question
USE REFERENCE:
Blanchard, D. (2021).
Supply chain management best practices (3rd ed.). Wiley.
Homework 1: 3 page with 2 references
Read the text and read the material provided by the MEFC characters. This material will also provide considerable guidance for answering the homework questions.
1. The purchasing department should be managed as a strategic supply chain center rather than as merely a place to beat down costs. Why has purchasing been isolated within some organizations, set low expectations for savings, or seen as a second or third fiddle to the star performers of sales, marketing, or finance? How can this have a detrimental impact upon the organization?
2. Describe in your own words Eastman Chemicals five-point strategy to ensure the company’s sourcing practices meet the needs of its customers.
3. Should transportation purchases be handled by the purchasing department. Why and why not?
4. The idea of reverse auctions has been around for a while. Why did Covisint automaker consortium-based exchange fail while other online marketplaces targeted to specific industries succeed? What factors can be measured within a healthy supplier/buyer rating system?
5. Birth control pills, HIV drugs, and now even high-priced injectable drugs have been flooded with counterfeit products. How can technologies including RFID and the blockchain assist in eliminating counterfeit products?
6. One of the most obvious characteristics of a best-in-class supply chain is an ability to consistently design and develop products that customers want to buy. Thanks to a software-based process known as product lifecycle management (PLM), manufacturers are able to automate the collaborative design of their products from anywhere in the world. Describe the capabilities of PLM. Why was PLM a success for Playtex Products but a struggle for the F-35 Joint Strike Fighter?
In this interactive scenario Carmen (Operations), Zara (Supply Chain), Desmond (IT), Alex (Purchasing), and Rashid (QA) will be discussing their planning and forecasting challenges and potential technological tools.
Alex – Taking our procurement digital is a critical step in making our procurement activities future-ready. Emerging technology and cloud-based automation software lie at the center of today’s most successful industry-leading businesses. Automating manual, paper-based processes significantly increase efficiency and streamlines data collection and analysis while cutting costs. The use of cloud-based software-as-a-service (SaaS) in procurement is rising rapidly. Paper-based procurement is a thing of the past. The insight gained from accurate data storage and automated analysis drives highly-informed decision-making. It is transforming procurement into one of the most influential business functions.
Desmond – eProcurement tools offer comprehensive vendor dashboards, pre-made contract templates, digital procurement processes, and extensive integration with accounting management systems. Digital procurement can help us reduce the repetitive operational parts of procurement, freeing up our team members to focus on strategic roles. The process of identifying a potential supplier, onboarding the vendor, scheduling the service, obtaining the invoice, and paying the vendor is overwhelming. If managed manually, just a simple process of submitting one vendor invoice can consume several hours.
Carmen – A recent report on contract management indicates that nearly 81 percent of organizations don’t use any Contract Lifecycle Management (CLM) software. As a result, they face a number of pain points including lack of consistency across contracts (53 percent), cumbersome processing (45 percent), and supply chain continuity problems (36 percent). We can stay clear of these procurement pitfalls by moving our contract management process to the cloud. If our contracts were created, stored, and maintained in a centralized data repository, we could leverage our spend optimally, reduce costs, and mitigate risk.
Zara – Our purchasing department should be managed as a strategic supply chain center rather than as merely a place to beat down costs. We need to empower our purchasing managers to create solutions and foster innovation, not merely pinch pennies. The practice of allowing our purchasing department to be an underachiever is an expensive approach to global supply management because it underpowers a vital contributor to our profits and growth.
Alex – We need to do a better job of forming strategic alliances with our preferred providers. The adoption of supplier relationship management (SRM) has become essential to our procurement department’s ability to add value and reduce spending. Having solid relationships with our suppliers isn’t enough these days. The most successful procurement teams now form strategic partnerships with suppliers. If we gain your suppliers’ trust, they can act as our eyes and ears, providing us with information about innovations. The process of identifying a potential supplier, onboarding the vendor, scheduling the service, obtaining the invoice, and paying the vendor is overwhelming. If managed manually, just a simple process of submitting one vendor invoice can consume several hours.
