01 - Introduction to supply chain - ISC

Covid-19:

• Everything stopped
• Lack of essential products

The objective of Supply Chain is to have:

• The right product
• at the right place
• at the right moment
• at the right cost
• with the right quality

According to Zara Founder Amancio Ortega:

3 things move across the SC:

• Products
• Cash
• Information

Historical evolution of SC

• 50's: Supply Chain is just a synonym of physical distribution
• 60's: It's material management
• 80's: Generalization JIT, Total quality control, perfection of EDI systems
• 90's: Supply Chain stands as its own discipline

Key elements

Departments of Supply Chain:

• #Procurement & materials planning
• #Production & logistics
• #Warehousing, transport & logistics
• #Demand & supply planning
• #Costumer service

Procurement

The procurement department is the one responsible for making sure we get the material.

• They ensure the sourcing of materials.
• Negotiate for good pricing

Roles:

1. Identify needs & create process for direct (the product itself) and indirect (what is needed around the product - all the needs that you can't attribute directly to the product) spend.
2. Reduce risk and ensure the security of supply
   • Ensuring you always have enough material
3. Lead E2E (end-to-end) purchase process
4. Contracts negotiation & approval
5. Lead innovation & quality & saving projects
6. Build suppliers collaboration (from "vendors to partners")

Production & logistics

The production and logistic department is responsible for managing and optimizing.

• They produce the service or the product
• They are also responsible for quality control
• They manage workers: safety, conditions,...
• Research and development
• Master plan schedule (what to produce and when to meet the needs of the costumers)

Roles:

1. Master plan schedule to fit demand
2. Produce dependent & independent demand

3. Technical packaging
4. Innovation & continuous improvements processes & tools
5. Quality control
6. Ensure right HS&E (Hygiene, Safety and Environment)
7. Cost control

### Warehousing

1. Storage, warehousing & materials handling
2. Define warehouse & logistic network aligned with business needs
3. Define optimal routes and transportation methods
4. Execute internal product movements in-between internal warehouses
5. Order & picking preparation. Deliver OTIF (On Time and In Full - How many times we deliver the complete quantity requested in time) to costumers
6. Inventory management

### Demand & supply planning

1. Forecasting/predicting how many units will be sold, for next 18 months
2. Lead S&OP process. Link between business & global planning
3. Ensure supply: right product in right place at right moment. Lead RCA (Route Cost Analysis - when you don't have the right number of a product, you try to understand why you're not at target and what to do get there)
4. Launches & Promos. Customization readiness
5. PIPO (Phase In - Phase Out) management
6. NPI management

### Costumer service

1. Order entry & management
2. Customer face - SPOC (Single Point of Contact) with costumers
3. Stock control tower & delivery creation

```ad-note
title: Stock Control Tower

Stock control tower:

Let's say we have 3 oprders of a product:
- 1 --> 100
- 2 --> 200
- 3 --> 500

We need 800 units in total.

We convert order in delivering --> confirmation

If we only have a total stock of 500, we can't deliver to everyone. How we choose whom to send and whom not, is managed by Costumer Service.

4. Build customer collaboration
5. Billing process
6. Claims & returns Management
7. Master data - people in charge of ensuring that the data managed in the company is correct (price, billing name, unites, etc...)

Push & Pull SC

Depending on weather the production is on demand or the company simply keeps producing the product anyway, the Supply Chain can be categorized as a:

• #Push SC
• #Pull SC

Push SC

A push SC has the following characteristics:

• Low production costs
• Low volatility
• Demand driven
• Proactive
• Standard production
• Short lead time

Postponement is a production system based moostly (about 70%) on a #Push SC, that, just for the final part, holds the product and personalizes it according to an order.

It basically convert to a #Pull SC just for the final part.

Pull SC

It has the following characteristics:

• High production costs
• High volatility
• Customer Order
• Reactive
• Customized (receive order with specific characteristics to produce)
• Long lead times
  Postponement is a production system based moostly (about 70%) on a #Push SC, that, just for the final part, holds the product and personalizes it according to an order.

It basically convert to a #Pull SC just for the final part.

Examples:

Cost vs Value

SC focused on Cost

• Efficiency
• Standardized products
• Keep stock low

SC Excellence matrix

Optimizing the supply chain

With the increase in service, a higher and higher cost is needed.

The more you grow, the cost grows a lot more than proportionally. There is not a way to have 100% service (always deliver). Usually you stay around 95-96%.

QAQC: Quality Control and Quality Assurance.

Tools

Manage, Optimize, Improve

ERP - Enterprise Resources Planning. The software that manages day to day activities across all functions in a company. (Oracle, SAP)

Systems: MPS & MRP

MPS: Master Production Schedule Plans: when to produce Finish or Semifinished products

MRP: Material Requirements Planning
MRP II: Material + Resources

Distribution Requirements Planning (DRP)

Planning and CRP

• Planning tools are softwares that provide businesses with forecasting solutions to predict customer needs. These tools analyse historical data to find statistical models to predict the future (SAP, jda)
• CS tools: Customer Service tools manage the order entry/processing & delivery creation

CRP: Costumer Replacement Planning. Part of CS tools.

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KPI: Key Performance Indicators