Introduction. ECT 7240 Supply Chain Management. Class in next week : Sept. 14, is cancelled! Make-up class: Oct. 15: 2-5 pm (Sat.).

Size: px

Start display at page:

Download "Introduction. ECT 7240 Supply Chain Management. Class in next week : Sept. 14, is cancelled! Make-up class: Oct. 15: 2-5 pm (Sat.)."

Benjamin Wheeler
6 years ago
Views:

1 Introduction to ECT 7240 Supply Chain Management Class in next week : Sept. 14, is cancelled! Make-up class: Oct. 15: 2-5 pm (Sat.).

Stores Customers Request: Buying detergent, towels, heaters,.

2 Supply Chain Examples Example 1: Park n Shop Procter & Gamble (Thail.) Da-Fa Textile, Inc. (China) Philico Factory (Malaysia) Park n Shop or thirdparty distribution centers Park n Shop Stores Customers Request: Buying detergent, towels, heaters,. Plastic Producer Chemical Producers Yarn Producer Color suppliers Electronics Components Producer Metal Processors Package Producer

3 Definition A firm s Supply chain consists of all processes and activities that are necessary to bring products to market. It includes procurement to acquire raw material; manufacturing to convert raw materials into components and final products; and distribution to respond to market demand SCM is a set of approaches to manage the SC, i.e., to efficiently integrate suppliers, manufacturers, warehouses, and stores, so that merchandise is produced and distributed at the right quantity, to the right location, and at the right time. Efficiently means minimizing the system-wide cost while satisfying service level requirement, or maximizing the total profit.

4 A process overview: manufacturing SCM activities and main business processes (Source: Ernst and Young Consulting)

5 Smile Curve 微笑曲線 Supply Chain Source: Adapted from the Stan Shih: Smile Curve concept.

6 Service Dominant Logic $1 versus $5-10: the difference come from services/risk-taking Apple iphone4 manufacturing cost = $100, but services in two years cost up to $2000 (in the US). In HK, an iphone4 unit was priced around HK$5000 for a 2-year plan at CUHK last December

7 Demand-Supply Web Mat'l Flow VISA Credit Flow Information Supplier Mfg. Retailer Consumer Supplier Warehouse Schedules Order Flow Wholesaler Cash Flow Retailer After sales support

8 Four Components of SC Materials flows (inventory) Transportation Facilities Information flows Cash flows Managing these components/flows -- logistics

9 Logistics Management and Supply Chain Management: what are the differences? They are ALMOST the SAME THING! but, Supply chain include Logistics - containing high level activities Logistics Management focuses more on Materials Flow execution Moving, storing, Analogy: budgeting vs. accounting within a firm SCM emphasis more on relationship, and is used more often when talking to customers and other partners on the chain/channel, e.g., cost/profit-sharing, choosing suppliers, coordinating channel However, logistics people are switching to call themselves SCM professionals

10 Logistics Management and Supply Chain Management: what are the differences? often they heavily overlap SCM activities actually are logistics activities In this SCM course, our focus is on interactions between companies, also touching on materials requirement planning

11 Course Plan (tentative) Session (Date) Process analysis 1 (7/9) Intro., Demand Forecasting: Chapters 1 & Chapters 1/7 (14/9) No Class -- a make-up on 8/10, Saturday 2-5 pm 2 (21/9) Demand Forecasting (continued) and Intro to MRP/DRP: Chapter 7 3 (28/9) Intro. To Inventory Management: Chapter 9 (5/10) Public holiday 4 (16/10 Make-up: Managing Uncertainty in SC + : Chapter 11 Sat., 2 5 pm) 5(12/10) Design Supply Chains for Short Life Cycle Products: Chapter 12 6 (19/10) Determining the Optimal Level of Stock: Chapter 12 Matching supply with demand alternatives under environments 7(26/10) Managing risk in Operations & Postponement. Chapters 11/12 8 (2/11) Beer Game + 9 (9/11) Midterm Exam. 10(16/11) Supply Chain Coordination/Integration: Chapter (23/11) Supply chain coordination: contracts 12(30/11) Int l Trade + Revenue Management: Chapters 13/15 Supply chain coordination issues + 13(7/12) Supply Chain Strategies and Network Design: Chapters 2/3/5 (14/12) Final Exam. (open-book/notes) (Time allowed, green SC will be discussed)

12 Course Plan Syllabus for ECT7030 Logistics Management 1. Introduction to Logistics Management 2. Global Logistics Network Design Issues 3. Transportation Strategy 4. Linear Optimization Review 5. Transportation Planning 6. Facility Location 7. Distribution Network Design 8. Warehouse Layout and Material Handling 9. Plant Visit to Hong Kong International Terminal 10. Global Logistics 11. Benchmarking a Supply Chain 12. Quick Response Logistics, Reverse Logistics, Third-party Logistics How about ECT 7030 Logistics Mgmt?

