Professional Documents
Culture Documents
Management
Source: STEVENS Institute of
Technology
Manufacturers
Transportation
Costs
Material Costs
Warehouses &
Distribution Centers
Customers
Transportation
Costs
Manufacturing Costs
Transportation
Costs
Inventory Costs
Plan
Plan
Source
Source
Suppliers
Make
Make
Manufacturers
Deliver
Deliver
Buy
Buy
Warehouses &
Customers
Distribution Centers
Transportation
Transportation
Costs
Costs
Transportation
Material Costs
Manufacturing Costs
Inventory CostsCosts
4
Deliver
Buy
Suppliers
Manufacturers
Warehouses
Distribution centers
Make
Source
Make
Deliver
Buy
Source
Travel times
Breakdowns of machines and vehicles
Weather, natural catastrophe, war
Local politics, labor conditions, border issues
Reduce uncertainty
Forecasting
Collaboration
Integration
10
Time
Consume
rs
Sales
Sales
Sales
Time
Retailer
s
Distributor
s
Sales
Manufacture
r
tier
Supplie
rs
Time
Time
Bullwhip Effect
11
Lead time
Price fluctuations
Batch ordering
Manufacturers
Source
Source
Make
Make
Warehouses &
Distribution Centers
Deliver
Deliver
Retailer
Sell
Sell
15
Manufacturing
Low purchase
price
Few
changeovers
Multiple
vendors
Stable
schedules
Long run
lengths
SOURCE
MAKE
Distribution
Low
inventories
Low
transportation
DELIVER
Customer Service/
Sales
High
inventorie
s
High
service
levels
Regional
stocks
SELL
16
CONSIDERATIONS
Network Planning
Inventory Control
Supply Contracts
Distribution Strategies
What are our core supply chain capabilities and which are not?
Does our product design mandate different outsourcing
approaches?
Risk management
Product Design
Source: Simchi-Levi
WHEN TO
CHOOSE
BENEFITS
Make to Stock
standardized products,
relatively predictable
demand
Low manufacturing
costs; meet customer
demands quickly
Make to Order
customized products,
many variations
Customization;
reduced inventory;
improved service
levels
Configure to Order
many variations on
finished product;
infrequent demand
Engineer to Order
complex products,
unique customer
specifications
Enables response to
specific customer
requirements
Source: Simchi-Levi
18
19
Panels of Experts
Internal experts
External experts
Domain experts
Delphi technique
Time-Series Methods
Market testing
Market surveys
Focus groups
Accurate
Forecasts
Causal Analysis
Moving average
Exponential smoothing
Trend analysis
Seasonality analysis
Delivery Performance
16%-28% Improvement
Inventory Reduction
25%-60% Improvement
30%-50% Improvement
Forecast Accuracy
25%-80% Improvement
Overall Productivity
10%-16% Improvement
25%-50% Improvement
Fill Rates
20%-30% Improvement
10%-20% Improvement
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22
23
POS data
24
Raw
Materials
Pull Strategy
End
Consumer25
Demand Uncertainty
Pull
Industries where:
Demand is uncertain
Customization is High
Scale economies are
Demand is uncertain
Scale economies are Low High
Low economies of scale
Computer
equipment
Furniture
Industries where:
Industries where:
Uncertainty is low
Low economies of scale
Push-pull supply chain
Books, CDs
Push
Industries where:
Low
Low
Pull
Where do the
following industries
fit in this model:
Automobile?
Aircraft?
Fashion?
Petroleum
refining?
Pharmaceuticals?
Biotechnology?
Medical Devices?
Grocery,
Beverages
Economies of Scale
High
Push
26
Source: Simchi-Levi
PUSH
PULL
Minimize Cost
Maximize Service
Level
High
Low
Resource Allocation
Responsiveness
Lead Time
Long
Short
Processes
Supply Chain
Planning
Order Fulfillment
Objective
Complexity
Focus
Source: Simchi-Levi
27
More Concepts
Reverse Logistics
3PL, 4PL, 5PL
E-Procurement
RFID Technology
CPFR Collaborative Planning
Forecasting and Replenishment
Green Supply Chain Management
28