EBU6609 Logistics and Supply Chain Management
TOPIC 6: SUPPLY CHAIN MAPPING MS. BING HAN
Weekly Plan:
Topic 6 (Recorded): Supply Chain Mapping
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Tutorial 2
EBU6609 LOGISTICS AND SUPPLY CHAIN MANAGEMENT 2
EBU6609 Logistics and Supply Chain
Management 1
Learning Objectives
1. Discuss the concept of SC design and its importance.
2. Explain process mapping and describe mapping’s role in SC design.
3. Describe several popular approaches for SC design.
4. Map out a supply chain. Describe key insights a manager can gain from a SC map.
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Supply Chain Management
SCM is the design of seamless value added processes across organisation boundaries to meet the real needs of the end customer. SC design and improvement is assisted by:
1. Process Mapping – creates visibility of current and improved processes.
2. Value Stream Mapping – depicts flow of information and materials
3. SC Mapping – displays the dynamics that govern how a supply chain works
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Failure to be Proactive in
Failure to proactively design a SC results in:
Poor coordination of effort
Incompatible information systems
Long cycle times
Communication problems
Customer service issues
Excessive waste and environmental degradation
Relatively high inventories for the level of customer service achieved
Lower the optimal profit
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Process Mapping
A process is defined as an activity that transforms or changes input into new output.
A process map is a graphic representation of the system and contains a sequence of steps that are performed to produce some desired output.
The primary goal behind process mapping is to make complex systems visible.
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Process Mapping
Developing a Process Map
Determine the purpose of the process map Establish level of detail
Establish system boundaries
Determine who has the required information or experience.
Analyse the process through observation and interviews, document each step.
Draw the map
Have the people who are involved in the mapping process as well as others (including those who actually perform the process) review the map for clarity and completeness
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Process Map – Bake a Cake?
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Process Map – Bake a Cake
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Process Analysis
Process analysis is used to identify non-value
1.Begin process analysis by examining the time, cost, resources, and people involved in each step.
added or redundant activities.
Identify the steps that consume the most time or resources.
Identify processes that take too long or vary greatly in time.
Identify points of delay.
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Process Analysis (cont’d)
◦ Estimate the value added by each step and judge the value against the cost.
◦ Consider the reasons for problems and how to improve specific activities or processes.
2.Re-examine each decision symbol.
◦ Determine if the decision is necessary and adds value?
◦ Consider combining decisions or moving them to another point in the process to create more value.
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Process Analysis (cont’d)
3. Check each rework loop. A rework loop involves iterative processes, like repeatedly checking a cake until it is done baking. Here, consider how rework can be reduced, eliminated, or combined with another step.
4. Finally, look at each process step again. Sometimes a process is done out of habit without verifying its value.
1. Verify that the step adds more value than its cost.
2. Judge if the step is redundant.
3. Consider how steps could be recombined for greater efficiency.
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Initial Process Map
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Improved Process Map
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Value Stream Mapping
Specific application of process mapping based on lean manufacturing principles.
System boundaries typically defined at the macro level.
Generally contains more information then typical process maps:
◦ Process time
◦ Process performance characteristics ◦ Information flows
◦ Physical flows
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Supply Chain Design
Supply chain design is just too important to leave to chance. Just as genetic engineering has begun to shortcut the process of species evolution, proactive chain design will shortcut and forever make obsolete the slow, incremental processes of industrial evolution.
– , Professor at MIT
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Supply Chain Design
1. Identify the chain’s end customer
2. Determine the Supply Chain’s value proposition
◦ Identify the key players at each level and the value
◦ Determine where your company is and value it adds
3. Analyse who possesses the power in the supply chain: manufacturer, distributor, retailer, or other party
◦ Determine who has the best linkages with the end customer
◦ Establish the key technologies that drive SC success
◦ Assess the core competencies that drive SC success
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Supply Chain Design
4. Isolate the major processes required to support the supply chain’s value proposition
◦ Determine where there is a significant amount of time and variability
5. Establish what the ideal supply chain would look like
◦ Ascertain the as-is value-added roles of the various supply chain members
◦ Analyse how much control over supply chain activity we want or need
◦ Clarify the should-be value-added roles of the various supply chain members
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Traditional and SC Process Focus
Inventory Management Approach
Cost Management Approach
Coordination of Sharing and Monitoring in Chain
Amount of Coordination of Multiple Levels in the Chain
Planning in Supply Chain
Supplier Management
Price focus
Traditional
Only company-owned
Arms-length and/or adversarial
Total cost
Supply Chain
Whole chains, high turns
Long Horizon for planning
Integrated with information technology
Close relationships with key suppliers
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Traditional and SC Process Focus
Leadership in Supply Chain
Sharing of Risks and Rewards
Speed of Operations, Information/Inventory Flows
Information Technology
Team Process
Traditional
Slow, limited
Not an issue; internal focus in supply chain
None with customers or suppliers
Supply Chain
Leadership roles defined among players
Defined with key players
Rapid, extensive
Extensive improvements and linkages
Joint teams with key customers and suppliers
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Approaches to Supply Chain
1. CommonElements:
1. Identification of Customer and Value Proposition
2. Identification of Membership
3. Structure of Member Relationships
4. Focus of Control
2. DesignTools
1. SCOR Model
2. Supply Chain Double Helix
3. Nature of Product or Service
4. Product Life-Cycle
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SCOR Model
Supply chains are based on a series of linked, plan- source-make-deliver-and-return processes.
