Research Topics: Supply Chain Process

MEASURING SUPPLY CHAIN PERFORMANCE THROUGH QUALITY

PERFORMANCE MEASUREMENT IN SUPPLY CHAIN Introduction Supply chain management (SCM) is the combination of art and science that goes into improving the way your company finds the raw components it needs to make a product or service and deliver it to customers (,1996). A way for understanding supply chain management is grouping all management activities into three categories: strategic, tactical, and operational. Strategic activities include building relationships with suppliers and customers, and integrating information technology (IT) within the supply chain. Studying competitors and making decisions regarding production and delivery would fall under the tactical category. The operational category includes the daily management of the supply chain, including the making of production schedules. Furthermore, SCM encompasses the planning and management of all activities involved in sourcing, procurement, conversion, and logistics management activities. Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third-party service providers, and customers. In essence, SCM integrates supply and demand management within and across companies. More recently, the loosely coupled, self-organizing network of businesses that cooperates to provide product and service offerings has been called the Extended Enterprise (2001). SCM can also refer to Supply chain management software which the  tools or modules used in executing supply chain transactions, managing supplier relationships and controlling associated business processes is met . Consideration of all possible occurring events and factors that can cause a disruption in a supply chain is certain but solutions can be created and planned. “Supplying the Chain”             In achieving a well-executed management of supplies, the following steps must be of use: Plan—This is the strategic portion of SCM. Companies need a strategy for managing all the resources that go toward meeting customer demand for their product or service. A big piece of SCM planning is developing a set of metrics to monitor the supply chain so that it is efficient, costs less and delivers high quality and value to customers. Source–companies must choose suppliers to deliver the goods and services they need to create their product. Developing a set of pricing, delivery and payment processes with suppliers and create metrics for monitoring and improving the relationships is essential. Processes for managing goods and services inventory, including receiving and verifying shipments, transferring them to the manufacturing facilities and authorizing supplier payments. Make—this is the manufacturing step. It is the scheduling of activities necessary for production, testing, packaging and preparation for delivery. This is the most metric-intensive portion of the supply chain, one where companies are able to measure quality levels, production output and worker productivity. Deliver—this is the part that many SCM insiders refer to as logistics, where companies coordinate the receipt of orders from customers, develop a network of warehouses, pick carriers to get products to customers and set up an invoicing system to receive payments. Return—this can be a problematic part of the supply chain for many companies. Supply chain planners have to create a responsive and flexible network for receiving defective and excess products back from their customers and supporting customers who have problems with delivered products(1995). Moreover, organizations that make up the supply chain are “linked” together through physical flows and information flows. Physical flows involve the transformation, movement, and storage of goods and materials. They are the most visible piece of the supply chain. But just as important are information flows. Information flows allow the various supply chain partners to coordinate their long-term plans, and to control the day-to-day flow of goods and material up and down the supply chain. Conclusion SCM is all about the good complexity to a firm’s strategy development efforts. Firms could succeed by being particularly good in one functional area, such as marketing, finance, or operations. Then firms recognized that they had to have sufficient capabilities across multiple functional areas in order to survive. Nowadays, much competition occurs between multi-firm supply chains, not just between individual firms. In addition to their debates about functional- and business-level strategies, managers of such  must  address how they will partner with other firms in order to compete and succeed. References     Credit:ivythesis.typepad.com

MEASURING SUPPLY CHAIN PERFORMANCE THROUGH QUALITY

PERFORMANCE MEASUREMENT IN SUPPLY CHAIN Introduction Supply chain management (SCM) is the combination of art and science that goes into ...

