Professional Documents
Culture Documents
AWARENESS
LOCAL WORKSHOP
1
Logistics Training International Ltd
OBJECTIVES
SCA:2
SUPPLY CHAIN CONCEPTS
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INVENTORY CONCEPTS
Why hold inventory
Forecasting issues
Order systems
SCA:4
WAREHOUSING CONCEPTS
Purpose of warehousing
Warehouse analysis
Warehouse methods
Layout planning
SCA:5
TRANSPORT CONCEPTS
Mode selection
Inter-modal co-ordination
Control of transport
SCA:6
NETWORK CONFIGURATION
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INFORMATION CONCEPTS
Major IT enablers
Impact of e-business
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THE SUPPLY CHAIN
SUPPLY PRIMARY GOODS FLOW DEMAND
PURCHASE I PRODUCTION I DISTRIBUTIONI MARKETING
INFORMATION FLOWS
I = INVENTORY
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Supply Chain Management
Supply chain is
not a FUNCTION
to a limited team,
its a PROCESS
The linking thing is not the COST, its the DEMAND of the
customer and the AVAILABILITY of the thing in the process.
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EFFECTIVE AND EFFICIENT
Effectiveness is doing the right things.
Efficiency is doing things right.
HIGH SURVIVAL
THRIVE
EFFECTIVE TAKEOVER
SLOW
DEATH
DEATH
LOW
LOW HIGH
EFFICIENT
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SUPPLY CHAIN PROCESS CYCLES
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SUPPLY CHAIN PROCESS
PLAN
Deliver Source Make Deliver Source Make Deliver Source Make Deliver Source
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FOUR PROCESSES OF SCOR 2
Sourcing/material acquisition
Obtain, receive, inspect, hold,
and issue material.
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FOUR PROCESSES OF SCOR 3
Production execution
Request and receive material,
manufacture and test product,
package, hold and/or release
product.
Make Manage make infrastructure
Engineering changes, facilities
and equipment, production
status, production quality, shop
scheduling/sequencing, short-
term capacity.
SCA:16
FOUR PROCESSES OF SCOR 4
Order management
Enter and maintain orders, generate quotations,
configure product, create and maintain
customer database, manage allocations,
maintain product/price database, manage
accounts receivable, credits, collections and
invoicing.
Deliver Warehouse management
Pick, pack and configure products, create
customer specific packaging/labeling,
consolidate orders, ship products.
Transport management
Manage traffic, manage freight, manage product
import/export, schedule installation activities,
perform installation, verify performance.
Manage deliver infrastructure
Manage channel business rules, order rules,
manage deliver inventories, manage deliver
quality.
SCA:17
CHAIN OF CHAINS
Multiple Production
Operations within a
Multiple Suppliers Business Multiple Customers
SUPPLY CHAIN MANAGEMENT
DP
MAKE TO STOCK 2
DP
3 ASSEMBLE TO ORDER
DP
4 MAKE TO ORDER
DP
5 PURCHASE AND MAKE TO ORDER
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DECOUPLING POINTS
RM MANU- SA FG FG CUSTOMERS
ASSEM
SUPPLIERS FACTURE DELIVERY
BLY
PURCHASED
RAW MATERIALS SUB-ASSEMBLIES FINISHED GOODS
DP
MAKE AND DELIVER TO STOCK 1
FORECAST
DRIVEN DP
ACTIVITY
MAKE TO STOCK 2
DP
3 ASSEMBLE TO ORDER
DP ORDER
4 DRIVEN
MAKE TO ORDER
DP ACTIVITY
5 PURCHASE AND MAKE TO ORDER
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OPERATIONS NOT RUNNING
SMOOTHLY
Poor customer service
Changed marketing goals
Changed competitive position
Excessive inventories
Excessive costs
New products
Acquisitions and mergers
Renting of external warehousing
Revision of labour agreements
Under-utilisation of resources
Duplication of activities
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COST TO SERVE BALANCE
CHANGE CHANGE
CONDITIONS CUSTOMER
OF SERVICE
SUPPLY OFFER
COST
TO
SERVE
SCA:23
SUPPLY CHAIN THE COMPETITIVE
TOOL
Pressures
on prices
Competition
