Lecture supply chain management chapter 2 supply chain planning

Bùi Thị Bích LiênL o g oLearning objectiveGain a conceptual appreciation of the businessactivities that drive supply chain operationsExercise a high-level understanding ofactivities in

06-Sep-21 Logo Learning objective Logo Chapter 2: Supply Chain Planning MsC Bùi Thị Bích Liên Gain a conceptual appreciation of the business activities that drive supply chain operations Exercise a high-level understanding of activities involved in supply chain planning Understand basic concepts of demand forecasting and inventory management Begin to assess how well these activities operate within your own organization Logo Contents Logo SCOR MODEL Processes and Operations Management Model in SC  Introduction 1994, PRTM & AMR coordinated to develop model 1996, transfer to SCC Demand Planning Being used in many different areas This model provides: Background structure, business process re-structure Unify the terminology in management  Product Pricing Establish the comparison standards, measure of performance Model has processes Plan, source, make, delivery and return 06-Sep-21 Logo Logo PLANNING IN SC Planning and orienting for all operations in SC Analyze and forecast Logo PLANNING Logo Rule Environment Market Competitors Using the information exactly and timely Focus resources on priority goals Sources Integrating supply chain requirements Identify final responsibility and specific action Infrastructure Info Technology Finance Human 06-Sep-21 Logo SOURCING IN SUPPLY CHAIN Logo SOURCING IN SUPPLY CHAIN Important decision Meet the requirement of customers with lowest cost Building CRM Lowest Total cost Lowest price per unit Logo SOURCING IN SUPPLY CHAIN Selecting suppliers: • Identify the criteria • Evaluate • Sign for approval • Control Suppliers Relationship management: • Evaluate quality • Adjust and complete Why we buy? Where we buy? From which suppliers How much we will buy? When we buy? How we buy? Logo OPERATION IN SUPPLY CHAIN Role Transaction management: • Price determination • Order • Delivery • Documents • Payment Analyze, discuss about demand for sourcing: • Know - how • Describe What we buy? Convert the raw material to finish products There are more and more enterprises who outsource their operation partly or entirely (manufacturing, experiment, packing) Requiring for objectives sharing and consistent process Manufacturing process depends on operation model 06-Sep-21 Logo OPERATION IN SUPPLY CHAIN Model Logo DELIVERY IN SUPPLY CHAIN When applied? Make To Stock - Consumer goods - Mass production, lot size selling Make To Order - Several optional goods - Partly completed product and assembled completely after received the order Assemble To Order - Variety of product and differentiation - Not regular demand, limit quantity Engineer To Order - Complicated products - Special demand Depends on modes of selling Logo - First requirement and the most basic - Plentiful product structure - Adequate in quality and quantity - Ready to serve customers  Variety, sufficient product  Lead time  Reliability  Flexibility  Information Requirements in delivering DELIVERY IN SUPPLY CHAIN Variety and sufficient product - Direct selling - Indirect selling Requirements Logo DELIVERY IN SUPPLY CHAIN Flexibility Reliability   Variability Variability identification identification and and response response   Current Current resources resources   Priority Priority rules rules - Lead time variety - Order editing - Safety inventory Stability level Lead time - From the time customer places the order to receive the product - Depending on many factors: IT, Inventory, transport, distance … Adaptive capacity Information  Fully accurate and timely  Simplicity and convenience  Before, within and after transaction 06-Sep-21 Logo REVERSE IN SUPPLY CHAIN Logo REVERSE IN SUPPLY CHAIN Definition: Reverse logistics Role: - Meet the customer’s requirement better - Protect the environment - A stage of supply chain - Effectively managing production line, package and related information - From the destination to the origin - Restore product value and waste disposal Benefit Creating smooth downstream logistics  Defective products return to the downstream logistics channel quickly Enhancing customer service • Fix, repair, warranty Characteristics: - Small scale and dispersed - Large recovery costs - Lacking of service suppliers who have