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Planning and Understanding Supply C hain C osts

Planning and Understanding Supply C hain C osts. Eric Meier (Convoy of Hope) Moin Islam (Georgia Tech) Tim Smith ( Kuehne & Nagel). Accord Developing E xcellence Forum 2013 Day Lab: Gifts In Kind . Agenda. Defining supply chain GIK supply chain activities

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Planning and Understanding Supply C hain C osts

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  1. Planning and UnderstandingSupply Chain Costs Eric Meier (Convoy of Hope) Moin Islam (Georgia Tech) Tim Smith (Kuehne & Nagel) Accord Developing Excellence Forum 2013 Day Lab: Gifts In Kind

  2. Agenda • Defining supply chain • GIK supply chain activities • Understanding supply chain cost drivers • Managing supply chain costs • Questions & answers • Group exercise • Final thoughts

  3. Defining Supply Chain • CSCMP definition: • “Supply chain management encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activities. Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third party service providers, and customers. In essence, supply chain management integrates supply and demand management within and across companies.” • Key Ideas • Extends concept beyond firm’s suppliers and customers • Stresses partnerships and collaboration

  4. goods, services, information, money End Customer Manufacturing Supply Distribution Defining Supply Chain • What is a Supply Chain (Network)? A system of organizations and processes that interact to convert raw inputs into products or services for customers

  5. Humanitarian Supply Chain (not so different ) Defining Supply Chain Source: B. Balcik et al (2010)

  6. Defining Supply Chain • Effectiveness: delivering on what is committed • Price • Quality • Response time • Flexibility • Efficiency: using resources in the “best” way Fundamental trade-off in supply chain  Responsiveness Cost Efficiency  Q: How to achieve both ?

  7. Defining Supply Chain

  8. Defining Supply Chain • CSCMP definition: • “Supply chain management encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activities. Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third party service providers, and customers. In essence, supply chain management integrates supply and demand management within and across companies.” • Key Ideas • Extends concept beyond firm’s suppliers and customers • Stresses partnerships and collaboration

  9. GIK Supply Chain ActivitiesLogistics Management

  10. GIK Supply Chain ActivitiesLogistics Management FREIGHT FORWARDERS

  11. DEMURRAGE • SEAPORT STORAGE • AIRPORT STORAGE • TRUCK DETENTION GIK Supply Chain ActivitiesLogistics Management • PRE SHIPMENT INSPECTION / REGULATIONS • DOCUMENTATION • IMPORT PERMIT • PRE CLEARANCE • ADDITIONAL FREE TIME FROM DEMURRAGE • TRANSIT vs BORDER vs FINAL CLEARANCE

  12. GIK Supply Chain Activities • Sourcing (?) • Transportation (inbound, inter-facility) • Storage (warehousing) • Inventory management (e.g. managing volume and obsolescence) • Distribution / fulfillment (outbound + last mile delivery) • Supply chain asset (facility, vehicle etc.) management

  13. Supply Chain Cost Drivers Does not apply for GIK • Material cost (direct material costs) • Inventory cost (cost of capital) • Storage and distribution ( Warehousing/ Fulfillment) • Transportation (Inbound + Inter facility + Outbound) • Supply chain personnel and IT systems (Under served) What gets measured, get managed - Peter Drucker

  14. Managing Supply Chain Costs Some of the widely used Key Performance Indicators (KPIs) in Industry: • Forecasting accuracy (%) • Total $ value of inventory • Inventory turns (days of inventory) • Total unit shipped (no. of packs or pallets) • Fill rate (% of order fulfilled ) • Back order (% of order outstanding) • Unit transportation cost ( e.g. $/lb or $/pallet) • Fulfillment lead time (order to delivery)

  15. Managing Supply Chain Costs • Supply chain planning is the KEY to manage costs • Critical planning processes: • Matching demand with supply (S&OP) • Meet demand with timely deliveries (distribution planning) • Supply Management (ensure on time, full quantity deliveries at the right cost) • Supply chain asset management ( track utilization of warehouse capacity, vehicles, etc.)

  16. Questions and Answers or comments

  17. Group Exercise Case study : Liberia Shipment

  18. Take away …

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