Consumer Prices
Reducing
Supply Chain Gap
Performance
Material Prices
Globalisation
SCA:24
SUPPLY CHAIN DIFFERENTIATION
Service demands
Increasing Choice
Differentiation
Responsiveness Lead time reduction
Order picking- exact quantities
Pressures
Shorter product life cycles
on prices
New Product Development
Competition
On shelf availability
More frequent deliveries
Delivery windows Consumer Prices
Consolidation Warehouses
Consistent Customer Relationships Supply Chain
Performance
Upstream management and visibility Material Prices
Innovation
Global sourcing Globalisation
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SERVICE PERCEPTION AND
EXPECTATION
Nature of Service
on offer Corporate Image
Word of mouth
Personal Needs Past Experience
communication
Expected Service
GAP 6
Perceived Service
GAP 5
Service delivery External communication
to customers
GAP 1
Staffs understanding
GAP 4 of service
requirements
GAP 3
Translation of
perceptions into
service system
GAP 2
Managements
perception of
customer
SCA:26
How a customer moves up in his journey
with 3rd party logistics
COLLABORATION
SHARE
$
LOYALTY
TRUST
Time SCA:27
9 SUPPLY CHAIN TRENDS
1. Average Services to Tailored Services
Its very dangerous giving an average Service where customers are
overcharged or underserved
2. Confrontation to Collaboration
Massive opportunities in Supply Chains, inventories can be
removed , cycle time reduced
5. Training to Learning
Implementing knowledge based learning removes supervisory
activity and adds value over and above the basic trained skills
SCA:28
9 SUPPLY CHAIN TRENDS
6. Eliminate Cost to Eliminate Waste
Improve the understanding of Supply Chain activities so
activities are carried out that add value, underpin these with
appropriate metrics
7. Efficient to Effective
Strategy has been based on past experience, this is no longer
good enough - be able to change quickly
SCA:29
MAKING EFFECTIVE
SUPPLY CHAIN
DECISIONS
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DECISION MAKING FRAMEWORK
PRODUCT
LEADERSHIP
COST
TO
SERVE
DRIVERS OF PERFORMANCE
SCA:31
INVENTORY
PIPELINE STOCK
REPLENISHMENT STOCK
REDUCE BY ORDERING
MORE FREQUENTLY
AND HENCE IN SMALLER
QUANTITIES
SAFETY STOCK
PROTECTS AGAINST
UNCERTAINTY
IN SUPPLY
AND DEMAND
RESTRICTS THE FLOW
SCA:32
SUPPLY CHAIN RESPONSE TIME
PROCUREMENT
TO STOCK
DELIVERY TO
CUSTOMER
SCA:33
SUPPLY CHAIN RESPONSE TIME
Distribution
Moving
Making
Buying
Total Lead
Time
(Source to
Payment)
SCA:34
SUPPLY CHAIN RESPONSE MATRIX
175
Retail Store
120 10
Distribution Centre
15
95
20 Finished Product Warehouse
5 Bulk
5 Cut Work
10 Fabric
5 Finished Fabrics
55
Grey
15 Fabric
MANUFACTURER
5 Yarn RMS
GARMENT
PRODUCTION
30 10 Yarn FGS
FABRIC
RETAILER
YARN
20 Fibre
10 15 20 10
Process
Lead Time
55
SCA:35
COST AND ADDED VALUE
Delivery to
DC Customer
Stock
Raw
Material
Stock Finished In
Goods Transit
VALUE ADDED
Production
COST ADDED
SCA:36
PLANNING INVENTORY FLOWS
Push or pull
Types of stock
SCA:37
PUSH & PULL ANALOGY
SUPPLY
PUMP OR STORE
VARIABLE
LEVELS
POSSIBLE
INVENTORY
INDIRECT
DIRECT
DEMAND SCA:38
INVENTORY BASIC ISSUES
Achieve a balance which:-
Minimises the costs at an acceptable level of investment.
Provides the desired level of service.
Independent issues:-
How much to order - (What is the order quantity?)
When to order - (What time and frequency?)
Forecasting - (When can I guess about the
above?)
Demand analysis - (What is unique about each
product?)
Order policies - (When to undertake reorder
reviews?)
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INVENTORY PLANNING & CONTROL
PLANNING
Basis requirements:
1. The beginning of the year opening stock.
2. The value of forecast demand on an annual basis phased
by month or week.
3. The value of planned receipts on an annual basis phased
by month or week.
4. The calculated value of closing stock at the end of each
month or week through the year.
