Supply Chain Management;

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Supply Chain Management Beyond
Acquisitioning Cobus Rossouw, 13 October 2008
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Definitions of Supply Chain Management

• Supply Chain Management is the integration of
  key business processes from end user though
  original supplier that provides products,
  services and information that adds value for
  customers and other stakeholders
• The Eight Essential Supply Chain Management
  Processes by Douglas M. Lambert,
• Supply Chain Management is an integrating
  function with primary responsibility for linking
  major business functions and processes within and
  across companies into a cohesive and
  high-performing business model.
• Council for Supply Chain Management Professionals
  (CSCMP)

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Supply Chain Integration
Few change overs long run lengths Stable plans
Lowest-Purchase Price Min No of Vendors
High availability of Stock (High service levels)

Low stock Min Distn. cost
Ingredients
Conversion
Wholesale / Retail
Natural Resources
Beneficiation
CONSUMER
Conversion
Packaging
EXISTS FOR THE SOLE PURPOSE OF SATISFYING
CONSUMER DEMAND
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Asset Centric Supply Chain
Labour
Maintenance
Natural Resources
CONVERSION
Utilities
EXISTS FOR THE SOLE PURPOSE OF MAXIMISING
UTILISATION
Service Delivery Supply Chains
Service Delivery Channel
Service Interface
SERVICE BENEFICIARY
Conversion into Products Supporting Service
Ingredients Packaging
EXISTS FOR THE SOLE PURPOSE OF SUPPORTING SERVICE
DEMAND
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Demand-driven Supply Networks AMR Research
Framework
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Supply Chain Reference Model
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Business Functions Processes
Function

• Organisational unit
• Specialist outputs
• Common skills pool
• Well-defined objectives
• Career paths
• Group mindset

Process

• Outputs
• Inputs
• Controls
• Mechanisms
• Integration
• Conflicting measures

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Supply Chain Management Process Model
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Operational Demand Management
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SCM Legal Framework
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Supply Chain Management Concept
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Objectives of SCM Policy Guidelines
Governance
Efficiency
Constitution PFMA / MFMA Consistent
Policies Preferential Procurement
Effectiveness
Cost Control Systems Performance Measurement
Provisioning Integrated Supply Chain Management
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Supply Chain Management Concept
Strategy
Suppliers
Customers
Operations
Supply Chain Management
Finance
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Supply Chain Management Concept
Demand Management
Acquisition Management
Disposal Management
Logistics Management
Performance Management
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Thank you
Supply Chain Management Beyond
Acquisitioning Cobus Rossouw, 13 October 2008
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Supply Chain Management Concept
Performance Management
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PFMA Performance Measurement
Retrospective Analysis gtgt Proper process being
used gtgt Objectives being achieved

• Achievement of goals
• Compliance to norms and standards
• Savings generated
• Stores efficiency
• Cost variance
• Contract breach
• Cost efficiency of process
• Conformance to policy guidelines
• Best practice
• Cooperative governance
• Reduction of regional disparities

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Supply Chain Management Concept
Demand Management
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PFMA Demand Management
Cross-Functional Process gtgt Supply Chain
Professional Closer to Customer gtgt Achieving
Maximum Value for Money

• Understanding future needs
• Identifying critical delivery dates
• The frequency of the need
• Linking the requirement to the budget
• Doing expenditure analysis
• Determining the specifications
• Doing a commodity analysis
• Doing industry analysis

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Framework for Supply Chain Management Policies

• 10. A supply chain management policy must
  provide for an effective system of demand
  management in order to ensure that the resources
  required to support the strategic and operational
  commitments of the municipality or municipal
  entity, are delivered at the correct time, at the
  right price and at the right location, and that
  the quantity and quality satisfy the needs of
  municipality or entity.

What ?
Why ?
How much ?
Where ?
How ?
When ?
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Supply Chain Management Concept
Acquisition Management
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PFMA Acquisition Management
Operational Procedures gtgt Governance of Supplier
Interaction gtgt Achieving Lowest Total Cost of
Ownership

• Preferential Policy Objectives
• Strategy on Approaching the Market
• Total Cost of Ownership Principles
• Bid Document, including detailed requirements
• Bid Evaluation Criteria
• Bid Evaluation and Recommendations
• Contract documents and agreements
• Contract administration
• Kick-start Logistics Management Process

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Framework for Supply Chain Management Policies

• 11. A supply chain management policy must
  provide for an effective system of acquisition
  management in order to ensure that
• Goods and services are procured in accordance
  with authorised processes only
• That Expenditure is incurred in terms of approved
  budgets
• Threshold values for different processes are
  complied with
• Bid documentation, adjudication and evaluation
  criteria and general conditions of the contract
  is in accordance with applicable legislation
• Treasury guidelines are properly taken into
  account

What ?
How much ?
How ?
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Standard Procurement Process
Demand Management
STRATEGIC
Define sourcing needs
Obtain Suitable Supply
Logistics Management
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Supply Chain Management Concept
Logistics Management
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PFMA Logistics Management
Control of Assets gtgt Working Capital Stock /
Inventory gtgt Fixed Assets Projects Immovable
Property

• Coding of Items
• Setting of Inventory Levels
• Placing of Orders
• Receiving and Distribution of Material
• Stores / Warehouse Management
• Expediting Orders
• Transportation Management
• Vendor Performance Management

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Logistics ManagementCSCMP Definitions
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Standard Procurement Process
Acquisition Management
Demand Management
OPERATIONAL
Execute Operational Procurement Process
Stock, Warehousing Transportation Management
Execute Operational Payment Process
Logistics Management
Disposal Management
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Inventory Targets
Inventory Units
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Supply Chain Management Concept
Disposal Management
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PFMA Disposal Management
End of Life-cycle Stage gtgt Working Capital Stock
/ Inventory gtgt Fixed Assets Depreciation
Replacement

• Obsolescence Planning
• Database of Redundant Material
• Inspection for Potential Re-use
• Strategy for Disposal Execution
• Physical Disposal
• Replacement Planning