...CHAPTER 13 – STRUCTURE OF THE SUPPLY CHAIN AIMS OF THE CHAPTER Products move through a series of operations in their process. This movement usually includes a physical flow of goods, and then we refer to the flow of materials through a supply chain. This chapter introduces the concept of logistics – or supply chain management – which is responsible for this flow. The chapter looks at the broad area of design, emphasising the number of points on the supply chain, the best locations for these, and the relationships between them. The aim of the chapter is to introduce the concept of supply chain management. More specific aims are to: • Explain the role of logistics – or supply chain management Logistics – which is equivalently known as supply chain management and sometimes physical distribution – is responsible for all the physical movement of materials. This includes movement into the process from suppliers, through operations, and then out of the process to customers. It is difficult to think of any business activity that does not depend, to some extent on logistics supplying required materials. Activities generally included in logistics are procurement, inward transport, receiving, warehousing, stock control, order picking, material handling, distribution, recycling, returns and waste disposal, location and associated communications. • Appreciate the role and importance of supply chains A supply chain consists of the series of activities and organisations...
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...A. Supply Chain Strategy There are three main types of supply chain strategies vertical integration, Keiretsu networks and virtual companies. Vertical integration develops the ability to produce goods and services previously purchased or to actually buy a supplier or distributor it can be forward or backward integration. Backward integration suggests a firm purchase its suppliers. Forward integration in the other hand, on the other hand, suggests that a manufacturer of components make the finished product. Vertical integration may provide opportunities for cost reduction, quality adherence and timely delivery. “Doing everything” is extremely difficult, risky and costly. It is not recommended for this group even though the talent is available. Lets first analyze the other strategies. Keiretsu networks are part collaboration, part purchasing from a few suppliers. The manufacturers are of then financial supporters through ownership or loans. The supplier becomes part of the company coalition known as keiretsu. Members of the keiretsu can also have suppliers farther down the chain, making even second and third-tier supplier’s part of the coalition. Even though this strategy is less risky it is one that the management is not accustomed to and there is still another strategy we haven’t discussed. The investors have the team and the managerial experience but do not have experience managing the type and scope of operation that requires manufacturing and supply chain...
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...supplier, Valley Bakers, to review the outcomes of their 180-day CPFR pilot program. When her drink arrived she hardly touched it,except to stir it nervously, until Gordon returned from the ticket counter. When she had agreedto accept the promotion to Category Director last year, she had no idea that the pressures ofthis job would be so enduring. The last six months had seemed like one long, dull headache. Since the initiation of the CPFR pilot program, it seemed that Valley, their supplier, had been making all the demands in this relationship. Wasn’t the customer supposed to be the one who was always right? Gordon eased into the chair next to her and immediately noticed the weary, pained look on her face. As Vice President of Supply Chain Operations for Texan Foods for the last 9 years, he had learned a lot about dealing with employee and customer frustrations. The CPFR pilot with Valley had tested his resolve as well. Valley’s CPFR team was unhappy with the small performance gains – and the occasional significant losses – that the program had delivered for the 34 SKUs that had been included in the pilot. Valley had wanted a more comprehensive level of collaboration from the very first day, and they were sure that Gordon was withholding information from them that would allow their small company to realize greater cost savings sooner. Always taking a conservative approach to new initiatives, Gordon had been adamant that the...
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... Then we also go ahead and recommend the best alternative according to us and discuss the reasons behind it. Alternatives with their pros and cons: - 1) Keep its existing supply chain a) Advantages: No major changes and additional costs involved. b) Disadvantages: Ford’s IT will eventually become obsolete. 2) Form a mix of online and offline operations and lay procedures to enable customization and ordering by customers over the internet but maintain physical dealerships as well. a) Advantages: Customization to clients, start of vertical integration, b) Disadvantages: Costly, time consuming, requires internal and external changes which are not easy to handle and integrate with other operations. Team 4 Critique 4 3) Create a virtually integrated supply chain based on Dell's model. Ford and all its suppliers would share information between their systems and the Internet to coordinate the flow of materials and production. All customer orders would be taken either via Ford's web site or by phone and then built. A pull system would be implemented completely. a) Advantages: Customization to clients, start of vertical integration in the supply chain. b) Disadvantages: Ford's traditional processes and production methods would have to be changed to take advantage of this new form of supply-chain management. Since it is a very costly and time consuming activity, the difference in the two industries makes it a risky option. After more careful examination and review of...
