ASSIGNMENT: SUPPLY CHAIN MANAGEMENT
SECTION A: CASE STUDY
Read the Case Study below and answer the questions that follow:
How Technology Can Ease Supply Chain Management and Mitigate Risk
As recently as 20 years ago, supply chain management was seen as something that took place behind the scenes without dedicated staff and resources. For many, it was regarded as a necessity for only the largest brands or companies with international distribution. When there was a disruption to the supply chain, the fix was easy. A company would pull a couple of people from whatever they were doing and put them on the problem. Once the kinks were ironed out, those people could go back their regular jobs.
In those days consumers were less demanding, less aware and certainly more patient, as they weren't familiar with online ordering with the ability to track shipments to a timely and expected delivery date. Even items that were custom built, beginning when an order arrived via the U.S. Postal Service, were handled with an understanding that completion and delivery would be unpredictable.
Supply chain management has been around at least as long as the assembly line, but until recently, the concept of a chief supply officer has been foreign. Now that role is seen as a highly strategic one that is increasingly valuable from both a customer service and a business perspective. As the role has evolved it's become a critical one, as managing a supply chain is complex, fraught with risk, subject to complex regulations, fines, competition, international shipping restrictions, and more.
As the internet, email and other technologies have become ubiquitous, the expectations of consumers have grown correspondingly. Today's companies are increasingly global and complex, with competition growing on every front and acquisitions that change business processes taking place with astonishing frequency.
At the same time, roles and responsibilities within companies have expanded and become more specific. With new technologies skills have become more specific, and companies are much less likely to want to pull people from important jobs to focus their attention on supply chain problems. The supply chain itself has become increasingly complex, with a higher number of ingredients and components leading to a finished product, and with a broader and more widespread base of suppliers. It's clear that monitoring the path of goods using tacks on a map no longer works.
Technology has crept into SCM step by step, beginning with electronic invoicing, computerized shipping and tracking and automated notifications that were advanced by companies like FedEx and UPS. Initially intended for business-to-business interactions, it took time before that level of tracking and accountability was provided to consumers. But even in those early days it was clear that the ability to notify everyone along the chain was important.
It wasn't until customer-focused companies like Zappos, the online retailer with the tagline "Powered by Service," came on the scene that consumers got a taste of how involved they could be with their purchases. Online natives like Zappos, didn't start with brick-and-mortar stores, so rather than having to adapt to new technology, they were born into the arms of it.
Consumers love these businesses because they can see immediately that their orders have been received, they are notified when orders are shipped, and they can track their purchase every step of the way. Before they order, they can read extensive reviews of the products they are about to purchase, as well as the company they are about to purchase from. This has set a new standard for online customer service; companies that can meet or exceed that standard have a distinct competitive advantage. Companies like Apple and Harley Davidson use that advantage to further personalize the purchase experience by taking custom orders, then building a product to the exact customer specifications.
That same kind of tracking and accountability can be applied to virtually every link in the supply chain to provide a moment-by-moment snapshot of how goods are moving around the planet. This is the aim of a supply chain manager, to know where inventory is and to anticipate delays and hitches before they affect the final assembly line. And just as technology has provided the business landscape with many more capabilities; it has contributed to a new recognition of supply chain management as a profession and a discipline. Today, knowledgeable supply chain managers command respect and correspondingly high salaries. Modern supply chain managers understand that technology provides increased visibility and accountability; therefore, a stronger competitive edge and tight control of the supply chain is worth the investment.
Key to this kind of efficiency is the ability to notify everyone along the supply chain when things aren't going exactly as planned, Notification technology has adapted along with SCM to provide an easy way to send one message to many at once, by a wide variety of devices. So employees at desks will get a call and an email, and someone out in a plant will get a text sent to their smartphone. When the information is shared in real-time, it allows teams to adapt and change to suit the situation, helping to keep manufacturing lines on time and on track.
As an example, one company that manufactures condiments that are packed in glass jars received a shipment of bottles that seemed fine, but revealed a visible flaw after being filled. The product was packed, labeled and shipped to retailers before the flaw was discovered, and the entire lot had to be recalled. With notification technology in place, the complicated task of issuing a recall was completed in minutes. The manufacturer notified everyone along the chain by sending a single automated alert. Whether the goods had shipped to a dozen or a thousand customers, tracking ingredients and notifying customers would still take just minutes.