SUPPLY CHAIN

Retail and Brewing Industry               The essay is all about the critical issues on the supply chains of the retail and brewing industry. As an introduction, retail and brewing industry are defined together with its unique characteristics that differentiate them from each other. The issues, together with significant facts, followed the introduction. A conclusion finalizes the said topic at the end of the essay. The Retail Industry  The retail industry involves the sale of new or used goods to final consumers for personal or household consumption. It also includes the repair of household equipment or motor vehicles. Most retailers employ fewer than twenty staff and are largely in the furniture/house wares/appliances stores sector, the recreational goods stores sector and specialized food (including take-away foods) sector. Larger retailers, employing two hundred people or more, operate in the clothing and soft goods sector, supermarket/grocery stores sector and department stores sector. About forty four thousand of the people employed in the industry are working proprietors and partners. A Look at the Brewing Industry A brewery, on the other hand, means any establishment made for the manufacture of malt liquors, such as beer and ale. Typically a brewery is divided into distinct sections, with each section reserved for one part of the brewing process. Breweries can take up multiple city blocks, or be a collection of equipment in a home brewer’s kitchen. The diversity of size in breweries is matched by the diversity of processes, degrees of automation, and kinds of beer produced in breweries. Brewing industry, therefore, is any industry involved in the brewing activity. Brewing is the production of alcoholic beverages and alcohol fuel through fermentation. This is the method used in beer production, although the term can be used for other drinks such as sake, mead and wine. The term is also sometimes used to refer to any chemical mixing process. Key Retail Industry Issues Retailers focused on supply chain efficiency in order to stay competitive, according to research by the NRF Foundation and Bearing Point, Inc. unveiled at the NRF Annual Convention and EXPO in New York. The study, ” 2004,  for 2005,” revealed that the majority of retailers cite supply chain optimization as a priority initiative for getting closer to the customer. In today’s competitive environment, retailers understand the importance of leveraging their customer information. Shopping data collected from the store level can be leveraged as valuable real time data and shared throughout a retailer’s supply chain network of suppliers, factories and distribution centers to meet anticipated product demand. Other key findings of the study include the fact that almost twenty five percent of retailers plan for half of their merchandise assortments to be private label. In the next twelve months, more than half of retailers (57%) plan to replace or upgrade their point-of-sale systems. While thirty eight percent of retailers will focus on domestic expansion, seventeen percent will focus on international expansion. This year, thirty three percent of retailers will focus on redesign and relocation of stores. More than one in five retailers (21%) list outsourcing as a priority for 2005. Retailers realize that in order to improve their businesses, it is important for them to reinvest in new technologies and programs. This was according to the NRF President and CEO . Consumers are rewarding retailers who utilize resources to feature new merchandise, new technology, and new ideas. The study also includes suggestions of several approaches for retailers’ use to provide competitive advantage and generate robust prospects for profitability. First is to create true supply chain visibility with a synchronized demand network that eases inventory pain by providing trading partners with optimal flow through of product and near-real time sharing of forecasts and demand signal. Second, link disparate systems for common connectivity to aid in retailers’ streamlining of operations. Targeting and segregating of high-value customers from low-and no-value customers and providing the right combination of product and services to earn loyalty is also of great help. Brewing Industry Issues             Brewing is almost certainly the most ancient manufacturing art known to men, and is probably as old as agriculture. Today the global beer market is worth USD 266.1 billion and is said to reach a value of USD 290 billion in 2008, which