

Order fulfillment

• Manufacturing flow management

Procurement

• Product development and commercialization

Returns

19

Supply Chain Business Processes

• Successful SCM requires a change from managing individual functions to integrating activities into key supply chain processes .

Traditionally, both upstream and downstream portions of the supply chain have interacted as disconnected entities receiving sporadic flows of information over time

• Operating an integrated supply chain requires continuous information flows , which in turn help to create the best product flows.

20

SCM: Integrating and managing business processes across the supply chain

Tier 2

Supplier

Information Flow

Tier 1

Supplier

Purchasing

Production

Manufacturer

Logistics

Marketing & Sales

PRODUCT FLOW

R&D

Finance

Customer

Customer

End-Customer

CUSTOMER RELATIONSHIP MANAGEMENT

CUSTOMER SERVICE MANAGEMENT

DEMAND MANAGEMENT

ORDER FILFILLMENT

MANUFACTURING FLOW MANAGEMENT

PROCUREMENT

PRODUCT DEVELOPMENT AND COMMERCIALIZATION

RETURNS

21

Types of intercompany business process links

Tier 3 to initial suppliers

Tier 2 suppliers

1

Tier 1 suppliers Tier 1

Customers

Tier 2

Customers

Tier 3 to

Consumers/

End-Customers

1

2

1 2 n n

1

1

2 n

2

1 n

1

1

1 n

2

2

3

3 n n n

1 n n

1

Managed process link Not-Managed process link n

Monitor process link Not-member process link

Members of the Focal company’s Supply Chain

Focal Company Non-Members of the Focal company’s Supply Chain 22

Tier 2

Supplier

SCM: disconnects

Information Flow

Tier 1

Supplier

Purchasing

Production

Manufacturer

Logistics

Marketing & Sales

PRODUCT FLOW

R&D

Finance

Customer

CUSTOMER RELATIONSHIP MANAGEMENT

Customer

End-Customer

CUSTOMER SERVICE MANAGEMENT

DEMAND MANAGEMENT

ORDER FILFILLMENT

MANUFACTURING FLOW MANAGEMENT

PROCUREMENT

PRODUCT DEVELOPMENT AND COMMERCIALIZATION

RETURNS 23

Management Components for

Successful SCM

( physical and technical components)

• planning and control of operations; moving supply chain in a desired direction

• work flow/activity structure ; how the firm performs its tasks and activities.

• organization structure ; individual firm and the supply chain, the use of crossfunctional teams

• product flow facility structure ; network structure for sourcing, manufacturing, and distributing across the supply chain.

Communication & information flow facility structure ; kind of information passed among channel members and the frequency of information updating

24

Management Components for

Successful SCM (cont.)

( managerial and behavioral components)

• management methods ; corporate philosophy and management techniques, a top-down organization structure with a bottom-up structure

• power and leadership structure ;

• risk and reward structure ;

• culture and attitude

25

SCM Decision Areas through

Internet

Purchasing/procurement

Inventory management

Transportation

Order processing

Customer service

Production scheduling

Relations with vendors

26

Purchase/Procurement

Decision Areas

• EDI programs with vendors

On-line purchasing from vendor catalogs

• Communicating with vendors

Negotiation with vendors

• Checking price quotations of vendors

Arranging for returned/damaged products to vendors

Dealing with warranty issues of vendors

27

Inventory Management Decision

Areas

EDI programs with vendors

• Coordination of JIT delivery programs

• Communication with customers on out-of-stocks, etc.

Notification of delays in order ship dates to customers

Communication with vendors on raw-material inventory levels

Communication with customers on emergency situations affecting inventory levels

• Communication with vendors on finished-goods inventory levels

• Communication with field warehouses and depots on field inventory levels

Communication with field depots on out-of-stock situations, emergencies, etc.

