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Week Four-Five
F Casafranca
2013
Whats New
Engineer by account demand visibility as close to source of demand as possible Allow SCM to manage (and intervene) in inventory flows the cant see and dont own Develop collaborative vision, metric, & processes with key accounts Develop costing systems that reflect horizontal S.C. processes
2
Whats New
(continued)
Think horizontally rather than vertically. Reduce transaction cost by trading information technology for transaction processing Align the firms internal & external business processes to focus on customer value delivery Utilize information technology as a learning/ teaching medium for all supply chain partners
3
Level of Customisation
Customer Demand
Level of Integration
Returns/ Cancellations
PROCESS DESIGN
Types
Low 1. Project Process High
2. Job Process Batch Process 4. Line Process 5. Continuous Process High Low
PROCESS ALTERNATIVES
Outsourcing
Vertical Integration
Forward Vertical Integration Backward Vertical Integration Resource Flexibility Capital Intensity Customer Involvement
Motivate workers
Comparing process designs Scheduling Inventory Management Capacity planning Timely performance appraisals
Yield Analysis
Cycle Times Brainstorming Activity Based Management (ABM)
INVENTORY MANAGEMENT
Managers job to balance conflicting costs and pressures between low and high inventories
Inventory holding cost/carrying costs Variable Interest Storage Handling Taxes Insurance Shrinkage
PURPOSES OF INVENTORY
To maintain independence of operations
INVENTORY COSTS
Holding (or carrying) costs
Costs for storage, handling, insurance, etc
Ordering costs
Costs of someone placing an order, etc
Shortage costs
Costs of canceling an order, etc
INVENTORY SYSTEMS
Single-Period Inventory Model
One time purchasing decision (Example: vendor selling t-shirts at a football game) Seeks to balance the costs of inventory overstock and under stock
Event triggered (Example: running out of stock) Time triggered (Example: Monthly sales call by sales representative)
TYPES OF INVENTORY
Cycle Demand is regular and consistent Uses Lot Sizing (Q) Avg Cycle Inventory = Q/2 Safety Stock Protects against uncertainties in demand Firm places an order earlier than when needed Anticipation Stockpile during low demand periods for high demand Pipeline Orders placed, but not received yet Measured as avg demand during lead time Pipeline = Average Demand/Lead Time
Safety Stock
Improve demand forecasts Reduce lead times Reduce supply uncertainties Rely more on equipment and labor buffers (cross-train)
JUST-IN-TIME SYSTEMS
Definition: to eliminate waste by cutting unnecessary inventory and removing delays in operations.
Inventory reduction
Also known as:
Zero inventory
Stockless production
Lean production Synchronous manufacturing
Material as needed
Continuous flow manufacturing
Production Lines
"Profit is the payment you get when you take advantage of change "
- Joseph A. Schumpeter
25
Manages more suppliers in second- and third-tiers Supply network more complex Expends more corporate resources Takes less risk in supply chain stability Chrysler
27
SUPPLY BASE
A group of suppliers within the reach of the visible hand of the focal company The portion of the supply network within the purview of the focal company Suppliers actively managed by the focal company Not all suppliers in the supply base are top-tier suppliers.
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Supply Base
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30
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Supply base management Number of Suppliers Differentiations Inter-Relationships
Buyer-Supplier Dyads
Supplier-Supplier Dyads
Buyer-Supplier-Supplier Triads
33
BUYER-SUPPLIER DYADS
Competitive Adversarial
New Adversarial
Cooperative Information and resource sharing Common goals Deep Understanding Tough love
34
SUPPLIER-SUPPLIER DYADS
Competitive Cooperative
35
36
Cons
Potential for supplier collusion Forward integration by suppliers
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38
TRIADS
The Real Fundamental Building Block Three States of Buyer-Supplier-Supplier Triads Balanced States
Unbalanced States
Structural Hole States
39
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S1
+
S2
S1
S2
+
S1
S2
+
Balanced State 1
Buyer Buyer
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Balanced State 2
Buyer
Balanced State 3
+
S1
+
S2
+
S1
S2
S1
S2
Unbalanced State 1
+
Unbalanced State 2
Unbalanced State 3
40
CLASS EXERCISE
Form into Three teams and discuss:
QUESTIONS??