Designing and managing thesupply chainShanghai Maritime University1-1
1-1 Designing and managing the supply chain Shanghai Maritime University
Chapter 1: An introduction toSupply Chain Management1-2
1-2 Chapter 1: An introduction to Supply Chain Management
What Is a Supply Chain?Flow of products and services from:RawmaterialsmanufacturersIntermediateproductsmanufacturersEndproductmanufacturersWholesalersand distributors andRetailersConnected by transportation and storageactivitiesIntegratedthroughinformation,planningandintegrationactivities.Costandservicelevels1-3
1-3 What Is a Supply Chain? Flow of products and services from: ⚫ Raw materials manufacturers ⚫ Intermediate products manufacturers ⚫ End product manufacturers ⚫ Wholesalers and distributors and ⚫ Retailers • Connected by transportation and storage activities • Integrated through information, planning, and integration activities • Cost and service levels
1.1 What Is Supply ChainManagement?Supplychainmanagementisa setofapproaches utilized to efficientlyintegratesuppliers,manufacturers,warehouses,and stores,so that merchandiseisproduced and distributed at the rightquantities, to the right locations, and at theright time,in orderto minimizesystemwide costswhile satisfyingservicelevelrequirements1-4
1-4 1.1 What Is Supply Chain Management? ⚫ Supply chain management is a set of approaches utilized to efficiently integrate suppliers, 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 system wide costs while satisfying service level requirements
Two Other Formal DefinitionsThe designand management of seamless,valueadded process acrossorganizational boundariesto meet the real needs of the end customerInstitutefor Supply ManagementManaging supply and demand, sourcing rawmaterials andparts,manufacturing and assemblywarehousing andinventory tracking,order entryand ordermanagement,distribution acrossallchannels, and delivery to the customerThe Supply Chain Council1-5
1-5 Two Other Formal Definitions The design and management of seamless, valueadded process across organizational boundaries to meet the real needs of the end customer Institute for Supply Management Managing supply and demand, sourcing raw materials and parts, manufacturing and assembly, warehousing and inventory tracking, order entry and order management, distribution across all channels, and delivery to the customer The Supply Chain Council
PC Industry Supply ChainTracing back the sereen you stare at for the bulk of your timeStrategicProduct innovationCustomerrelationsOperationsFocusSofware cempanicsGlobal logisties cumpaniesFinalComponents makersFedEx, UPS, BAX GlobalCustomerstPC eampaniesContractStragemanufacturersDirect (Dell,OEMsGateway)DistributorsResellersLargeAsin (MitacEnteprisesSemkconductorsFIC, Acer...)CompaniesIngramRetilIndirect (IBM)Micro, Techand productCompaq, HP,U.S. (SCI,Data)VARsToshiba, Apple)Solectron...)MotherhoardsflowsIntegratorsConsumersFlat-pmelDealersdisplysLocalCompaneatsassemblersOtherSMEsdistributars(White bos)(Arow,Avnet)ActivitiesR&DManufacturingAssemblyDistributionSales, service, support
1-6 PC Industry Supply Chain Tracing back the screen you stare at for the bulk of your time
Cisco's ValueNetwork2.Orders areautomaticallytransmittedtosuppliersorProvidersscheduledintheCiscoCiscoproductionsystem23.Contractmanufacturers1.Customers80%of7buildandship60%ordersareconfiguredofunitsdirecttoandsubmittedviacustomersCisco's Web siteCustomers64.Ciscoproductionconfigures only highlycomplexorders6.Service70%oftechnicasupportcallsdonotrequire5.ConsolidationcentershumaninterventionCiscooperatesjustthreecentersworldwide1-7
1-7 Cisco’s Value Network
SM DefinitionMaterial FlowARAERetailerSupplieristributoveeConsumersDistributorEnd-UserSupplierValue-AddedServicesFunds/DemandFlowInformation FlowAfterSalesServiceFlowPi1-8
1-8 Source Supplier Supplier Distributor Distributor Retailer End-User Converter Converter Consumers Information Flow Funds/Demand Flow Value-Added Services Material Flow Reuse/Maintenance/After Sales Service Flow SCM Definition
The SCM NetworkWarehousesandManufacturersCustomersSuppliersdistribution centersManufacturing costsTransportation costsMaterial costsTransportationcostsInventory costsFIGURE1.1:Thelogisticsnetwork1-9
1-9 The SCM Network FIGURE 1.1: The logistics network
Key ObservationsEvery facility that impacts costs needs tobeconsideredSuppliers'suppliersCustomers'customersEfficiency and cost-effectiveness throughout thesystem is requiredSystemlevelapproachMultiplelevelsofactivitiesStrategic-Tactical-Operational1-10
1-10 Key Observations ⚫ Every facility that impacts costs needs to be considered ⚫ Suppliers’ suppliers ⚫ Customers’ customers ⚫ Efficiency and cost-effectiveness throughout the system is required ⚫ System level approach ⚫ Multiple levels of activities ⚫ Strategic – Tactical – Operational