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Supply chain management

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Mohamed Geoushy

on 3 March 2014

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Transcript of Supply chain management

Supply Chain Management What is manufacturing? What is Supply chain ? Manufacturing is :

The process of transforming raw
materials into finished products. Supply Chain is :

The global network used to deliver product & services from raw material to end customers
through an engineered flow of information,
physical distribution & Cash flow. What is supply
chain management ? Supply chain management is an art
or science that improves how a company
finds raw materials, and processes them
into a product or service to be delivered
to customers . APICS Dictionary when it defines SCM as the

"Design, planning, execution, control, and monitoring of supply chain activities with the objective of creating net value, building a competitive infrastructure, leveraging worldwide logistics, synchronizing supply with demand and measuring performance globally." Another definition:

Acquiring inputs from suppliers (purchasing),
converting those inputs into a finished product
(production),and delivering those products – or outputs - to customers (fulfillment). Supply chain activities cover everything from :

- Product development
- Sourcing
- Production
- Logistics
as well as the information systems needed to coordinate these activities. Supply chain managers decide where to
locate manufacturing and distribution
facilities, how to route goods and materials
among those facilities, and from which parts
of the world to source the inputs EFFICIENTLY. Effective (adj.): Adequate to accomplish
a purpose; producing the intended or
expected result.
Doing right things .

Efficient (adj.) Performing or functioning in the
best possible manner with the least waste
of time and effort.
Doing things right. So what drives the
supply chain ??
Demand management

Customers have an inherent demand
for the products & services, producers
should react to that demand . What are the
demand management processes ? 1. Marketing management .

2. Customer relation ship management .

3. Demand planning . 1.Marketing management :

It’s role is to develop & implement marketing plan for products with order qualifying & order winning.

Utilizing the marketing mix tools 4P’s
“ Product – Price – Promotion - Place “

e.g : P&G pricing strategy in Japan . 2.Customer relationship management

Achieving better business results through listening
to customers needs.

Better design : e.g. Contraception pills .

Availability : e.g flu medications in winter . 3. Demand planning

Recognition of valid demands, which comes
in two forms “ forecast & actual customer orders , minimizing misleading data .

Garbage in = Garbage out .

Bill of material: A listing of sub assemblies, intermediates,
parts & raw materials that go into a parent assembly showing the quantity of each required to make an assembly.

- APICS dictionary .
From BOM we get to run a software solution called MRP . All requirements are
available so proceed
in manufacture . Shortage in requirements ,
Purchase order to
be issued . Run MRP Lead Time ?? Lead Time is :

The time it takes my supplier
to deliver item , from the moment it’s ordered till arriving to my warehouse. Shared plans with supplier enhance better lead times.

... Yet it's a double edged weapon . Always keep in mind " If you fail to plan ...
you are planning to fail " MRP Material Requirement Planning MRP is a software applications used in most manufacturing companies also non – manufacturing such as retails , distribution & service ,

It performs two major functions : Material Requirement Planing 1. Calculating all items requirements,
lead time for each item , it does that fast
accurately ,& in very high volumes . 2. Create actions & exception messages . ERP Enterprise Resource Planning Nowadays operations software evolved to integrate more functions such as marketing , finance , sales ,manufacturing ,R&D, HR & distribution all working together toward the same business objectives & it’s called Lean Concept / JIT
"Lean / JIT just in time "

Is a production practice created by TOYOTA that considers the use of resources for any goal other than the creation of value for the end customer to be wasteful, and thus a target for elimination. WASTE !!
1.Process :

Unneeded steps to produce work ,

e.g : Inter operational cleaning . 2. Movement (transportation) :

– Moving product unnecessarily across the work station . 3.Methods:

Wasted time or effort by operators.

e.g : working in sequence instead of parallel .
Folding inserts 4. Product defects : The time & effort consumed in rework & products recalls . 5. Queuing delays.

Delayed WIP "work in process"

e.g : When work stations speeds are not coherent . Products that remains in the warehouse are subjected to shelf life decrease . 6. Over production / excess inventory : 7. People skills.

e.g : Hiring under qualified people & over qualified people . The concept of SIX SIGMA ?? e.g : Lay out defects such as locating the blistering machine in midway between the granulation & the compression machine disrupting the work flow . In 1980s Motorola pioneered and developed
the six-sigma breakthrough strategy
focusing on reducing the variation in the process to improve the product.
The sigma level indicates how often defects are like to occur. The higher the sigma value ,the better product will be & will result in less defects . Answer :

At the six sigma level ,the number of defects per million product is only 3.4 .

Applied in airplanes Industries to protect human lives . Question :

To what extent can this concept minimize variation ??? Most companies operate at 3 or 4 sigma ,or a yield of 93.3 % to 99.4 % . What could be a cause
of variation ?? Emergency power shut down Room temp. variation through the day . Poorly trained operators. Use of expired material. What is Six sigma built on ? 3.The quality of the output of a process is a function of the variation in the process . SIX Sigma 3 major concepts 1. Eliminating variations that causes defects. "Harmful" 2. Understand what the
customer wants . Reverse supply chain !! Reverse logistics is the process of managing the
return of goods. Reverse logistics is also
referred to as "Aftermarket Customer Services". 7 chosen Tips for successful
supply chain management TEAM Together Everyone Achieves More Tip 2 Timing affects every thing .

early..... over stock
Late .... out of stock Tip 1 • Supply chain affects not one or two departments, but the whole company, so always keep in touch.

Make sure you keep all involved parties up-to-date on any issues or problems that may arise. Tip 3 Good sales forecast is paramount . Work in Teams Tip 4 Don’t Assume Too much, dig deeper work on facts . Tip 5 Always have a contingency plan “ plan B "

e.g : lists of approved suppliers. Tip 6 Pay attention to changes in external conditions, a change in weather can affect the whole chain. Tip 7 Be flexible, plan for delays, and be creative. Mohammed Future Pharmaceutical Industries FPi Geoushy BOM Bill Of Material ERP enterprise resource planning . Applied to all type industries
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