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1. Advanced Supply Chain ManagementSurath PralongsilDecember 2009Advanced Supply Chain ManagementSurath PralongsilDecember 2009Value Chain ManagementSupply Chain…
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  • 1. Advanced Supply Chain ManagementSurath PralongsilDecember 2009Advanced Supply Chain ManagementSurath PralongsilDecember 2009Value Chain ManagementSupply Chain ManagementLogistics Management
  • 2. Supply Chain Management / Surath Pralongsil 2Outline of today09:00 – 09:15 (15 min) Overview of supply chain management09:15 – 09:45 (30 min) Strategic supply chain management09:45 – 11:30 (1hr 45 min) Supply chain simulation (beer game) + Break11:30 – 12:30 (60 min) Integrated supply chain planning12:30 – 13:30 (60 min) Lunch13:30 – 14:00 (30 min) Supply chain collaboration & efficientconsumer response (ECR)14:00 – 15:30 (1hr 30 min) - Synchronized production/supply15:30 – 15:45 (15 min) Break15:45 – 16:00 (15 min) - Vendor-managed inventory (VMI)16:00 – 16:45 (45 min) IT in supply chain management16:45 – 17:00 (15 min) Wrap-up
  • 3. Supply Chain Management / Surath Pralongsil 3Objective of today• To understand the concept, process and benefit of SCM in business,and utilize SCM in his/her own work.• To be aware of the real applications of SCM in SCCC context andother industries.• To be able to work from a holistic point of view (looking at big picture)• To promote collaboration within and across organization, andunderstand supply chain partners capability
  • 4. Supply Chain Management / Surath Pralongsil 4Contents of Supply Chain Management• Overview of Supply Chain Management• Value Management• Customer Value• Value-Based Pricing• Customer Relationship Management• Strategic Supply Chain Management• Supply Chain Network Design andOptimization• Integrated Supply Chain Planning• Sales & Operation Planning (S&OP)• Enabling Technology• Outsourcing• Inventory Management• Warehouse Management• Transport Management• International Logistics Management• Reverse Logistics• Supply Chain Costing / Activity-BasedCosting / Cost-To-Serve• Supply Chain Collaboration• Efficient Consumer Response (ECR)• Continuous Replenishment andSynchronized Production / Supply• Vendor-Managed Inventory (VMI)• Strategic Sourcing and Procurement• Supplier Relationship Management• Supply Chain Performance Management• Just-in-time• Lean and Six Sigma• Green Supply Chain• Supply Chain Traceability and Security• The Future Supply ChainSupplementary• Supply-Chain Operations Reference-model (SCOR)• Supply Chain/Logistics Scorecard• Supply Chain Simulation: Beer Game• Product Code Classification• ABC Analysis• Best Practice
  • 5. Advanced Supply Chain ManagementSurath PralongsilDecember 2009Overview of Supply Chain Management
  • 6. Supply Chain Management / Surath Pralongsil 6Supply ChainManufacturer Retailer ConsumerDistributor/WholesalerSupplierInformation Flow and Financial FlowInformation Flow and Financial FlowPhysical FlowPhysical FlowProcess and PeopleProcess and People
  • 7. Supply Chain Management / Surath Pralongsil 7Supply ChainAll interactions, from order entry through paid invoices, end to end from yoursupplier’s supplier to customer’s customer… scope of SCM as SCC determined
  • 8. Supply Chain Management / Surath Pralongsil 8Value Chain• Michael Porter of Harvard university said that “A business is profitableif the value it creates exceeds the cost of performing the valueactivities. To gain a competitive advantage over its rivals, a companymust either perform these activities at a lower cost or perform them ina way that leads to differentiation and a premium price (more value).”MARGINMARGININBOUNDLOGISTICSOPERATIONS OUTBOUNDLOGISTICSMARKETING& SALESSERVICEPROCUREMENTFIRM INFRASTRUCTUREHUMAN RESOURCE MANAGEMENTTECHNOLOGY DEVELOPMENTPRIMARY ACTIVITESSUPPORTACTIVITIESMARGINMARGININBOUNDLOGISTICSOPERATIONS OUTBOUNDLOGISTICSMARKETING& SALESSERVICEPROCUREMENTFIRM INFRASTRUCTUREHUMAN RESOURCE MANAGEMENTTECHNOLOGY DEVELOPMENTPRIMARY ACTIVITESSUPPORTACTIVITIES