Unfortunately, even though the SCM profession and the technology are burgeoning, many companies are still entrenched in outdated, monolithic systems, using phone, fax and email to communicate throughout their lengthy and complicated supply chains. But even these companies feel the pressures of competition and keeping costs down pushing them towards more and better technology and automated processes that provide a way to notify everyone along the chain.
The fact that technology with notification has influenced the SCM scene is evident by the increasing trend towards just-in-time inventory management. JIT is a great way to free up cash and increase working capital by letting inventory run down. This can free up many millions of dollars, not just held in the goods themselves, but in storage, security and management of goods. It also reduces the risk of inventory becoming obsolete while in storage.
JIT also comes with risks, many of which have been starkly illustrated by the earthquake and subsequent tsunami in Japan, which have left global manufacturers scrambling for alternative parts and materials that were impacted by the double disaster. The moment that tragedy occurred, alerts began. Supply chain managers quickly used notifications to reach everyone along the chain, both suppliers and customers, to assess the situation and reserve materials they knew would soon be in short supply. Suppliers, in turn, could easily respond to these alerts, and those responses were logged, making it easy for supply chain managers to track materials and adapt accordingly.
Despite the risks, JIT manufacturing has become so entrenched that many companies simply can't afford to stock and warehouse as much inventory as they used to. So if the supply chain is impacted, orders are affected or downtime in the plant occurs. Successful JIT relies on a tightly managed supply chain, with the ability to alert suppliers quickly in the case of an increased need for materials or goods. This tight management is only possible when SCM technology is tightly integrated with notification capabilities.
Manufacturing is complicated, and supply chain interruptions can cause inventory levels to plummet precipitously. To maintain a steady flow of ingredients, components and finished goods there must be clear communication all along the chain. That requires a solution that is more efficient and sophisticated than sending a mass email or pulling staff to make panicked phone calls.
When the earthquake and tsunami happened earlier this year, many executives around the world had emergency meetings to assess how the disaster would affect their companies and determine what they could do to minimize that impact. Those who had a notification system in place were able to do so quickly, notifying all top managers at once via phone, email, SMS and more, and connecting these decision makers using a conference call bridge that everyone could join with a touch of their keypad. This helped them share information, make urgent decisions and coordinate response efforts.
This disaster reminded us all that, when it comes to business continuity, its important to plan for the worst. It also highlighted the fact that old systems and old ways of doing things just don't work in this type of extreme situation. When this kind of interruption happens, consumers start clamoring for information and solutions; expectations are higher than ever before, It's important to get ahead of consumer reaction quickly, as call centers will quickly be swamped with calls for information. With a plan in place it's possible to use a bad situation to build goodwill and trust with customers.
The situation in Japan reminded a lot of people that bad things can happen, and that an event can have a huge impact, even on those that are highly prepared. Sadly, many companies stop right there, realizing that they don't have a plan, and paralyzed about where to go from there. The survivors over the long term are those who have considered the what-ifs and have put solid plans in place for dealing with interruption. Wise companies will initiate the use of SCM technology and a notification solution. Any company that doesn't use technology as part of SCM is at a distinct disadvantage, no matter how good their business continuity plans.
According to supply chain experts, there are four major areas where SCM technology with notification will help. Those areas are global trade, supply relationship management, reverse logistics, and supply chain execution. Let's look at each of these areas:
Global trade - Global trade is fraught with constantly changing regulations. A well-respected company recently received an exceedingly heavy fine for inadvertently side-stepping regulations and shipping night-vision goggles that eventually landed in the hands of terrorists. Automated notification, as part of SCM technology, could have kept everyone along the chain appraised of the latest updates and helped to avoid such a situation.
Supply relationship management - In 2007, Mattel had to recall over 10 million toys because lead paint was detected. To stop the spread of tainted toys, the company had to work backwards along the chain to find out where the lead came from, and also forward to where the final goods were all shipped to effect a recall. With notification as part of an SCM toolkit, much of this communication could be automated, thus speeding the process and providing a reliable audit trail.
