Mdp Scm Overview1
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Overview
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Charles Darvin saidIt is not the strongest, who would survive – over a period of time, but – the flexible and fittest.
Transition phases of Manufacturing Sector
Evolution of Supply Chain Concept
Transition phases of Manufacturing Sector
• Craft Production • Mass Production • Lean Production • Customized Production
VALUE MATRIX Up to 1920
MARKET ENTRY PARAMETERS
CAPACITY TO PRODUCE
MARKET LEADERSHIP PARAMETERS
HIGH CAPACITY TO PRODUCE (HC)
1920 - 40
HC
HC + COST COMPETANCY (CC)
1940 - 80
1980 - 90
1990 Onwards
HC + CC
HC CC TQM
HC CC TQM Delivery
HC CC + Quality
HC CC TQM + DELIVERY
HC CC TQM Delivery VALUE
ERP
CRM
TQM Drive
Competition & Customer Retention “ In today’s competitive environment (wherein there are many suppliers, all giving equal offerings & quality) the customer has a choice to switch over.
Q - How would you retain your customer ? ( Remember – Real Profit comes only from Repeat Sale. )
‘ Customer Value ’ Concept Capability required for
Market Entrance and Market Leadership has changed from
“Ability to Supply” to
“Ability to Add More & More Value” to customer
Value
Quality = ---------Cost
Service X
--------Time
Value Addition activities come by -
• Adding benefits / uses • Reducing cost • Defect-free Quality • Right Time Delivery Q – Can SCM help in “ Value Creation Activities”?
What is Supply Chain ?
Design
Procure
Fabricate
Subassemble
Final assemble
Test
Stock as Inventory
Is it possible to manage this supply chain ?
Pack & Ship
Manuf actur ing Envi ronm ents
• Make to Stock
( MTS )
• Assemble to Stock
( ATS )
• Make to Order ( MTO ) • Engineered to Order ( ETO )
Make to Stock ( MTS ) Environment
Customer Order
Design
Procure
Fabricate
Subassemble
Final assemble
Test
Stock as Inventory
Pack & Ship
L.T. Customer doesn’t have to wait He has a choice to select/ reject
FG manufactured before Customer Order Hence “ Pushing the Sale “ philosophy
Assemble to Stock ( ATS ) Environment
Customer Order (CODP)
Design (Modular Product)
Procure
Fabricate
Subassemble
Stock Standard Modules as Inventory
Final assemble The Customer Selected Modules
Test
Pack & Ship
L. T. Key components are planned & stocked in anticipation of Customer Order CODP ignites the assembly of Customized Product
Make to Order ( MTO ) Environment
Customer Order (CODP)
Design
Stock component Design & Standards Parts
(Customer design, if required) Procedure (Componen ts & RM)
Fabricate
Subassemble
Final assemble
Test
L. T. Goods & Services to be manufactured after receipt of customer order Adv. – Customer gets more options , Manufacturer curtails inventory
Pack & Ship
Engineered to Order (ETO) Environment
Customer Order (CODP)
Design (Unique Engg. Design or significant customization)
Procure (RM, Standard components etc.)
Fabricate
Subassemble
Final assemble
L. T. Highly customer focused environment requiring Unique Design, Significant Customization
Test
Pack & Ship
Flows in a Supply Chain Materials & credit
Consumer
2nd Tier Supplier
Distributors/ Dealers
2nd Tier Supplier 2nd Tier Supplier
Anchors 1st Tier Supplier
Small to Midsize Companies Large Companies
Orders & cash
Supply Chain ( Martin Christopher)
The supply chain is the network of organizations that are involved, through upstream and downstream linkages, in the different processes and activities that produce value in the form of products and services in the hands of the ultimate consumer.
SCM & Vertical Integration Supply chain management is not the same as ‘vertical integration (normally implies ownership of upstream suppliers and downstream customers). Vertical Integration was once thought to be a desirable strategy but increasingly organizations are now focusing on their ‘core-business’ – in other words the things they do really well and where they have a differential advantage. Everything else is ‘out-sourced’ – in other words it is procured outside the firm.