enough capability Save the cost for enterprise • Recycled materials, recycled packaging, reselling products Create a “green image” for businesses • Reduce the impact to the environment Logo Logo REVERSE IN SUPPLY CHAIN Green Supply Chain New materials Procurement Manufacture Distribute Recycled materials Reverse Logistics Centre Recycle Waste proposal Upstream Re-manufacture Repair 06-Sep-21 Logo Introduction Logo What is supply chain planning? Supply chain planning is the process of planning a product from raw material to the consumer It includes supply planning, production planning, demand planning, and sales and operations planning Logo  Supply planning determines how best to fulfill the requirements created from the demand plan The objective is to balance supply and demand in a manner that achieves the financial and service objectives of the enterprise  Production planning addresses the production and manufacturing modules within a company It considers the resource allocation of employees, materials, and of production capacity Logo  Demand planning is the process of forecasting demand to make sure products can be reliably delivered Effective demand planning can improve the accuracy of revenue forecasts, align inventory levels with peaks and troughs in demand, and enhance profitability for a particular channel or product  Sales and operations planning (S&OP) is a monthly integrated business management process that empowers leadership to focus on key supply chain drivers, including sales, marketing, demand management, production, inventory management, and new product introduction 06-Sep-21 Logo Demand Planning Logo The role of forecasting in SC Demand Forecasting Consequences of wrong forecasting Forecasting variables Forecasting methods The basic for all strategic and planning decision in a supply chain Example:  Production: scheduling, inventory, aggregate planning  Marketing: sale force allocation, promotions, new product introduction  Finance: plant/equipment investment budget  Personnel: workforce planning, hiring staffs Logo Logo Forecast’s characteristics - Measure the error - Eg: car and car’s components 06-Sep-21 Logo Logo Consequences of wrong forecast  Missed profits/earnings  Lost customers  Missed orders  Unacceptable forecast error  Decreased market share  Late-to-market and underperforming new products  Supply interruption  Lower inventory turnover  Longer lead times Logo Logo Case Study? Higher total costs Poor use of resources Increased obsolescence Lack of teamwork and cohesion from the top on down Inaccurate and incomplete information available for decision making and control Inefficient planning process https://www.academia.edu/9864312/Suppl y_Chain_Management_Case_of_Cisco_S ystems 06-Sep-21 Logo Logo Demand Market is growing or in recession period? The market is at saturation or stable demand? Does the product have seasonal needs? The market is in the development stage? Logo Supply Supply is determined by the suppliers and leadtime:  Few suppliers / long leadtime  instability and difficult to forecast  Many suppliers / short leadtime  easy to forecast Logo Product characteristics New or Old products?  Example: in the summer (coat)  Moon cakes Alternative products Supplementary products 06-Sep-21 Logo Logo Competitive Environment Market share? Development trend of competitors? https://corporatefinanceinstitute.com/resou rces/knowledge/modeling/forecastingmethods/ Market growth rate? https://otexts.com/fpp2/case-studies.html Logo Logo Qualitative method Qualitative method is based on intuition, observation ability or subjective opinion about the market This method is appropriate when there is very little historical data to make a forecast 10 06-Sep-21 Logo Logo Delphi method Subjective opinions of the surveyed subjects such as:     Department management of the business Salesman Investigate customers Expert opinion inside and outside of the business Logo Logo Causal Predictive method based on determining the relationship between quantities (variables), then based on which to make predictions  For example: Revenue & expenses; advertising & profits; price & salary  price and demand for gold; loan needs and interest rates  Gasoline prices increased, transport costs increased Scatter graph method Regression analysis by the least squares method 11 06-Sep-21 Logo Logo Scatter method 𝑏= ∑   ∑   ∑   – ∑   Consumption volume of the company as followed: ∑   (∑   ) Quarter -b a: độ chặn (intercept) b: độ dốc (Slope) n: số liệu ta có (no of data) 𝑎= Sale (y)   Marketing cost (x) 𝑥𝑦 ∑   1000 units 10 15 20 1000 USD 45 55 35 65   1000  Identify the correlation between revenue and marketing cost?  