indicates that this age-old product is far from being out of fashion today and still registers growth. The value chain of the brewing industry today however is under a lot of pressure. Regulatory compliance, global competition, emerging new markets in Eastern Europe and Asia versus traditional and mature markets in Europe and the US, and finally shifting consumer patterns are heavily influencing this traditional industry. Needless to say that these factors play an important role in the brewing business and that they are forcing manufacturers to consider various investments that enables them to face these challenges. Choices on brand strategies, mergers and acquisitions, costs reductions and investments/divestments are reshaping the traditional value chain were the focus always was on the brewing process and the primary quality of the beer. As such we see the value chain slowly shifting towards a focus on supply chain and filling & packaging, implicating that flexibility, time to market and managing costs are the keys. The key issues in the brewing industry are on market dynamics, global or distributed manufacturing, regulatory requirements, and on marketing & RFID Technology. With regards to market dynamics, it says that growth, through consolidation, gives brewers greater efficiencies and economies of scale. It also increases utilization of industry capacity. Globalization gives brewers the opportunity to expand into markets with more growth potential than their own backyards. Shifts are seen from mature markets towards China, India or Latin America where the increasing standard of living and increasing population will lead to greater alcoholic beverage consumption. In the mature local markets, changing consumption patterns require brand management and manufacturing optimization as prices are under pressure. Introductions of low-carb beers, mix beers and innovative packaging addressed consumers “value of life” and increases sales of premium brands. As a result, beer manufacturers are challenged to adapt to new markets and consumer behaviors while dealing with pressure on prices and risk of declining brand awareness. On the global or distributed manufacturing issue, the current market situation demands a good manufacturing strategy. Producing in several locations using economies of scale, low cost operations are keys to secure market share. Furthermore, supply chain and marketing are putting demands on manufacturing facilities that require more flexibility and transparency into the plant. After many mergers & acquisitions and as a result of the autonomy of the local plants, many enterprises that now are focusing on consolidation, visibility and efficiency of their production capacity are confronted however with many applications and systems in the different manufacturing locations. As a result, beer manufacturers are challenged to standardize systems and procedures in order to obtain plant visibility, which enables focusing on low costs operations and economies of scale. Today’s brewers operate in a complex public policy environment. Legislative, regulatory, and social challenges can directly affect brewers’ day-to-day business activities and their outlook for the future. Kyoto treaty and local energy reduction programs require breweries to optimize processes and procedures. European Union’s Packaging and waste directive specifies high amounts of recycling to be achieved. Traceability in perspective of the EU Food Law and US Bio-Terrorism Act require big investments in automation and IT projects. Corporate marketing strategies are driven by global branding and increasing product diversification. Smart RFID labels become cheaper and have big potential in addressing customer service, cost reductions, counterfeiting, asset management, etc. Conclusion             Retail trade sector comprises establishments primarily engaged in retailing merchandise, generally without transformation, and rendering services incidental to the sale of merchandise. The retailing process is the final step in the distribution of merchandise. Retailers are therefore organized to sell merchandise in small quantities to the general public. It is opposite to the case of the brewing industry. In here, it is the initial step in the process of making a product, example is the beer. That is why a deeper understanding of their unique characteristics and differentiation from each other makes it easier to determine solutions to the issues involving the two industries.       References Credit:ivythesis.typepad.com

