Transcript Supply-Chain Management
Supply-Chain Stategy
Operations Management Dr. Ron Tibben-Lembke
Supply Chain Designs
Supply Uncertainty Low Demand Uncertainty Low Efficient High Responsive High Risk-Hedging Agile Efficient – economies of scale Risk-Hedging – pooled resources, multiple sources of supply, need good IT Responsive – Changing consumer needs Agile – responsive to changing needs, pooled resources
Mass Customization
Highly customized Integrate design, processes, supply network Supply components cheaply to production points Fast, responsive production, quick delivery Higher weight, lower value
Managing the Supply Chain
Postponement -- withhold any modification until as long as possible. Keep product generic “vanilla” HP Benetton Home Depot paint department Channel Assembly -- have distributor assemble products from components
HP Inkjet Printers
Printers made in Vancouver, sent via ship through Panama Canal to Europe Europe warehouse stocks inventory by country physically different-- power supply manuals different languages Substitution not allowed Re-supply time very long
Euro Plugs
No standardized power supplies for Europe Different power supply for every country.
HP Inkjet Printers
Redesigned printers so that power supply added in Europe Re-engineer product, power supply Assembly done in a warehouse (Quality?) Manuals added in Europe Many expensive changes Store ‘vanilla’ boxes Postpone point of differentiation 25% cost reduction
Before
Delayed Customization
Production Storage Shipping Storage After
Benetton
Sweaters of undyed wool, dyed once demand is known Dyeing LT much faster than production How many undyed sweaters to make?
How many Red, Green, Blue, also, if this production process is cheaper, and you know you’ll sell some minimum amount?
Behr Paints
Small # of bases Small # tints Unlimited # combinations Keep stock colors on hand?
How many gallons?
Which ones?
Lower labor costs Higher inventory costs
Bullwhip Effect
Lack of information sharing can cascade through the supply chain.
Small changes at retail level lead to huge swings at manf., like bullwhip Several retailers order all at once, distributor thinks sales have jumped, orders a much bigger order, etc.
Better: sales information shared across the “Value Chain.”
Managing the Supply Chain
Drop Shipping -- Supplier sends directly to the store, not to store’s warehouse Blanket orders -- Long-term pledge to buy certain amount, shipped quickly EDI -- standardized format for sending electronic information computer-to computer