SC Modeling 1

8/2/2019 SC Modeling 1

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Supply Chain Modeling and Analysis, February 2005 ?

Supp ly ChainSupply Cha in

Model ingModel ing

and Analys isand Analys is

Alexandria

February 2005

Speaker: Dr. Amr Eltawil


Who am I ?

Dr. Amr Eltawil. Lecturer, Production Engineering Department

Faculty of Engineering, Alexandria University.

Ph.D. Industrial Engineering, joint researchprogram between Alexandria University andUniversity of Miami, Florida, USA.

Interests: Supply Chain Management Operations Research applications. Manufacturing Systems Modeling and Simulation. Applied Statistics. Decision Support Systems (MIS, MRP, ERP, CRM, CMMS)


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Supply Chain Modelingand Analysis Agenda

Introduction to Supply ChainManagement

Unilever Supply Chain Model

Forecasting

Inventory Management:

Production and Operations Planning

Supply and distribution strategies


Supply Chain Modeling

and Analysis Agenda

Introduction to Supply ChainManagement.

Unilever Supply Chain Model.

Forecasting. Production Planning.

Inventory Management.

Supply and distribution.


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What is a Supply Chain?

A supply chain refers to the flow ofmaterials, including:

information,

Services or materials

Cash

from suppliers through factories andmanufacturers to customers.


Supply

Sources:plantsvendorsports

RegionalWarehouses:stockingpoints

FieldWarehouses:stockingpoints

Customers,demandcenterssinks

Purchase

Inventory

TransportationInventory

A Gener ic Supply Chain

Inventory

Plants:plants


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Supply Chain Modeling and Analysis, February 2005 `

Cycle View of Supply Chains

Customer Order Cycle

Replenishment Cycle

Manufacturing Cycle

Procurement Cycle

Customer

Retailer

Distributor

Manufacturer

Supplier

Any cycle

0. Customer arrival

1. Customer triggers an order

2. Supplier fulfils the order

3. Customer receives the order

Supply Chain Modeling and Analysis, February 2005

Det ergent supply chain:

Customer wants

detergent

Albertsons

Supermarket

Third

party DC

Unilever or other

manufacturer

Plastic

Producer

Chemical

manufacturer

(e.g. Oil Company)

Tenneco

Packaging

Paper

Manufacturer

Timber

Industry

Chemicalmanufacturer

(e.g. Oil Company)


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Supply Chain Modeling and Analysis, February 2005 ^

Supply Chain Management

A supply chain consists of

SCM aims to Match Supply andDemand, profitably for productsand services

SUPPLY SIDE DEMAND SIDE

The right

Product

Higher

ProfitsThe right

TimeThe right

CustomerThe right

QuantityThe right

StoreThe right

Price=++ ++ +

Achieves

SupplierSupplier ManufacturerManufacturer DistributorDistributor RetailerRetailer CustomerCustomer

UpstreamDownstream

Supply Chain Modeling and Analysis, February 2005 ??

I mpor t ance of Supply ChainManagement

In 2000, the US companies spent $1 trillion (10% of GNP) onsupply-related activities (movement, storage, and control ofproducts across supply chains). Source: State of Logistics Report

Eliminating inefficiencies in supply chains can savemillions of $.

Tier 1Tier 1SupplierSupplier

ManufacturerManufacturer DistributorDistributor RetailerRetailer CustomerCustomer

Inefficient

logistics

Highstockouts

Ineffective

promotions

Frequent Supplyshortages

High landed coststo the shelf

High inventoriesthrough the chain

Low order fillrates

Glitch-Wrong Material,Machine is Down

effect snowballs


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SCM Gener at ed Value

Minimizing supply chain costs while keepinga reasonable service level customersatisfaction/quality/on time delivery, etc.

This is how SCM contributes to the bottomline

SCM is not strictly a cost reduction paradigm!


SCM in a Supply Net wor k Supply Chain Management (SCM) is concerned with the

management and control of the flows of material, information, andfinances in supply chains.

Supply

Demand

Products and Services

Cash

Supply Side OEM Demand Side

THAILAND INDIA MEXICO TEXAS USN-Tier Suppliers Suppliers Logistics Distributors Retailers

Information

The task of SCM is to design, plan, and execute the activities atthe different stages so as to provide the desired levels ofservice to supply chain customers profitably


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Supply Chain Mat er ial andI nf or mat ion Flows

Supplier

Supplier

Supplier

Inventory

Inventory

Distributor

Inventory InventoryManufacturer

Customer

Customer

Customer

Market research datascheduling information

Engineering and design dataOrder flow and cash flow

Ideas and designto satisfy end

customerMaterial flowCredit flow


Supply Chain Management

Companies no longer compete solely as individual entities, butrather as supply chains.

The survival of the single company depends on themanagement's ability to integrate the company in a network.

Therefore, successful SCMwill determine the ultimate

success of the singleenterprise.

This requires companies tobe far more open and toengage in a closer andmore integrated cooperationwith other companies thanhas previously been thecase.


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Def init ions: SCM

The Council of Logistics Management definessupply chain management as:Supply Chain Management is the systemic,

strategic coordination of the traditional business

functions and the tactics across these businessfunctions within a particular company and acrossbusinesses within the supply chain for the

purposes of improving the long-term performanceof the individual companies and the supply chainas a whole.

