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UMMC – Supply Chain Mgmt. Course 1 Introduction to Supply Chain Management Concepts Mike Almich and Tony Bucko. Course List. Intro to SC Concepts Financials Logistics and Distribution Purchasing Inventory Management 1 Inventory Management 2 SC Technology Production Management

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UMMC – Supply Chain Mgmt.

Course 1

Introduction to Supply Chain Management Concepts

Mike Almich and Tony Bucko


Course List

  • Intro to SC Concepts

  • Financials

  • Logistics and Distribution

  • Purchasing

  • Inventory Management 1

  • Inventory Management 2

  • SC Technology

  • Production Management

  • Quality Control and Improvement


What will we cover today?

  • Importance of SC Management

  • Development of the SC Concept

  • Components of SC Management

  • Flow of Materials and Information

  • Issues and Challenges

  • Opportunities


What is SCM

  • Supply chain management can be viewed as a pipeline or conduit for the efficient and effective flow of products/materials, services, information, and financials


Importance of SCM

  • Dollars

    • SCM expenses average 25% of U.S. corporate budgets

    • Dollar value of U.S. inventory in 2004 equal to U.S. federal budget

  • Leverage

    • Cost reductions in SCM go directly to bottom line

    • Efficiency is amplified in ROA

    • SCM have direct effect on customer perceptions (timely delivery, quality, etc)

  • Opportunity

    • SCM has much opportunity for improvement in most organizations


  • http://www.youtube.com/watch?v=_8sBuBcCGs8


Development of the Supply Chain Concept

Physical Distribution Concept

Logistics Management Concept

Value Chain Concept

SCM


Physical Distribution Concept

  • 1950s and 1960s

  • Focused on outbound logistics

    • Logical due to value of finished goods

  • Total systems costs and analyzing tradeoff scenarios


Logistics Management Concept

  • 1970s and 1980s

  • LMC integrated inbound logistics into the Physical Distribution Concept

  • Came about due to deregulation of transportation

  • More international sourcing also led to focusing on inbound side


Logistics Management Concept

Physical supplyPhysical distribution

materials managementoutbound logistics

inbound logistics


Value Chain Concept

  • 1990s

  • Further deregulation in the areas of finance and communication

  • Developed as a tool for evaluating competitive advantage

  • Integrated sales, marketing, purchasing, and manufacturing with logistics.


Supply Chain Management

  • Mid 1990’s to present

  • Globalization

  • Technology

  • Organizational consolidation

  • The empowered consumer


Manufacturing Supply Chain


Supply Chain Management

Globalization


Supply Chain Management

  • Organizational Consolidation

    • Move from adversarial relationships with suppliers to collaborative relationship


Supply Chain Management

  • The Empowered Consumer

    • Technology and globalization has shifted power to the consumer

    • This increases pressure on supply chain


An example in Fairview System terms…


SCM Components

  • Financials

  • Inventory Management

  • Logistics and Distribution

  • Supply/Demand Management

  • SC Technology

  • Production Management

  • Quality Control and Improvement

  • Purchasing


Financials

  • Basic Business Financials

    • Income Statement

    • Balance Sheet

    • Cash Flow Statement

    • General Ledger

      • Accounting Practices

      • ROA/ROI


Financials

The Supply Chain Financial Impact

  • A major financial objective for any organization is to produce a satisfactory return for stockholders.

  • The absolute size of the profit must be considered in relation to the stockholders’ net investment, or net worth.

  • An organization’s financial performance is also judged by the profit it generates in relationship to the assets utilized, or return on assets (ROA).

  • The supply chain plays a critical role in determining the level of profitability in an organization.


Inventory Management

  • In U.S. Inventory investment averages about 14% of GDP or $2.1 Trillion

  • When to Order/How much to Order

  • Balancing Supply with Demand

  • Large Impacts on Financials and Customer Service

    http://www.investopedia.com/video/play/what-is-gdp#axzz1cjqs0ph6


Inventory Management

  • Critical Decision-making for Inventory Control

    • Quantity Issues

    • Classifying Inventory

    • Timing Issues

    • Systems for Inventory Control

      • Continuous/Periodic

        • Two Bin/Kanban


Inventory Management

  • Approaches of Inventory Management

    • JIT

    • MRP and DDMRP

    • EOQ

      • Fixed Order Quantity/Order Interval

        • Condition of certainty

        • Condition of Uncertainty


Logistics/Distribution

  • In U.S. Logistics and Distribution accounts for 8.3% of GDP or $1.2 Trillion (2010)

  • The physical flow of goods and services up and down the supply chain

  • Critical to demand fulfillments


Supply/Demand Management

  • Focused efforts to manage input fluctuations

  • Focused efforts to process, influence, manage, and anticipate customer demand

  • http://www.youtube.com/watch?v=HuuweJmSXlg


Supply/Demand Management

  • VMI

  • EDI

  • CPFR

  • Bullwhip Effect

  • Buyer/Seller Relationships

http://www.youtube.com/watch?v=wLNdDSYqhNw


SC Technology

  • Supports critical supply chain capabilities and strategies

  • A well-designed SCIS framework links people, processes, and technology in a manner that provides actionable information and enhances decision making.


SC Technology


Production Management

  • Production Systems

    • Made to Stock (MTS)

    • Assemble to Order (ATO)

    • Make to Order (MTO)

    • Engineer to Order (ETO)

  • Push/Pull Systems


Quality Control and Improvement

  • Service Process Design/Analysis

    • Factors Influencing Process Design

  • Strategic Importance

  • Continuous Process Improvement

  • Pareto Analysis

  • Ishikawa Diagrams

  • Modeling Principles


Quality Control and Improvement

  • Lean Principles

  • 6 Sigma

  • Benchmarking

  • Just-In-Time

  • TQM (Total Quality Management)

  • ISO:9000


Quality Control and Improvement


Purchasing

  • Purchasing Activities

  • Strategic Sourcing

  • Vendor Management

  • Total Cost of Ownership


Supply Chain Issues


So what can we do?

  • Control our costs

    • Reduce Pricing to reduce cost

    • Reduce variation/standardize product to reduce costs

    • Manage our Inventory


6 Drivers of Supply Chain Excellence


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