Operation management 9e stevenson mcgrwhill chap011

11 Supply Chain Management McGraw-Hill/Irwin Copyright © 2007 by The McGraw-Hill Companies, Inc All Learning Objectives        Explain what a supply chain is Explain the need to manage a supply chain and the potential benefits of doing so Explain the increasing importance of outsourcing State the objective of supply chain management List the elements of supply chain management Identify the strategic, tactical, and operations issues in supply chain management Describe the bullwhip effect and the reasons why it occurs 11-2 Learning Objectives        Explain the value of strategic partnering Discuss the critical importance of information exchange across a supply chain Outline the key steps, and potential challenges, in creating an effective supply chain Explain the importance of the purchasing function in business organizations Describe the responsibilities of purchasing Explain the term value analysis Identify several guidelines for ethical behavior in purchasing 11-3 Supply Chain Management  Supply Chain: the sequence of organizations - their facilities, functions, and activities - that are involved in producing and delivering a product or service Sometimes referred to as value chains 11-4 Facilities       Warehouses Factories Processing centers Distribution centers Retail outlets Offices 11-5 Functions and Activities         Forecasting Purchasing Inventory management Information management Quality assurance Scheduling Production and delivery Customer service 11-6 Typical Supply Chains Production Distribution Purchasing Receiving Storage Operations Storage 11-7 Typical Supply Chain for a Manufacturer Figure 11.1a Supplier Supplier Supplier } Storage Mfg Storage Dist Retailer Customer 11-8 Typical Supply Chain for a Figure 11.1b Service Supplier } Storage Service Customer Supplier 11-9 Need for Supply Chain Management 1.Improve operations 2.Increasing levels of outsourcing 3.Increasing transportation costs 4.Competitive pressures 5.Increasing globalization 6.Increasing importance of e-commerce 7.Complexity of supply chains 8.Manage inventories 11-10 Goal of Purchasing  Develop and implement purchasing plans for products and services that support operations strategies 11-43 Duties of Purchasing  Identifying sources of supply  Negotiating contracts  Maintaining a database of suppliers  Obtaining goods and services  Managing supplies 11-44 Figure 11.5 Purchasing Interfaces Legal Operations Accounting Purchasing Data processing Design Suppliers Receiving 11-45 Purchasing Cycle Legal 1.Requisition received Operations Accounting 2.Supplier selected 3.Order is placed Purchasing Data processing 4.Monitor orders Design 5.Receive orders Receiving Suppliers 11-46 Value Analysis vs Outsourcing  Value analysis  Examination of the function of purchased parts and materials in an effort to reduce cost and/or improve performance 11-47 Centralized vs Decentralized Purchasing  Centralized purchasing  Purchasing is handled by one special department  Decentralized purchasing  Individual departments or separate locations handle their own purchasing requirements 11-48 Suppliers  Choosing suppliers  Evaluating sources of supply  Supplier audits  Supplier certification  Supplier relationships  Supplier partnerships 11-49 Factors in Choosing a Supplier     Quality and quality assurance Flexibility Location Price 11-50 Factors in Choosing a Supplier (cont’d)     Product or service changes Reputation and financial stability Lead times and on-time delivery Other accounts 11-51 Evaluating Sources of Supply  Vendor analysis: Evaluating the sources of supply in terms of price, quality, reputation, and service 11-52 Evaluating Sources of Supply  Vendor analysis - evaluating the sources of supply in terms of       Price Quality Services Location Inventory policy Flexibility 11-53 Supplier as a Partner Table 11.9 Aspect Adversary Partner Number of suppliers Many One or a few Length of relationship May be brief Long-term Low price Major consideration Moderately important Reliability May not be high High Openness Low High Quality May be unreliable; buyer inspects At the source; vendor certified Volume of business May be low High Flexibility Relatively low Relatively high Location Widely dispersed Nearness is 11-54 Supplier Partnerships  Ideas from suppliers could lead to improved competitiveness 1.Reduce cost of making the purchase 2.Reduce transportation costs 3.Reduce production costs 4.Improve product quality 5.Improve product design 6.Reduce time to market 7.Improve customer satisfaction 8.Reduce inventory costs 9.Introduce new products or services 11-55 Critical Issues  Strategic importance      Cost Quality Agility Customer service Competitive advantage  Technology management  Benefits  Risks 11-56 Critical Issues  Purchasing function     Increased outsourcing Increased conversion to lean production Just-in-time deliveries Globalization 11-57 ... State the objective of supply chain management List the elements of supply chain management Identify the strategic, tactical, and operations issues in supply chain management Describe the bullwhip... Inventory management Information management Quality assurance Scheduling Production and delivery Customer service 11-6 Typical Supply Chains Production Distribution Purchasing Receiving Storage Operations... best move and store materials 11-15 Strategic or Operational  Two types of decisions in supply chain management  Strategic – design and policy  Operational – day-today activities  Major decisions