If marketing cost increases up to 75000 USD, how much the revenue will be? Logo Logo Time series analysis This method uses the historical data assumption as a basis for forecasting future needs Model: moving average and exponential smoothing Application: when the data in the past is reliable, the market is stable and the demand curve is not volatile much 12 06-Sep-21 Logo Moving Average: simple method Logo Moving average • Advantages: Simple moving average: n most recent periods High value of n  more accurate • Simple • Disadvantages: • • • No consider seasonality in this data Having equal weight for recent periods Need huge amount of past data Logo Example Logo Ex Identifying revenue trend in years? Years 20X0 X1 X2 X3 X4 X5 X6 Sale (units) 390 380 460 450 470 440 500 Moving total of Moving average years of years Sale (1) Sale (2) = (1)/3 Years Number of students 2006 7800 2007 7600 2008 9200 2009 9000 2010 9400 2011 8800 2012 10000 Moving total of MAV of 3 years years 13 06-Sep-21 Logo Logo Exponential smoothing Moving average  Weighted Moving average method: more weight to the most recent period  N =  maximum to the most recent data  There is no set rule to give the value of the weights  Experts: experiences, exposure  There is some exceptional situations, we should not assign the maximum weight to the most recent period because of the temporary nature of particular phenomena  Whenever we update the data  we update the forecast for the next period immediately  Whatever is happening, whatever changes happened  always include in our forecasting method and continuously updated for next period refer time  Advantage: used all the value Logo Exponential smoothing Logo Exponential Smoothing Month i Ft – Forecast for period t Ft-1 – Forecast for period t-1 Dt-1 – Real demand of period t-1 α- Smoothing constant Real demand (Dt) 100 110 120 115 125 Predictable demand(Ft) α=0.10 Ft,0.1 100 Error α=0.40 Ft,0.4 100 Error 14 06-Sep-21 Logo The average method Logo The mean method Summarising: Y = T + S + C + R Y: the actual time series T: the trend series S: the seasonal component R: the residual component C: the cyclical component  economist Y = T + S + R Summarising: Y = T x S x C x R Y: the actual time series T: the trend series S: the seasonal component R: the residual component C: the cyclical component  economist (không đưa vào dự báo) Y = T x S x R Logo Example: The average method a Hãy vẽ đồ thị doanh số tuần b Sử dụng phương pháp trung bình động mơ hình cộng để tìm xu hướng điều chỉnh mùa vụ c Sử dụng phương pháp trung bình động mơ hình nhân để tìm xu hướng điều chỉnh mùa vụ d Dự báo doanh số tuần thứ 5, doanh số thứ tuần Monday Tuesday Wednesday Thursday Friday Logo Week (1000 units) Week Week 80 104 94 120 62 82 110 97 125 64 84 116 100 130 66 B1: Tính tổng chuỗi thời gian (Tính tổng số chu kỳ theo phương pháp trượt) B2: Tính số bình qn di động B3: Xác định biến động mùa vụ: S=Y–T B4: Xác định biến động trung bình liệu theo mùa vụ B5: Tìm cách triệt tiêu để tổng S tiến đến B6: Tính mức biến động trung bình theo đơn vị liệu Xác định biến động xu hướng theo đơn vị mùa vụ 15 06-Sep-21 Logo Logo Simulation The mean method B1: Tính tổng chuỗi thời gian (Tính tổng số chu kỳ theo phương pháp trượt) B2: Tính số bình quân di động B3: Xác định biến động mùa vụ: S=YxT B4: Xác định biến động trung bình liệu theo mùa vụ B5: Tìm cách triệt tiêu để tổng S tiến đến B6: Tính mức biến động trung bình theo đơn vị liệu Xác định biến động xu hướng theo đơn vị mùa vụ Simulation method is a combination of causal and time series methods to simulate consumer behavior under different conditions and circumstances Apply: sales fluctuations if prices fall Volatility in market share if competitors launch new products and open up shop next door Logo Product pricing Logo C’ method  Price of product as 3C methods  Cost  Incoterms 2020  Competitors Customer 16 06-Sep-21 Logo Logo Pricing on cost Total fixed cost: VNĐ 300 mil  Quantity of products: 10.000 items  Variable unit cost: VNĐ150,000 đ/item  Calculating the unit price if:  Expected profit on price is 20% Logo http://blogcongdong.com Click to edit company slogan 17