13 Course Objectives Introduce the SCM vocabulary Understand major qualitative features regarding the operations of a SC Provide some basic SCM analytical tools Gain insights into the IT implications

14 Textbooks and Readings Required textbook: 1. Chopra S. and Meindl, P.: Supply Chain Mgmt, Strategy, Planning & Oper. (4 rd edition) Reference books 1. Designing and Managing the Supply Chain, Simchi-Levi, D, Kaminsky, P & Simchi-Levi E. Mcgraw-Hill, Matching Supply with Demand: An Introduction to Operations Management, 2 nd Edition, by Gerard Cachon and Christian Terwiesch. McGraw-Hill, 2009.

15 Grading There are three major parts to your final grade: Individual: There are 4 major parts to your final grade: Assignments (Two Sets) 18% Case preparation 12% Midterm (open book/notes) [Nov. 16] 30% Final Examination (open book/notes) [Dec. 14] 40% Make-up exams are not offered. Case Preparation (I.e., case reading) o The instructor will present 3 cases in class. o These cases are typically long and contain complicated scenarios. o 2 weeks before the case presentation, you are given a set of questions. o You should hand in your answers to these questions prior to the class in which we will discuss the case. o Any late submission will be discarded and marked zero. Those cases will be tested in the final examination.

16 Grading Assignments o They consist of short case studies and homework. Assignments will be graded. Only accept electronic submission is accepted (via the course ), and the score to later submission will be discounted according to the number of days of lateness. Zero tolerance to plagiarism (both parties will be equally penalized).

17 Midterm/Final Exam Both are open-book Textbooks, notes, everything except Topics/chapters examined in Midterm will NOT be re-tested in Final Topics/chapters to be specified in later classes Midterm: November 16, Final: December 14, both in class! Combination of quantitative & qualitative questions May include questions drawn from the cases Samples of questions to be posted in due time No class in next week : Sept. 14! Additional Class: Oct. 15, 2-5 pm!!

18 Course Logistics TA: Dr. Ma Lijun Note handouts also available online My Tel No: , Office Hrs: Contact me, Office: Engg-II, 507 Class website Login ID: ECLT5940, password: 5940atSE

19 Teaching Method Lectures Topics Case analysis Assignments Game playing (by applying what you have learnt) Mathematics: Simple algebra, Basic Probability & Stat. Quantitative > Qualitative

20 Why Take This Course? HK, a service economy, is becoming a log s/distribution hub Natural trans-shipment point/excellent infrastructure / competitive log industry Working in a logistics company, you are better acknowledged of your customer s SCM needs HK locates bewtn USA/EU markets and China, world factory: a major sourcing hub HK companies moved their mfg outside, but HQs here remotely control all flows thru information flow When you aspire to work in a distribution network, the course provides with cutting-edge concepts/techniques For general/operations people, the course is most relevant For a business IT analyst, the knowledge is an asset

21 The following are add-on/optional materials Offshore Trade/Logistics 離岸公司 / 貿易 / 物流 Go to wiki offshore company

22 Trade conducted outside of HK Non-HK resident registers a HK co. HK bases offshore co. Pure/Hybrid However,you can also do business in HK Why do I need one? HK

23 Example:Geneva - capital of headquarters Establishing a subsidiary in the following three countries: Germany France Italy 37% 30% 33% Switzerland:Income tax: 24% 2002: 55% largest global firms locate their global headquarters in Geneva,UK and Belgium ranked no. 2,16% each

24 Example:Registering a Trade Firm in HK HK is a trade hub,the rule of law, world s freest economy, free flow of funds,free flow of information,excellent logistics services, Low tax (17.5%):only the profit generated in HK,and all revenue earned outside not taxable Actual tax rate is less than 17.5%

25 Re-export Trade China Co. A Payment Delivery 供货 USA Co. B 1. B A: $2 mil 2. A delivers B 3. A: it costs $800K Profit? Tax? China Co. A Invoices 发票 Offshore Co. C: Documents/financial centre USA Co. B 1. B C: $2 mil 2. C A: $1 mil 3. C delivers B 4. A s profit? Tax? World-wide about 40% merchandise trade done thru offshore trade centers

26 "Make no mistake, tax evasion, wherever it takes place, is illegal. Tax mitigation, on the other hand, is legal -- and financial advisers reckon it should play an important part in everyone's financial planning." Another common form of tax avoidance is through internal transfer of profit. Tax Haven: * Whether there is a lack of transparency Whether there are laws or administrative practices that prevent the effective exchange of information for tax purposes with other governments on taxpayers benefiting from the no or nominal taxation. Whether there is an absence of a requirement that the activity be substantial