  • 9. Supply Chain Management / Surath Pralongsil 9Value ChainFocus on how a business creates customer value by examining contributionsof different internal activities to that valueAllow better identification of a firm’s strengths and weaknesses since thebusiness is viewed as a processThe activities within the value chain are split into two sections:• Primary activitiesThese are activities associated with physical creation of the product,marketing activities, activities involved with the transfer to the buyer & after-sale support• Support activitiesThese activities provide support to the organization as a whole to keep itfunctioning & provide the infrastructure of the company
  • 10. 10Supply Chain Management / Surath PralongsilHolcim Value ChainTransactionalMortarsReady - mixConcreteAsphaltConcreteProductsCementitiousMaterials(cement,mineralcomponents)Direct SalesInfrastructureCommercial /IndustrialBuildingHousingDemandSupplyBasic MaterialsProcessingDirect SalesAggregates(sand, gravel,stone, recycledaggregates)TradersWholesalersRetailersTradersWholesalersRetailersApplicationsApplications andConstruction FieldsEnd - usersGeneralContractorsCivilEngineeringChannelsTransformationalMasonsSelf - builders
  • 11. 11Supply Chain Management / Surath PralongsilReady mixTransactionalBasic MaterialsProcessingSupplyEnd - usersChannelsTransformational- mixConcreteTradersWholesalersRetailersGeneralContractorsCivilEngineeringMasonsSelf - buildersProduct End-userAggregatesAsphaltMortarsReady MixConcreteConcreteProductCementitiousMaterials(cement,mineralcomponents)Channel / DistributionDemandConstructionFieldsInfrastructureCommercial /IndustrialBuildingHousingConstructionFieldModern TradeDirect SalesDirect SalesValue chain defines the scope, relating to SCCC corebusinessesSCCC-investing businessSource: adapted from Holcim Value ChainCo-ProcessingEnergyMineralComponentsSupplierR/M, SupplyCoreForwardIntegrationBackwardIntegrationVerticalIntegration
  • 12. 12Supply Chain Management / Surath PralongsilSource: adapted from Holcim Value ChainCoreForwardIntegrationBackwardIntegrationmixTransactionalBasic MaterialsProcessing End - usersChannelsTransformational-ConcreteSCTWholesalersRetailersSekisui – SCGIndustrySCG – SekisuiSalesCivilEngineeringMasonsSelf - buildersProduct End-userCPACAggregate AsphaltTigerMortarCPAC• Roof tiles,• Ceramic floor / wall tile• Paving block• Light weight concreteblock• Gymsum boardChannel / DistributionCement ThaiHome martDirect SalesSCI EcoServiceSCTMineralComponentsSupplierR/M, SupplyRefractorySCG Value ChainGray CementWhite Cement
  • 13. 13Supply Chain Management / Surath PralongsilCement flow total market 2006End userProducerTransformationalchannelContractor65%Contractor65%Transactionalchannel30.1 Mio t100%CPM18%CPM18%RMX26%RMX26%Agent20%Agent20%Directsales5%Bulk40%Bag60%Selfbuilder /Mini-contractor17%ConstructionfieldDrymortar1%Whole-saler48%Retailer38%Simple house28%Simple house28%Single house20%Single house20%Highrise6%Highrise6%Infrastructure20%Infrastructure20%Comm.11%Comm.11%Indust.6%Indust.6%Inst.1%Inst.1%Townhouse4%Townhouse4%Multist.<64%Multist.<64%
  • 14. 14Supply Chain Management / Surath PralongsilValue creation* for SCCC’s key stakeholders from 2010 to 2013?Input factor (cost of all goods,materials and services purchased)Depreciation and amortizationBenefit to employees, government,shareholders and creditorsBenefit to shareholdersRetained in businessBenefit to employeesBenefit to governmentBenefit to creditors32%DividendEmployeeTax*Illustration
  • 15. Supply Chain Management / Surath Pralongsil 15Value Added• Refers to the additional value created at a particular stage ofproduction or through branding and marketing. In modern neo-classical economics, especially in macroeconomics, it refers to thecontribution of the factors of production, i.e. land, labor and capitalgoods, to raising the value of a product and corresponds to theincomes received by the owners of these factors.• The enhancement added to a product or service by a company beforethe product is offered to customers.
