Introduction to SCM. Richard Pibernik Lehrstuhl für Logistik und Quantitative Methoden. Christian Heinrich Lehrstuhl für BWL und Wirtschaftsinformatik

Transcription

1 Introduction to SCM Richard Pibernik Lehrstuhl für Logistik und Quantitative Methoden Christian Heinrich Lehrstuhl für BWL und Wirtschaftsinformatik 1

2 Learning Objectives After this part of our lecture you should be confident about answering the following questions: What are Supply Chains? What are important decisions to be taken by Supply Chain Management? What are key planning tasks and how are related Finally: Understand what this whole course is about and how we organized the different sessions 2

3 Some Supply Chain Examples Automotive Supplier Chemicals High-tech Fashion 3

4 Example 1: Injection Valve Supply Chain Lathe Chromeplate Store T T Assemble T T Customer processes D v 1,1 v 1,2 v 2,1 D USA v 3,1 v 3,2 Brazil v 5,8 v 5,9 v 5,10 v 5,11 v 5,1 v 5,2 v 5,3 v 5,4 USA v 5,5 v 5,6 v 5,7 Brazil v 5,12 v 1,3 D v 3,3 D v 4,1 EU v 5,13 v 5,14 v 5,15 China v 3,4 v 5,18 v 5,17 v 5,16 v 5,19 USA v 1,4 v 2,2 USA Japan South Korea Australia v 3,5 v 3,6 v 3,7 v 5,21 v 5,20 v 5,22 v 5,23 Mexico v 5,24 v 5,25 China v 5,26 v 5,27 South Korea Australia v 5,28 v 5,29 4

5 Questions What does the company want to achieve with this Supply Chain? What are key objectives? What are the key decisions that have to be taken in this Supply Chain, in the long term? medium term? short term? 5

6 Example 2: iphone Supply Chain 6

7 iphone Supply Chain The succes of the iphone Distribution of the iphone worldwide (quarterly, in 1,000s) Total Source: Welt kompakt, , p. 19 7

8 iphone Supply Chain Structure and components Components of the iphone 3 Source: (Copyright isuppli) 8

9 iphone Supply Chain Touch Sensor Module Supply Chain Source: (Copyright 2011 Saturna Capital Corporation) 9

10 iphone Supply Chain Global Supply Chain (selection) Source: 10

11 iphone Supply Chain Supply Chain (USA) Company Head office Part Intel Portland Radio Frequency (Memory) Omnivision Santa Clara Camera Broadcom Corp. Irvine GPS, WiFi, Bluetooth Texas Instruments Corp. Dallas Touch Screen Controller Skyworks Woburn Radio Frequency (Radio Modules) 11

12 iphone Supply Chain Supply Chain (Asia) Company Head office Part LG Seoul Display Chimei Innolux Miaoli Touch Screen Foxconn Shenzhen Assembly Operations Suppliers from Taiwan Chip Foundry, Assembly Operations etc. 12

13 iphone Supply Chain Suppliers and cost structure Supplier Part Cost (in US-$) Source:

14 iphone Supply Chain Distribution of value (2010) Source: Kraemer et al. (2011), p. 5 14

15 Questions What does Apple want to achieve with this Supply Chain? What are key objectives? What are the main differences compared to the previous example (i.e. the SC for injection valves)? What are the key decisions that have to be taken in this Supply Chain, in the long term? medium term? short term? Who takes these decisions? 15

16 iphone Supply Chain Sources and additional reading Kraemer, K.L.; Linden, G.; Dedrick, J. (2011): Capturing Value in Global Networks: Apple s ipad and iphone, available online: ( ) Interactive world map with the entire supply network of the iphone: board1?:embed=yes&:toolbar=yes&:tabs=no Additional reading (optional): Dedrick, J.; Kraemer, K.L.; Linden, G. (2009): Who profits from innovation in global value chains?: a study of the ipod and notebook PCs, Industrial and Corporate Change, Vol. 19 (1), p

17 Example 3: H&M Supply Chain 17

18 H&M Supply Chain Countries with Shops Source: Markencheck: H&M (ARD) 18

19 H&M Supply Chain Asian countries with production sites Source: Markencheck: H&M (ARD) 19

20 H&M Supply Chain days 1 1 Includes cutting, production, quality check, packaging for shipment and all the above stages Source: H&M 20

21 H&M Supply Chain Product manufacturing in Asia Product manufacturing in Europe Retailers DC H&M does not have any factories of its own; instead, it entrusts around 750 suppliers to manufacture products for them (the bigger part in Asia; the remaining part in Europe, e.g. in Romania & Turkey). Responsiveness based on local production in Europe One distribution centre (DC) situated in every country Continuous and efficient collection of information along the supply chain Legend: Fabric manufacturing (Pre-production) Final products manufacturing 21

22 Questions What does H&M want to achieve with this Supply Chain? What are key objectives? What are the main differences compared to the previous example (i.e. the iphone SC)? What are the key decisions that have to be taken in this Supply Chain, in the long term? medium term? short term? Who takes these decisions? 22