SUPPLY CHAIN

Retail and Brewing Industry The essay is all about the critical issues on the supply chains of the retail and brewing indu...

SUPPLY CHAIN REDESIGN AT FINNFOREST CORPORATION

SUPPLY CHAIN REDESIGN AT FINNFOREST CORPORATION       INTRODUCTION                 Business organizations today operate in a turbulent and dynamic business environment. The contemporary business environment is undergoing a metamorphosis as rapid technological innovations, competitive markets, diverse customer preferences, and extensive global operations prevail in it. To ensure continuous operation and survival in today’s rigid business environment, a business firm has to be open to change and improvement. Business processes, services, products and operations should be consistently subject to evaluation and refinement. The norm is to deliver quality products and services while maintaining flexible and effective operations.             One of the most vital aspects of a business operation is the management of the supply chain. The supply chain comprises of the coordinated arrangement of manpower, technology, and production processes that transforms raw materials into tangible products or services. The supply chain is the overall process that determines how business firms secure materials, exploit people, utilize machines, and follow business processes to develop specific products and services for the satisfaction of consumers. This business operation is crucial as any defect in one area can render adverse impacts to the others. Thus, management of the supply chain entails strategies and constant monitoring to ensure its consistency to deliver outputs to the customers at the most convenient time. ANALYSIS OF THE FINNFOREST SUPPLY CHAIN               The supply chain network at Finnforest Corporation starts at the forests in Finland where the company gathers the logs from trees found in these forests and ends in the retail outlets that sell the finished timber products to individual customers, industrial and construction firms, and timber merchants in the United Kingdom. The entire supply chain process of the company follows twelve steps. The first step is the harvesting of trees which takes one day, seven days to get to the mills, and has fourteen days of inventory. The second step is transporting the logs to the sawmills which takes one day, seven days to become grade togs and one day in inventory. The third step is to grade togs which take 0.1 day, one day before primary manufacturing and ten days in inventory. Primary manufacturing or the processing of logs into timber follows which takes 0.1 day, one day before kiln drying and one day in inventory. Kiln drying takes five days, five days before grading and two days in inventory. Grading takes place in 0.1 day and 0.5 day before packing. Packing occurs in 0.1 day, 0.5 day before transport to the ports, and 45 days in inventory. Transportation to the ports takes one day, one day before the products arrive in the United Kingdom and ten days in inventory. Transportation of timber products to the United Kingdom takes eleven days, fourteen days before they are processed into consumer products and thirty-one days in inventory. Processing of timber into specific consumer products takes 0.1 day, fourteen days before they get to the warehouse and one day in inventory. Warehousing of consumer products takes forty-six days and transportation to retailers takes 0.5 days, and four days lead-time.             Finnforest is confronted with three challenges in its supply chain network. First, the company basically has a slow supply chain process due to the amount of time that each step consumes. The first eight steps of its supply chain network take place in a single location  which is Finland, yet consume 8.4 days of activity time, 18 days of lead time and contain 83 days of inventory. According to  (2005) one cause of under-supply in timber products can be traced to a poorly structured supply chain network characterized by lack of communication and coordination between producers of sawmill timber products and end-users (p. 1). In the case of Finnforest, the company’s partners such sawmill producers, harvesters of logs and others who facilitate the process of harvesting logs, transforming them into timber products, packing and transporting are located in Finland while the retailers and consumers are in the United Kingdom. The distance between the two locations may pose certain inconsistencies in communication of orders and demands which make the first phase of supply chain long and tedious. Secondly, Finnforest suffers high inventory because of the need for storing the products before they are transported to the actual market which is in another country. Finnforest’s supply chain generally consists of 161 days of inventory which is more than the 20 days of actual activity time for each step in the supply chain process to be undertaken. The high inventory will cause problems with the financial status of the company because products in inventory do not generate income and the binding capital in those inventories prohibits the company from investing in other projects that would gain actual return ( 1997).  Finally, the company has long lead time of exactly 50 days with each step of the supply chain process contributing to the total lead time except warehousing. The primary cause of the lead time is the complex arrangement of suppliers, distributors, manufacturers and retailers involved in the company’s supply chain. Different entities handle the harvesting of logs, processing them into timber, and transporting them to the second location which add conflicts to the entire process as these various entities have their own interests, targets and goals.  (1995) claims that the organizations involved in a supply chain function independently. These organizations facilitate each of the typical supply chain functions such as planning, purchasing, manufacturing and distribution without intervention from the other players. Thus, the possibility of conflicting objectives and interests is high. Planning and purchasing partners pursue customer satisfaction and more sales while manufacturers underscore enhanced throughput without much consideration of inventory or distribution capacities. Considering the abovementioned situations, Finnforest needs to strengthen integration and coordination in its supply chain network to address the three problems.   