28

Transportation Management

Decision Areas

Scheduling pickups at regional distribution centers

Scheduling drop-offs at regional distribution centers

Monitoring on-time arrivals of carriers

Managing claims status and processing communication with carriers on overall performance

29

Order Processing Management

Decision Areas

• Communication with customers on order status

Communication with vendors on order efforts

• Communication with customers on out-of-stocks

Check credit status of customers

• Check credit status of vendors

Communication with customers on returned merchandise

• Providing total order-cycle performance for customers

Providing credit processing status to customers

• Obtaining price quotes from vendors

Providing price quotes to customers

30

Customer Service Management

Decision Areas

Receipt of customer complaints

Providing technical service

Notifying customers of emergencies in the supply

• chain—strikes, fires, etc.

Use of Internet to sell to customers

Manage the outsourcing of customer service functions

31

Production Scheduling

Decision Areas

• Coordination of production schedules with vendors

Coordination of production schedules with field depots

Coordination of production schedules with JIT schedules of vendors

• Coordination of production schedules of multiple manufacturing sites in the United States

Coordination of production schedules of multiple manufacturing sites at international locations

32

Vendor Relations Decision

Areas

Coordination of deliveries of vendors to field warehouses and depots

Communication with vendors regarding raw-material stock levels at their plant sites

Purchasing of items from vendor on-line catalogs–supply lists

Receipt of information queries from vendors

• Provision of information regarding vendor queries

• Providing vendors with service ratings on their overall performance

• Processing of returned materials, damaged products to vendors

• Providing vendors with ratings of the on-time performance of their carriers

33

Research Groups for SCM

• Supply Chain Council

- Supply Chain Operations Reference (SCOR)

Model

- www.supply-chain.org

- Korea chapter ( 한국능률협회컨설팅 )

34

Research Groups for SCM (cont.)

• The Global Supply Chain Forum (GSCF)

- A group of non-competing firms and a team of academic researchers

- To improve theory and practice of SCM

- Director: Prof. Lambert at Ohio St. U.

35

Research Groups for SCM (cont.)

Council of Logistics Management

• http://www.CLM1.org

Journal of Business Logistics

36

Suggestions For Future Research

• What are the operational definitions of the key business processes and what are the relationships among these processes?

• How do you obtain the functional areas in order to implement a process approach within the firm?

• How can the various participants in a company be encouraged to work toward a common goal?

Beyond internal integration, how should interorganizational change management be implemented?

37

suggestions for future research

(cont.)

• How should the existing supply chain be mapped?

Should the map include all connected firms or only the primary firms?

Are there other means of determining who should and should not be part of the supply chain map?

• What are the implications for good SCM practice based upon the horizontal structure, the vertical structure, and focal company position in the supply chain?

38

suggestions for future research

(cont.)

What is the value proposition at the consumer level or end point of the supply chain?

What are the methods that should be used to determine value ?

How should the various firms in the supply chain share the costs and the benefits ?

39

suggestions for future research

(cont.)

What metrics should be used to evaluate the performance of the entire supply chain, individual members or subsets of members?

What are the potential barriers to implementation and how should they be overcome?

40

suggestions for future research

(cont.)

What is the process to take the map of the existing supply chain and to modify it to obtain the best supply chain given the desired outputs?

41

suggestions for future research

(cont.)

• What determines with whom to link business processes?

What are the steps to take to determine with whom to link?

What are the critical factors to the firm’s success and that enable the firm to link with specific companies?

• What are the barriers to forming these relationships?

42

suggestions for future research

(cont.)

What determines the processes to link with these key members ?

How should the firm decide which internal processes to link with suppliers and customers?

What decision criteria determine whose internal business processes prevail across all or part of the supply chain?

43

suggestions for future research

(cont.)

• What determines the type/level of integration that should be applied to each process link?

• Some guidelines regarding what level of management components to apply to achieve the desired relationship and management of a link.

Do changes in the physical and technical components automatically require changes in the managerial and behavioral components?

44

Directions for future research & developing S/W

• e-business and SCM

• ERP and SCM

• The mapping bet. the existing logistics system and the ideal SCM

• SCP (SCM Planning)

• SCS ( supply chain simulator)

45

SCP is a major component of supply chain improvements.

