Operations
13-14
473.31
Fall 2015
Bruce Duggan
Providence University College
Summary
Managing your supply chain effectively is a prerequisite for business
success today.
Supply chain design should include sourcing, inventory management,
logistics, level of vertical integration, performance measurement,
product design, and the design of the reverse supply chain.
Outsourcing is an important way to reduce cost, while improving the
strategic focus of the firm.
Learning Objectives Review
1. What are some important sourcing considerations beyond simple material purchasing?
2. What are some of the contributing factors that cause the bullwhip effect in supply chains?
3. How can supply and demand characteristics influence how supply chains should be structured?
4. What are some reasons that can justify outsourcing?
5. What is meant by "green sourcing" and what should be included in a total cost of ownership
analysis?
6. What are some metrics to measure supply chain performance?
7. What are the basic building blocks required for an effective mass customization program?
8. What are the five steps involved in collaborative planning, forecasting, and replenishment (CPFR)?
9. What is a reverse supply chain?
Supply Chain Management
Supply chain management involves optimizing the entire supply chain
operations for the product by taking a systems approach to managing
the flow of information, materials, and services from raw materials
suppliers through factories and warehouses to the end costumer.
Supply Chain Management
12-4
Strategic Sourcing
Strategic Sourcing is the development and management of supplier
relationships to acquire goods and services in a way that aids in
achieving the immediate needs of the business.
Strategic Sourcing
Bullwhip Effect
Bullwhip effect refers to the variability in demand is magnified as we
move from the customer to the product in the supply chain.
12-7
Bullwhip Effect
12-8
Functional and Innovative Products
Functional products
• staples that people buy in a wide range of retail outlets, such as grocery
stores and gas stations
Innovative products
• products such as fashionable clothes and personal computers that typically
have a life cycle of just a few months
Functional and Innovative Products
Hau Lee’s Concepts of Supply Management
12-11
Hau Lee’s Concepts of Supply Management
Hau Lee’s approach to supply chain (SC) is one of aligning SCs with the
uncertainties revolving around the supply process side of the SC
A stable supply process has mature technologies and an evolving
supply process has rapidly changing technologies
Types of SC’s
•
•
•
•
Efficient SC’s
Risk-Hedging SC’s
Responsive SC’s
Agile SC’s
Logistics
• the management functions that support the complete cycle of material flow:
o from the purchase and internal control of production materials…
o to the planning and control of work-in-process….
o to the purchasing, shipping, and distribution of the finished product
Vertical Integration and Outsourcing
Vertical Integration
• the proportion of the supply chain that the company owns
Outsourcing
• the act of moving a firm’s internal activities and decision responsibility to
outside providers
Reasons for Outsourcing
Greensourcing
benefits:
• Many firms are looking to their supply chains to deliver "green" results.
• A significant area of focus relates to how a firm works with suppliers where
the opportunity to save money and benefit the environment might not be
a strict trade-off proposition.
• Financial results can often be improved through both cost reductions and
boosting revenues.
Greensourcing
Total Cost of Ownership (TCO)
components:
•
•
•
•
•
•
•
•
•
Transportation
Installation
Inventory management
Administration
Order processing
Training employees
Data acquisition and evaluation
Operating and maintenance
Disposal.
LO5
Total Cost of Ownership (TCO)
Copyright © 2013 McGraw-Hill Ryerson Limited
12-16
Measuring Supply Chain Performance
Inventory Turnover Calculation
Mass Customization
Mass customization
the ability of a company to deliver highly customized products and
services to different customers around the world.
Process Postponement
The key to mass customization is effectively postponing the tasks of
differentiating a product for a specific customer until the latest possible
point in the supply-chain network
LO7
Mass Customization
Principle 1: A product should be designed so it consists of independent
modules that can be assembled into different forms of the product
easily and inexpensively.
Copyright © 2013 McGraw-Hill Ryerson Limited
12-24
LO7
Mass Customization
Principle 2: Manufacturing and service processes should be designed so
that they consist of independent modules that can be moved or
rearranged easily to support different distribution network designs.
Copyright © 2013 McGraw-Hill Ryerson Limited
12-25
LO7
Mass Customization
Principle 3: The supply network should be designed to provide two
capabilities.
• First, the supply network should supply the basic product to the facilities
performing the customization in an cost-effective manner.
• Second, the supply network must have the flexibility and the responsiveness
to take individual customers’ orders and deliver the finished, customized good
quickly.
Copyright © 2013 McGraw-Hill Ryerson Limited
12-26
Collaborative Planning, Forecasting, and
Replenishment (CPFR)
Collaborative Planning, Forecasting, and Replenishment (CPFR)
• a technique used to coordinate demand forecasting, production and purchase
planning, and inventory replenishment between supply chain trading
partners.
Collaborative Planning, Forecasting, and
Replenishment (CPFR)
Step 1. Creation of a front-end partnership agreement.
Step 2. Joint business planning.
Step 3. Development of demand forecasts.
Step 4. Sharing forecasts.
Step 5. Inventory replenishment.
LO8
Collaborative Planning, Forecasting, and
Replenishment (CPFR)
Copyright © 2013 McGraw-Hill Ryerson Limited
12-29
Reverse Supply Chain
Reverse Supply Chain
•
a series of activities required to retrieve a used product or return from a
customer and either dispose of it or reuse it
Reverse Supply Chain
Five Components:
• Product acquisition
• Reverse logistics
• Inspection and disposition
• Reconditioning
• Distribution and sales
Reverse Supply Chain
12-32
The Successful Supply Chain
Supply chains should be customized.
Partnerships are important.
Information should be shared.
Holistic internal supply chain management.
End of Chapter 13
Assigned problems for ch 13
Probs 1 & 4
• Hin
Probs 2 & 3
• Ken
Final Exam (take-home)
company
pages
topic
assigned to
Hin
Eastern Gear Ltd.
450-453
3
Operations strategy & process design
US Stroller
453-458
5
Pull system vs manufacturing cells
3M
467-475
8
Quality (6 Sigma)
Merriwell Beg
504-505
2
Forecasting
Consolidated Electric
516-517
2
Inventory control
Southern Toro
520-526
6
Inventory management
Ken
Toys Plus
527-530
3
Master production schedule
Hin
Ken