23 H&M Supply Chain Sources Hasan, M.R.; Alim, M.A. (2010): Factors Affecting Supply Chain Management Efficiency in Cross Border Outsourcing: A case study of H&M and its Outsourcing Operations in Bangladesh H&M, Head office Markencheck: Der H&M-Check (ARD, ) 23

24 Example 4: Chemical Supply Chain Source: 24

25 Planning in complex product structures Erdöl-Raffinerie Ammoniak- Fabrik Salpetersäure- Fabrik Hydroxylamin- Fabrik Schwefelsäure- Fabrik Polyamid-Sortiment Aromaten- Anlage Cyclohexan- Fabrik Anolon-/Keton Fabrik Caprolactam- Fabrik Polyamidproduktion (Polymerisation) Polyamidproduktion (Konfektionierung) Kraftwerk Düngemittel-Fabrik Source: BASF 25

26 Stages from raw material to end-customer Planning Company A Company B Company D Company C Execution - Commodity - - Relocation - Tank Styrodur Factory, Germany, Italiy,... CHEM CHEM CHEM CHEM CHEM Benzol Ethylbenzol Styrol Polystyrol Styrodurplatten Sales - - Buy Pipeline Exxon, Shell,... Isover G+H,... Raffinerie Distributor Construction materials trade Constructor Naphtha Product portfolio Product portfolio Lieferung Source: BASF 26

27 Where do you see complexity? Sales in North America with external customers North America Product 1 N-XYZ Product 2 N-ABC Product 3 N-ABC Product 4 N-ABC APO-DP Raw material product 2 North America - Asia APO-DP Sales in Europe with external customers APO-DP Europe Product 1 Product 2 Product 3 Product 4 E-XYZ E-JKL E-GHI E-DEF Raw material product 2 Location 1 and 2 in Asia Raw material product 2 Europe - Asia APO-DP Asia/Location 2 Product 3 Product 4 Sales in Asia with external customers A-MNO A-MNO Asia/Location 1 Product 2 APO-DP A-MNO Usage of APO-DP for customer demands and transfers between regions 27

28 Questions What does BASF want to achieve with its Supply Chain? What are key objectives? What are the main differences compared to the previous examples (i.e. the iphone & the H&M SC)? What are the key decisions that have to be taken in this Supply Chain, in the long term? medium term? short term? Who takes these decisions? 28

29 Summary: What is a Supply Chain? (1) All stages involved, directly or indirectly, in fulfilling a customer request Includes manufacturers, suppliers, transporters, warehouses, retailers, and customers Within each company, the supply chain includes all functions involved in fulfilling a customer request (product development, marketing, operations, distribution, finance, customer service) Customer is an integral part of the supply chain 29

30 Summary: What is a Supply Chain? (2) Includes movement of products from suppliers to manufacturers to distributors, but also includes movement of information, funds, and products in both directions Probably more accurate to use the term "supply network" or "supply web" Typical supply chain stages: customers, retailers, distributors, manufacturers, suppliers All stages may not be present in all supply chains 30

31 The Objective of a Supply Chain (1) Maximize overall value created Supply chain value: difference between what the final product is worth to the customer and the effort the supply chain expends in filling the customer s request Value is correlated to supply chain profitability (difference between revenue generated from the customer and the overall cost across the supply chain) 31

32 The Objective of a Supply Chain (2) Example: Dell receives $2000 from a customer for a computer (revenue) Supply chain incurs costs (information, storage, transportation, components, assembly, etc.) Difference between $2000 and the sum of all of these costs is the supply chain profit Supply chain profitability is total profit to be shared across all stages of the supply chain Supply chain success should be measured by total supply chain profitability, not profits at an individual stage But??? 32

33 The Objective of a Supply Chain (3) Sources of supply chain revenue: the customer Sources of supply chain cost: flows of information, products, or funds between stages of the supply chain Supply chain management is the management of flows between and among supply chain stages to maximize total supply chain profitability 33

34 Decisions in a Supply Chain (1) Supply chain strategy or design Decisions about the structure of the supply chain and what processes each stage will perform Strategic supply chain decisions Locations and capacities of facilities Products to be made or stored at various locations Modes of transportation Information systems Supply chain design must support strategic objectives Supply chain design decisions are long-term and expensive to reverse must take into account market uncertainty 34

35 Decisions in a Supply Chain (2) Supply chain planning Definition of a set of policies that govern short-term operations Fixed by the supply configuration from previous phase Starts with a forecast of demand in the coming year Planning decisions: Which markets will be supplied from which locations Planned buildup of inventories Subcontracting, backup locations Inventory policies Timing and size of market promotions Must consider in planning decisions demand uncertainty, exchange rates, competition over the time horizon 35

36 Decisions in a Supply Chain (3) Supply chain operation Time horizon is weekly or daily Decisions regarding individual customer orders Supply chain configuration is fixed and operating policies are determined Goal is to implement the operating policies as effectively as possible Allocate orders to inventory or production, set order due dates, generate pick lists at a warehouse, allocate an order to a particular shipment, set delivery schedules, place replenishment orders Much less uncertainty (short time horizon) 36

