Supply Chain Management

1. Supply Chain Management Şahver Damla Coşkunlar Statistical Simulation Dokuz EylulUniversity

2. Contents • What is Supply Chain ? • Elements of Supply Chain • Supply Chain Development history • Supply Chain Management • Manufacturing Strategy • Supply Chain Management Flows • Supply Chain Management Activities • Supply Chain Management Technology • Firm Examples • Lean Thinking SupplyChainManagement

3. What is Supply Chain A supply chain is the group of components (suppliers, distribution points, transportation providers) necessary to bring your product from its raw material state to the end user. Supply Chain Management Up Stream Down Stream

4. Supply Chain A simplesupplychain model consists of fourcomponents: • Supplier: suppliestherawmaterials • Manufacturer: producestheproduct • WarehouseorDistributionCenter: storesandshipstheproduct • EndUser(customer): receivestheproduct Supply Chain Management

5. 3 Types of Supply Chain Basic Supply Chain Enlarge Supply Chain High Level Supply Chain Supply Chain Management

6. Elements of theSupplyChain Customer: Thecustomerstartsthechain of eventswhentheydecidetopurchase a productthat has beenofferedforsaleby a company. Thecustomercontactsthesalesdepartment of thecompany, whichentersthesalesorderfor a specificquantityto be delivered on a specificdate. Iftheproduct has to be manufactured, thesalesorderwillinclude a requirementthatneedsto be fulfilledbytheproductionfacility. SupplyChainManagement

7. Elements of theSupplyChain Planning: Therequirementtriggeredbythecustomer’ssalesorderwill be combinedwithotherorders. Theplanningdepartmentwillcreate a production plan toproducetheproductstofulfillthecustomer’sorders. Tomanufacturetheproductsthecompanywillthenhavetopurchasetherawmaterialsneeded. Purchasing: Thepurchasing departmentreceives a list of rawmaterialsandservicesrequired bytheproductiondepartmenttocompletethecustomer’sorders. Thepurchasingdepartmentsendspurchaseorderstoselectedsuppliersto deliver thenecessaryrawmaterialstothemanufacturing site on therequireddate. Supply Chain Management

8. Elements of theSupplyChain Inventory: Therawmaterialsarereceivedfromthesuppliers, checkedforqualityandaccuracyandmovedintothewarehouse. The supplierwillthensend an invoicetothecompanyfortheitemsthey delivered. Therawmaterialsarestoreduntiltheyarerequiredbythe productiondepartment. Production: Based on a production plan, therawmaterialsaremovedinventorytothe productionarea.Thefinishedproductsordered bythecustomeraremanufacturedusingtherawmaterialspurchasedfromsuppliers. Aftertheitemshavebeencompletedandtested, theyarestoredback in thewarehousepriortodeliverytothe customer. SupplyChainManagement

9. Elements of theSupplyChain Transportation: When the finished product arrives in the warehouse, the shipping department determines the most efficient method to ship the products so that they are delivered on or before the date specified by the customer. When the goods are received by the customer, the company will send an invoice for the delivered products. Supply Chain Management

10. Supply Chain Management

11. Supply Chain Development History • Before 1970: Traditional production (push production) • From 1970: Just in Time • 1980 to 1990: ERP IT systems (Pull production) (Start of Supply Chain) • From 1990:Developing of IT systems, Lean Supply Chain Management

12. Supply Chain Management Supply chain management is a set of approaches utilized efficiently to integrate suppliers, manufacturers, warehouses, and stores so that merchandise is distributed at the right quantities, to the right locations, and at the right time, in order to minimize system-wide costs while satisfying service level requirements. Supply Chain Management

13. Supply Chain Management Management Sales Purcha- sing Produc- tion Distribu- tion IT systems (MRP) Supply Chain Management

14. Supply Chain Management To get most profit; • Provide best customer service • Provide lowest production cost • Provide lowest inventory investment • Provide lowest distribution cost Supply Chain Management

15. Manufacturing Strategy • Specifications require • Customization • Postponement • Global or standard products Supply Chain Management

16. SCM Flows Supplychainmanagement can be dividedintothreemainflows: • Theproductflow • Theinformationflow • Thefinancesflow Supply Chain Management

17. SCM Flows • The product flow includes the movement of goods from a supplier to a customer, as well as any customer returns or service needs. • The information flow involves transmitting ordersand updating the status of delivery. • The financial flow consists of credit terms, payment schedules, and consignment and title ownership arrangements. Supply Chain Management