  • 16. Advanced Supply Chain ManagementSurath PralongsilDecember 2009Overview of Supply Chain ManagementSupply Chain & Logistics
  • 17. 17Logistics EvolutionLogistics EvolutionJourney of SCCC Logistics to“Logistics Solution Provider”TransportationDistributionIntegratedLogisticsSupply ChainManagementValueManagementSolutionProviderOutboundInboundWarehouseDispatchingPacking3rdand 4thLogisticsServiceProvider(LSP)ApplicationServiceProvider(ASP)ValueManagementCustomerPropositionNetworkSynchronize& OptimizeSupplyPlanningDemandPlanningOutboundInboundWarehouseOutboundInboundSource: Khun Nopporn Thepsithar, SCCC
  • 18. Supply Chain Management / Surath Pralongsil 18Supply Chain and Logistics• “A position of enduring superiority over competitors in terms ofcustomer preference may be achieved through logistics.” (ProfessorMartin Christopher)• The prizes in today’s markets go only to those companies which arecapable of providing added value in ever-shortening time scales.”(Professor Martin Christopher)• “Nowadays, it’s supply chains that compete with supply chains, notcompanies with companies.” (Allan Waller, Price WaterhouseCoopers)
  • 19. Supply Chain Management / Surath Pralongsil 19Supply Chain Management• the design, planning, execution, control, and monitoring of supplychain activities with the objective of creating value, building acompetitive infrastructure, leveraging logistics capability,synchronizing supply with demand and measuring performance.(Source: APICS)• “The goal of supply chain management is to link the marketplace, thedistribution network, the manufacturing process and the procurementactivity in such a way that customers are serviced at higher levels butat lower costs.” (Professor Martin Christopher)• “the management of upstream & downstream relationships withsuppliers & customers to deliver superior customer value at less costto the supply chain as a whole”• The word “Supply Chain” is not just about supply. It is about bothsupply and demand, better called “Integrated Supply ChainManagement”
  • 20. Supply Chain Management / Surath Pralongsil 20Logistics Management• Is the means whereby the needs of Customers are satisfied throughthe co-ordination of the materials and information flows that extendfrom the market place, through the firm and its operations and beyondthat to suppliers. (Professor Martin Christopher)• Logistics is part of the supply chain process that plans, implements,and controls the efficient, effective forward and reverse flow andstorage of goods, services, and related information between the pointof origin and the point of consumption in order to meet customers’requirements. (The Council of Logistics Management)• Logistics is all about getting the right goods to the right place at theright time in the right quantity at the right quality at the right price.
  • 21. Supply Chain Management / Surath Pralongsil 21Supply Chain Management v.s. Logistics• Logistics management involves the strategy & operations relating tothe movement of goods within the enterprise & with its immediatesuppliers & customers. Logistics management develops a plan for theflow of products & information through a business.• Supply chain management involves managing the relationshipsamong all members in the supply chain. Supply chain managementaims at coordinating the processes of all supply chain members, bothdownstream towards customers & upstream towards suppliers.Supply chain management is linked together with cross-companystrategies and processes• A company‘s Logistics strategy needs to be closely aligned with thesupply chain‘s overall strategy.