SCOR Model Steps in the SCOR model:
◦ Analyse the basis for competition: what do you need to do well in order to succeed? How can you measure and monitor your progress in these key areas?
◦ Configure the supply chain as it is and as you would like it to be. Include geographic locations and flows.
◦ Align performance levels, practices and systems across information and work flows.
◦ Implement SC processes and systems, including people, processes, technology and organisation
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Supply Chain Double Helix
Supply chains are constantly evolving and changing as the environment which they compete changes.
The ability to design and redesign supply chains proactively that creates competitive advantage.
As a company designs and redesigns its supply chains must take advantage of “design for” initiatives.
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Supply Chain Double Helix
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Design for Initiatives – DFX
Design for initiatives attempt to create an atmosphere where designers work with other key players internally or externally to insure critical issues are considered and integrated into design of products and processes.
Design for manufacturability
Design for environment
Design for distributionDesign for supply
Design for disassembly
Design for the customer
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Nature of the Product or Service
Supply chain should be structured based on whether the product or service they deliver is innovative or functional in nature.
Innovative products have short life cycles Functional products fulfil basic needs
Insight generated from this design strategy can complement the SCOR, Double Helix, or product life-cycle models.
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Innovative Product Supply Chains
Innovative products have relatively: ◦ high profit margins
◦ unpredictable short-lived demand
◦ high risk of obsolescence.
Supply chain should:
◦ Seek to minimize inventory
◦ Focus on speed and flexibility
Ideal supply chain: Responsive
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Functional Products Supply Chains
Functional products have relatively: ◦ Predictable demand
◦ Long life cycles
◦ Large number of substitutes
Supply chain should:
◦ Seek to minimize cost
◦ Provide reliable and high service levels
Ideal supply chain: Efficient
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Product Life Cycle Issues
Supply Chain Mapping
Supply chain mapping generally begins with a high level map to identify major linkages and bottleneck areas.
Supply chain maps should consider linkages with customers and key suppliers.
Tools like the pipeline map may identify unnecessary complexity, thereby leading to improvements to the current competitive state of the supply chain.
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Pipeline Map – Example
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Pipeline Mapping Steps 1.Identify the item that you wish to map.
2.Identify all of the processes that occur on the physical pipeline for that product, including supplier processes.
3.Determine who performs each process in the chain.
4.Talk to each of the entities that performs a process, determine how long the process takes; how much inventory is present; how much inventory is in transit and transit times for materials.
◦ Inventory would include raw materials, components, and output
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Pipeline Mapping Steps
5.Draw the SC pipeline map from raw material to end user as a series of horizontal and vertical lines.
a.Begin by drawing a horizontal line from the commodity market to the end user.
b.The length of the horizontal line represents the total process and relevant transportation time.
c.Starting with the earliest process, write the name of the processes in order above. After the name of
the process, indicate the time the process takes.
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Pipeline Mapping Steps
d. Draw vertical lines at the beginning and end of each process to indicate the average amount of inventory that each party has on hand in terms of both input and output.
– These represent the average inventory that any party in the supply chain is holding.
– If the product is not physically transformed by the process, only one inventory level is shown.
– Adding total inventory in the pipeline identifies the amount of “non-value added” days or buffer inventory.
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Pipeline Mapping Steps (cont’d)
e. Alternatively, use flow modelling to, identify both the time and cost associated with a process. Focus process improvement on the processes with the highest value and the longest delays.
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Pipeline Mapping Steps
6. Analysethesupplychainforopportunities.
◦ Consider means to reduce the pipeline length.
◦ Map relevant SC processes. Look for unnecessary processes and delays. Identify potential improvement opportunities.
◦ Consider means to reduce the level of buffer inventory.
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Pipeline Mapping Steps
7.Prioritize your ideas from step 6. Work with the team, suppliers, customers and other affected parties to implement, manage, and monitor changes. Analyse the new supply chain, revisiting step 6 until satisfied with the improvement results or they are no longer cost-beneficial.
8.Repeat the procedure with other supply chains.
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Other types of SC maps – sourcemap
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Sourcemap – another example
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Readings Leenders, pp509-512, Ch19
Christopher, Chapter 3, pp162-5 (see also some pdf pages on QM+)
EY’s smartmap: https://youtu.be/yBC4aXro9RA
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