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Unit 7 Lecture (A supply chain is the subsystem of a value chain that…
Unit 7 Lecture
A supply chain is the subsystem of a value chain that relates to the physical movement of goods, materials and information through supply, production and distribution. It's purpose is to co-ordinate these flows to maximise customer value at minimum cost. (it is therefore important to integrate this with other value chain processes)
Vertical structure of a supply chain:
- Suppliers
- Manufacturing plant
- regional warehouse
- retail store
- customer
While goods move from top to bottom however there is a financial and invoice stream that does the opposite
Variants:
Tier 2 suppliers - individual comonents or materials
Tier 1 - suppliers who combine the compnentsDistributors:
Distribution centre
Fulfilment centreRetailer:
Brick and mortar
- Mail Order
- Online retailer
Supply chain integration
Market Relationship
relastionship only lasts as long as the transaction
Strategic alliance/partnership
Longer term relationship where orgs work together and agree costs, maximising flexibility but minimising the risks. Sharing of ownership.
Virtual org
Producsts tailored to the org. Dependent on information from te customer end
Virtual Integration
Where the organisation takes over the supplier. Creates complex process to be handled by the company due to growing size and developing markets. Quite often the supplier operates in a different market and complicates the business
The SCOR Model
Plan
Develop a strategy to match demands wth resources.
Source
Develop sources to meet plan and demand
Make
Transfrm goods and service to finished state, scheduling etc
Deliver
Deliver to customer
Return
Deal with excess goods or returns
Design of supply chain
A - strategy
- Efficiency
- Responsiveness
B - configuration
- Push: Work better when sales patterns are consistent (car manufacturer)
- Pull: Made to order technically. Many systems and points of distributions
- Push/Pull boundaries: Many are both. Understand the point where it goes from push to pull. The location of the boundary affects how efficient the system is. e.g Ford who push cars to dealers, and they then hold the inventory to react to a pull demand
- Postponement: delaying customisation until the product is close to the customer.
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Reverse logistics:
The flow of goods discarded or not used being returned to suppliers for resale or disposal
Resuing
Repairing
Refurbishing
Remanufacture
Cannibilsing fo parts
disposal
ALl departments in the chain are involved, finance etc
- Perfect Order Fulfilment = Reliability of delivery
- Order fulfilment lead time = responsiveness
- Perfect delivery fulfilment - ersponsiveness
- Customer Satisfaction
- Average inventory value = supply chain efficiency
- Inventory turnover = supply chain efficiency
- Co2 emmissions - sustainability
- Energy reduction = sustainability
- Total supply chain costs = cost efficiency
- Warranty/returns processing costs = cost efficiency
Metrics
- Costs (procurement, Labour, inventory, transportation)
- Service - (in-stock probability, Stockout probability)
Variability
- demand - level of demand, product variety (what item), location (wont know where demand will occur). Most demand variations come from the customer, but also from products or outlets
- Bullwhip effect - Tendency of demand to become more volatile at the high end of the chain.
Due to 1) overreacting and 2) Batching (were there are minimum order levels or incentives to order larger amounts and this leads to spikes)
- Supply chain partner performance : quantity, quality, finances, operating practices
- disruption =
Location decisions
- Customer access
- demand and markets
- sourcing
- retaining workforce
- availability of labour and skill
- labour rates
- Location of competitors
- volume of traffic in location
Location decisions
Global, regional, community, site
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Managing Service Relationships
- Service Capacity - Analogous to inventory
Productive capacity - transfer of knowledge, replacement substituting technology for human involvement, Embellishment - teaching customers to perform tasks
Variation in qualityBidirectional Optimisation - doing what is best for both customer and service providerPerishability - Capacity is limited to the time the provider spends with the customer
Social Media in services
- Wide reach, decentralised and less hierarchised
- Multiple points of production and consumption
- Easy access at little cost
- ease of use
- immediacy
- flexibility
Increasinly this is the first place customers will now go to to contact services
Five strategies for moving to online
- TUne up remidners
- Cookie cutter presence
- Lead generation
- Customer education
- Start online, finish offline
Outsourcing of services
- Need identification
- Information search - collect refs, contacts and consult potential partners to outsource to
- Vendor selection - based on refs, costs and sites
- Performance evalutation - once complete you will evaluate and depending how, you may need to reenter the circle
Potential problems of outsourcing
- Loss of direct control of quality
- Jeopardises employee loyalty
- Data security and customer privacy
- Dependence on supplier
- Additional co-ordination
- Loss of skills and capacity
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