  • 22. Supply Chain Management / Surath Pralongsil 22An Enterprise IntegrationPHASES Functional IntegrationPhase 1Phase 1BaselineBaselinePhase 3Phase 3InternalInternalIntegrationIntegrationPhase 2Phase 2FunctionalFunctionalIntegrationIntegrationPhase 4Phase 4ExternalExternalIntegrationIntegrationPurchasing Material Control Production Sales DistributionMaterial Management Manufacturing Management LogisticsMaterial Management Manufacturing Management LogisticsSuppliersInternal Supply ChainCustomers
  • 23. Supply Chain Management / Surath Pralongsil 23Characteristics of Supply Chain EvolutionFragmentedPyramidIntegratedEnterpriseIntegratedSupply ChainValue Network /Virtual CompanyStrategyFunctionalintegrationDriven by cost andefficiencyCross-functional integrationDriven by customer satisfactionProcess ownersIntegrated applicationsProcess automationCross-functional integrationIntra-enterprise focusedLimited co-operation (within anenterprise)One teamEmpowered, self-directedteamsFlattened pyramidWe sell semi-customizedproducts.Which of our products would abunch of customers buy?Semi-customized products inneed of a market segment.Inter-enterpriseintegrationDriven by supply chainoptimizationCore competency, agility, opportunityDriven by change and uncertaintyPeople Subject matter experts Knowledge workers Knowledge workers with smart agentsTechnologyIndependent systemsIslands of automationElectronic commerce enabledScaleable cross-platformportableElectronic marketplace enabledPlug compatible and inter-operableProcessFunctional silosDepartment focusedCross-company integrationSupply-Chain focusedDynamic, end-to-end integrationOpportunity and value-add-focusedCultureAdversarial, mutualtrustI’ll do my job, you doyoursMutual truth and fullcooperation (extendedenterprise)One teamNeed-based, value-add cooperationWhat true value does everyone add?StructureHeavy command andcontrolPyramidPartnership / alliancePipelineVirtual / fungibleNetwork / WebProduct /ServiceWe sell products.What products can wemake?Mass-producedproducts in need of amarketWe offer semi-customizedsolutions.How can we offer best totalvalue to a customer segment?Fully optimized semi-customized solution in need ofa market nicheWe help our customer (s) to get thebest possible solution.What must we do to give the best totalsolution to this individual customer?Information-rich mass-customizedsolution configured for one customerSource: KPMG Transportation & Distribution
  • 24. 24Source: McKinseySupply chain framework3. Production managementTranslate market requirements intoproduction requirements, andmanage the resulting constraints2. Forecast and demand managementEnsure appropriate supply at low costthrough accurate demand forecastingand efficient order management6. Supply chain integrationCreate integratedprocesses to facilitateinformation flow supportedby a supply chain focusedorganization5. Distribution managementEnsure reliable logisticsand optimal material flowin the outbound network0. Supply chain configuration7. Supply chain transformationEnsure sustainability and constant improvement in whole networkUnderstand market and network dynamics and configure network with optimal cost and flexibility1. Service-levelmanagementUnderstand cus-tomer requirementsand serve themaccordingly4. SupplymanagementEnsure reliablesupply and inte-grate with suppliers3254 16
  • 25. Supply Chain Management / Surath Pralongsil 25Internal Supply Chain Management& Logistics ManagementSupply Chain ManagementFlow ManagementDistribution ManagementLogistics ManagementImport & ExportQuality controlSimulatewarehouse spaceand workloadSimulateTrucking PlanSimulateInternationalTransport PlanBreak down andconsolidate logisticalcostsCheck subcontractorinvoicesSC deployment resultanalysisBenchmarkingImportandexportorderTransferOrderTrack & trace(including Log Bookmonitoring in line withKPI definition,operational audit)ControlCheckSellSupply Chain Supply Chain ExecutionProductionOptimisation of Supply Chain ConfigurationSteer, plan andschedule warehouseoperation basing onwarehousing policyContract establishment