outline - Supply chain management managing every business...

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Supply chain management – managing every business activity across all business disciplines, from supplier to customer, in a way that: Causes no corporate difficulties Saves money Doesn’t anger customers Logistics – management of the flow of goods or materials from point of origin to point of consumption while conforming to customer requirements Responsible for the “seven Rs”: 1. Right product 2. Right time 3. Right cost 4. Right place 5. Right quantity 6. Right customer 7. Right condition Overall competency in logistics creates enterprise-wide value Service Benefits o Availability o Operational performance o Service reliability Cost minimization Key Logistics Activities: Order processing Inventory management Transportation Warehousing Facilities management Materials handling Packaging Reverse logistics Customer service Manufacturing support Communications Procurement/ purchasing Information management Operations support Planning/ forecasting Maintenance support Inbound logistics – “materials management” Functions: Anticipating materials requirements Sourcing and obtaining materials Introducing materials into the organization Monitoring the status of materials as a current asset Objectives: Low costs Quality assurance Low level of tied-up capital High level of service Support of other enterprise functions Materials make up over 50% of total costs Reducing inbound costs by 10% = increasing sales by 68% Reducing inbound costs by 10% = reducing labor costs by 36% Procurement – activities associated with the acquisition of materials Purchasing of materials Quality management
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Vendor relationship Coordination with other departments o Information systems interconnectivity dominate supply chain management Receiving – physical receipt of the purchased materials when they show up at your facility Data obtained during this process is vital to systems in divisions like finance, accounting, marketing, international, etc. Quality assurance – checks all inbound deliveries and samples materials to determine vendor compliance to specifications Just-In-Time Inventory – a fundamental change in business philosophy Developed the Toyota Production System (TPS)- W. Edwards Deming and Taiichi Ohno Materials are used until a pre-arranged order point is reached The requirement is communicated back to procurement which places a short lead time order Frequent, small shipments, arrive just-in-time to fill depleted materials- the closer to running out the better Virtually no safety stock Benefits: o Productivity improvements o Decreased inventories o Reduced manufacturing cycle times o Lower costs Challenges: o Production scheduling o Supplier capabilities o Logistics networks o Demand forecasting o Slight failure can lead to costly plant shutdowns Materials Requirements Planning
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