18. SCM Activities SupplyChainManagement has threelevels of activitiesthatdifferentparts of thecompanywillfocus on. • Strategic, • Tactical, • Operational. Supply Chain Management

19. SCM Activities: Strategic At this level, company management will be looking to high level strategic decisions concerning the whole organization, such as the size and location of manufacturing sites, partnerships with suppliers, products to be manufactured and sales markets. Supply Chain Management

20. SCM Activities:Tactical Tacticaldecisionsfocus on adoptingmeasuresthatwillproducecostbenefitssuch as usingindustrybestpractices, developing a purchasingstrategywithfavoredsuppliers, workingwithlogisticscompaniestodevelopcosteffecttransportationanddevelopingwarehousestrategiestoreducethecost of storinginventory. Supply Chain Management

21. SCM Activities:Operational Decisions at this level are made each day in businesses that affect how the products move along the supply chain. Operational decisions involve making schedule changes to production, purchasing agreements with suppliers, taking orders from customers and moving products in the warehouse. Supply Chain Management

22. Supply Chain Management Technology If a company expects to achieve benefits from their supply chain management process, they will require some level of investment in technology. • Enterprise Resource Planning (ERP) • SAP and Oracle. Supply Chain Management

23. SCM Technology Since the wide adoption of Internet technologies, all businesses can take advantage of Web-based software and Internet communications. Instant communication between vendors and customers allows for timely updates of information, which is key in management of the supply chain. Supply Chain Management

24. Firm Examples Oyak Renault TurkeyRomain FranceGermany SlovakiaPoland South AfricaSpain Supply Chain Management

25. Firm Examples VestelElectronic China, Korea, Taivan, Indonezia, Tayland, India, Malezia, Brezilia, Mexico, Poland, Checz Republic, Slovakia veLitvania. Alarko Carrier 19 country, 256 firm from Europe and Asia Supply Chain Management

26. LEAN THINKING Supply Chain Management

27. Lean History Supply Chain Management

28. Lean Thinking • “All we are doing is looking at the time line.. from the moment the customer gives us an order to the point when we collect the cash. And we are reducing that time line by removing the non-value added wastes” Quote by Taiichi Ohno Supply Chain Management

29. The Five Lean Principles Supply Chain Management

30. Value Stream Supply Chain Management

31. What is Kaizen? Kaizen: Constant improvements Two kinds of Kaizen

32. Customer Simplicity Waste Process Visibility Regularity Flow Pull Postponement Prevention Time Improvement Partnership Value networks Gemba Variation reduction Participation Thinking small Trust Knowledge The 20 Charactiristics Of Lean

33. WASTE (MUDA Japanese for waste) • Waste elimination is a means to achieving the Lean ideal • Waste prevention is at least as important as waste elimination • Value is the converse of waste. • Continually improvements • Preventing and reducing waste • Enhancement of specifically

34. The Seven Wastes (Ohno)

35. The Seven Wastes (Ohno) The waste of: • Overproduction • Waiting • Unnecessary motions • Transporting • Overprocessing (Inappropriate processing) • Unnecessary inventory • Defects

36. Lean Thinking To Business Processes • Order to replenishment • Order only what has been sold • Order to production • Make to order • Product development • Develop only what can be sold

37. Role Of Lean Practise • Small-batch production • Often production costs only • Reducing total costs in supply chain • Deliver at the expected time • Rapid changeover • Reduce changeover time • SMED (Single minute exchange of dies)

38. SMEDSingle minute exchange of dies

39. Lean Designs • Design strategies • Avoid inherent in the design • Product design • Reducing numbers of parts • Features that aid assembly, only one way • Modular designs, allows upgrading • Facility design • Modular design of equipment • Modular design of layout • Small machines

40. JIT Just in Time • The discipline of doing things just-in-time neither too early nor too late • Demand from the customer-next process • Pull scheduling • No stocks

41. THE PYRAMID OF KEY FACTORS

42. Application Methods 5S Value Stream Mapping SMED CRM TPM Kaizen Kanban Poka Yoke( No Failure) FMEA(Failure Mode & Effects Analysis) Supply Chain Management

43. References • Tedarik Zinciri Yönetimi ,U. E. Eymen, Kaliteofisi Yayınları No: 14 Şubat 2007 • Sürekli Akış Yaratmak,M.Rother,N.Harris, 2001 Web sites • www.godependable.com/supply-chain-management.asp • www.productionplanning.com • www.capital.com.tr • http://searchcio.techtarget.com • http://logistics.about.com SupplyChainManagement

44. ThankYou Supply Chain Management