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...Logistical Strategies within the Supply Chain La’Trice L. Watson American Military University Abstract Logisticians continually make strategic level decisions in order to manage uncertainty, customer service and cost. Clients such as manufacturers, raw materials suppliers, distributors, retailers and shippers are provided a service by logistic service providers within the supply chain which makes it necessary to formulate strategies (Davenport, Jarvenpa, & Beers, 1996). Logistics is a part of the supply chain, which plans, implements, and controls the efficient, effective forward and reverse flow and storage of goods, services, and related information between the point of origin and the point of consumption to meet the clients’ needs (Butterworth-Heinemann, 2004). A number of logistical strategies exist from company to company, each claiming to be more efficient, faster, and better than their competitors. Any logistical strategy should contain some common components that supports the company’s overall logistics strategy (Waters, 2003). An effective strategy can be established for any logistical situation utilizing these four components: Agile logistics, lean management, a good relationship with vendors and effective technology systems. Logistical Strategies within the Supply Chain Because supply chain strategy depends on the type of supply chain a company uses, the type of functional strategies chosen should complement the type of...
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...Abstract The Darden Restaurant chain is responsible for serving over 300 million meals annually throughout the United States and Canada in over 1,700 restaurants. Three of the most popular casual dining restaurants are the Olive Garden, Long Horn Steakhouse, and Red Lobster; with over 180,000 employees it is the largest full-service restaurant company in the world (Darden, 2012). Darden has found means of outsourcing certain aspects of the business to optimize their profits, through the use of supply-chain management strategies. On page 461 at the conclusion of the Outsourcing Offshore at Darden Video Case Study; in part 3 or Managing Operations Chapter 11, 4 Discussion Questions are posed. 1. What are some outsourcing opportunities in a restaurant? A variety of opportunities to outsource exist in a corporation of this size; human resource divisions are often times given to third parties, recruitment in particular. Payroll and taxes could be outsourced. Cleaning services, including sending out laundry aprons towels etc. rugs are often sent out to be cleaned oppose to internally cleaning them. Cleaning the seafood and prepping for cooking such as filleting fish and de-veining shrimp. Maintaining websites, working on promotional marketing online and in the communities is another job that can be easily outsourced. 2. What supply-chain issues are unique to a firm sourcing from 35 countries? Utilizing sources from so many countries could compromise standard working...
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...Shelf life upto 15 days: One concept for a better supply chain management solution is first-expired-first-out (FEFO), which was first introduced at the end of the 1980s. The basic idea is to apply stock rotation in such a way that the remaining shelf life of each item is best matched to the remaining transport duration options, to reduce product waste during transportation and provide product consistency at the store. Variations in food quality and the remaining shelf life are calculated automatically from accumulated environmental condition data, such as temperature; the shelf life variations are then used by warehouse management software to match the shelf life variation to inventory rotation, routing and special handling. Owing to the lack of automated data capture and shelf life calculation systems to perform this task, FEFO has found very little practical application so far. The current quality state of packed food is often hard to measure and is not visible from the outside. For example, a ‘red’ tomato might last for two more weeks in good condition or it might change to an unacceptable colour and texture the next day. In general, the remaining shelf life cannot be measured directly, yet it may be predicted by biological models calculating the effect of accumulated temperature and other influences. Electronics componets supply chain: http://www.zvei.org/Publikationen/Guideline-Supply-Chain-Management.pdf Clothes by e-commerce http://www.pwc.in/assets/pdf...