Reverse logistics - Reverse logistics is the process of managing the return of goods, recycling of batteries and other components, disposal of products coming off lease, and the auctioning of those items, etc. When there is a sudden influx of new goods, manufacturers have to offload outdated goods quickly. Notification can help alert a variety of recyclers and other parties at once, allowing them to respond with times they are available to remove redistributed goods.
With supply chain execution - one large discount retailer uses notification to make the delivery cycle more efficient. When a delivery arrives, staff has already been notified to be on standby to receive it immediately. If staff is not available, it's easy to alert a truck to deliver to an alternate store and to reroute staff, saving both time and money.
As business complexity and global competition increases and consumer loyalty becomes more tenuous, more and more companies are exploring SCM technology to gain operational efficiencies. Using technology complemented with a reliable notification solution, they can establish a foundation for consistent leadership and secure a strong competitive edge.
Questions 1 - 2 are based on the case study: How Technology Can Ease Supply Chain Management and Mitigate Risk
Answer BOTH questions.
QUESTION 1
The article indicates that supply chain technology has led to increased customer satisfaction over the years. In light of this, discuss how the role of IT has catered for efficient customer relationship management in supply chains. In your discussion suggest evidence of this in the case study.
QUESTION 2
The article provides a birds eye view of some catastrophic outcomes that resulted in the absence of technology in supply chains. Use these examples and adapt a discussion based on why it is important to therefore select an IT system that addresses a company's key success factors to ensure success is maintained and failure minimised.
SECTION B: ESSAY QUESTIONS
Please select two of the 3 essay questions bellow
QUESTION 3
Illustrate the processes involved in Material Requirements Planning (MRP) with an accompanied discussion based on how MRP is used as a software tool to assist in improving supply chain efficiencies.
QUESTION 4
4.1 Discuss Collaborative Planning, Forecasting and Replenishment (CPFR) describing the models of CPFR; basic CPFR, developed CPFR and advanced CPFR.
4.2 Discuss which of the 3 models you would recommend for improving supply chain efficiencies.
QUESTION 5
Mini Case Study: C H Technologies
After Catherine Hutton completed her supply chain management degree through Mancosa she decided to leave her job to start her own computer hardware and software retail outlet selling computers and supply chain software. She is very industrious and at the outset decided to concentrate her business efforts on marketing computer equipment and programs to small and medium-sized enterprises and consumers in the Milnerton, Table View, Parklands, Montague Gardens and Killarney Gardens areas.
Six months after setting up the business and doing her groundwork to forge strong relationships with her targeted customers in her area of operation, she opened her first retail outlet in the popular and fast growing suburb of Table View. She employed the following people to assist her to position her business as the IT retailer of choice in the region:
• a receptionist/Girl Friday; and
• two salespeople (paid on a commission basis only).
It has now been twelve months since she has opened doors in Table View. The business is booming and Catherine has developed a very good name for her computer brand (CH Technologies) and herself as a customer-orientated retailer.
Because Catherine imports her components in bulk from China and pays for every consignment that she imports in cash, she enjoys a sizable discount, which she has passed on to her customers. By doing so, and not compromising on service quality, she has increased brand and business standing to the point that over 60% of her sales come from current customers. Of the remaining 40%, half (20% of total sales) comes from referrals from existing customers and only 20% from new customers.
Approximately three months previously, Yoshi Enterprise PLC (Catherine's sole supplier in China) was bought out by Compute] 2000 (a Chinese IT market leader). Consequently, a number of her personal contacts in the business were retrenched, leaving Catherine with no one that she knew to whom to refer her problems.
The situation was further worsened by the following SCM setbacks:
• erratic order and delivery lead times;
• component malfunctions (5% of all imported components); and
• poor inter-organisational and intra-organisational communication.
In order to rectify the situation, Catherine has decided to jump on the first plane that she can in order to visit her suppliers and discuss the resolution of these problems.
Discuss how the seven areas of the SCOR model can be used to assess C H Technologies current operational operations.
