Global supply chain management - IB
Lecture 1
Stakeholders:
- Suppliers, supply raw materials, (semi)-finished products, to downstream customers.
Supply demand at lowest possible costs or respond quickly to changing requirements and
minimize stock-outs.
- Manufacturer, decide what to make and buy. They have different choices, how do they
select and develop suppliers.
- Distributors, store temporary to balance fluctuation of supply and demand. They
also transport from manufacturers to retailers.
- Retailers, sell the products to end customer and perform some marketing activities.
- Customers, buy the products and services.
Supply chain management = the management of the material and information flows within and
across the stakeholders. It requires investment in building relations with suppliers and customers
to obtain cooperation and integration of materials and information.
- The ultimate goal is to maximize the Supply Chain Surplus = Customer Value – Supply
Chain Cost
- To maximize this you need to understand what is value for the final customer and create
this value at the minimum overall cost. Not for one company, but for the entire supply
chain.
Logistics = the part of the supply chain process that plans, implements and controls the efficient
and effective flow and storage of goods, services and related information from the point of origin
to the point of consumption.
- Transportation, movement, storage for example
- Inbound logistics/Materials Management = all the activities to move material,
components and information from raw materials to and within the production process.
- Outbound logistics/Physical Distributions = The movement of goods and information
outward from the end of the assembly line to the customer.
- Four important questions about logistics:
o Which logistics decisions should be made?
o Which logistics costs should be paid?
o Which objectives do you want to achieve?
o Which constraints can you define?
▪ Objective = Expression that maximises or minimises some aspect.
▪ Constraint = Restriction that limit the degree to which a manager can
pursue an objective.
- Logistics control. Managers need to control the performance of logistics.
o Quality, inventory levels, cycle time. But most importantly productivity.
Single factor = Output / Single input factor Multifactor = Output / Multiple input
factors.
, lOMoARcPSD|14840171
Lecture 2:
Arrivals:
- Inter arrival time = Time between two subsequent arrivals of products at their entrance in
the product.
- Arrival rate = number of products that arrive per time unit.
Throughput time = Time that passes between the moment at which the customer/product enters the
system and the moment at which the customer/product is ready.
Deterministic throughput time = throughput time estimated by adding up the expected
processing times of the different processes. Probability distributions, and waiting-line effects are
ignored and only the average values are considered
A production/service time follows a normal
distribution The mean = µ
The standard deviation = σ
So with a deterministic throughput time the µ is used.
Design capacity = Theoretical maximum output of a system or process in a given period
Effective capacity = Actual capacity that can be expected given the product mix, methods of
scheduling, maintenance and standards of quality.
Serial processing = Process where steps are performed consecutively
Parallel processing = Process where steps can be performed simultaneously
Parallel servers (machines or operators) means that in a process a product only needs to be treated
by one of the servers. X amount of parallel servers means that the design capacity = X * design
capacity of one server. But the throughput time is still calculated by one design capacity.
So: 3 servers with a design capacity of 10 per hour means that there is a design capacity of 3
* 10 = 30 customers/product per hour. However throughput time is still 60/10 = 6 customers
per hour.
Bottleneck = an operation that limits output in the system.
To find the bottleneck you follow 3 steps:
- Calculated design capacity of each process.
- Calculate the expected number of products at that process. (use percentages in systems
with multiple paths)
- Compare answers from steps 1 and 2.
If the design capacity is lower than the expected number of products then the process is a bottleneck.
If the design capacity of all processes is sufficient then the system is constrained by the arrivals.
Departure rate = The number of products/customers that leave the system per time unit.
It is determined by the capacity of the bottleneck. If the system is constrained by arrivals then the
departure rate equals the arrival rate.
, lOMoARcPSD|14840171
Utilisation rate = the fraction of the total time of the total time in which a machine is used for
production = total operating time / total time = actual output / design capacity
Efficiency = actual output / effective capacity
ONLY IF THE SYSTEM IS CONSTRAINED BY THE ARRIVALS
The utilisation rate ρ for a workstation consisting of n identical, parallel servers can be
computed from ρ = λ / (n*μ). λ = Arrival rate μ = Production rate
Because λ products/customers arrive and (n*μ) products/customers can be produced/served.
Batch production produces x products of the same time
The design capacity of batch production can be calculated with three steps.
- Compute the processing time per batch = number of products * production time per product
+ setup-time
- Compute the average number of batches processed per hour = 60 / processing time
per batch (step 1)
- Calculate the design capacity = batches per hour (step 2) * products per
batch Productive utilisation rate = normal utilisation rate excluding set-up times.
Work In Progress (WIP) = The number of products that have been taken into production, but haven’t
been finished.
ONLY IF THE SYSTEM IS CONSTRAINED BY THE ARRIVALS
To estimate WIP we use Little’s equation: L = λ * W
L is the average WIP W is the deterministic throughput time λ is the arrival rate
If λ is products per hour and W is in minutes then W needs to be divided by 60.
IF THERE IS A BOTTLENECK
We use another equation to estimate WIP. You multiply the utilisation rate of every process with
the batch size. Do this for every process and then add all the outcomes.
Lecture 3:
Queue = Waiting line
Arrival = 1 person, 1 job etc that arrives and demands a service
Queue discipline = Rules for determining the order that arrivals receive service
Channel = Number of servers
Phase = The number of steps in a service
Lecture 1
Stakeholders:
- Suppliers, supply raw materials, (semi)-finished products, to downstream customers.
