Professional Documents
Culture Documents
Operations Management
William J. Stevenson
8th edition
16-2 Supply Chain Management
CHAPTER
16
Facilities
Warehouses
Factories
Processing centers
Distribution centers
Retail outlets
Offices
16-5 Supply Chain Management
Forecasting
Purchasing
Inventory management
Information management
Quality assurance
Scheduling
Customer service
16-6 Supply Chain Management
Production Distribution
Purchasing
Receiving Storage Operations Storage
16-7 Supply Chain Management
Supplier
Supplier
Supplier
} Storage Mfg. Storage Dist. Retailer Customer
16-8 Supply Chain Management
Supplier
Supplier
} Storage Service Customer
16-9 Supply Chain Management
1. Improve operations
2. Increasing levels of outsourcing
3. Increasing transportation costs
4. Competitive pressures
5. Increasing globalization
6. Increasing importance of e-commerce
7. Complexity of supply chains
8. Manage inventories
16-10 Supply Chain Management
Bullwhip Effect
Figure 16.3
Amount of
= inventory
Organization Benefit
Lower inventories
Higher productivity
Greater agility
Higher profits
Logistics
Logistics
Refers to the movement of materials and
information within a facility and to incoming
and outgoing shipments of goods and
materials in a supply chain
16-15 Supply Chain Management
Logistics
Materials Movement
Figure 16.4
Work center
Work center Work
center
Work Storage
center
Storage
Storage
RECEIVING
Shipping
16-17 Supply Chain Management
Uses of DRP
Workers
Equipment
Financial flows
16-19 Supply Chain Management
Increased productivity
Reduction of paperwork
Increased accuracy
16-21 Supply Chain Management
E-Commerce
Advantages E-Commerce
Companies can:
Have a global presence
Improve competitiveness and quality
Analyze customer interests
Collect detailed information
Shorten supply chain response times
Realize substantial cost savings
Create virtual companies
Level the playing field for small companies
16-24 Supply Chain Management
Disadvantages of E-Commerce
Customer expectations
Order quickly -> fast delivery
Order fulfillment
Order rate often exceeds ability to fulfill it
Inventory holding
Outsourcing loss of control
Internal holding costs
16-25 Supply Chain Management
SCOR Metrics
Table 16.4
Perspective Metrics
Reliability On-time delivery
Order fulfillment lead time
Fill rate (fraction of demand met from stock)
Perfect order fulfillment
Flexibility Supply chain response time
Upside production flexibility
CPFR
CPFR Results
1. Quality
2. Cost
3. Flexibility
4. Velocity
5. Customer service
16-32 Supply Chain Management
Velocity
Inventory velocity
The rate at which inventory(material) goes
through the supply chain
Information velocity
The rate at which information is
communicated in a supply chain
16-33 Supply Chain Management
Challenges
Trade-offs
1. Lot-size-inventory
Bullwhip effect
2. Inventory-transportation costs
Cross-docking
3. Lead time-transportation costs
4. Product variety-inventory
Delayed differentiation
5. Cost-customer service
Disintermediation
16-35 Supply Chain Management
Trade-offs
Bullwhip effect
Inventories are progressively larger moving
backward through the supply chain
Cross-docking
Goods arriving at a warehouse from a supplier
are unloaded from the supplier’s truck and
loaded onto outbound trucks
Avoids warehouse storage
16-36 Supply Chain Management
Trade-offs
Delayed differentiation
Production of standard components and
subassemblies, which are held until late in the
process to add differentiating features
Disintermediation
Reducing one or more steps in a supply chain
by cutting out one or more intermediaries
16-37 Supply Chain Management
Purchasing
Goal of Purchasing
Duties of Purchasing
Purchasing Interfaces
Figure 16.5
Legal
Operations Accounting
Data
Purchasing
processing
Design
Receiving
Suppliers
16-43 Supply Chain Management
Purchasing Cycle
Legal
1. Requisition received
Operations
Accounting
2. Supplier selected
3. Order is placed Purchasing
Data
process-
ing
4. Monitor orders
5. Receive orders Design
Receiving
Suppliers
16-44 Supply Chain Management
Value analysis
Examination of the function of purchased
parts and materials in an effort to reduce cost
and/or improve performance
16-45 Supply Chain Management
Centralized purchasing
Purchasing is handled by one special
department
Decentralized purchasing
Individual departments or separate locations
handle their own purchasing requirements
16-46 Supply Chain Management
Suppliers
Choosing suppliers
Evaluating sources of supply
Supplier audits
Supplier certification
Supplier relationships
Supplier partnerships
16-47 Supply Chain Management
Location
Price
16-48 Supply Chain Management
Other accounts
16-50 Supply Chain Management
Supplier as a Partner
Table 16.9
Supplier Partnerships
Ideas from suppliers could lead to improved
competitiveness
1. Reduce cost of making the purchase
2. Reduce transportation costs
3. Reduce production costs
4. Improve product quality
5. Improve product design
6. Reduce time to market
7. Improve customer satisfaction
8. Reduce inventory costs
9. Introduce new products or services
16-53 Supply Chain Management
Critical Issues
Strategic importance
Cost
Quality
Agility
Customer service
Competitive advantage
Technology management
Benefits
Risks
16-54 Supply Chain Management
Critical Issues
Purchasing function
Increased outsourcing
Increased conversion to lean production
Just-in-time deliveries
Globalization