Assignment Guidelines
• Word limit: Approximately 3500 - 4000 words
ASSIGNMENT: SUPPLY CHAIN MANAGEMENT
SECTION A: CASE STUDY
Read the Article below and answer the questions that follow: (Aggregate Planning Today)
Aggregate Planning Today
A firm must plan its manufacturing activities at a variety of levels and operate these as a system. Aggregate planning is medium-range capacity planning which typically covers a time horizon of anywhere from three to 18 months. The goal of aggregate planning is to achieve a production plan which will effectively utilise the organization's resources to satisfy expected demand. Planners must make decisions on output rates, employment levels and changes, inventory levels and changes, back orders, and subcontracting. Aggregate planning determines not only the output levels planned but also the appropriate resource input mix to be used. Aggregate planning might seek to influence demand as well as supply. If this is the case, variables such as price, advertising, and product mix might be used. If changes in demand are considered, then marketing, along with operations, will be intimately involved in aggregate planning.
Aggregate planning is essentially a big-picture approach to planning. Planners generally try to avoid focusing on individual products or services unless, of course, the organisation has only one major product or service. Instead, they focus on overall, or aggregate, capacity. Aggregate planning is closely related to other corporate decisions involving, for example, budgeting, personnel, and marketing. The relationship to budgeting is a particularly strong one. Most budgets are based on assumptions about aggregate output, personnel levels, inventory levels, purchasing levels, etc. An aggregate plan should thus be the basis for initial budget development and for budget revisions as conditions warrant.
A majority of aggregate planning approaches incorporate continuous decision variables and require frequent adjustments to both production and workforce settings. Despite the availability and diversity of these approaches, few significant applications have been reported. Complex models with restrictive assumptions and infeasible decisions are cited as contributing to the lack of acceptance of aggregate planning in the business environment.
Aggregate planning in perspective
Characteristics of aggregate planning
In the broad sense of the definition, the aggregate-planning problem has the following characteristics:
• a time horizon of about 12 months, with updating of the plan on a periodic basis (perhaps monthly);
• an aggregate level of product demand consisting of one or a few categories of product - the demand is assumed to be fluctuating, uncertain, or seasonal;
• the possibility of changing both supply and demand variables;
• a variety of management objectives which might include low inventories, good labour relations, low costs, flexibility to increase future output levels and good customer service;
• facilities that are considered fixed and cannot be expanded.
Aggregate planning forms an important link between facilities planning on the one hand and scheduling on the other. A facility plan determines the physical capacity which cannot be exceeded by aggregate planning. Thus facilities' planning extend further into the future than aggregate planning and constrains the aggregate-planning decisions. Scheduling, on the other hand, refers to the short range (a few months or less) and is constrained by aggregate-planning decisions. While aggregate planning deals with the acquisition of resources, scheduling is concerned with allocating available resources to specific jobs and orders. Thus, a basic distinction should be made between acquiring resources through aggregate planning and allocating them through scheduling.
Decision options
The aggregate-planning problem can be clarified by a discussion of the various decision options available. These will be divided into two types:
• those modifying demand;
• those modifying supply.
Demand can be modified or influenced in several ways:
• pricing;
• advertising and promotion;
• backlog or reservation;
• development of complementary products.
There are also a large number of variables available to modify supply through aggregate planning. These include: hiring and layoff of employees; using overtime and under time; using part-time or temporary labour; carrying inventory; subcontracting; and making cooperative arrangements.
In considering all these options, it is clear that an aggregate-planning problem is extremely broad and affects all parts of the firm. The decisions which are made must, therefore, be strategic and reflect all the firm's objectives. Some of the multiple trade-offs which should be considered are customer service level (through back orders or lost demand), inventory levels, stability of the workforce and costs.
Basic strategies
There are a number of strategies which aggregate planners might adopt. Some of the more prominent ones are:
• maintain a level workforce;
• maintain a steady output rate;
• match demand period by period;
• use a combination of decision variables.
The first three strategies are pure strategies in that each has a single focal point; the last strategy is a mixed one. Under the level workforce strategy, variations in demand are met by using some combination of inventories, overtime, part-time workers, subcontracting, and back ordering. Maintaining a steady rate of output implies absorbing demand variations with inventories, subcontracting, or backlogging. Matching capacity to demand implies a "chase" strategy; the planned output for any period would be the expected demand for that period.
