Global Supply Chain Management. Ecosystem Aware. Performance Analysis. N. Viswanadham

Transcription

1 Performance Analysis N. Viswanadham

2 Contents l Global Supply Chain Performance l Lead Time l Cost l Performance Measures & Ecosystem

3 Global Supply Chain Ecosystem Aware China Supplier Supplier India Suppliers Transport hub Singapore Distribution Center Malaysia Manufacturing Inventory hub Retail Store UK USA Distribution Demand USA UK Back to DC Europ e Retail

4 Global Supply Chain Performance

5 Performance Measures l Lead time : Interval between start and end of a process. l Supply Chain: Time interval between raw material order until final product reaches the retailer or consumer Reducing lead time frees resources, reduces cost, and improves quality. l Cost: Unit Cost, Costs involved in Transport and Storage, Customs, Insurance, Financial Services Margins, Negotiations, Inspection, Damage, Theft, Obsolescence, etc. Strategies for cost reduction are important.

6 Performance Measures l Quality : Management of all work processes so that each is on target and the entire process is on target with low variability. l Flexibility : Ability to meet customer demands under uncertainties in various dimensions such as delivery time, delivery schedules and ordered quantities, design, demand and product mix changes. Measured in terms of Product variety manufactured and delivered, changeover times between products, time interval between successive new product introductions.

7 Lead Time

8 Lead Time l Map the entire process highlighting the subprocesses, interfaces, decision making points, etc l Interval between the start and end of the process New product : Concept to Market time Order to delivery process : Delivery time Supply chain process : Procurement to Retail B2B process: Warehouse to warehouse (Intl) B2C process: warehouse to consumer l Lead time includes quality and cost Low lead time no defects and less resources

9 Supply Chain Lead Time The lead times are longer in global supply chains because of the transport delays and the customs procedures at the ports. Lead time is important for perishable food, fashion and electronic products

10 Various Components of Lead time l Procurement lead time: The time required for supplier selection based on time, cost and priority considerations l Supplier lead time: The time elapsed from the time the order is received till the component is ready for delivery at the supplier. l Inbound logistics delivery: The time required for the components or subassemblies to reach the supply hub near the factory. It is the maximum of the delivery times from various suppliers and includes the passage through international ports. l Assembly time: The time required for assembly, testing and packaging for final delivery to the distributor l Outbound logistics delivery: Time required for various subassemblies to reach the consumer site after customization.

11 l l Various components of Lead time Customs and Trade Facilitation: Time taken by the customs for processing the shipment at various ports that the components and final product visits. Coordination time: Time required for choosing the partners for particular order and for quality and exception management. l Location of facilities in several countries will certainly increase the complexity of coordination, scheduling, transportation, and in-transit inventory. l Uncertain lead times will increase the inventory levels. Political uncertainties and differences in culture further exacerbate the problems.

12 Process Variance Reduction l More variance of the delivery time requires larger buffer stocks to meet the demand l Variability reduction is a common objective

13 Garment Supply Chain Ecosystem Aware Lead Time = Max(10+4,12+3) = 50 weeks

14 Cost

15 l l l l l l l Total Landed Cost Unit cost : raw materials and component costs Inbound logistics cost: Cost moving materials and components to the factory site from the suppliers located in different countries. Assembly cost: This includes the labor, assembly and equipment costs (such as molds or other asset specific investments) Customs, duties, and taxes Inventory Costs: Raw materials, work in process and finished goods inventories Outbound logistics cost: The transportation costs include: supplier in LCC to the port, LCC port to domestic port, Domestic port to distribution centers, Pick and pack operations at the distribution centers & plants, Distribution centers to customers. Coordination Costs: Inspection cost, managing relationships with companies in different time zones, culture and language s, IT administrative and legal functions.

16 Transaction Costs Ecosystem Aware Delivery Resource Institutions Supply Chain Shipping, Inventory, Asset specific Hard & Soft Infrastructure Asset Specific Clusters, Human, Financial, Power, etc. Taxes, Tariffs, SEZs, FTAs, Social groups Production, Quality, Transport Coordination Costs Broker fees Transaction Cost

17 Performance Measures & Ecosystem

18 Ecosystem Enablers l The nation s economic and import and export policies such as tariffs, customs regulations, free trade agreements and the logistics infrastructure highly influence the growth of the firm and the industry vertical l These Enablers are the features of the ecosystem elements that influence the competitiveness. l Enablers are vertical dependent and include both hard infrastructure as well as soft infrastructure which implements regulations. l Lead time or Cost are dependent on all the four elements of SES i.e. their both soft and hard enabling features

19 Ecosystem Enablers & Performance Enablers Lead Time Cost Quality Flexibility Supply Chain Modular Products, JIT, TQM, SRM, SC Visibility, Collaboration Delivery Services Connectivity, Port, Road & IT Infra., 3PLs, Software Vendors Institutions FTAs, Customs, FE, IP & Legal System, Trade Facilitation Resources Natural Resources, Power, Clusters, Finance, R & D Labor productivity Management Skills Low Low Low Low High Product Design Cost, Low Production Cost High Quality Products Product Configuration and Cost Low Transportation & Inventory Costs High SC Service Levels &Market Reach Delivery Service to Global Customers Low Tariffs, High Profits High SC Service Levels Supply and Market Globally Low Factor Costs High Management Quality Multinational Sourcing and Management

20 Competitiveness and Ecosystem l No Country can be competitive in all verticals. l Countries need to build hard and soft infrastructure and make policies and regulations to improve the investment climate for verticals they want to nurture. l This would improve lead times and cost

21 National to Firm Competitiveness Measures Country Region Vertical Industry Firm Level Logistics & IT Institutions Resources Delivery Infrastructure (Logistics & IT) Regional Logistics & IT Infrastructure Vertical Industry Specific Logistics & IT Infrastructure Firm Logistics & IT partners Customs, Trade, Tax Policies Industry and FDI incentives Tariffs, Duties, Sales Taxes Industry Promotion Incentives Company ties with Govt. and Social groups Resources Management Regional Resources & Management Skills Vertical Industry Specific Resources and skills Relationships with Banks, R &D, other vertical members Country Competitiveness Index Firm Competitiveness

22 Conclusions l This chapter brings to focus the relationship between conventional performance measures and the ecosystem enablers. l One can perform the analysis using Markov chains, Queuing networks etc by mapping the end to end delivery process. l Location selection, Supplier selection problems can be solved using AHP,...