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Slides_for_class_5 - Copyright, Blake Johnson Next stage of...

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Unformatted text preview: Copyright, Blake Johnson Next stage of course: Into the details of supply chain planning and execution Managing uncertainty in commodity products revolves around the market-wide supply-demand balance – Aggregate capacity vs. market-wide demand • Price moves to balance – To manage future performance, use forward contracts to match assets and liabilities • When asset-liability matching not possible or cost-effective, balance risk vs. return For non-commodity products, individual buyers and suppliers must know more about the details of each other’s capabilities and requirements – Buyer’s demand distribution over time and performance objectives over it – Key supplier decisions by lead time • Capacity, materials, production, WIP, FGI • Associated costs, constraints, and risks – Direct sharing of the information is not a realistic approach • Too much work (“can’t), information is proprietary and has negotiation value (“won’t”) – Appropriately structured relationships can be very efficient and effective Copyright, Blake Johnson Supply chain today vs. solution requirements Range plan Range performance management Range forecast What we know What we don’t know When we’ll learn more Operating and financial performance of alternative range plans Across potential supply and demand outcomes Forecast Range around forecast Demand Demand Range min Range max Cost vs. flexibility vs. lead time - How much of the range to cover?- Most efficient way to cover it? Revenue $xxxx Cost xxxx Margin xxx Assets $xxxx Liabilities xxx Revenue $xxxx Cost xxxx Margin xxx Assets $xxxx Liabilities xxx Too much Cost Too little Revenue $xxxx Cost xxxx Margin xxx Assets $xxxx Liabilities xxx Revenue $xxxx Cost xxxx Margin xxx Assets $xxxx Liabilities xxx Too much Cost Too little Revenue $xxxx Cost xxxx Margin xxx Assets $xxxx Liabilities xxx Revenue $xxxx Cost xxxx Margin xxx Assets $xxxx Liabilities xxx Too much Cost Too little Almost nothing Almost nothing Which direction to look? How to select? Little visibility into performance and value poor basis to manage, choose Incomplete view of problem Today Impact Quite strong, but more opportunity remains Copyright, Blake Johnson Inventory and agility are components of a range plan Potential revisions to plan/ forecast Planning Optimize inventory, agility and responsiveness Plan/forecast Short term variability around plan Medium-long term uncertainty Short term uncertainty (months, quarters) (Days, weeks)- Manage capacity, availability, lead time and price- Improve supply planning and efficiency- Minimize role of and need for inventory Demand Strategic Tactical Execution Copyright, Blake Johnson Dynamically optimize flex by lead time...
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This note was uploaded on 06/16/2010 for the course MS&E 369 taught by Professor Blakejohnson during the Spring '08 term at Stanford.

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Slides_for_class_5 - Copyright, Blake Johnson Next stage of...

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