Source: Council of Logistics Management


Def init ions: Logist ics

The Council of Logistics Management defineslogistics as:

Logistics is that part of the supply chainprocess that plans, implements, and

controls the efficient, effective forward andreverse flow and storage of goods,services, and related information betweenthe point of origin and the point ofconsumption in order to meet customers'requirements.

Source: Council of Logistics Management


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Supply Chain Modeling and Analysis, February 2005 ?`

Gener al Supply Chain Model

SCOR ModelSCOR Model

Supplier CustomerCustomersCustomer

SuppliersSupplier

Internal or External Internal or External

Your Company

Plan

MakeDeliverSource Make DeliverMakeSourceDeliver SourceDeliverSource

Return Return ReturnReturn Return Return

Return Return

Supply Chain Council & Supply Chain Operations Reference (SCOR) Model OverviewSupply-Chain Council, Inc. www.supply-chain.org


Supplier Customer Customers

CustomerSuppliersSupplier


Your Company

Plan

MakeDeliverSource Make

DeliverMakeSourceDeliver SourceDeliverSource


R et ur n R et ur n

Supplier Customer Customers

CustomerSuppliersSupplier


Your Company

Plan

MakeDeliverSource Make

DeliverMakeSourceDeliver SourceDeliverSource


R et ur n R et ur n

PlanPlan

MakeDeliverSourceSource Make

DeliverMakeSourceDeliver SourceDeliverDeliverSource

ReturnReturn ReturnReturn ReturnReturnReturnReturn ReturnReturn ReturnReturn

ReturnR et ur n R et ur nReturn

Supply Chain Management(I nt egrat ed Component s)

Mid-TermPlanning /

S&OPShort -Term

Planning

Long RangePlanning

DemandPlanning

SupplyChain

Planning

MasterProductionSchedule

MaterialsPlanning

FactoryPlanning

Logistics

Procurement

CustomerOrder

Management

Weeks / Days / MinutesQuarters / Months / WeeksYears / Quarters

Time

Horizons

Product &Component

Design


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Supply Chain Modeling and Analysis, February 2005 ?^

Planning, organizing, directing, &controlling flows of materials Begins with raw materials

Continues through internal operations

Ends with distribution of finished goods

Involves everyone in supply-chain Example: Your suppliers supplier

Objective: Maximize value & lower waste

Supply-Chain Management


The SCM Advant age

The key objective of SCM is to create andmaintain an efficient and effective integratednetwork of business relationships.

Effective SCM can ensure more efficient and

accurate order processing, reductions ininventory levels, narrower market-windowachievement, lower transaction and materialscosts, as well as strategic relationships withsuppliers If you get it right


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What might go wr ong?

Inadequate or poor quality planning

Inaccurate or unrealistic forecasts

Unreliable production, inventory, andother business data

Unreliable supply chain partners

Lack of awareness of how IT can help


SupplyChain

INPUTS OUTPUTS

PERFORMANCE DRIVERS

QualityService

FlexibilityCost

Social

SC Per f or mance Dr ivers


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What is aWor ld Class Supply Chain?


Supply Chain Vision

Deliver perfect flow of material, product,information and cash to/from materialsources and end users:

Smooth Continuous

Efficient

Minimum Cost

Materials Factory StoreCustomers

& Consumers

Information

Produc

ts

&Ser

vices

Distribute


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One Size Does Not Fit All

Unilever operates in many uniquemarkets with different: Consumer Requirements

Distribution Channels

Customer Structures

Competitors

These markets require a differentsupply chain response and it is thisresponse that we must focus on


We must creat e a compet it ive advant age f r om supplychain everywhere t hat we oper at e.

To do t his t he supply chain must have the abilit y t o:

How t o Have a Wor ld Class

Supply Chain?

Identify the supply chaincapabilities that deliver acompetitive advantage

Rapidly build and implementthese capabilities

Continuously monitor themarket for changingrequirements


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Supply Chain Modeling and Analysis, February 2005 ?`

Cr it ical Success Fact or s Tot al consumer and cust omer f ocus Pr ocess or ganisat ion wit h cross-f unct ional

t eams

Under st anding and use of t r ade-of f s Per f ormance measur ement I nt egr at ed inf or mat ion syst ems

I nt egr at ed planning syst ems - one set ofplans Appr opriat e manuf act ur ing t echnology Supplier par t nerships


Magnit ude of Supply Chain

Management Compaq estimates it lost $0.5 billion to $1

billion in sales in 1995 because laptops werenot available when and where needed

When the 1 gig processor was introduced by

AMD (Advanced Micro Devices), the price ofthe 800 meg processor dropped by 30%

P&G (Proctor&Gamble) estimates it savedretail customers $65 million (in 18 months) bycollaboration resulting in a better match ofsupply and demand


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Supply Chain Modeling and Analysis, February 2005 ?^

Supply Chain Modelingand Analysis Agenda

Quantitative and analytical methods forSupply Chain Management modeling,analysis and design

Day 1: Forecasting.

Day 2: Inventory Management.

Day 3: Production and aggregate planning. Day 4: Distribution decisions and Design of

distribution networks.

SC Modeling 1

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