What is the driving point of supply chain management?

What is the driving point of supply chain management?

How to improve the performance of supply chain by means of responsiveness and efficiency must start with the driving factors that affect the performance of supply chain, including facilities, inventory, transportation, information, procurement and pricing strategies, which affect and interact with each other. So, here is the driving point of supply chain management that I sorted out for you. Welcome to read and browse.

Drive 1: facilities

Supply chain is a network composed of nodes and lines, and nodes are facilities in the supply chain network, that is, places where products are produced, processed, stored and assembled. The function, location, capacity and flexibility of facilities have great influence on the performance of supply chain. For example, a tire company located its warehouse near the automobile assembly center, although this reduced efficiency; Or, Suning Appliance will concentrate its inventory in the distribution center DC, although this will reduce its responsiveness. The key to facility management lies in the following aspects.

Functional localization

For production facilities, enterprises must decide whether they are flexible or dedicated, or a combination of the two. Flexible production capacity may be used for multi-variety production, but it is often inefficient, while dedicated production capacity can be used for mass production of few varieties, but its reaction ability is weak. Secondly, enterprises must decide the functional orientation of facility layout, such as product-centered or processing-centered. Finally, for warehouse or DC, enterprises must decide whether it is a cross-warehouse facility or a storage transit facility. The hub design is different in different modes.

Location layout

The company's decision on where to build facilities is an important part of supply chain design. The most basic question is: to obtain centralized layout for economies of scale, or to be closer to consumers and improve the responsiveness to customers. In addition to the quantitative analysis of cost-benefit factors, qualitative analysis is also needed, such as macroeconomic factors, labor quality, labor cost, facility cost, infrastructure situation, natural climate, tax policy and other factors. The principle usually followed is that if the products become heavier and heavier with the circulation process, the facilities should be close to consumers, such as Mengniu yogurt and bottled water of various brands; As products become lighter and lighter with the circulation process, facilities should be close to suppliers, such as Rizhao Steel.

Reduce excess capacity

Enterprises must also determine the ability of facilities to complete the expected functions. A large amount of overcapacity makes the facilities very flexible and can cope with the ups and downs of demand. At the same time, excess will also increase costs. The automated three-dimensional warehouse built by Hohhot Mengniu Group belongs to this category. Equipment without excess capacity is more efficient in unit product cost, but it is difficult to cope with the fluctuation of demand, so enterprises must make a trade-off to determine the appropriate capacity of equipment. The most effective mode is Beijing Putian Lee Tae Communication Technology, and China Mobile implements a comprehensive mode of self-operated warehouse and sub-warehouse outsourcing to seek a balance between efficiency and response.

Measurement index

The measurement indexes of node facilities in supply chain include capacity, utilization rate, process time efficiency, product variety, customer satisfaction and so on.

Drive 2: Inventory

What is the essence of supply chain management? Effective movement of inventory? Inventory is one of the supply chains? Muscle? , including all raw materials, work in progress and finished products in the supply chain. All problems in the supply chain are related to inventory, and changing inventory policy can greatly change the efficiency and responsiveness of the supply chain. For example, Jinyi Screw, Oshi Electronics, etc. They all meet the random needs of customers by storing a large amount of inventory in order to respond quickly. However, a large amount of inventory will increase operating costs and reduce efficiency, and vice versa.

Misunderstanding of inventory

As for some people? Inventory is the root of all evil in the company? Is unreasonable, if there is no inventory in the supply chain, the supply chain will not exist. Accurately speaking, inventory plays a link role in the supply chain and is the most important source of cost in the supply chain. It has a great influence on rapid response. For example, if you walk into Youngor's store and come out with your favorite shirt, you may have to wait 8- 10 days after placing an order on an e-commerce clothing website, because they use different supply chains and inventory strategies.

Inventory plays an important role in the ability of supply chain to support enterprise competitive strategy. If the competitive strategy of an enterprise requires a high level of responsiveness, it can make a large amount of inventory close to users. On the contrary, enterprises can improve efficiency by centralizing inventory and using the law of large numbers to reduce inventory.

Measurement index

Inventory measurement indicators in supply chain include average inventory, scrap rate, average replenishment quantity, average safety inventory, seasonality, order satisfaction rate, shortage rate and so on.

Drive 3: Transportation

Transportation is a supply chain? Bones? So that inventory can be transferred from one node to another in the supply chain. Transportation can take many combinations of nodes and routes, and each combination has different performance characteristics, which has a better impact on the responsiveness and efficiency of the supply chain. For example, a batch of goods from Shenzhen to Beijing are airlifted, and the response of the supply chain is faster, but at the same time, the high cost reduces the efficiency. On the contrary, choosing cheaper automobile transportation will improve the efficiency of the supply chain and limit its responsiveness. Transportation management mainly includes the following aspects.

Traffic network design

The company decided to transport the goods directly from the place of supply to the place of demand? Or will it pass through the middle distribution center? Is it delivered independently? Or joint delivery?

