Supply Chain Management Operations Management Development Programme Programme
- Slides: 28
Supply Chain Management & Operations Management Development Programme
Programme 08: 30 – 10: 30 Introduction Origins of SCM Components of SCM 10: 30 – 11: 00 - 13: 00 - 14: 00 - 15: 15 - 16: 30 Tea Operations Management Lunch Government and SCM Tea Public Sector SCM
What is a Supply Chain? o A supply chain consists of the flow of products and services from: – – – Raw materials manufacturers Intermediate products manufacturers End product manufacturers Wholesalers and distributors and Retailers o Connected by transportation and storage activities, and o Integrated through information, planning, and integration activities 3
What is Supply Chain Management? Here are two definitions: The design and management of seamless, value-added process across organizational boundaries to meet the real needs of the end customer Institute for Supply Management Managing supply and demand, sourcing raw materials and parts, manufacturing and assembly, warehousing and inventory tracking, order entry and order management, distribution across all channels, and delivery to the customer The Supply Chain Council
Traditional Scope of the Supply Chain Business logistics Physical supply (Materials management) Sources of supply Physical distribution Plants/ operations • Transportation • Inventory maintenance • Order processing • Acquisition • Protective packaging • Warehousing • Materials handling • Information maintenance Internal supply chain Customers • Transportation • Inventory maintenance • Order processing • Product scheduling • Protective packaging • Warehousing • Materials handling • Information maintenance
Logistics vs Supply Chain Management Council of Logistics Management • “Logistics is the process of planning, implementing and controlling the efficient, cost-effective flow and storage of raw materials, inprocess inventory, finished goods and related information from the point of origin to point of consumption for the purpose of conforming to customer requirements. ” Handfield and Nichols • SCM is the integration of all activities associated with the flow and transformation of goods from raw materials through to end user, as well as information flows, through improved supply chain relationships, to achieve a sustainable competitive advantage.
Supply Chain is Multi. Enterprise Conventional Scope Focus Company Suppliers Customers/ End users Supplier’s suppliers Acquire Convert Product and information flow Distribute
Important Elements of Supply Chain Management Purchasing. Operations. Logistics. Integration- Supplier alliances, supplier management, strategic sourcing Demand management, MRP, ERP, JIT, TQM Transportation management, customer relationship management, network design, service response logistics Coordination/Integration activities, global integration problems, performance measurement
Elements / Components of SCM Purchasing- Trends: • Long term relationships • Supplier management- improve performance through– Supplier evaluation (determining supplier capabilities) – Supplier certification (third party or internal certification to assure product quality and service requirements) • Strategic partnerships- successful and trusting relationships with top-performing suppliers
Elements / Components of SCM Operations- Trends: – Demand management- match demand to available capacity – Linking buyers & suppliers via MRP and ERP systems – Use JIT to improve the “pull” of materials to reduce inventory levels – Employ TQM to improve quality compliance among suppliers
Elements / Components of SCM Distribution- Trends: – Transportation management- tradeoff decisions between cost & timing of delivery/customer service via trucks, rail, water & air – Customer relationship management- strategies to ensure deliveries, resolve complaints, improve communications, & determine service requirements – Network design- creating distribution networks based on tradeoff decisions between cost & sophistication of distribution system
Elements / Components of SCM Integration Trends: – Supply Chain Integration- when supply chain participants work for common goals. Requires intrafirm functional integration. Based on efforts to change attitudes & adversarial relationships – Global Supply Chains- advantages that accrue from sourcing from larger global market e. g. , lower cost & higher quality suppliers. May involve operating exposure, which is risk found in foreign settings – Supply Chain Performance Measurement- Crucial for firms to know if procedures are working
Importance of Supply Chain Management Cost savings and better coordination of resources are reasons to employ Supply Chain Management – Reduced Bullwhip Effect- the magnified reduction of safety stock costs based on coordinated planning and sharing of information – Process Integration- Interdependent activities can lead to improved quality, reduced cycle time, better production methods, etc.
Origins of Logistics Mngt
Key Activities/Processes • Primary – Setting customer service goals – Transportation – Inventory management – Location • Secondary, or supporting – Warehousing – Materials handling – Acquisition (purchasing) – Protective packaging – Product scheduling – Order processing
Logistics Strategy and Planning • The objectives of logistics strategy – Minimize cost – Minimize investment – Maximize customer service • Levels of logistical planning – Strategic – Tactical – Operational
The Logistics Strategy Triangle (4 problem areas) Customer service goals · The product · Logistics service · Information sys.
LEAN PRODUCTION • "A team-based approach to continuous improvement focused on eliminating non-value added activities or “waste” from the viewpoint of the customer. ” • “. . . a system for organising and managing product development, operations, suppliers, and customer relations. ”
LEAN PRODUCTION – KAIZEN • Kaizen. . . rapid improvement processes - the "building block" of all lean production methods. • Kai – Change. . . . Zen - Good "CHANGE FOR THE BETTER" • Big results come through routinely applying small, incremental changes. . continuous improvement. .
2 GOVERNMENT AND PROCUREMENT
Government and Procurement • Procurement by the state serves two broad purposes: – Primary – Efficient acquisition of goods & services – Secondary – Socio-economic transformation • Constitutional imperative (Section 217) • South African public sector spent R 500 billion on goods and services in 2013/14
Government and Procurement – a key developmental tool • S 217(3) of the Constitution prescribes the framework within which preference and socio-economic objectives are to be achieved. – Local Economic Development – “Set asides” • Procurement should talk to broader macro-economic strategy: – National Growth Plan and the NDP – The need to create jobs thus eliminating poverty. • In essence, need to strengthen basic service delivery whilst promoting labour intensive programmes • EVERYONE’s RESPONSIBILITY
Legislative Environment CONSTITUTION PFMA PPPFA Preferential Procurement Regulations 2011 üInstructions üCirculars üGuidelines BBBEE Act Revised BBBEE Scorecard & Codes of Good Practice The Organisation’s SCM Policy PAJA & PAIA
The Public Sector SCM System • “Demand” • Needs Assessment • Planning • Specification Pre-Bid Bidding • • “Acquisitions” Invitation to bid Evaluation of bids Adjudication • “Logistics and Disposal” • Contract Mangt • Ordering & Paying • Disposing of items Post-Bid
Roles and Responsibilities of Bid Committees • Appointment of Bid Committees ‘The cornerstone of the successful implementation of Supply Chain Management is the establishment of well functioning Bid Structures’ • According section 44 & 56 of PFMA: The Accounting Officer must appoint the following: – Bid Specification Committee – Bid Evaluation Committee – Bid Adjudication (Award) Committee
Specific Evaluation Matters • Four (4) broad steps to the evaluation process: i. iii. iv. STEP 1: Compulsory Statutory Requirements STEP 2: Minimum Mandatory Bid Requirements STEP 3: Functionality against pre-set criteria STEP 4: Price and Preference Points • NB: SCM Policy can indicate who will evaluate steps 2 & 3 (Both for quotations and bids). . . SCM to first issue an evaluation guideline. . .
The End
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