KBJ3D3 – RANTAI PASOK DALAM

BISNIS
SEMESTER 7 – 2022/2023

02. SUPPLY CHAIN DRIVERS

AND METRICS

Dr. AKHMAD YUNANI, S.E., M,T,

ADMINSTRASI BISNIS – FAKULTAS KOMUNIKASI
DAN BISNIS
 TUJUAN PEMBELAJARAN
Setelah mengikuti sesi ini, mahasiswa dapat

To identify and understand different indices of supply chain

1 performance

To understand the "science" of lead time reduction in supply

2 chains

To appreciate the role of Internet technologies in improving the

3 delivery time performance of supply chains

Referensi: CHR, Chapter 3, STD, Chapter 3

OUTLINE OF THE SESSION
• Taxonomy of Supply Chain Performance
Measures
• Quick Response Supply Chains
• Fundamental Laws of Lead Time Reduction
• Synchronized Supply Chains
Close interaction among
chains

Most firms learn from close

interaction with suppliers,
customers and rivals.
Furthermore, processes of
knowledge creation are strongly
influenced by specific localized
capabilities such as resources,
institutions, social and
cultural structures (Maskell,
1999)
 SUPPLY CHAIN @ A GLANCE

OEM

10/13/2022
 Supply Chain Management

What is Supply Chain?

“Ajaran” tentang SCM terpotret sebagai perpaduan dari 3
elemen: deskripsi, preskripsi, dan tren (Storey, 2006).

APICS: SC is a global network used to deliver products and

services from raw materials to end customers through an
engineered flow of information, physical distribution, and
cash (APICS, 2008).

Value chain is the integrated macro process of Marketing,

Design, Supply, and Customer (Bolstorff, 2007).

Supply Chain Management consist of firms collaborating to

leverage strategic positioning and to improve operating
efficiency (Bowersox, 2002).
SUPPLY CHAIN PERFORMANCE

Supply Chain Management (SCM) is becoming

a critical issue in company evolution: today,
the world economic situation provides new
opportunities for improving the supply chain,
while new technologies are enabling changes
for reengineering processes and networks
(Bruzzone, 2002).

Today’s customers are smart and

clever. They no longer accept
standardized products as they have in
the past. To a supply chain, such
diverging customer needs represent
two things: source of intense
competition, and a cause of uncertainty
(Pujawan, 2004).
Measuring Supply Chain
Performance
What is performance

Performansi organisasi mencakup

Lingkup Performansi organisasi
sering menjadi ranah literatur
manajemen strategik, namun
demikian pengungkapan dalam
perspektif ekonomi, keuangan,
dan akuntansi akan lebih
melengkapi kajian dan menarik
untuk dibahas.
tiga area spesifik dalam perusahaan:
(a) financial performance (profits,
return on assets, return on
investment, etc.); (b) product
market performance (sales, market
share, etc.); and (c) shareholder
return (total shareholder return,
economic value added, etc.)
(Richard, 2009)
Ukuran kinerja seharusnya
komprehensif, mencakup 3
aspek utama melengkapi ukuran
finansial; pasar, proses internal,
dan pembelajaran dan
pertumbuhan (Kaplan, 2007)

Performance measurement
Measuring Supply Chain
Performance
What is performance

Performance is the final result

of all activities. In evaluating
performance the emphasis is
on assessing the current
behavior of the organization in
respect to its efficiency and
effectiveness. The appropriate
performance measurement
tools should be (Ghosh,
2006):
• Relevant to the strategic
goals of the organization
and accountable to the
individuals concerned
• Focus on measurable
outputs
• Verifiable
Measuring Supply Chain
Performance
What is performance

4 Perspectives Performance
Source: Kaplan, 2007.
Measuring Supply Chain
Performance
What is performance
How One Company Linked
Measures from the Four
Perspectives
Source: Kaplan, 2007.

Backlogging → menunda
pemenuhan order → stockout
SL ➔ 1 – stockout
E = ekspektasi
P = persepsi
S ➔ P/E ≥ 1
Measuring Supply Chain
Performance
Why SC performance

• It is generally believed that a well-crafted system of supply chain

metrics can increase the chances for success by aligning processes
across multiple firms, targeting the most profitable market segments,
and obtaining a competitive advantage through differentiated,
• Several factors are contributing to management’s need for new types of
measures for managing the supply chain including (Lambert, 2001):
• The lack of measures that capture performance across the entire supply chain.
• The requirement to go beyond internal metrics and take a supply chain perspective.
• The need to determine the interrelationship between corporate and supply chain
performance.
Measuring Supply Chain
Performance
Why SC performance

• The complexity of supply chain management.

