Supply Topic 2 (Mapping Supply Chain Network) Flashcards
Hierarchy for supply systems mapping
- Global value chain maps
- supply network maps (interfirm)
- supply chain maps (focus on specific product line)
- value stream maps (focus on materials)
- process maps (specific part of whole chain - manufacture)
- bottom = highest level of a supply chain network = global value chain map
distribution
steps taken to move and store a product from the supplier stage to the customer stage in supply chain
2 things distribution directly affects / performance of distribution network evaluated on 2 dimensions
- supply chain cost (needed to meet requirements)
- customer value (customers get)
- driving profitability
7 rights
goals of supply distribution
1. right product
2. right quantity
3. right condition (not broken)
4. right place
5. right time
6. right customer
7. right price
- goal of supply distribution network
2 factors affecting distribution network design
- supply chain cost
- elements of customer value influenced by network structure
4 supply chain cost elements affected by network structure
- inventories (stored)
- transportation (moved)
- facilities (warehouse, distribution centres, where locate and how many to build)
- info (build info systems = different ones = different costs and value)
7 customer value elements influenced by network structure (value measured)
- response time (time to receive order from placing order)
- product variety (number of products/configurations offered by network)
- product availability (enough available inventory)
- customer experience (perceive the service)
- time to market (time to bring new product to market)
- order visibility (after place order and receive order how much updates received)
- return ability
3 factors affecting distribution network design
- inventory costs and number of facilities
- transportation costs and number of facilities
- logistics cost, response time and number of facilities
Inventory costs and number of facilities
- more facilities = inventory costs are higher = need to be stored in lots of different places
transportation costs and number of facilities
- decrease then increase again
- inbound transportation costs (materials coming into facility) and outbound transportation costs (ship to customer) = usually higher = distributed everywhere and not centralised
- too many warehouses and transportations = increase as have to ship to inventories just for storage
logistics cost, response time and number of facilities
- response time is quicker when have a warehouse closer to me
- logistics cost = lower then higher
- logistics cost = inventory cost + facility cost + transportation cost
design options for distribution network - 2 factors affecting
2 key decisions!
- will product be delivered to customer location or picked up from prearranged site (company distribution ends and customer gets involved)
- will product flow through an intermediary
6 design options for distribution network
- manufacturer storage with direct shipping
- manufacturer storage with direct shipping and in-transmit merge
- distributor storage with carrier delivery
- distributor storage with last mile delivery
- manufacturer/distributor storage with customer pickup
- retail storage with customer pickup
distribution networks that ship directly to customer
(manufacturer storage with direct shipping)
- storage at manufacturing site
- large variety of high value
- low and uncertain demand = slow response time
- low inventory & facility cost
- high transportation cost = slow response time
manufacturer storage with direct shipping and in-transit merge
- adds 1 stop (intermediate stop)
- low inventory cost
- lower but high transport cost
- long response time
distributor storage with carrier delivery
- all goods/inventory is stored at the warehouse
- products are stored closer to us = transportation and response time is lower
- inventory cost is higher - inventory not so aggregated and scattered and spread into different warehouses
- facility costs are higher
distributor storage with last-mile delivery
- home food delivery
- high inventory
- quick response time
manufacturer/distributor storage with customer pickup
- last mile is done by the customer itself
- pick up sites
- amazon lockers
- click and collect
- low transport
- similar to carrier response time
retail storage with customer pick up
- traditional way of distribution
- high inventory cost
- low transport cost (lowest!)
- quick response time
- limited product variety - limited space
distribution networks that ship directly to customer
- large variety of high value products
- low and uncertain demand
- low inventory cost
- lower facility cost
- high transportation cost
- slow response time
distribution network that carry local inventory
- storing at retail side
- high demand
- high inventory & facility cost
- low transportation cost
- fast response time
tiers
based on importance and relation to supply chain
complex supply chain network
first mile in supply chain
first = start of delivery period
product from manufacturer via courier to carrier
last mile in supply chain
end of supply chain
finish when order is delivered
challenges associated with supply chain mapping
- communicate, convince, decide
- breadth, time
- method, visuals
- scope (micro/macro lvl) of mapping
- tier 1, 2,3 etc
- complexity (hybrid network)
- product, info, flows
- capturing changes/iterations to the map
- limited data
supplier selection using analytic hierarchy process method
multiple criteria decision making tool
ranking/selecting best in set of alternatives
criteria = quality, costs
multiple criteria
multiple choice of alternatives
AHP
Analytic hierarchy process
process of AHP method:
- build decision hierarchy structure
- score criteria using pairwise comparison
- calculate weights of criteria
- check consistency
- calculate global weights of sub-criteria
- score suppliers on sub-criteria’s performance
- calculate performance values of criteria for suppliers
- rank suppliers based on performance values and select best supplier
build a decision hierarchy structure
- criteria used for evaluation and selection
- main criteria = cost, quality, delivery and service
- sub criteria
score main criteria using pairwise comparison
1 = equal importance
9 = “a” extremely more important than ‘b’
row to compare with column
consistency index (CI)
(weight x by value) for all rows added up - number of criteria divided by number of criteria - 1
random inconsistency (RI)
1.98 x (no. of criteria - 2) divided by no. of criteria
consistency ratio
CI/RI
must be less than 0.2
global weight of all sub criteria
weight of main criterion x local weight of subcriterion