Zara – If we tell our purchasing department to beat down suppliers in order to get the lowest price, then we are not leaving ourselves much of an opportunity for collaboration, and they may just decide they can no longer afford to work with us.
Rashid – We need to also consider how we track our products both inbound and outbound. Though as a furniture company, we don’t have to worry about food safety or counterfeit pharmaceuticals, we do have to worry about stolen goods which are increasing at an alarming rate. The FDA has urged the adoption of RFID technology to track and trace all pallets and cases of pharmaceuticals and the potential use of a blockchain based network to validate the authenticity of drug identifiers. We may want to use similar track-and-trace types of technology in our procurement and shipping of products.
Carmen – Continuous improvement practices like Lean and Six Sigma need to be tied tightly with our supply chain processes. We have done a good job of training our people on LSS methodology. They understand that we must have quality at the source, that we need to put things into continuous flow, that pull methodology is better than push in terms of scheduling, and that they correct way to maintain our machinery is proactively rather than reactively. But it is feasible for an operation to become too lean. This can happen when we use the just-in-time philosophy with no buffer. JIT can lead to inconsistent fleet utilization, reduced payload optimization, reduced ability to effectively plan fleet operations, and of course may leave us stranded during major crisis. We can determine optimal inventory levels and safety stocks at various buffers within the supply chain. This will also help us establish bi-directional flow between the supply chain and manufacturing.
Zara – One of the most obvious characteristics of a best-in-class supply chain is the ability to consistently design and develop products that customers want to buy. Given the constant demand for developing new products and getting them to market as quickly as possible, many other companies have turned to Product Lifecycle Management (PLM). The PLM technology enables manufacturers to manage and share complex design and production information across the organization and even to suppliers. PLM designers can tap into a central workspace and get access to part designs, bills of material, product specifications, product scheduling, etc. These can also include additive manufacturing (3D) designs and the inputs developed through generative artificial intelligence (AI).
Homework 2: 3 pages with at least 2 references
Read the text and read the material provided by the MEFC characters. This material will also provide considerable guidance for answering the homework questions.
1. Aberdeen Group asked 286 companies which transportation best practices had been the most important in driving supply chain improvement. Explain the top six results.
2. Fulfilling on perfect orders all the way to the last mile is a crucial part of transportation management as it has a major impact on brand perception, reputation, and customer satisfaction. Best-in-class companies have an on-time delivery rate over 96% whereas average companies deliver on-time 91% of the time. Would an Uber type of delivery service increase last mile satisfaction? Would a similar service be appropriate for the trucking industry?
3. What is omni-channel distribution and why is it so difficult?
4. Warehouse Management Systems (WMS) are used by best-in-class organizations. What savings have they seen and what other technologies do they use in the warehouse?
5. How are Petzl America and cosmetic giant L’Oreal using technology to enhance their warehouse and distribution operations?
In this interactive scenario Carmen (Operations), Zara (Supply Chain), Desmond (IT), Alex (Purchasing), and Rashid (QA) will be discussing major challenges affecting trucking, TMS capabilities, last-mile logistics, omni-channel fulfillment, and WMS and MHE advancements.
Zara – We have a lot of challenges now in our trucking operations. It has become a highly regulated industry anywhere from the hours a trucker can drive, the type of fuel they can use, and the tracking of certain products and then filing electronic manifests if they are crossing international borders. We have heard more about loads being stolen, drivers being denied the ability to even use the bathroom in some carrier facilities, long wait times at certain facilities, and the difficulty truckers are having just to find a place to park their trucks for the night.
Carmen – Our truckers are asking for more money. Maybe we can address some of these issues and avoid the increase. We need to figure out how to make this partnership work better. Rather than giving them 12-hour notice on pickups, maybe we can give them a two day notice which allows them to better plan their schedules and lives. Maybe through better communication and collaboration we can share ideas of how to improve.
Alex – Some ideas I have heard include centralizing transportation planning across the company, reconfigure our transportation network, synchronize activities, take greater control of inbound freight, and work with suppliers to create a more economical transportation process.