27 Offshore Financing A 股 /B 股 H 股 N 股 S 股? Chinese companies get listed in HK China Firm (1)Decided to IPO overseas Owner(s) (3)Take over the control (2)Register offshore company BVI Strategy share holders Public share holders (5)Money flowed back China or BVI Another offshore company (4)HK IPO HK Stock Exchanges

28 盛大互动娱乐上市后的股权结构示意图 End of offshore

29 A Mini Case of a SC Components take different modes from different parts of the world; changed hands several times before reaching the destination wooden casing: sea, Sweden microprocessor: air, Malaysia destination: USA screw: train, China Cheap peripheral: van, HK LCD: truck, China microphone: air, Japan

30 The Story of Pressing a Button Customer HiFi Co. Ltd. (a US Dealer/Distributor) places an order to Silvery Consumer Products sales, production planning, product costing, production logistics/shipping of Silvery Consumer World Freight Logistics warehouse container terminal container vessel

Mr. Simon Smith of the Customer HiFi Co. Ltd. had just completed the order form for shipment on his computer. He double checked the amount and the cost: 1,000 sets of Hi-Fi for $650K.

31 Mr. Simon Smith of the Customer HiFi Co. Ltd. had just completed the order form for shipment on his computer. He double checked the amount and the cost: 1,000 sets of Hi-Fi for $650K. It was not a big deal. Yet the order probably would give him $70K to $85K net profit in six months. He pressed the return button of the keyboard. The electronic data was transferred motionlessly and silently. There was no warning. Mr. Smith turned off his computer, feeling sorry for the other end of the world; the ants in Hong Kong, or Shenzhen, would start to work crazily when they discovered his buttonpush a few hours later in their morning.

32 Mr. Smith was wrong. The ants had already been working for some time on Smith s order. Right after Tommy, Sales Manager of Silvery Consumer Products, caught the air about Smith s order, he had started pressing the Production Planning Department for the earliest possible delivery date. Johnny of the Planning Department had to check what material was available and what was not. Luckily the order only required standard components. It should be easy for Johnny to buy, steal, or beg from vendors or other orders. It was estimated to complete this order within 2 weeks

33 Services of Freight Forwarders Lou Pun took up the phone. World Freight Logistics, he said hastily, while his eyes were still fixing on the screen. It was Horace of Silvery Consumer Products on the other end of the line: 1,000 sets of Hi-Fi s. Around Six pallets. Oct. 15, LA. When will they be ready? Around the third week of September. plenty of time. By sea is good enough.. There s

34 How about Oct. 17 in LA? Short trip to LA. You may get your goods ready by 26 or 27 of Sept. Standard charge. If you want to be in LA on or before Oct. 15,... OK, there is one. Woo! Long one; nearly round the world. Goods must be ready by 20th. Absolutely no later than that. Another one: well, you won t try that; first to Singapore; transit there; slightly more expensive than the first one; store for two days in Singapore. Goods ready by 21st. Which one do you like?

35 Orient Overseas Container Line

37 How much is the first one? FOB-HK. Others are the same as usual. OK. Pick and pack, customer clearance, and documentation in Hong Kong. Do you need custom clearance in LA? No. Now it was Lou Pun s turn to calculate. His fingers flied over the keys of the large Casio calculator. In less than 10 seconds he told Horace the exact number. Horace seemed happy with the number. Thanks, Horace. We will be at your Buji factory on 27 of Sept.

38 Factory Warehouse Joseph of Warehouse (under Logistics Dept) had prepared for this moment. Horace had informed him days ago the expected completion time. Yesterday Joseph had ordered his subordinates to check out the Hi-Fi s from the warehouse by this time. Soon, the truck arrived to the Container Terminal loaded up to an APL ship (for LA)

39 Silver Consumer Product Ltd A Summary Horace Joseph An order

40 carriers: provide means of transportation customers: shippers send and consignees receive Carriers e.g. Airlines, Rail, Ocean Liners 實際營運人 Air-cargo, Ocean, Rail Terminals Types of Players in an International Transaction of Goods terminal operators: provide facilities to (temporarily) store, sort, change carriers, and change hands for cargoes Logistics Service Companies, e.g. Express, Trucking, Third-party Logistics Air-cargo, Ocean, Rail Terminals freight forwarders: the travel agents of cargoes Warehouse Operators Cargo Consolidators Agents: Forwarders who take care of the headache for shippers and consignees 40 Consolidators: build up and breakdown cargoes warehouse operators: provide all sort of storage needs Manufacturers/ Distributors/ Retailers Divisions of Logistics Transportation Operations Planning Warehousing

Introduction. ECT 7240 Supply Chain Management

Introduction. ECT 7240 Supply Chain Management Introduction to ECT 7240 Supply Chain Management Definition A firm s Supply chain consists of all processes and activities that are necessary to bring products to market. It includes procurement to acquire