Development points:
Opening stock
Forecast demand
Phasing of the demand
Planned receipts
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INVENTORY CONTROL
CONTROL
SCA:41
MODEL FOR INVENTORY PLANNING
Analyse Demand eg trend, level, frequency, distribution, service level,
ABVC analysis. To be done, line by line.
Establish When to Order eg demand quantities, lead times, service levels, free
stock
Lead time
Demand
Order policies
Service level (stock availability)
Product lines
Externalise stock holding
Stock holding levels and pipelines effects
SCA:43
FORECAST NEED
DP CUSTOMER ORDER
UNCERTAINTY GAP
CYCLE TIME (D)
SCA:44
BETTER PLANS
Reduce T time
SCA:45
DECISION MAKING FRAMEWORK
PRODUCT
LEADERSHIP
COST
TO
SERVE
DRIVERS OF PERFORMANCE
SCA:46
NETWORK DESIGN DECISIONS
DESIGN DECISION
SCA:47
WAREHOUSE PLANNING
STOCKPILING
PRODUCTION
PRODUCT MIXING
CONSOLIDATION
DISTRIBUTION
CUSTOMER SERVICE
SCA:48
WAREHOUSE RELATIONSHIPS &
LINKS
Purchasing To hold purchased anticipation or investment
stocks.
SCA:49
WAREHOUSE METHODS
Warehouse objectives:
Maximise storage in cubic terms.
Minimise handling operations.
Warehouse size
Warehouse operations
SCA:50
WAREHOUSE SIZE
Layout involves:
Space for goods and storage equipment
Aisles
Gangways
Other areas
Modular planning
MB
Pallet Pallet
ML
SCA:51
WAREHOUSE OPERATIONS
Goods inwards
Methods by which goods are received
Use of an unloading dock
Stock location criteria in bulk store
Fixed positioning
Random positioning
Order picking methods
Low level picking
High level picking
Station picking
Order picking
Line picking
Zonal picking
Goods outwards
SCA:52
WAREHOUSE OPERATIONAL
PLANNING MODEL
Analyse Stock list eg Demand Volumes/Movements/
Method related
Cubic utilisation
Procedures
Equipment related
Systems related
People related
SCA:54
STORAGE
Storage methods
Adjustable pallet racking
( A.P.R.) - components
upright
beam
bracing
protection
decks/cradles/pallet stops/tie
bars
STORAGE
Storage methods
Factors - Random location
Any free storage location can be
allocated to a SKU
Best utilisation of space
Average stock quantity + 10%
Requires effective management system
STORAGE
Storage methods
Cantilever racking
Long loads
Bar stock
Profiles
Timber
(served by sideloader/4 way
reach trucks)
STORAGE
Storage methods
Pallet live storage - Pallet slave application
STORAGE
Storage methods
Pallet live storage
Gravity / braked rollers
Requires good quality pallets or
use of slave pallets
Automatic FIFO
High throughput speed
Very high storage density
High stock rotation
Orderpicking ( low SKU volume)
Very high cost per pallet position
STORAGE
Storage methods
A.P.R.- Standard
SCA:62
GLOBAL OPERATIONS MODEL
LOGISTICAL
APPROACH
LIABILITY PHYSICAL
NETWORK BASE
THROUGH
FLOW OF TRANSPORT
INFORMATION OPERATION
COMMERCIAL
SYSTEM
SCA:63
GLOBAL OPERATIONS MODEL
DOCUMENT
CUSTOMS
COMMERCIAL LCL INLAND INLAND LCL
& PORT TO PORT &
SYSTEM PACK MOVE MOVE PACK
D D
BILL OF RELEASE
FLOW OF DELIVERY
BOOKING LADING OR INVOICE MANIFEST OF
INFORMATION INSTRUCT
WAYBILL CARGO
LIABILITY
CFS ROAD RAIL TERMINAL SEA CONCEALED
NETWORK
SCA:64
INFORMATION FLOWS
Information Flow
Customers
Raw material
Time
SCA:65
EPOS
Materials
Usage
Machine Production
Performance Plans Delivery Plans
Manufact-
Supplier Supplier Retail Retail
Factory urers Consumer
Factory Warehouse Warehouse Branch
Warehouse
Stock
Movement Telemarketing
Plans
SCA:66
FOOD SUPPLY CHAIN