Whatever strategy an organization is considering, two important factors are company policy and costs. Company policy may set constraints on the available options or the extent to which they can be used. As a general rule, aggregate planners seek to match supply and demand within the constraints imposed on them by policies or agreements and at a minimum cost.
Aggregate-planning costs
When demand is considered given, the following costs should be considered: hiring and layoff costs;
• overtime and undertime costs;
• inventory carrying costs;
• subcontracting costs;
• part-time labour costs;
• cost of stockout and back order.
Some or all of these costs may be present in any particular aggregate-planning problem. The applicable costs will be used to select alternative strategies.
Review of aggregate-planning models
All models for aggregate planning depend on the estimation of a number of cost parameters. Some other approaches - which do not require explicit cost parameter estimates - bring us closer to the model to be proposed here. Based on implicit costs, the management coefficients model focuses on making decisions consistent rather than mathematically optimal. This approach uses linear regression of historical decision variables to determine preferred sets of coefficients. To accommodate the multiple and often conflicting objectives inherent in aggregate production-planning decisions, goal programming, an extension of linear programming, attempts to minimise the deviations from prioritised goals and to get away from rigid cost formulations.
Source: Pin I, International Journal of Productivity and Performance Management
Questions 1-- 2 are based on the case study Aggregate Planning Today. Answer BOTH questions.
QUESTION 1:
You are required to respond to the article above and provide a follow up article on the options for managing an aggregate plan. You can be creative and provide your own feasibility analysis of the options you think are most suitable and why.
QUESTION 2:
You are required to once again respond to the article,
2.1 Provide strategies for balancing supply and demand in aggregate planning and indicate how the four strategies indicated in the article can fit in with the strategies you have mentioned.
2,3 Discuss Job Process and Line Process functions indicating the labour and machinery utilisation effects of both, for the purpose of the article.
SECTION B
Please select two of the 3 essay/short note questions below:
QUESTION 3
3.1 Discuss three reasons for holding inventory, using examples of your own.
3.2 Calculate the EOQ for Walton's Stationery based on the following information for white boards.
• Demand (D) =8000 white boards
• Holding cost (H) =R48 per white board/annum
• Ordering cost = R55.00 per white board (5)
QUESTION 4
Mini Case Study: Maria's Foods
Maria's Foods is a relatively small speciality food manufacturer that has served the local Cape Town market for 10 years. It has a narrow product line (few products) and sales of approximately R18 million per annum. Maria's Foods are growing every year and is now competing with the larger retail outlets such as Pick 'n Pay, Shoprite-Checkers and Spar. Her operations will have to be revisited to cater for a more competitive advantage.
Develop an operational strategy for Maria and indicate how Maria can use value drivers to differentiate her product offerings from that of competitors.
QUESTION 5
"Good operational decisions should have measurables in place resulting in higher revenues, increased profits, increased productivity and customer satisfaction."
In light of the statement, discuss the various operational decisions indicating how these results can be achieved for an organisation.
Assignment Guidelines
• Word limit: Approximately 3500 - 4000 words
• The length of your answers to each question should be in line with the mark allocation.
• Your assignment should include a Table of Contents page.
• Text: Font: Arial or Times New Roman (12), Spacing: 1 and a half lines
• All text must be justified at each margin.
• Your answers must include any theories, charts, tables or exhibits necessary to support your analysis and recommendations.
• Ensure that the readings are not merely reproduced in the assignment without original critical comments and views. Cohesive and logical arguments reflecting original thinking is encouraged.
• You MUST use theory/literature to support your discussion/observation and opinions. Do not merely extract information from the Case Study.
• References - At least 5 sources of reference (textbooks, journals, press reports, internet, etc.) must be included in your bibliography. Information quoted/paraphrased from sources listed in your bibliography must be referenced in-text. The Harvard system of referencing must be used.
Students will be penalised up to 10% for poor referencing.
• It is imperative that students proof read and edit their assignments prior to submitting them. Assignments must be free from errors and of a professional standard.