37 Process View of a Supply Chain Cycle view: processes in a supply chain are divided into a series of cycles, each performed at the interfaces between two successive supply chain stages Push/pull view: processes in a supply chain are divided into two categories depending on whether they are executed in response to a customer order (pull) or in anticipation of a customer order (push) 37

38 Cycle View of Supply Chains Each cycle occurs at the interface between two successive stages Customer Customer Order Cycle Retailer Replenishment Cycle Distributor Manufacturing Cycle Procurement Cycle Manufacturer Supplier Chopra/Meindl, 2007, p.11 38

39 Push/Pull View of Supply Chains Procurement, Manufacturing and Replenishment Cycles Customer Order Cycle Push Processes Pull Processes Customer Order Arrives Push/Pull Boundary Chopra/Meindl, 2007, p.13 39

40 Push/Pull View of Supply Chain Processes (1) Supply chain processes fall into one of two categories depending on the timing of their execution relative to customer demand Pull: execution is initiated in response to a customer order (reactive) Push: execution is initiated in anticipation of customer orders (speculative) Push/pull boundary separates push processes from pull processes 40

41 Push/Pull View of Supply Chain Processes (2) Useful in considering strategic decisions relating to supply chain design more global view of how supply chain processes relate to customer orders The relative proportion of push and pull processes can have an impact on supply chain performance 41

42 Push/Pull Processes for Dell Supply Chain Customer Order and Manufacturing Cycle Procurement Cycle Pull Processes Customer Order Arrives Push Processes Customer Order and Manufacturing Cycle Procurement Cycle Chopra/Meindl, 2007, p.14 42

43 Supply Chains for Dell vs. Traditional PC Manufacturer Customer Customer Dell Pull Retail Store Pull Supplier Dell Supply Chain PC Manufacturer Supplier Chopra/Meindl, 2007, p.99 Traditional PC Supply Chain 43

44 Competitive and Supply Chain Strategies Competitive strategy: defines the set of customer needs a firm seeks to satisfy through its products and services Product development strategy: specifies the portfolio of new products that the company will try to develop Marketing and sales strategy: specifies how the market will be segmented and product positioned, priced, and promoted Supply chain strategy: determines the nature of material procurement, transportation of materials, manufacture of product or creation of service, distribution of product Consistency and support between supply chain strategy, competitive strategy, and other functional strategies is important 44

45 Supply Chain Planning - Overview Strategic Network Design Planning Horizon SC Master Planning Demand Planning Material Production Distribution Requirements Planning Planning Planning & Transportation Order Purchasing Scheduling Planning Fulfillment Monitoring/Event Management APS Materials Management Purchasing Production Planning Sales & Distribution ERP * *Relevant modules for Supply Chain Management 45

46 Strategic Network Design Key tasks: Determine the structure of the supply chain Number of stages Number of nodes (e.g. production plants, warehouses) on each stage and their geographical location Potential flows between nodes Determine the resource configuration for nodes and links Capacity Technology The tasks are interrelated! Key objectives: Inputs: Outputs: 46

47 Demand Planning Key task: generate long-term, medium-term und short-term demand forecasts Objectives: Inputs: Outputs: 47

48 SC Master Planning Key task: Determine production, inventory and shipping quantities for the whole supply chain on a medium term basis (e.g months, with monthly time buckets) Key objectives: Inputs: Output: 48

49 Distribution & Transportation Planning Key tasks: Distribution planning: Allocate finished goods to warehouses/distributions centers, determine inventory quantities Transportation planning: generate transportation orders allocate transportation orders to resources (e.g. trucks) routing Key objectives: Inputs: Outputs: 49

50 Production Planning & Scheduling Key tasks: Production planning: Determine optimal lot sizes Scheduling: Allocate lots to available resources Key objectives: Inputs: Outputs: 50

51 Material Requirements Planning and Purchasing Key tasks: generate replenishment orders and schedule their execution Key objectives: Inputs: Outputs: 51

52 Order Fulfillment Key tasks: Receive and handle customer orders Allocate customer orders to inventory/capacity Quote due date Key objectives: Inputs: Outputs: 52

53 Disclaimer You have to understand the aforementioned SC planning tasks and how they are related! This course will provide you with details for these planning tasks and also show you how they interact Moreover, you will get a good overview of how these tasks are executed in practice and how they are supported by modern Information Systems 53

54 Course Outline (1) Introduction to Supply Chain Management (2) Strategic Network Design (3) Demand Planning 1 (4) Demand Planning 2 (5) Master Planning 1 (6) Master Planning 2 (7) Order Fulfillment (8) Industry Presentation (9) Sales & Operations Planning (10) Supply Chain Coordination and Collaboration 1 (11) Supply Chain Coordination and Collaboration 2 (12) Questions & Answers 54

55 Readings Chopra/Meindl (2010). Supply Chain Management. 4th Edition, Pearson, Boston et al.; Chapter 1 Stadtler/Fleischmann (2012). Hierarchical Planning and the Supply Chain Planning Matrix. In: Stadtler et al. (eds.): Advanced Planning in Supply Chains, Springer, Berlin et al.; Chapter 2 Shapiro (2007). Modeling The Supply Chain. 2nd Edition. Brooks/Cole; London; Chapter 1 55