Choice of transportation mode

The mode of transportation is the way that products move from one place to another in the supply chain network, which is usually selected by land, sea, air and railway pipelines.

Measurement index

Inward transportation cost, outward transportation cost.

Drive 4: Information

Information is one of the supply chains? Nerve? , including equipment, inventory, transportation, cost, price, customer data and analysis data in the whole supply chain. It is the most important factor that affects the performance of supply chain. Because it directly affects other factors, information provides an opportunity for management and makes the supply chain more flexible and efficient. For example, airlines can use the online platform to pre-sell air tickets and predict the future demand in advance to decide whether to increase or decrease the number of flights. A pharmaceutical company can produce and store drugs according to the expected customer demand by mastering the information of customer demand pattern, and customers will find drugs in time when they need them, thus making the supply chain respond very quickly. Such a demand information transmission system can also make the supply chain more efficient.

Information decision-making composition

Push and pull. When designing supply chain processes, it is necessary to determine whether these processes are part of the push stage or the pull stage in the supply chain. Push system generally needs detailed information in the form of material demand plan, while pull system needs to convey the actual demand to the whole supply chain quickly.

Coordination and information sharing. Supply chain coordination means that all stages of the supply chain operate on the basis of information sharing to maximize the total profit of the supply chain. Lack of coordination will lead to a huge loss of supply chain profits. The coordination of different stages of supply chain requires that each stage can share information with other stages. This is the key to the success of supply chain.

Forecast and overall planning. Forecasting is a science and art, and obtaining forecasting information often means using complex methods to estimate the sales revenue and market conditions of the future market. Companies usually predict output at the tactical level and whether to build new factories or warehouses at the strategic level.

Informatization. Measurement index

Measuring information quality includes forecast lead time, forecast error, seasonal factors, plan fluctuation and other indicators.

Driving Force 5: Purchasing

Procurement is the source of supply chain management in manufacturing industry, and it is to choose who will engage in specific supply chain activities. At the strategic level, these decisions determine which functions are performed by the company itself and which functions seek outsourcing. Purchasing decision affects the responsiveness and efficiency of supply chain. After Apple outsourced a large number of production to China for OEM, its efficiency was improved, but its response ability declined due to the long distance. In order to avoid shortage, air transportation was chosen. Another example is FLEX, which wants to provide customers with fast and efficient purchase options. It is produced in low-cost rural areas of the United States.

Composition of purchase decision

First of all, the most important decision of purchasing is self-made or outsourcing, which is driven by its influence on the total profit of supply chain. If the total profit of the supply chain increases significantly and there is no additional risk, it is best to choose outsourcing. In transportation tasks, managers must decide whether to outsource all of them, whether to outsource only the parts that need quick response or the parts that need high efficiency. It should be based on whether it is conducive to improving the profitability of the supply chain.

Secondly, managers must determine the number and selection criteria of suppliers. As for the selection method, it depends on the balance of the supply market to decide whether to negotiate or invite tenders.

Finally, the supplier makes the delivery process for the customer. Biha, for direct materials, the supply mechanism between manufacturers and suppliers should be established to ensure good coordination between enterprises and suppliers. The organization of MRO products should be properly organized to ensure the lowest transaction cost.

Purchasing measurement index

Bidding to measure procurement performance includes: days payable, delivery time and turnover rate. Average purchase quantity, punctuality rate, quality qualified rate.

Driving Force 6: Pricing

Pricing determines how companies in the supply chain charge for goods and services, thus affecting customers' behavior and performance. For example, 3pl will change the price according to the lead time of customers. Customers who pay attention to efficiency will place orders in advance, and customers who pay attention to responsiveness will place orders when they are close to demand. If the price does not change with the delivery time, early orders will rarely appear.

For commodities, pricing affects the customer base and customer expectations who choose to buy this product, and is a lever to adjust supply and demand. For example, short-term discounts can be used to eliminate oversupply or reduce seasonal demand peaks caused by long-term demand.

Pricing decision-making composition

First, pricing and economies of scale. Because logistics costs are increasing and decreasing.

Quantity discount is a common phenomenon in supply chain operation, and this strategy should be used cautiously to ensure that quantity discount conforms to economies of scale.

Second, the long-term strategy of low price, high throwing and low sucking. COSTCO supermarkets in the United States implement daily low prices to maintain long-term price stability, and even do not discount expired food or damaged goods to ensure relatively stable demand. The high and low pricing strategy leads to the peak of procurement, which actually leads to the advance of future demand, distorts the supply chain and leads to the transmission of distorted information in the supply chain.

Third, it is a fixed price or menu price. The national price of cigarettes is a fixed price, and the fixed freight rate of SF Express by city is a typical fixed price. If the marginal cost or customer value of the supply chain changes greatly in some attributes, then providing a price menu is the most effective method.

Pricing measurement index

Profit rate, average receivable days, average order quantity, etc.

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