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Supply Chain Drivers and Metrics

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34 views

Supply Chain Drivers and Metrics

Uploaded by

Moona Malik
Copyright
© © All Rights Reserved
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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3

Supply Chain
Drivers and
Metrics

PowerPoint presentation to accompany


Chopra and Meindl Supply Chain Management, 5e
Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall.
© 2012 Prentice Hall Inc. 1
1-1
3-1
Drivers of Supply Chain Performance

• Facilities
– The physical locations in the supply chain
network where product is stored,
assembled, or fabricated
• Inventory
– All raw materials, work in process, and
finished goods within a supply chain
• Transportation
– Moving inventory from point to point in the
supply chain

Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall. 3-2


Drivers of Supply Chain Performance

• Information
– Data and analysis concerning facilities,
inventory, transportation, costs, prices, and
customers throughout the supply chain
• Sourcing
– Who will perform a particular supply chain
activity
• Pricing
– How much a firm will charge for the goods and
services that it makes available in the supply
chain

Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall. 3-3


A Framework
for
Structuring
Drivers

Figure 3-1

Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall. 3-4


Facilities
• Role in the supply chain
– The “where” of the supply chain
– Manufacturing or storage (warehouses)
• Role in the competitive strategy
– Economies of scale (efficiency priority)
– Larger number of smaller facilities
(responsiveness priority)

Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall. 3-5


Facilities
• Components of facilities decisions
– Role
• Flexible, dedicated, or a combination of the two
• Product focus or a functional focus
– Location
• Where a company will locate its facilities
• Centralize/decentralize, macroeconomic factors,
quality of workers, cost of workers and facility,
availability of infrastructure, proximity to
customers, location of other facilities, tax effects

Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall. 3-6


Facilities
• Components of facilities decisions
– Capacity
• A facility’s capacity to perform its intended
function or functions
• Excess capacity – responsive, costly
• Little excess capacity – more efficient, less
responsive

Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall. 3-7


Inventory
• Role in the Supply Chain
– Mismatch between supply and demand
– Satisfy demand
– Exploit economies of scale
– Impacts assets, costs, responsiveness,
material flow time

Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall. 3-8


Inventory
– Material flow time, the time that elapses
between the point at which material enters the
supply chain to the point at which it exits
– Throughput, the rate at which sales occur
– Little’s law

I = DT
where
I = Inventory , T = Flow time , D = Through put

Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall. 3-9


Transportation
• Role in the Supply Chain
– Moves the product between stages in the
supply chain
– Impact on responsiveness and efficiency
– Faster transportation allows greater
responsiveness but lower efficiency
– Also affects inventory and facilities

Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall. 3-10


Transportation
• Role in the Competitive Strategy
– Allows a firm to adjust the location of its
facilities and inventory to find the right
balance between responsiveness and
efficiency
• Components of Transportation
Decisions
– Design of transportation network
• Modes, locations, and routes
• Direct or with intermediate consolidation points
• One or multiple supply or demand points in a
single run
Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall. 3-11
Transportation
– Choice of transportation mode
• Air, truck, rail, sea, and pipeline
• Information goods via the Internet
• Different speed, size of shipments, cost of
shipping, and flexibility

Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall. 3-12


Information
• Role in the Supply Chain
– Improve the utilization of supply chain
assets and the coordination of supply chain
flows to increase responsiveness and
reduce cost
– Information is a key driver that can be used
to provide higher responsiveness while
simultaneously improving efficiency

Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall. 3-13


Components of Information Decisions

• Enabling technologies
1. Electronic data interchange (EDI)
2. The Internet
3. Enterprise resource planning (ERP)
systems
4. Supply chain management (SCM)
software
5. Radio frequency identification (RFID)

Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall. 3-14


Sourcing
• Role in the Supply Chain
– Set of business processes required to
purchase goods and services
– Will tasks be performed by a source internal
to the company or a third party
– Globalization creates many more sourcing
options with both considerable opportunity
and potential risk

Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall. 3-15


Sourcing
• Role in the Competitive Strategy
– Sourcing decisions are crucial because
they affect the level of efficiency and
responsiveness in a supply chain

– Outsource to responsive third parties if it


is too expensive to develop their own

Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall. 3-16


Components of Sourcing Decisions
• In-house or outsource
– Perform a task in-house or outsource it to a
third party
• Supplier selection
– Number of suppliers, evaluation and selection
criteria, direct negotiations or auction
• Procurement
– The supplier sends product in response to
customer orders

Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall. 3-17


Pricing
• Role in the Supply Chain
– Pricing determines the amount to charge
customers for goods and services
– Affects the supply chain level of
responsiveness required and the demand
profile the supply chain attempts to serve
– Pricing strategies can be used to match
demand and supply

Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall. 3-18


Pricing
• Role in the Competitive Strategy
– Firms can utilize optimal pricing strategies to
improve efficiency and responsiveness
– Pricing strategies vary to meet different
customer responsiveness requirements

Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall. 3-19

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