Supply Chain Operations:
Making and Delivering
Chapter – 3
Objectives


Exercise an executive level
understanding of operations involved
in the categories of making products
and delivering products.
Assess supply operations in your
company that may be candidates for
outsourcing.

Make
– Product design
– Production scheduling
– Facility management

Deliver
– Order management
– Delivery scheduling



Direct deliveries
Milk Run deliveries
Delivery sources
– Return processing

Outsourcing Supply Chain Operations
Product Design (Make)



Product design and selections of the
components needed to build them are
based on the technology available and
product performance requirements.
When considering product design from
supply chain perspective the aim is to
design products with fewer parts, simple
designs, and modular construction from
generic sub-assemblies.
The supply chain required to support a
product is molded by the product’s design.
Product Design (Make)



Product design defines the shape of the
supply chain and this has a great impact on
the cost and availability of the product.
There is a natural tendency for design,
procurement, and manufacturing people to
have different agendas unless their actions
are coordinated.
A cross functional team can evaluate
existing preferred suppliers and
manufacturing facilities.
Product Scheduling (Make)



Production scheduling allocates available
capacity to the work that needs to be done.
The goal is to use available capacity in the
most efficient and profitable manner.
Product scheduling operation is a process of
finding the right balance between high
utilization rate, low inventory levels, and
high levels of customer service.
Product Scheduling


When a single product is to be made in a
dedicated facility, scheduling means
organizing operations as efficiently as
possible and running the facility at the level
required to meet demand for the product.
When several different products are to be
made in a single facility; each product will
need to be produced for some period of
time and then time will be needed to switch
over to production of the next product.
Production Scheduling


The first step in scheduling multiproduct production is to determine
economic lot size.
Second step is to set the right
sequence of production runs for each
product.
Facility Management (Make)


Facility management decision happen within
the constraints set by decisions about facility
locations.
Ongoing facility management takes location
as a given and focuses on how best to use
the available capacity.
– Role of each facility will play
– How capacity is allocated in each facility
– Allocation of supplies and markets to each facility
Order Management (Deliver)


Order management is the process of
passing order information from customers
back through the supply chain from retailers
to distributors to service providers and
producers.
This process also includes passing
information about order delivery dates,
product substitutions, and back orders
forwards through the supply chain to
customers.
Principles of Order Management




Enter the order data once and only once
Automate the order handling
Make order status visible to customers and
service agents
Integrate order management systems with
other related systems to maintain data
integrity
Delivery Scheduling (Deliver)


The delivery scheduling process works
within the constraints set by
transportation decisions.
There are two types of delivery
methods: direct deliveries and milk run
deliveries.
Direct Deliveries



Direct Deliveries: are made from one
originating location to one receiving
location.
In this methods, the routing is simply a
matter of selecting the shortest path
between the two locations.
They are efficient if the receiving location
generates economic order quantities that
are the same size as the shipment
quantities.
Milk Run Deliveries


Milk Run Deliveries: are deliveries that are
routed to either bring products from a single
originating location to multiple receiving
locations or deliveries that bring products
from multiple originating locations to single
receiving location.
There are two main techniques for routing
milk run deliveries: savings matrix and
generalized assignment techniques.
Delivery Sources



Deliveries can be made to customers from
two sources:
Single Product Locations: are facilities such
as factories or warehouses where a single
product or a narrow range of related items
are available for shipment.
Distribution centers: are facilities where bulk
shipments of products arrive from single
product locations.
Return Processing (Deliver)



This process is also know as reverse
logistics.
Return is often difficult and inefficient
process.
Companies and supply chains as a
whole need to keep track of kinds of
returns that happen.