SPECIFIC STEPS CONTAINING THE LARGEST AMOUNT OF WASTED TIME                         Wasted time is the duration marked by absence of activity between a step in the supply chain process and the one preceding it. Wasted time in Finnforest Corporation occurs throughout the supply chain network. The most notable wasted time occurs between harvesting the trees and transporting the harvested logs to the sawmills (approximately 1 to 10 days), between kiln drying and grading (approximately 7 days), between arrival of timber products in the UK and manufacturing them into consumer product (approximately 4 days), between consumer product manufacturing and warehousing (approximately 15 days), and between warehousing and transport to retailers (approximately 4 days).   OPPORTUNITIES FOR REDUCING THE OVERALL SUPPLY CHAIN LEAD-TIME               Finnforest Corporation has to improve the flexibility of its supply chain network and coordination among the various entities involved in the process. Coordination and flexibility go hand in hand because a company that has well-aligned supply chain operations is guaranteed total flexibility. First, Finnforest has to plan its supply chain operation in advance to minimize wasted transactions.   (2007) reports that the first step in the pursuit of supply chain flexibility is by designing a supply chain model. A supply chain model requires the company to determine the kinds of strategies and amount of time to suffice current customer needs. In this approach the company has to analyze and understand customer and stakeholder expectations in order to conceptualize the supply chain requirements and costs involved in each. Designing a supply model would enable Finnforest to gather data on what the British market really prefer and be able to tailor their activities in Finland. Secondly, Finnforest has to reinforce integration in all its facilities. Integration should occur among the people in each facility and between the different facilities. The first kind of integration necessitates constant communication and coordination between individuals performing a specific task. For example, people responsible for harvesting the trees or transporting the logs to the mills should coordinate to ensure that everyone knows what the supply chain requirements are and all efforts are geared towards meeting the requirements. Integration among people performing a particular function can be associated with the term “general coordination” in manufacturing companies. Multi-plant coordination, on the contrary, requires that production decisions are coordinated between different entities of a supply chain so as to achieve an integrated apparoach for the overall performance of the company. In this coordination, things like effects of uncertainty of final demand, complexities in production process at each facility and capacity weaknesses at each facility must be considered ( 1997). For Finnforest, multi-plan coordination should be observed in each of the twelve steps of the supply chain process i.e. people harvesting the trees, people transporting to sawmills, people grading the logs, people facilitating the primary manufacturing process and so forth in order to ensure collaboration of efforts and to facilitate monitoring of performance and output. Finally, to improve flexibility and coordination, Finnforest has to align its supply chain processes with the end products. There is a need to tailor supply chain operations to the nature of markets consuming the products. In order to do this, there is a need to identify the two types of products –   functional products and innovative products. Functional products are staples which are stable needs of the market while innovative products are varied, short-lived and volatile demands. Functional products require supply chains that are physically efficient and focused on lessening inventory. Innovative products necessitate a supply chain that is responsive and has built-in strategies for storing inventory to meet changes in demand for the product (2006). Finnforest’s products are stable demands because individuals often need timber products for home improvements, and industrial companies have a great need for them. Thus, it needs an efficient supply chain that guarantees minimal lead time and inventory.   SUMMARY OF ACTIONS FOR FINNFOREST                         Finnforest’s problem with the supply chain rests on the long duration of lead time in the process which triggers high inventory as the need to store the products become a necessity while waiting for the next supply chain step to be undertaken. Developing a supply chain model, promoting coordination and integration among the various supply chain players, and aligning supply chain processes with end products will help the company address the problem of wasted time.          Developing a supply chain model requires the company to establish a feedback system that would gather views, opinions and preferences at the customer and supplier levels. This feedback system can be in the form of survey questionnaires to be distributed to customers by retailers in the UK or a database in the company’s website wherein the customers and suppliers can access and leave their comments on how the company delivers its products. Information that would be accumulated in the feedback system would provide the company with basis on what the customers prefer, what the suppliers think is the problem with the supply chain network, the effects that these defects in the supply chain will provide, and what can be done to improve the supply chain operations. The feedback system can also help Finnforest to identify what kind of flexibility terms should be contracted with its partners. Finnforest collaborates with other parties like sawmill operators, transport and logistics firms and retailers to ensure that its products reach the market. If the company knows what the customers prefer and what the suppliers think are the weaknesses of the supply chain network, it can specify the amount of time and kind of output that should be rendered by each player in the supply chain to ensure that everything will flow smoothly in the least cost and amount of time possible (2007). Moreover, the company needs to reinforce and