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Course I: Supply Chain Management Concepts & Overview Course II: Supply Chain Management Domain
Purchasing and Procurement Sales Forecasting & Demand Planning Production planning and control Inventory Management Distribution & Warehousing Customer service
Q&A
What is SCM???
Supply Chain Management means transforming a companys "supply chain" into an optimally efficient & customer-satisfying process. Efficiency of whole supply chain is importance over individual node/link efficiency.
Supplier
Manufacturer
Customer
Cash Flow
Flows in SCM
Material Flow: Flow of physical goods/
services.
Principal Issues
Inventory reduction Lead time Reduction Quick response to changing customer needs Improving the accuracy of forecast 4R Model Better customer service Higher value for money Shared business vision
Low
High
Cost
Low
Transportation
Route and Mode of transportatioo
Facilities
Production and storage sites.
Information
Availability of information at right time.
Responsiveness
Inventory
Transportation
Drivers
Facilities
Information
Purchase Cycle
Receiving & Analyzing purchase requisition
Selection of supplier, issue request for quotations, receiving And analyzing quotations, selecting supplier Negotiation and deciding the right price/ e-bidding Issue PO Follow up, receiving and accepting goods Approving supplies invoice for payment
Forecasting demand forms basis for all strategic planning decision. Determine responsiveness of supply chain which determined the forecasting frequency. Integrate demand planning with forecasting. Eg. Capacity constraint, purchase etc. Identify the components of a demand forecast. Systematic and random component. Analyze demand forecast to estimate forecast error.
Master Plan
Production Plan:
Inv level, Quantities of product group, resources etc
Aggregate Planning
Is a process of determining levels of capacity
production, subcontracting, inventory and stockout over specified time horizon to maximize profit.
Production levels Inventory levels Aggregate planning
Production cost
Labour Constraints
Capacity levels
Subcontracting, OT, hire and fire etc
3 months to 18 months
Cycle Inventory
Amount of inventory used to satisfy average
demand between receipt of supplier shipments. Cycle inventory is result of production and purchase in lot size. Supply Chain Decision: Trade of between cost of holding and cost of ordering.
Safety Inventory
Inventory held in case demand exceeds
expectations. This is to counter uncertainty.
Seasonal Inventory
Inventory that is built up to counter
predictable variability in demand.
EOQ Determination
Total cost
Cost
Holding cost
Ordering cost Material Cost EOQ
Lot size
EOQ Model
Holding Cost Ordering Cost
Holding cost Avg inv. * Cost of carrying. = (Q/2 )*H Ordering cost - No of order * Order cost /order = (R/Q) * S
EOQ Model
Total Cost = (R/Q)S + (Q/2) H Differentiating w.r.t Q Optimum lot Size Q* = Sqrt (2RS/H)
This is the EOQ which optimizes the
carrying and holding cost.
Physical Distribution
S U P P L I E R
Physical supply
Manufacturer
Distribution
Physical Distribution
S U P P L I E R
Distribution
Refer to movement of product/material
from one location to another. Logistic Networks: Direct Shipment Network
Supplier
Retail Point
Supply Chain Manager decisions: Lot quantity and mode of transportation. Direct Shipping with Milk Run: Milk run is route in which a truck either deliver product from single supplier to multiple retailers or vice versa.
Consolidation Lover cost
Supplier
Retail Point
Supplier
Distribution
Retail Point
Distribution Warehouse: Dynamic purpose of movement and mixing. Bulk and Break. Emphasis is on movement and handling and not
on storage.
Role of Warehousing
Transportations consolidation Product Mix Services
Customer Service
Customer driven market. Price = Cost + Profit Traditional approach Profit = price cost
Decided my market
Thank You