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...Postponement as Supply Chain Strategy The postponement strategy is based on the following two basic principles of demand forecasting. 1. The accuracy of the forecast demand decreases with an increase in the time horizon. The farther the time window for which the demand is being forecasted, the more inaccurate it will be. The figure graphically represents this effect as a funnel: as time extends farther into the future, the forecast error grows, showing that the forecast demand will have larger and larger variations as time periods progress into the future. 2. Demand projections for a product group are generally more accurate than projections for individual products. For example, it is much easier to forecast the total demand for LCD TVs than it is for an individual TV of a specific brand, model, screen size, resolution, and color contrast ratio. The postponement strategy leverages the above characteristics of demand forecasting. It dictates that the firms should postpone the creation or delivery of the final product as long as possible. For retailers, this takes the shape of postponing the delivery of the final product to its destination, while for assemble-to-order manufacturers this means postponing the final assembly of the product. For manufacturing scenarios like build-to-stock, the postponement strategy may drive pushing the packaging or final assembly of the products, allowing the manufacturer to personalize, configure finished products to customer orders, and...
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...I believe that supply chain is the base of an operation strategy. The relationship between both is crucial to define limits in an overall strategy for the company and the link for this relation must be the reconciliation between our resources and the requirements of the market. All decisions made over operation strategy and supply chain would aloud scale economies or may open the scope over markets. For example, Benetton moves inventory to stores around the world faster than its competition by building flexibility into design, production, and distribution or, Sony that purchases components from suppliers in Thailand, Malaysia, and around the world. These examples lead to my next points. Under the concept of strategy’s four perspectives, there is an external and internal overview that permits framework for a deep analysis or SWOT, which will help to develop an effective strategy formulation. It is not easy to explain market movements but we can have in mind the flow of the strategy decision areas (resources, capabilities, processes) and performance objectives (customer needs, market positioning, competitors actions). In the other hand, top-down/bottom-up perspective give us a concept that clarify the link over a corporate strategy, tactical and operational experience. To understand this concept, I prefer to support my analysis on the five generic competitive performance objectives, that allow us to understand the necessity of being right (Quality), being fast (Speed), being on...
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...SUPPLY CHAIN STRATEGY FOR ZARA FASHION Which is Zara's main competitive advantage? The blend of technology-enabled strategy that Zara has unleashed seems to break all of the rules in the fashion industry. That the company doesn’t outsources manufacturing to low-cost countries, it keeps huge swaths of its production in-house, enabling Zara to move faster to the style and fashion designs that the consumers are looking for, than its competitors. thethe main difference between the supply chain management and logistics from Zara and from it nearly competitors. Zara’s supply chain is high vertically integrated and keeps most of its operations, including production at the same country (Spain), probably facing more expensive manufacturing costs, but eliminating transportation costs and the time, energy and resources it involves. Some examples between Zara and its competitors are: ASPECT ZARA COMPETITORS The average time from idea to appearance in store * 15 days * 12 times faster than Gap Most of the products you see in stores didn't exist three weeks earlier, not even as sketches Once or twice a season H&M takes three to five months to go from creation to delivery Other retailers need an average of six months to design a new collection and then another three months to manufacture it Inventory Number of Designs 12 Inventory turnover / Year 12,000 Designs Others between 3-4 times Others Averages :4000-6000 An effective supply chain mainly consists in making information flow and...
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...Case 1: Zara, H&M, Benetton Supply Chain Strategies | Executive Summary The performance of many organizations is highly dependent on utilizing the correct supply chain model. This report focuses on the analysis of the supply chains of three clothing companies: Zara, Hennes & Mauritz (H&M), and Benetton. The analysis was focused on three aspects. First, the supply chain models of the three retailers were compared and contrasted and there was an evaluation whether each of the retailers has the right supply chains for the type of products they offer. Second, the analysis highlighted how the supply chain architecture of the three companies impacts the management of inventory, information, and capacity. Finally, the analysis also included some research on how the supply chain strategies of these retailers have changed in recent times and its impacts on their relative competitive advantage. Based on the analysis, several recommendations around strategic and process improvement were provided for Zara, H&M, and Benetton. The recommendations are further supported by an implementation plan as well as an overall assessment of the risks that the retailers face. Sources of analysis include the two Harvard Business Review Articles “What is the Right Supply Chain for Your Product” and “Rapid-Fire Fulfillment”. The analysis also utilized several research reports from DataMonitor. Analysis Zara, H&M, and Benetton are all clothing retailers that focus on fashion...