enhance coordination among the various people and organizations involved in the entire supply chain network. (2005) argue that trading partners in the supply chain should realize that their performance and actions impact the total performance of the system. Finnforest can improve coordination through information sharing and a team-based approach. These strategies mean that members of the supply chain communicate and coordinate their activities, decisions and plans through consistent information sharing regarding changes in demands, goals and target output to maximize system performance (). The feedback system proposed above would help in this strategy. Since the feedback system has given Finnforest a chance to gather market intelligence and develop plans according to the gathered information, it can now disseminate its plans to the various partners. All the partners must know the objectives of the company, target production and costs, and other specific production metrics. This way the partners can pattern their individual activities with the general plan and teamwork would be established. For example, if the people who harvest tress and transport logs to the sawmills know that there is great demand of products from the UK consumers and the company wishes to deliver finished products in the shortest time possible, they would be encouraged to hasten their harvesting activities in order to quickly transport the logs to the sawmills and for the other partners to continue with their work accordingly. Finally, Finnforest has to enhance its supply chain network into a demand-driven system. Again, the two prior strategies would enable this last strategy. General objectives developed from the feedback system and the team-based approach discussed above would mean that everyone in the Finnforest’s supply chain network knows the objectives and targets that the company wants to accomplish in order to satisfy the customers. Accordingly, all the entities would function towards customer satisfaction.  (2006) state that teamwork and coordination in a supply chain connotes that the ultimate focus of all supply chain players would be on satisfaction of end customer requirements regardless of their position in the supply chain. Hence, if partners know that the requirements are for a variety of products with short lead times, each partner in the chain would attempt to react quickly to render varied products for the customer’s satisfaction ().   EFFECTS OF THE PROPOSED ACTIONS               The three proposed strategic actions would provide certain benefits to Finnforest in its aim to minimize lead times in the supply chain network. The team-based approach of all partners wherein information sharing is prevalent and everyone is pursuing the primary aim of customer satisfaction would lessen raw and finished good inventories because everyone would only produce goods that are dictated by the company’s general plan and based on what the customers require. Conceptualizing a plan based on the feedback system would enable the company to identify the types of products that are frequently needed by the customers in UK so that they  can develop plans to produce these products and be able to disseminate the plans to all the partners especially to those who handle procurement of raw materials. There will also be efficient use of warehouse space since all the products that would be stored are needed by the market, thus, replenishment becomes consistent and waste is minimized. Furthermore, lead times would be minimized because team work and coordination would enable the different partners to consistently monitor each other’s performance and output so as to make the necessary adjustment if a defect is detected. If all partners work collaboratively, all the activities are scrutinized, defective actions would be identified and immediate solution cold be provided to ensure that ultimate objectives are still fulfilled. Lesser lead times will ensure real-time delivery because time is maximized and the entire supply chain process is shortened. Finally, Finnforest’s team-based approach and emphasis on coordination would make the company more responsive to changing circumstances. Some of these circumstances are need of consumers to consistently improve their living condition through home improvements which entail increased demand for timber products and adverse effects on product demands by the different seasons in Europe. In light of the increased need for home improvement, Finnforest would be able to know this because of the feedback system that it implements. Thus, the company can readily determine the volume of products that should be produced over a specified period of time to cover consumer needs. In relation to the changing seasons of the locale, the company has a team-based approach to its supply chain network. This means that each partner contributes to the knowledge base and decision-making processes. Hence, each partner has the freedom to express the difficulties that they encounter in every season so that the entire team can plan the adjustments that should be made. For example, the transportation partner can verbalize that they cannot transport logs during winter because of heavy snow or the harvesting people cannot cut more trees during rainy seasons. Accordingly, the entire team can conceptualize plans like doubling the volume of logs before rainy seasons and more production before winter so that warehouses can have sufficient stocks for consumer’s demands during the entire winter season even if no transportation of logs can be facilitated. In summary, the focus on customer requirements and coordination basically results to consistent oversight and analysis of the supply chain process (2006) in which all the decisions, plans and activities of the company and all its partners are dictated by the customers and the general corporate objectives, and wherein every effort is focused on maximizing performance for the efficiency of the entire system and customer satisfaction in the end.             APPENDIX   Figure 1: General Coordination and Multi-Plant Coordination ( 1997). This figure summarizes the proposed strategies for Finnforest wherein all supply chain efforts are monitored, scrutinized and enhanced by all partners through information sharing and teamwork. Credit:ivythesis.typepad.com

