You are on page 1of 5

The DEP supply chain process can be described using the diagram below.








Chemical compound: (A,B,E,F) (A,B,C,D) (A,B,E,F) (C,D) (E,F) (C,D)
% of business: (60,60,15,15) (25,25,15,15) (15,15,25,25) (60,60) (60,60) (25,25)

of Raw MaterialOrder
to the Manufacturing
and conversion
Orders Arrive at the Warehouse
Transportation and

When DEP receives the customer order, it is electronically wired from the marketing
and sales departments to the manufacturing department. The order is then
recorded into the information system which allows for the tracking and monitoring
of the shipments as they are delivered to the manufacturing facility as well as
construct optimal production schedules to reduce idle time and waste. The six
companies listed above, supply six different chemical compounds that feed into the
production of various polymers. After receiving the raw material shipments, DEP
commences the manufacturing process, following which the converted and
consolidated chemicals in the form of requested polymers are transported to the
warehouse where the orders are matched to their corresponding documentation,
labeled, finalized and prepared for outbound shipment. Delivery is then scheduled
and carried out, transportation being divided between the DEP truck fleet and
common carriers.
The following is the identification of some of the value producing and value reducing
stages of the DEP supply chain operations some of which should be continued,
improved or reconsidered:
Value Adding Stages:

It can take anywhere from 3 to 6 days for the order to leave the warehouse in a “ready to ship”  condition. The minimum performance cycle time of the chief suppliers is 4 days. An additional 3 days from the day the order leaves manufacturing until it is shipped from the warehouse and the calculations show a total of 9 days minimum in DEP’s SC performance cycle. shrink wrapping) delivery of produce from manufacturing to company warehouse Value Compromising Stages:  Tied up and unused inventory resulting in an incurrence of inventory  management and maintenance costs Slow preparation of shipping documents as well as verification and matching of manufacturing documentation to the received orders. Using the same metrics described above the maximum performance cycle will result . Companies 4 and 5 have a minimum delivery time of 4 days from the date of the order and seem to be the limiting factor in DEP’s supply chain performance cycle. The current procurement protocol of DEP is to source the 6 essential compounds needed for the polymer production from 3 different companies. 25 and 15 percent of the business respective to the cost of their materials and performance. another 2 days are needed before the order is produced and is ready to be shipped to the warehouse.     Rapid inbound logistics and the inter-departmental electronic communication and information systems Production and conversion process Favorable Facility locations Packaging labeling and sorting of materials (palletization. The annual bidding process determines the lowest cost suppliers that will get 60. Fluctuating and tentative delivery window (up to 6 days) for customers outside the 200 mile reach of the DEP truck fleet. Taking into account the minimal 6 days from the order date of manufacturing. Considering DEP’s evaluative performance criteria.

6 days before the order is shipped from the warehouse and a worst case scenario of 6 days for the common carrier to deliver it to the customer). In addition. the delivery of 2 days and the high fill rates are unmatched by the primary suppliers providing the same compounds. DEP should develop more rigorous performance criteria. Likewise. . In addition to ensuring a continuous supply of raw material throughout the year. the annual bidding process should move away from the myopic lowest cost procurement strategy and view the process through the integrated TCO lens considering factors such as service delivery. fulfillment rates and overall performance. Comparing the primary with the ancillary 21 days (9 days from the start date for the shipment of raw material to arrive. Although the utilization of supplementary vendors will increase the procurement costs for the company. Using the 25 and 15 percent vendors. making primary vendors aware of the conditions and requirements of GARP’s service window and delivery thresholds and not having to oblige itself to any one particular supplier for an extended period of time. the performance cycle could be improved favorably. these vendors also serve as as a protective safety net against any unexpected or unreasonable price increases by any individual company. the delivery time from order and fill rate is quite impressive for the ancillary or non-primary vendors. educate suppliers about the newly implemented changes and work proactively to develop and enhance their performance capabilities. DEP can reconsider its inveterate inventory management procedures and look for ways to reduce costs associated with inventory storage and maintenance and consider a new approach. DEP should implement a more malleable delivery and contractual arrangements. Considering Company 2 and Company 3 particularly. To use ancillary suppliers more effectively.

These steps serve as a reflection of DEP’s business adaptability and can be considered the touchstone of “order winning criteria”. If all else remains the same. benchmarking and service capabilities measures. We were able to maintain the competitive price. shrink wrapping and verification of manufacturing tickets to orders could be easily performed at the end of the production line. I would also inform him of the changes in company’s strategy regarding newly implemented supplier performance criteria. decreasing the time the warehouse spends preparing the shipments with some products qualifying for expedient shipment out of the warehouse immediately after the production process. labeling and other activities associated with the preparation of orders for final shipment and delivery to the operational structure of the company. up-to-date manufacturing equipment I would strongly emphasize the quality of our product compared with that of our competitors’ and our initiative towards continuous improvement and away from obsolescence. DEP should review all of the established contracts with their vendors negotiating tighter delivery deadlines and overall higher delivery performance and thresholds.If I were in Tom’s shoes. I would sell Binish on the successful adjustments we have made in response to the new qualifying criteria of GARD’s suppliers. Activities such as labeling. top quality polymer. the first thing I would do is consider the attainability of shrinking the service window without compromising the polymer quality while maintaining the competitive price and advantage. Most importantly. Due to DEP’s ongoing investment in the most advanced. reduce our service window and provide higher delivery thresholds while still producing high-grade. I would introduce the idea of reducing the time spent at the warehouses for packaging. palletization. . To further shorten DEP’s performance cycle and leadtime.

This case is a perfect example of what it takes for businesses to stay competitive and how crucial and integral supply chain management has become to the success of any organization. retention of competitive advantage and maximization of the bottom line. Supply chain managers must be able to adapt a dynamic approach to the operations of their company. perceiving new trends and market changes while timely executing appropriate decisions aimed at the prosperity of the firm. .