• The requirement to align activities and share joint performance measurement
information to implement strategy that achieves supply chain objectives.
• The desire to expand the “line of sight” within the supply chain.
• The requirement to allocate benefits and burdens resulting from functional shifts
within the supply chain.
• etc
Measuring Supply Chain
Performance
What is SC performance

• Unit pengukuran setiap tipe

• Umumnya, pengukuran kinerja supply chain menggunakan
dua model: biaya dan kombinasi antara biaya dengan daya
tanggap terhadap pelanggan (Beamon, 1999)
• Single supply chain performance measures (cost focused)
• New framework
• Resource (cost); output (customer responsiveness);
and flexibility (how well the system reacts
uncertainty)
Measuring Supply Chain
Performance
What is SC performance

Performance Goal Reasons

measurement
type
Resource Hi-level of efficiency Efficient resource management is critical
to profitability → Profit = TR – TC
Output Hi-level of customer service Without acceptable output, customers
will turn to other supply chain

Flexibility Kemampuan merespon In an uncertain environment, supply

perubahan perubahan chain must be able to respond to
lingkungan change
Measuring Supply Chain
Performance
What is SC performance

Performance Goal Reasons

measurement
type
Resource Hi-level of efficiency Efficient resource
management is critical to
profitability
Output Hi-level of customer service Without acceptable output,
customers will turn to other
supply chain
Flexibility Kemampuan merespon In an uncertain environment,
perubahan perubahan supply chain must be able to
lingkungan respond to change
Measuring Supply Chain
Performance
What is SC performance

Performance Unit pengukuran

measurement type

Resource Total cost Inventory

Distribution cost ROI
Manufacturing cost
Output Sales On-time deliveries
Profit Backorder/stockout
Fill rate Customer response time

Flexibility The advantages of flexible supply chain system → can be applied to

measure system’s ability to accommodate volume and schedule
fluctuations from suppliers, manufacturers, and customers.
Measuring Supply Chain
Performance
What is SC performance
– Balanced Scorecard Perspective
• BSC was developed outside SCM [(Smith, 2002); (Brewer,
2000); (Olhager, 2002)]:
– How to develop BSC for the company in a specific SC, given its
“environment”?
– Does the BSC for a specific company depend on the
upstream/midstream/downstream position of that company in
the SC?
• Permasalahan kinerja SCM menjadi sederhana kala ukuran
BSC di-shared oleh (Kleijnen, 2003):
– All stakeholders (manajer, karyawan, pelanggan, pemasok, bank,
dsb)
– Seluruh unit dalam perusahaan
– Seluruh perusahaan dalam rantai pasok
Measuring Supply Chain
Performance
What is SC performance

(i) Customer

(ii) Improving
(iv) Financial Visi dan
the internal
position strategi
operation

IT as enabler or In a SC, one company’s

(iii) Stimulating customer may be another
mean of innovation SC innovation
company’s supplier
Source: Kleijnen, 2003
FUNCTIONAL VS PROCESS
PERFORMANCE MEASURES

• Functional measures provide only a partial

picture
• Functional excellence does not imply
process excellence
• Function-based optimization can be
disastrous
• Our attention will be on supply chain
process performance measures
FINANCIAL MEASURES OF SUPPLY
CHAIN PERFORMANCE

• Financial Measures
– Market share
– Stock
– Valuation
– Profits
– ROI
– Inventory Turns
• Financial measures are lagging metrics, a result of past
decisions
• Operational, non-financial measures are excellent
indicators of process health
OPERATIONAL,
NON-FINANCIAL MEASURES

• Cycle time
• Customer service level
– order fill rate
– Stock-out rate
– backorder level
– probability of on-time delivery
• Inventory levels
• Resource utilization
• Capacity/Throughput
OPERATIONAL,
NON-FINANCIAL MEASURES

• Quality
• Reliability
• Dependability/Performability
• Flexibility
– volume
– product mix
– routing
– delivery time
QUICK RESPONSE
SUPPLY CHAINS

