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Supply Chain Management
Supply Chain Management
Chwen-Tzeng Su, PhD
Professor, Department of Industrial Management
National Yunlin University of Science & Technology
Touliu, Yunlin, Taiwan 640, R.O.C.
E-mail: suct@yuntech.edu.tw
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The Manufacturing Environment
The Manufacturing Environment
Global Market and Competition
Rapid Changes
?New products rapidly introduced
?Short, unknown product life cycles
High Variety of Products
Increasing storage and transportation costs
Difficult to forecast demand
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Supply ChainManagement Process
Supply ChainManagement Process
Distribution Center
Plant
Customer
Supplier
• Multi - Organization
• Multi - Currency
• Global Consolidation
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The Goals of the
The Goals of the
Manufacturing Organization
Manufacturing Organization
Responsiveness
Competitive pricing
Efficiency
Customer service
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Why Do These Goals Conflict?
Why Do These Goals Conflict?
Forces for keeping low inventory
?inventory expensive
?low salvage values
Forces for keeping high inventory
?long lead times
?customer service is important
?demand is hard to predict
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Definition:
“Supply ChainManagement is primarily concerned
with the efficient integration of suppliers, factories,
warehouses and stores so that merchandise is
produced and distributed in the right quantities, to the
right locations and at the right time, and so as to
minimize total system cost subject to satisfying
service requirements.”
Supply Chain Management
Supply Chain Management
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Suppliers
(International)
1.2 Million PC/Yr.
Glasgow U.K.
Warehouse
Port
PC Assembly
Plant
13 Transshipment
Points (TPs) in Europe
Country-wide
Distribution
Centers (DCs)
Retailers
Example of a Typical Supply Chain: IBM Europe PC Supply Chain
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What Is the Goal of SupplyChain
What Is the Goal of SupplyChain
Management?
Management?
Supply chainmanagement is concerned with the
efficient integration of suppliers, factories, warehouses
and stores so that merchandise is produced and
distributed:
?In the right quantities
?To the right locations
?At the right time
In order to
?Minimize total system cost
?Satisfy customer service requirements
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Why SC Catches Attention?
Why SC Catches Attention?
Information technology revolution
Global competition in cost, quality, delivery, and cycle
time.
Emergence of inter-organizational relationship
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Information Technology Revolution
Information Technology Revolution
In the not-too-distant past, the primary means of
communication between members of a supplychain
was paper.
One problem with paper-based systems has been the
time and money that is wasted re-keying the same
information into different computer systems.
As a result the growth of computers, which support
networks, and networks that support people’s needs
(business transactions, communication, etc.), has
exploded.
[...]... ?e-collaboration with major buyers ?monitoring of productivity & returns on investments 23 Case: How Dell Reengineered its SupplyChain (cont.) ? ? Results: ? Classic case in supply chainmanagement ? In 2003, Dell made over $1 million in computer web sales/ day ? Becomes leader in Customer Relationship Management (CRM) ?Online tracking of orders & shipments ?Viewer approved configurations and pricing ? Customized... time • High in stock • Enormous variety of products • Low prices 30 ? ? Why is Global Optimization Hard? The supplychain is a dynamic system ?Not only demand and supplier capabilities change over time, but supplychain relationships also evolve overtime ?Uncertainty is inherent in every supplychain ?Increasing customer power leads to increased demands on retailers ?Increased retailer power leads to... model , one can change the manner in which business is done ? To implement this model on a large scale, one needs to build super supply chainmanagement ? Another major success factor in Dell’s plans was the improvements made in its logistics system along the entire supplychain ? Improved communications and customer service, which are part of Dell’s CRM program, are the cornerstones of its success... techniques, and approaches for Supply ChainManagement focus on: ?Global Optimization ?Managing Uncertainty 26 Optimization ? ? What is it? Why is it important? What tools and approaches help? 27 Sequential Optimization vs Global Optimization ? ? Sequential Optimization Procurement Planning Manufacturing Planning Distribution Planning Demand Planning Global Optimization Supply Contracts/Collaboration/Information... is Global Optimization Hard? The supplychain is a complex network ?The difficulty increase exponentially when an entire system is being considered than when a single facility is being considered ?Facilities dispersed over a large geography, and in many cases, all over the globe Different facilities have conflicting objectives 29 Conflicting Objectives in the SupplyChain ? ? 1 Warehousing • Low inventory... time by 10-20% ? Reduced transportation cost by 10-15% 21 Case: How Dell Reengineered its SupplyChain ? ? Problem: ? Dell pioneered the mail order approach to selling PCs ? 1993, Compaq cuts prices to In drive Dell out of the market Dell experiences $65 million in losses 22 Case: How Dell Reengineered its SupplyChain (cont.) ? ? Solution: ?Dell implements the following re-engineering strategies: ?direct... 13 Notice: ? ? Who is involved? What level of activities are involved? What do we mean by integration? 14 ? ? SupplyChain Planning Processes Material Requirement Planning Component Requirement Supplier Demand Forecasting Demand Planning Production Plan Plant Warehouse Logistics Retailer Order Management 15 ? ? A complex network – example National Semiconductors: • Production: – Produces chips in six... repair centers Spare Parts ? Optimal design of spare parts 17 ? ? GSCM at National Semiconductors ? Which supplier to keep ? Which product to buy in a nation Supplier Selection ? Which supplier should supply each plant ? Location & availability of cheap labor ? Export regulations, duty rates Miscellaneous 18 GSCM at Digital Equipment Corp ? ? ? Objective Function for GSCM ? GSCM minimizes a weighted . Typical Supply Chain: IBM Europe PC Supply Chain
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What Is the Goal of Supply Chain
What Is the Goal of Supply Chain
Management?
Management?
Supply chain. Supply Chain Management
Supply Chain Management
Chwen-Tzeng Su, PhD
Professor, Department of Industrial Management
National Yunlin