Zara – Our transportation management system (TMS) helps us keep trucks filled and running on schedule while reducing manual processes in our outbound planning operations. It is designed to optimize the best shipping choices, whether they be carrier selection, load building, fleet management, routing and scheduling, or freight audit payment. These systems are not expensive. They can cost anywhere from ½ million to over $1 million.
Desmond – I remember when we put our TMS in, it required a shift from the old method of phone calls, faxes, and emails, and was difficult for some of our employees to make this adjustment. We have been able to centralize and automate our carrier selection and tendering, no longer needing to reference individual carrier websites.
Rashid – Best-in-class companies have an on-time delivery rate of at least 97%. Ours is in the range of 93% so we are in the average range. I guess that’s better than being in the lowest group which average around 83% on-time delivery. We also need to avoid using expedited shipping as much as possible. We only use it about 5% of the time, but best-in-class use it 3% or less through better management of inventory flow and not just storage. Fulfilling on perfect orders all the way to the last mile is a critical part of transportation management. It has a major impact on our brand perception, reputation, and customer satisfaction.
Zara – I have heard that Uber has created a freight division for independent truck drivers to pick up entire loads and deliver them to customers docks using an app similar to what consumers use when they want to hail a car. Maybe we want to consider using this on an as needed basis. We could even pay independent drivers to use their own vehicles to pick up packages at our local warehouses and then deliver them to the consumers house depending on the product.
Carmen – We are really getting stretched to meet orders coming from different locations. Sometimes our orders come from furniture companies and we need to deliver to their showrooms, which is usually a larger load. Others orders however come from individuals visiting our website and we need to deliver individual pieces of furniture to their home, which is a much smaller load. Then we have those who go into the furniture store and the store wants us to deliver the furniture directly to the customer. This is a challenge not only for transportation but also for maintaining a consistent inventory. However, this also provides us more exposure for our outstanding products.
Alex – One of the biggest challenges of these differing methods of fulfillment is last minute order changes, maintaining inventory visibility and control, and order management using our technology. Fortunately, we purchased a warehouse management system (WMS) that can react to many of these changes. As we progress, we will need to invest into more automated material handling equipment (MHE) to more carefully and accurately pick and put away items.
Zara – Several best practices that other companies have taken to maximize the productivity of their distribution centers (DC) include eliminating all the obsolete products, known as dead inventory, even though finance doesn’t want to write it off. We need to examine our order pattern to determine which are our fastest moving products, and keep them at the front of the warehouse. Sometimes, during peak seasons, even our best technology and processes are not enough and we need to either hire additional workers or add hours or shifts to current employees. We need to insist that every incoming truck has an appointment and run off of a more firm schedule. One other idea is, depending on the load, we may need the driver to deliver directly to the furniture store and bypass our warehouse altogether.
Carmen – We are probably due to run another network design problem to see if we need additional production sites, warehouses, or distribution centers as we fortunately continue to grow. If we do that we also have to consider some site selection criteria which includes looking at the workforce and labor pool in different areas, road infrastructure and congestion, road and bridge conditions, local railroad and air service, and of course taxes and fees.
Homework 3: 3 pages with at least 2 references
Read the text and read the material provided by the MEFC characters. This material will also provide considerable guidance for answering the homework questions.
1. Describe the four best practices global supply networks have in common listed by Handfield & Nichols
2. What should be included in a regional logistics assessment?
3. Who are the fastest growing economies in the world? Are these good places to outsource production?
4. What factors need to be considered when looking at reshoring?
5. JD Power and Associates says best-in-class companies collect the right information from their customers, properly analyze the information and ensure that it gets into the hands of the people who are in a position to use it, and they properly act on the information. Describe the four questions that they believe every company should be able to answer and include a company that you believe does it well.
6. Describe the guidelines provided by Matchette & Seikel concerning how to get the most out of a relationship.
In this interactive scenario Carmen (Operations), Zara (Supply Chain), Desmond (IT), Alex (Purchasing), and Rashid (QA) will be discussing their globalization and off-shoring concerns and customer service challenges.
