Professional Documents
Culture Documents
SCM Module 1 Introduction
SCM Module 1 Introduction
Paper
Timber Tenneco
Manufa
Co Packaging
cturer
Wall
Wall Mart Customer
P& G
Mart Stores
Transporter
Chemical Plastic
Mfr Mfr
Supply Chain Stages
Supply Chain Stages include:
• Customers Funds/Information
• Retailers
• Wholesalers/ Distributers
• Manufacturers
• Suppliers
Products
Source of Revenue and Cost
Simplified SC:
Delivery of a supplier Value: Quality, Flexibility
Innovation & Value Flow to Customer
Supplier’s Customer’s
Supplier Manufacturer Customer
Supplier Customer
1 2 3
4
3 1
3. Replenishment Cycle 5
4.Retailer
2
1
6
3 5. Stages
4
2 2. Manufacturing cycle 5 3. Distributer
1 6
3 4
2 1. Procurement 2. Manufacturer
5
Cycle
1 6
4. Cycles 1. Supplier
Stages of SC Varies
Each cycle occurs at the interface between
2 successive stages of SC
• Buyer • Seller
• Economies of scale in • Ensures Product
Ordering availability
• To reduce the cost of • Forecast demand
receiving • Order fulfillment
• Arranging reverse flow process
– returning defects, • Cost of transport &
recycling materials delivery
Differences between Cycles
• In Customer Order • In other cycles. Order
Cycle, demand is placement is uncertain –
external- uncertain forecasted
• Scale of an Order: • Order Quantity-gradually
Customer requirement, multiplies from user to
meager dealer, dealer to
compared to other SC distributor, distributor to
members manufacturer
A cycle view of SC defines processes and the owners
of each. Specifies roles and responsibilities each
member and desired outcome for each process.
Push and Pull View of the SC
• Push / Pull Boundrey
P1 P2 P3 K K1 N-1 N
Replenishment
and Mfg Cycle
Supplier
L.L. Bean’s -‘make to stock’
• L.L Beans executes all processes before customer
order arrives (customer order cycle)
• Order fulfillment takes place, from built
inventory ( Replenishment cycle)
• Goal of replenishment cycle is ‘ensure
availability, when customer order arrives’
• The same principle follows in Manufacturing
cycle, procurement circle etc,.
Dell’s build to Order
customer
Dell’s SC
Pull Process
Customer Order
Manufacturing, cycle Customer order
& Manufacturing
Cycle Dell
Customer Order Arrives
Procurement
Cycle
Push Process
Procurement,
Cycles
Dell’s Build-to-Order
• Dell supplies computers directly to customers
• Demand is filled from production( not fm stk)
• Order recd- mfg cycle is part of customer order
cycle.
• Only 2 cycles work:
– 1. customer order cycle & Mfg cycle
– 2. Procurement Cycle
All processes are PULL process
Goal is ,to identify the appropriate Push/Pull boundary,
such away that demand & supply match effectively
Adjusting Push /Pull Boundary
Usage in SC Strategic decisions: (Case)
Until 1990, Processes of paint manufacture was done in
large factories
Stages: Base mfr –color mixing – can transportation –
packing (Push process)
Uncertainty in matching ‘supply & demand’
After 1990, SC restructured – Mixing at outlet stores, after
customers placing orders(Pull)
Color mixing was pushed from Push to Pull
Key Point
• Advantages:
– 1. customers get their ‘specific shades’
– 2. paint inventories, got reduced-across SC
3 SC Macro Processes
• 1. Customer Relationship Management-CRM
– Processes interfacing between Firm & customers
• 2. Internal Supply Chain Management- ISCM
– Processes with in the firm- Internal customer
• 3. Supplier Relationship Management-SRM
– Processes interfacing between Firm & suppliers
• SC Responsiveness:
– 1. Respond to wide range of quantity demanded
– 2. Meet short lead times
– 3. Handle large variety of products
– 4. Build highly innovative products
– 5. Meet high service level
– 6. Handle supply uncertainty
SC Efficiency:
1. Increase in Cost, lower efficiency (1 to 5 - increase cost)
3. Achieving Strategic Fit
Responsive SC
o f F it
one egic
Responsiveness Z rat
spectrum St
Efficient SC
Certain Implied uncertainty Uncertain demand
demand Spectrum
Different Roles of Implied Uncertainty for SC Responsiveness
SC Strategy
Manufacturing
Inventory
Lead Time
Product development Purchasing Marketing and Sales
Strategy Transportation Strategy
Finance Strategy
Competitive Strategy
Logistic Drivers