How the focus on Production Methodology got shifted
Tiered Production
PRESENT
FUTURE
Time
Levels
Levels
Size Size Tall and Broad based structure with many levels
Network
Small and flat structure with few levels
Functional Organization with coordinators process
Network based structure
Transition phases of Manufacturing Sector
Evolution of Supply Chain Concept
Transition phases of Manufacturing Sector
• Craft Production • Mass Production • Lean Production • Customized Production
VALUE MATRIX Up to 1920
MARKET ENTRY PARAMETERS
CAPACITY TO PRODUCE
MARKET LEADERSHIP PARAMETERS
HIGH CAPACITY TO PRODUCE (HC)
1920 - 40
HC
HC + COST COMPETANCY (CC)
1940 - 80
1980 - 90
1990 Onwards
HC + CC
HC CC TQM
HC CC TQM Delivery
HC CC + Quality
HC CC TQM + DELIVERY
HC CC TQM Delivery VALUE
ERP
CRM
TQM Drive
Competition & Customer Retention “ In today’s competitive environment (wherein there are many suppliers, all giving equal offerings & quality) the customer has a choice to switch over.
Q - How would you retain your customer ? ( Remember – Real Profit comes only from Repeat Sale. )
‘ Customer Value ’ Concept Capability required for
Market Entrance and Market Leadership has changed from
“Ability to Supply” to
“Ability to Add More & More Value” to customer
Value
Quality = ---------Cost
Service X
--------Time
Value Addition activities come by -
• Adding benefits / uses • Reducing cost • Defect-free Quality • Right Time Delivery Q – Can SCM help in “ Value Creation Activities”?
What is Supply Chain ?
Design
Procure
Fabricate
Subassemble
Final assemble
Test
Stock as Inventory
Is it possible to manage this supply chain ?
Pack & Ship
Manuf actur ing Envi ronm ents
• Make to Stock
( MTS )
• Assemble to Stock
( ATS )
• Make to Order ( MTO ) • Engineered to Order ( ETO )
Make to Stock ( MTS ) Environment
Customer Order
Design
Procure
Fabricate
Subassemble
Final assemble
Test
Stock as Inventory
Pack & Ship
L.T. Customer doesn’t have to wait He has a choice to select/ reject
FG manufactured before Customer Order Hence “ Pushing the Sale “ philosophy
Assemble to Stock ( ATS ) Environment
Customer Order (CODP)
Design (Modular Product)
Procure
Fabricate
Subassemble
Stock Standard Modules as Inventory
Final assemble The Customer Selected Modules
Test
Pack & Ship
L. T. Key components are planned & stocked in anticipation of Customer Order CODP ignites the assembly of Customized Product
Make to Order ( MTO ) Environment
Customer Order (CODP)
Design
Stock component Design & Standards Parts
(Customer design, if required) Procedure (Componen ts & RM)
Fabricate
Subassemble
Final assemble
Test
L. T. Goods & Services to be manufactured after receipt of customer order Adv. – Customer gets more options , Manufacturer curtails inventory
Pack & Ship
Engineered to Order (ETO) Environment
Customer Order (CODP)
Design (Unique Engg. Design or significant customization)
Procure (RM, Standard components etc.)
Fabricate
Subassemble
Final assemble
L. T. Highly customer focused environment requiring Unique Design, Significant Customization
Test
Pack & Ship
Flows in a Supply Chain Materials & credit
Consumer
2nd Tier Supplier
Distributors/ Dealers
2nd Tier Supplier 2nd Tier Supplier
Anchors 1st Tier Supplier
Small to Midsize Companies Large Companies
Orders & cash
Supply Chain ( Martin Christopher)
The supply chain is the network of organizations that are involved, through upstream and downstream linkages, in the different processes and activities that produce value in the form of products and services in the hands of the ultimate consumer.
SCM & Vertical Integration Supply chain management is not the same as ‘vertical integration (normally implies ownership of upstream suppliers and downstream customers). Vertical Integration was once thought to be a desirable strategy but increasingly organizations are now focusing on their ‘core-business’ – in other words the things they do really well and where they have a differential advantage. Everything else is ‘out-sourced’ – in other words it is procured outside the firm.
How the focus on Production Methodology got shifted
Tiered Production
PRESENT
FUTURE
Time
Levels
Levels
Size Size Tall and Broad based structure with many levels
Network
Small and flat structure with few levels
Functional Organization with coordinators process
Network based structure
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