and follow upLogistics project steeringInformation system requirementMulti product lines service requirements arbitrationDeploymentResources and investment planningCheck compliance with Service SpecificationJustification: Trade off service / CostsPerformance control(KPI definition andresult)Cost & BudgetcontrolSteeringofOperationStrategicSteeringDefine ServiceSpecificationSupply ChainPlanningPlan & scheduleproductionTacticalSteeringProposaloflogisticsalternatives(Project)Quality & 3PL AuditSteer, plan andscheduletransportoperation basingon truckingpolicySteer, plan andscheduleinternationaltransportoperation basingon transportpolicyPhysicalExecutionTransport OperationHandleClaimsWarehouseoperationsInvoiceproductsLocal InternationalNature&TypeofFunctionStorage Transport ProjectSource: Capgemini
  • 26. Supply Chain Management / Surath Pralongsil 26Supply Chain Competence FrameworkA. StrategyB. PlanningC. Plant OperationsD. DistributionE. Human ResourcesF. Information TechnologyG. Capital ManagementH. PerformanceManagementA. Strategy1. Supply Chain Strategy Development2. Make vs Buy / Contract Manufacturing3. Network Design / Optimization /Rationalization4. Product Configuration / De-proliferation /Complexity ReductionB. Planning5. Forecasting6. Sales & Operation Planning7. Inventory Planning8. Supply Chain PlanningC. Plant Operations9. Production Optimization10.Maintenance Management11.QA / QCcD. Distribution12.Transportationi. Inboundii.Outbound13.Warehouse Management /Inventory ManagementE. Human Resources14.Organization Alignment15.Readiness to Change16.Professional Development /Training / Rewards andRecognitionF. Information Technology17.ArchitectureG. Capital Management18.Fixed Capital Managementi. Capital Planningii.Capital ProjectManagementH. Performance Management19.Integrated StrategicMeasurement20.Performance Dashboard21.Continuous ImprovementSource: A T Kearney
  • 27. Supply Chain Management / Surath Pralongsil 27Top Down, Bottom UpEXECUTIONIdentificationStandardizationOptimizationOperationalOrders, Commitments,Asset TrackingTACTICALPlanning,Optimization,ArbitrationSTRATEGICStructure,Costs, PoliciesPHYSICALERPTACTICAL PLANNINGSTRATEGIC DIRECTION
  • 28. Supply Chain Management / Surath Pralongsil 28Effective and Efficient Supply ChainKey factors:• Understanding end customer needs• Adopting effective supply chain strategies to meet end customerneeds• Integration of the members of the supply chain• Successfully tackling operational issues• Successfully handling the impact of internationalization on the supplychain• Managing the information systems & technology which hold thesupply chain together• Ensuring value for the customer provided by the supply chain
  • 29. Advanced Supply Chain ManagementSurath PralongsilDecember 2009Strategic Supply Chain Management
  • 30. Supply Chain Management / Surath Pralongsil 30Supply Chain PhilosophyDemand SupplyLogistics: Cost and Service Trade-Off
  • 31. Supply Chain Management / Surath Pralongsil 31Key Objectives of Supply Chain Management• Delivery of value• Responsiveness• Reliability
  • 32. Supply Chain Management / Surath Pralongsil 32Supply Chain Strategy• a planning activity focused on the long-term decisions of the supplychain– The choice of products & services to offer to customers– The structure of the logistics network & the supply chain– The capabilities the supply chain will specialize in– The types of relationship between supplier & customers• Creating competitive advantage, which is sustainable over a longperiod & reliant on systems of capabilities rather than a singlecapability– Opportunities in global markets– The provision of tailored services for customers– Rapid communication with customers & suppliers– The need for time compression strategies in order to cope with shorterproduct life cycles
  • 33. Supply Chain Management / Surath Pralongsil 33Competitive Advantage in Supply ChainManagement• Globalization• Integration– Internal Integration– External Integration– Capability Integration– Relationships• Time-
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