Strategic and Financial Impact

Customer

Service

– In-stock availability

Lead time

– Ability to tailor to specific customer needs

Costs

Assets

Fixed

– Purchase Cost

– Variable Manufacturing

Trans/Distribution

– Obsolescence/Markdown

Administrative/Transaction

– Manufacturing

– Distribution Centers

– Inventory

46

Supply Chain Requirements

New product introductions/innovations

Cycle time/response time reduction

Strategic relationships

Cost effective replenishment and fulfillment

Customer specific and channel specific service and value delivery

Dynamic end-to-end decision support

47

Advantages of SCM Planning

Simultaneous material and capacity planning

Decision support with what-if

Consider real-world constraints

Optimizes plan in concert with business goals

48

Expected Benefits of SCM Planning

Improved delivery performance

Decrease in order cycle times

Increase in order fill rates

Reduced planning times

Reduced response times

Improved asset utilization

Inventory reduction

Dynamic profitability determination

49

Key Processes - Sales and Demand

Planning

Suppliers

Retail

Statistical Forecasting

Collaborative

Forecasting

• Sales Planning

Life Cycle Planning

• Promotion Planning

Manufacturing

Units

Distribution

Center

50

Key Processes - Operations Planning

$

$

Manufacturing

Units

$

Long range Planning

Simultaneous material and capacity planning

Constrained master production scheduling

Product cost planning

51

Key Processes - Distribution

Planning

C u s t o m e r s

D i s t r i b u t i o n C e n t e r s

M a n u f a c t u r I n g U n i t s

S u p p l i e r s

Supply and

Distribution Network

Planning

• Supply Network

Planning and

Optimization

Supply/Demand balancing

Vendor Managed

Inventory (VMI)

52

Key Processes - Production

Scheduling

Customer

• Interactive shop floor scheduling

• Rate-based scheduling

Flow sequencing and scheduling

Line balancing

53

Key Processes - Order Fulfillment

Available to promise

(ATP)

Global

– Local

Rules-based

Product Allocation

Material Substitution

Vendor Managed

Inventory

54

Supply Chain Simulator

55

Supply Chain Simulation Experiments

Supply Chain Analysis Logic

Current

Performance and

Capabilities Model

Generic Model For

Specific Industry

Opportunity

Estimating Model

Opportunity

Assessment

Model

Performance

Baseline

Financial Impact

Performance

Impact

56 Source: Joint Industry Project on ECR. 1994. Performance Measures

Simulation Paradigm

Input 1

Input 2

Output 1

Output 2

Input M

Output N

57

Supply Chain Simulation

Number and location of suppliers, manufacturers,

DC's

Inventory levels at each site

Manufacturing and replenishment policies:

BTP, BTO, Partial BTO,

Continuous, Periodic

Transportation policies

Supply planning policies

Lead times

Supplier reliability

Demand variability

Cycle times

Serviceability

Shipments and revenue

Turns

Costs

Inventory

Material handling

Transportation

Manufacturing

58

Benefits of Supply Chain

Simulation

Quantification of supply chain issues before solution implementation

Nonlinear analysis of supply chain issues

Stochastic problems can be addressed

General-purpose across supply chain domains

End-to-end analysis

59

Supply Chain Simulation Is ...

End-To-End

Strategic

High Level

differs from typical business process modeling

60

Simulation and Optimization Working

Together

Relational data files

Supply

Planning

Optimizer

Supply Chain

Simulator

Simulation Engine

Model Data

User Interface

Report Generator

Financial

Reports

Inventory

Optimizer

61

結 論

A Goal Setting for SCM Suitable to a Scale /

Circumstances, Approach and Level of the

Company in Advance.

Not to Disappear while Speaking Prosperous for SCM as the other Different Solutions.

Rather then Indiscreet Import Foreign S/W,

Research and Develop S/W Suitable to Korea

Actual Circumstances.

62

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