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...Supply Chain Management: Challenges, Remedies and the Impact of change - Overview By Adawari Josiah Jumbo Student No.: 15522057 Submitted To Laureate Online Education & University of Liverpool – Online Masters Degree In Partial fulfillment for the award of Master of Science (M.Sc.) Degree in Operations and Supply Chain Management Instructor: Professor Anshuman Khare 2010. ACKNOWLEDGEMENT I am delighted to say thanks my Instructor Professor Anshuman Khare for your professional support and supervision all through this module including this project work for your encouragement is commendable. The learning acquired through interaction with my course mate has been tremendous, I therefore say thanks to my entire class mate. I also appreciate all authors whose works aided me in this project. I am sincerely indebted to all of you. To God, I say thanks for your kindness and support for this programme. Adawari Josiah Jumbo ABSTRACT This research was carried out to find out the challenges and the economic and operational impact of change on supply chain, including the options available to improve the challenges and create increased performance on the chain. To drive home the study we focused on PHRC Limited in Nigeria. We also undertake a comprehensive review of...
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...Ford Motor Company: Supply Chain Strategy Attn: Jac Nasser, CEO Dear Mr. Nasser Please find attached the report as requested Yours Truly, Teri Takai Ford Motor Company: Supply Chain Strategy ------------------------------------------------- Case Study Response Executive Summary As Director of Supply Chain Systems and decision maker on if we should proceed with the Virtual Integration Model I have carefully analysed all aspects of this model to see if it could work within Ford and the Automobile industry. We have a rich history of success and working through difficult challenges and I have no doubt that we will do so again with the right decision on this model. The Automobile industry is a complex one with many suppliers, parts, dealerships, competitors and all this is now happening in a global market. This complexity makes efficiencies difficult to implement and drives up the costs our supply chain. Many efficiencies would require the cooperation of both internal and external parties and would require significant investment. Ford’s main problem with their current system is the inefficient usage of their huge data base, the complex network of suppliers, the presence of many independent distributors who are making forecasting difficult and the lack of direct communication with customers. Through my review I have come to the conclusion that the full implementation of the Dell Model would not work; the way customers buy cars and computers in this day and...
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...Ford Motor Company: Supply Chain Strategy Executive Summary The Ford Motor Company is a well established, international automotive design and production company that is shifting the company mission to have an emphasis on shareholder value and customer responsiveness. In the face of increasing international competition, Ford has recognized several facets of operations that can be better executed in order to attain the outlined objectives. There has been several alternatives to various operations within Ford that can directly alter the fundamentals of its business, all with a strategic significance put on the supply chain procedures. This case study identifies these options; maintaining current practices and partnerships, standardization of their supply chain and sub-system products to simplify the supply process, adjust the retail services and dealership chains to drive market driven sales and a combination of virtual integration with key suppliers to drive relationship based supply that is determined by a forecast driven sales and production model, called the Ford 2000 Process. Through the evaluation of the presented alternatives, the Ford 2000 Process has been selected as being the most effective path to achieve the corporate goals of the Ford Motor Company. Ford should be able to utilize it’s current market share and global supply network to generate beneficial partnerships on key suppliers and stabilize a fluctuating production model that is riddled with waste...
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...As director of Supply Chain Systems, Teri Takai recommends implementing virtual integration strategies from companies like Dell to portions of Ford’s supply chain strategy. Although there are several key differences between the companies, the restructuring plans of Ford 2000 have set a viable foundation to implement Dell’s virtual integration strategy in inventory management, customer service and support and suppliers’ management. The redesign of the process must include design not only of the supply chain but also of fulfillment, forecasting, purchasing, and a variety of other functions that historically been considered independently within the Ford hierarchy. Teri believes that implementing virtual integration by building on Ford’s key initiatives and projects including Ford Production Systems (FPS), Order to Delivery (OTD) and Ford Retail Network (FRN) that are currently underway will make their supply chain run more smoothly with less bottlenecking, reduced inventory, and better overall performance. Managers could overcome the complex and inaccurate manual process of forecasting and procuring parts which would result in reduced OTD lessen costs and enhance customer satisfaction. Further improved Supply Chain management will improve Supply Chain responsiveness and increase shareholder value to keep investors interested in the company. ------------------------------------------------- Introduction Due to increase in market competition, supply chain superiority of...
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