Supply demand at lowest possible costs or respond quickly to changing requirements and
minimize stock-outs.
- Manufacturer, decide what to make and buy. They have different choices, how do they
select and develop suppliers.
- Distributors, store temporary to balance fluctuation of supply and demand. They
also transport from manufacturers to retailers.
- Retailers, sell the products to end customer and perform some marketing activities.
- Customers, buy the products and services.
Supply chain management = the management of the material and information flows within and
across the stakeholders. It requires investment in building relations with suppliers and customers
to obtain cooperation and integration of materials and information.
- The ultimate goal is to maximize the Supply Chain Surplus = Customer Value – Supply
Chain Cost
- To maximize this you need to understand what is value for the final customer and create
this value at the minimum overall cost. Not for one company, but for the entire supply
chain.
Logistics = the part of the supply chain process that plans, implements and controls the efficient
and effective flow and storage of goods, services and related information from the point of origin
to the point of consumption.
- Transportation, movement, storage for example
- Inbound logistics/Materials Management = all the activities to move material,
components and information from raw materials to and within the production process.
- Outbound logistics/Physical Distributions = The movement of goods and information
outward from the end of the assembly line to the customer.
- Four important questions about logistics:
o Which logistics decisions should be made?
o Which logistics costs should be paid?
o Which objectives do you want to achieve?
o Which constraints can you define?
▪ Objective = Expression that maximises or minimises some aspect.
▪ Constraint = Restriction that limit the degree to which a manager can
pursue an objective.
- Logistics control. Managers need to control the performance of logistics.
o Quality, inventory levels, cycle time. But most importantly productivity.
Single factor = Output / Single input factor Multifactor = Output / Multiple input
factors.
, lOMoARcPSD|14840171
Lecture 2:
Arrivals:
- Inter arrival time = Time between two subsequent arrivals of products at their entrance in
the product.
- Arrival rate = number of products that arrive per time unit.
Throughput time = Time that passes between the moment at which the customer/product enters the
system and the moment at which the customer/product is ready.
Deterministic throughput time = throughput time estimated by adding up the expected
processing times of the different processes. Probability distributions, and waiting-line effects are
ignored and only the average values are considered
A production/service time follows a normal
distribution The mean = µ
The standard deviation = σ
So with a deterministic throughput time the µ is used.
Design capacity = Theoretical maximum output of a system or process in a given period
Effective capacity = Actual capacity that can be expected given the product mix, methods of
scheduling, maintenance and standards of quality.
Serial processing = Process where steps are performed consecutively
Parallel processing = Process where steps can be performed simultaneously
Parallel servers (machines or operators) means that in a process a product only needs to be treated
by one of the servers. X amount of parallel servers means that the design capacity = X * design
capacity of one server. But the throughput time is still calculated by one design capacity.
So: 3 servers with a design capacity of 10 per hour means that there is a design capacity of 3
* 10 = 30 customers/product per hour. However throughput time is still 60/10 = 6 customers
per hour.
Bottleneck = an operation that limits output in the system.
To find the bottleneck you follow 3 steps:
- Calculated design capacity of each process.
- Calculate the expected number of products at that process. (use percentages in systems
with multiple paths)
- Compare answers from steps 1 and 2.
If the design capacity is lower than the expected number of products then the process is a bottleneck.
If the design capacity of all processes is sufficient then the system is constrained by the arrivals.
Departure rate = The number of products/customers that leave the system per time unit.
It is determined by the capacity of the bottleneck. If the system is constrained by arrivals then the
departure rate equals the arrival rate.
, lOMoARcPSD|14840171
Utilisation rate = the fraction of the total time of the total time in which a machine is used for
production = total operating time / total time = actual output / design capacity
Efficiency = actual output / effective capacity
ONLY IF THE SYSTEM IS CONSTRAINED BY THE ARRIVALS
The utilisation rate ρ for a workstation consisting of n identical, parallel servers can be
computed from ρ = λ / (n*μ). λ = Arrival rate μ = Production rate
Because λ products/customers arrive and (n*μ) products/customers can be produced/served.
Batch production produces x products of the same time
The design capacity of batch production can be calculated with three steps.
- Compute the processing time per batch = number of products * production time per product
+ setup-time
- Compute the average number of batches processed per hour = 60 / processing time
per batch (step 1)
- Calculate the design capacity = batches per hour (step 2) * products per
batch Productive utilisation rate = normal utilisation rate excluding set-up times.
Work In Progress (WIP) = The number of products that have been taken into production, but haven’t
been finished.
ONLY IF THE SYSTEM IS CONSTRAINED BY THE ARRIVALS
To estimate WIP we use Little’s equation: L = λ * W
L is the average WIP W is the deterministic throughput time λ is the arrival rate
If λ is products per hour and W is in minutes then W needs to be divided by 60.
IF THERE IS A BOTTLENECK
We use another equation to estimate WIP. You multiply the utilisation rate of every process with
the batch size. Do this for every process and then add all the outcomes.
Lecture 3:
Queue = Waiting line
Arrival = 1 person, 1 job etc that arrives and demands a service
Queue discipline = Rules for determining the order that arrivals receive service
Channel = Number of servers
Phase = The number of steps in a service