Carmen – Customers want our furniture to be better quality than our competition, less expensive, and delivered on their schedule. This leaves very little room for profit margin. What do you think about off-shoring some of our production?
Zara – When it comes to overseas production and going global, but I have some concerns. Many of the low-cost production areas, like China, are also totalitarian regimes. They don’t operate the way we expect and the government is very involved in operations. The idea of collaboration is foreign to them. Some of these countries pose a very high risk based on such factors as corruption, political instability, labor abuses, dismal sustainability practices, intellectual property infringement, and other global worst practices.
Alex – Cheap labor sometimes means forced labor or exploitation. A proliferation of very affordable high-tech devices could be a sign of counterfeiting IT products. Too many or too few police or military could indicate lack of control and illegal behaviors. Open land with a good water source could indicate the government moving people to make room. Logistics infrastructure is generally centered on large cities, whose ports and cities are alarmingly congested, and whose citizens have been known to appropriate American intellectual capital as their own.
Rashid – We also need to look at wage projections if we are using that as a reason for producing our furniture there. In 1990 US workers earned 56 times the amount a typical Chinese worker earned. Chinese wages have increased so much that now, US workers earn 4 times what a Chinese worker makes.
Desmond – If we are going to consider overseas production, here are a few things to consider:
1. Is it part of our company’s business strategy to own foreign real estate?
2. Will our ability to serve global markets be enhanced by owning our own facilities overseas?
3. Are we financially able to enter a new market quickly, which would include facilities and marketing?
4. How flexible is our marketing and distribution strategy to adjust as the market develops more slowly or quickly than we expect?
5. Do we have a local supply base and have connection with reliable logistics services in the area?
6. Do we know the local culture and laws, to include connections with local officials?
Carmen – If we decide to off-shore any production, we need to go there early in the discussion process and often to make sure we understand the whole picture.
Alex – I believe our main attraction to offshoring is an attempt to lower our labor costs, but those savings tend to be short-term rather than long-term gains. We need to also consider the total supply chain costs which include total cost of ownership, total landed cost, inventory holding cost, and the cost of product obsolescence. We need to figure in how much it costs to transport goods to the customer, not just to the port. We can evaluate the changes in in-bound, outbound, and inter-facility costs that occur when we consider different sourcing points.
Zara – Are we looking just at overseas production or are we also looking at overseas sales? Customers in one region of the world might have different preferences than other regions. We might have to allow for the localization or customization of our furniture to meet their unique needs. Overseas customers living rooms don’t often resemble those of the US.
Desmond – Are we putting the customer at the center of everything we do? What are we doing with customers so that they know that they are seen and valued? We can provide them excellent furniture but are we making human connections? Do we consider their value over a lifetime rather than by the transaction? We need to insist that every employee in our organization focus on the customer, and then we need to empower them to do so. Do we know what it takes to make our customers happy? Do we have the analytics to know who our top 20% of customers are? The key to any successful relationship, supply chain or otherwise, is trust. How have we developed that trust? Both our customers and our suppliers must be able to trust us. We need to develop trust and prevent distrust
Rashid – This also necessitates that we reach out to our critical suppliers, strengthen our business relationship, and collaborate. Collaboration is well worth the effort as it can result in reduction in inventories and costs, along with improvements in speed, service levels, and customer service. Collaboration can also be a struggle and we need to understand when it is the right time to collaborate, that all senior managers are committed to the process, we don’t rely too much on technology and remember to include people in the process,
Alex – Even though we provide outstanding products with good customer service, our level of product returns are a bit of a struggle. Once customers get our furniture into their house for a few days and don’t like it, they want it to be very easy to return it. We need this return process to be as seamless as the sales process and see this as another opportunity to engage with the customer. We also have to get better at our recovery rate on returned items. We already use progressive dispositioning to continuously identify and disposition our excess as early in the cycle as possible, whether that includes repairing, refurbishing, liquidating, or recycling. Our recovery rate is about 70% however companies that do it really well are averaging 80-90%. I believe with better customer service and making our customers feel seen and valued, we can reach those goals.