0 012345 678905
Manufacturer Regional
EDI Retail Regional
Warehouse
Warehouse Scanning Scanning (Pallets)
(Pallets) HQ
EDI Retail
HQ
Manufacturer Packaging
HQ Designs
Supplier
EDI HQ
Supplier
Factory
Factory
EDI Supplier Warehouse
Scanning (Pallets)
Scanning (Pallets)
SCA:67
COLLABORATIVE PLANNING
COLLABORATOR A COLLABORATOR B
DATA JOINT
INTERNAL PROCESSES INTERNAL PROCESSES
FLOWS PROCESSES
COLLABORATIVE
SERVER
= FUNCTION
SCA:68
E-BUSINESS
Inventories Information
Physical assets Replaced by Intellectual assets
Closed business systems New collaborative relationships
Increase
Profit
Increase New Markets
Revenue Maximise Customer Value - QSCT
Personalised Marketing increased satisfaction
Convenience 24/7 Order Capture , tracking
SCA:69
SUPPLY CHAIN SYNCHRONISATION
SCA:70
LOGISTICS PLANNING STRUCTURE
MODEL FOR Forecast Demand
LOGISTICS PLANNING
Determine Service Constraints
Locate Warehouses
AGILE
COST TO SERVE
ZONE OF
OBSTACLES
STRATEGIC PRODUCT VARIETY
FIT PRODUCT LIFE CYCLES
DEMANDING CUSTOMERS
FRAGMENTATION
STRATEGY EXECUTION
GLOBALISATION
LEAN
LOW
CERTAIN UNCERTAIN
SCA:72
LEAN SUPPLY CHAINS
SCA:73
AGILE SUPPLY CHAINS
SCA:74
KEY POINT
THERE IS NO RIGHT
SUPPLY CHAIN STRATEGY
INDEPENDENT OF THE
COMPETITIVE STRATEGY
THERE IS A RIGHT
SUPPLY CHAIN STRATEGY
FOR A GIVEN
COMPETITIVE STRATEGY
SCA:75
TAILORING SUPPLY CHAINS
Product
Low High
SCA:76
TAILORING SUPPLY CHAINS
384 Buckets Cluster into Six Supply Chains
Important, unique attributes of supporting
pipeline
Systems Co-ordinated staging, marshalling of orders for installers
orders Dedicated installer support
Customer
Cycle shipping
inventory
Stocking points near largest customer locations
replenishment
Rapid Order-specific shipping
response Low cycle time, order entry and material handling
SCA:77
SUPPLY CHAIN SEGMENTATION
1. Unit value (Low margin? High full-stream cost?)
2. Sales volume (Unit sales per year?)
Nature of relationship Product Strategy and Economics
(Long-standing? Transactional?)
Capacity to draw in others
3. Degree of order co-ordination
(Independent line items? Complete systems?)
Accuracy of delivery timing
15 minute window? Plus or minus 3 days?) Special Interaction Requirements
On site service (Dump? Installation?)
4. Merchandising (Product displays? Promotions?)
Order taking (EDI? In person? Involved?)
Product preparation (Standard? Custom?)
5. Order response time (Hours? Days? Weeks?)
Frequency (Time per day? Irregular?)
Order quantity (Individuals? Truckloads?) Standard Delivery and
6. Product shipment norms (Parcel? Truckload?) Order Requirements
Destination locations (Clustered? Scattered/Rural?)
Packaging (Returnable? Custom?)
Demand patterns (Seasonal? Derived or pulled demand?)
7. Product handling characteristics (Binnable? Bulk?
Handling Requirements
Liquid?)
8. Demand variability (Predictable?
Product substitutability (Unique?High variance?)
Highly
Inventory Requirements
interchangeable?)
Cost of no stock/no delivery (Lost sale? Plant
closure?) SCA:78
SUPPLY CHAIN BARRIERS
STRONG NO
FUNCTIONAL SUPPLY CHAIN
BARRIERS THINKING
IMBALANCE
POOR BETWEEN
COMMUNICATION SUPPLY &
DEMAND
INACCURATE
FORECASTS
LACK
CREATE
OF TRUST
MAYHEM &
ANARCHY
SCA:79
WORKING TOGETHER
TO
TO
UNDERSTAND
BREAKDOWN
SUPPLY CHAIN
FUNCTIONAL
PROCESS
BARRIERS TO
TO
BALANCE
SUPPLY &
IMPROVE
DEMAND
COMMUNICATION
TO
BUILD
TRUST BY TO
WORKING
TOGETHER REDUCE
IMPACT OF
INACCURATE
FORECASTS
SCA:80