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Ch16 PDF

1. The document discusses supply chain management and lean production in supply chains. It covers topics like supply chain components, supply chain management philosophy, key issues, trends, supplier management, customer partnerships, and lean concepts like kanban and reducing the bullwhip effect. 2. Lean concepts aim to match supply and demand efficiently through small batch delivery, point-to-point communication, and reducing variations that cause inventory fluctuations. 3. The bullwhip effect magnifies inventory fluctuations as demand variations propagate up the supply chain through factors like forecast inaccuracies and order batching.

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AKARSH JAISWAL
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37 views

Ch16 PDF

1. The document discusses supply chain management and lean production in supply chains. It covers topics like supply chain components, supply chain management philosophy, key issues, trends, supplier management, customer partnerships, and lean concepts like kanban and reducing the bullwhip effect. 2. Lean concepts aim to match supply and demand efficiently through small batch delivery, point-to-point communication, and reducing variations that cause inventory fluctuations. 3. The bullwhip effect magnifies inventory fluctuations as demand variations propagate up the supply chain through factors like forecast inaccuracies and order batching.

Uploaded by

AKARSH JAISWAL
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Supply Chain

• Supply Chain (Also referred to as value chain)


– the sequence of organizations involved in producing and delivering a
product or service
• The sequence begins with suppliers of basic materials and
Lean Production in the extends all the way to the final customer
–
Supply Chain –
Warehouses
Factories
– Processing centers
– Distribution centers
– Retail outlets
– Offices

15-2

Supply Chain Management Supply Chain Management


Supply Chain Management Philosophy
• Entire supply chain acts as a single integrated entity
• Supply Chain Management (SCM) • Cost, quality, and delivery requirements of final manufacturing customer are
shared throughout SC
– The strategic coordination of business functions • Inventory is last resort for resolving supply-demand
within a business organization and throughout its imbalances.

supply chain for the purpose of integrating Process Orientation


supply and demand management Entire SC is a linked process; value is created by managing
the elements as an integrated process, not separately.

Customer Orientation
Each supplier knows its position in the chain and considers itself an
“extension” of its customers’ factories.

Teamwork
Companies work in industry groups to coordinate design, manufacture, and
logistics to gain a greater share of the final market.

Key SCM Issues Trends in SCM


• The goal of SCM is to match supply to demand as effectively • Trends affecting supply chain design and
and efficiently as possible management:
• Key issues:
– Measuring supply chain ROI
– Determining appropriate levels of outsourcing
– Managing procurement
– “Greening” the supply chain
– Managing suppliers – Re-evaluating outsourcing
– Managing customer relationships – Integrating IT
– Being able to quickly identify problems and respond to them – Managing risks
– Managing risk
– Adopting lean principles

Supply Chain Management 1


Supplier Management Customer-Supplier Partnership
• Choosing suppliers
• Supplier audits
• Supplier certification
• Supplier relationship management
• Supplier partnerships
– CPFR (collaborative planning, forecasting, and
replenishment)
– Strategic partnering

Lean Supply Chain Lean Supply Chain

Facility layout

Truck delivery at points-of-use

Four tiers of seat production in an automaker’s supply chain


Kanban
Lean Supply Chain
Small batch
delivery

Kanban link between the seat-cover manufacturer and the fabric mill
1. At the seat cover plant a roll of fabric is taken from storage for cutting and
sewing.
2. Kanban bar code on the roll is read.
3. Order information is accumulated and transmitted daily to fabric mill.
4. At fabric mill the specified number of fabric rolls for shipment are withdrawn
Decreasing delivery times: six from storage.
trucks, two drivers. 5. Kanban bar codes on the outbound rolls are read and transmitted to the
seat cover plant to update its inventory status.
Configurations of daily milk runs. 6. Fabric rolls are shipped to seat cover plant.

Supply Chain Management 2


Kanban
Lean Supply Chain
Hospital supply room Level production, uniform schedules

Multiple products
• For each product try to establish a somewhat level schedule.
• Then try to produce at a uniform level for each.

Lean Supply Chain The Bullwhip Effect


Point-to-point communication • Variations in demand cause inventory fluctuations to
Direct-link electronic data interchange (EDI) enables each party fluctuate and get out of control
to access portions of the other’s systems and eliminate delays – Inventory fluctuations are magnified by
in sharing schedule updates. • Periodic ordering
• Reactions to shortages
Point-to-point communication reduces information time lags and • Forecast inaccuracies
also information distortion. Updates in forecasts and plans • Order batching
for the final customer (top tier) are communicated directly to • Sales incentives and promotions
suppliers at every tier of the chain, which enables companies • Liberal product return policies
low in the chain to make immediate adjustments for changes – Results in
in demand. • Higher costs
The alternate—the usual stepwise, tier-to-tier downward • Lower customer satisfaction
communication—results in a progressive worsening of
distortion in requirements for suppliers at lower-tier levels,
the bullwhip effect.

Creating an Effective Supply Chain


 Begins with strategic sourcing
 Analyzing the procurement process to lower costs by reducing waste
and non-value-added activities, increase profits, reduce risks, and
improve supplier performance
 Between customer-supplier there must be
 Trust
 Effective communication
 Information velocity
 Supply chain visibility
 Event management capability
 Performance metrics

Supply Chain Management 3

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