• Minimal cycle times

– supply chain end-to-end lead time
– order-to-delivery lead time
• Minimal spread in cycle times
• Synchronization among various stages
LEAD TIME REDUCTION

• Cycle time is an all-encompassing

measure
• Provides competitive edge
• Leads to increased customer satisfaction
• Leads to reduced inventory, reduced
onsolescence and increased quality
COMPONENTS OF
SUPPLY CHAIN LEAD TIME

• Procurement lead time

• Manufacturing lead time
• Distribution lead time
• Logistics lead time
• Setup times
• Waiting times
• Decision-making times
• Synchronization times
FUNDAMENTAL LAWS OF LEAD
TIME REDUCTION

First Law: Little's Law

– Average Inventory is the product of average waiting
time and throughput rate
– Inventory reduction and optimal utilization of resources
is the key to lead time reduction
– Throughput and lead time are negatively correlated
(classical queuing theory)
– Load balancing and optimal resource allocation will help
FUNDAMENTAL LAWS OF LEAD
TIME REDUCTION

Second Law: Pollaczek-Khintchine Formula

– Waiting times are positively correlated to variance of
arrival and processing times
• Input control
• Process control
• Fluctuation smoothing
– Controlled arrivals can significantly reduce lead times
• closed mode operation better than open mode
– Strict control of processing times reduces lead times
considerably
FUNDAMENTAL LAWS OF LEAD
TIME REDUCTION

Third Law: Forrester Effect

– Inventories grow in successive echelons of the supply
chain as demands get amplified in the upstream
direction
– Inventory expansion leads to rising levels of lead time
– Accurate forecasting and intelligent use of information
are is key to reducing the effects of this
FUNDAMENTAL LAWS OF LEAD
TIME REDUCTION

Fourth Law: Taguchi's Loss

– Taguchi's loss function is decided by variability and also
bias (deviation from optimal nominal)
– Do not always try to eliminate variation, but minimize
the effects of variability
– Find robust operating points (nominal)
FUNDAMENTAL LAWS OF LEAD
TIME REDUCTION

Fifth Law: Use the Internet

– Availability and intelligent use of critical
information is a key requirement
– Use of Internet and Ecommerce Technologies
can help dramatically in this
– Synchronization between the front-end and
back-end is critical
SYNCHRONIZED SUPPLY CHAINS

• Variability is the main enemy in achieving lead time

reduction, as evidenced by:
– Forrester Effect
– Pollaczek-Khintchine Formula
– Taguchi's Loss Function
• Our objective is to design a highly synchronized supply
chain network that works like a world class relay racing
team
• We wish to use best practices in manufacturing, design, and
tolerance domains
 DESIGN OF SYNCHRONIZED
SUPPLY CHAINS

• Y = f (X1, X2, . . . , Xn)

• Y represents supply chain lead time or order-to-delivery lead time
• f is a deterministic function
• X1, X2, . . . , Xn are lead times of individual business processes,
continuous random variables
• Y is a continuous random variable
• Analysis: Compute the probability distribution of Y
given f and the distributions of X1, X2, . . . , Xn.
• Synthesis: Find the best nominal and tolerances for X1,
X2, . . . , Xn, given nominal and tolerance specifications
for Y.
 EXAMPLE:
A PLASTICS SUPPLY CHAIN

• Procurement
• Sheet Fabrication
• Transportation
• Manufacturing
• Assembly
• Delivery
A SIX SIGMA FRAMEWORK

• Six Sigma Quality: A process is considered to be of

six sigma quality if there are no more than 3.4 non-
conformities per million opportunities (3.4 ppm) in
the presence of typical sources of variation.
• Analysis and Synthesis are based on:
– Characterizing product-process quality using process
capability indices Cp and Cpk
– Use of statistical tolerancing techniques to reduce lead
times
WHERE CAN WE APPLY THIS?

• Due Date Setting

• Selection of Supply Chain Resources
• Make-to-stock versus make-to-order versus
build-to-order
• Resource Allocation
• Selecting logistics providers
• Select Robust Operating Points
CONCLUSIONS

• There are fundamental laws governing lead time

reduction in supply chains
• Variability reduction and synchronization among
internal business processes of a supply chain is a
key to achieving a high level of delivery
performance
• Use of Internet and Ecommerce technologies could
be a key for achieving outstanding delivery
performance