SUPPLY CHAIN REDESIGN AT FINNFOREST CORPORATION

SUPPLY CHAIN REDESIGN AT FINNFOREST CORPORATION INTRODUCTION Business organizations today operate in a turbu...

Supply Chain Management Activities in a Leading Retail Industry among the Business Owners, Suppliers and Customers

Supply Chain Management Activities in a Leading Retail Industry among the Business Owners, Suppliers and Customers   In general, Supply Chain Management (SCM) is a wide area in a leading retail industry that combines all the companies involved in the production of goods and services such as the manufacturers, suppliers, wholesalers, distributors, retailers and consumers.  All of these people play a major role in the process of delivering goods and services to the market.  Hence, the Supply Chain Management (SCM) principles are vital in order to satisfy the customers.  Due to the continuous increase of competition in the market, many enterprises these days are leading towards wider scope and improvements in their supply chain capabilities with the help of new technology such as computer.  This optimization of supply chain performance  by the use of  electronic mail and the internet have been  paved the  communication and data exchange as well as the  facilitating of  the necessary flow of information between the companies in the supply chain becomes easier compared the past years. In this connection, a main principle of supply chain management network facilities is the way how people involved in the procurement transform their products and services, then how they eventually distribute them to the market. Hence, this cycle is an integrated supply chain of interrelated obligations from one   person to another.  The  integration of the  individual tasks of the  supplier to the  manufacturer, as well as the manufacturer to the consumer are  interconnected  from one another in order to achieve a main goal  and that is to produce  a quality product for their consumers. (http://en.wikipedia.org/wiki/Supply_chain_management)   Moreover, the links within the supply chain are not possible without the important data and information, computer systems and processes that are being done by each of them.  Hence, supply chain management becomes more complex whenever   goods flow from more than one supplier to more than one manufacturing and distribution site and to the consumers. The opportunity of outside sources for other functions like assembly and packaging are also optional in the supply chain management.   Whereas, the basic task of retail store or distributor stays the same.  Still the suppliers are required to supply materials, the manufacturers still have to produce goods; as well as the distributors still have to distribute   products to the retailers, so as the customers still have the desire to purchase products in the retail stores.   There are various kinds of events occur unexpectedly in the supply chain management like suppliers sometimes may make early or late deliveries of the raw materials.  There are times that customers for any reason can increase their orders or even cancel their orders especially, if other retailer is offering more attractive deal to them.  However, there are new customers who immediately place huge order.  Occasionally, machines, delivery truck, computer can shut down; and even employees can get sick, or go on strike and leave their jobs.  All these things just show that even supplier shipments and manufacturing companies are having quality problems at some point in time. As a result, it is important to have a chain visibility in the inventory level in order to have an improved performance in the supply chain management area.   For illustration, Procter & Gamble (P&G)   has been always reviewing the demand patterns of their consumers in the market; so that they will not encounter shortage supply problems. (http://www.referenceforbusiness.com/management/Str-Ti/Supply-Chain-Management.html) Subsequently, to be able to help in creating an efficient, effective and integrated supply chain management; reduction of costs also plays a significant role in the    cycle. A study showed that supply chain costs may represent more that eighty percent of the cost structure in a typical manufacturing company. These numbers indicate that even slight improvement eventually translates into millions of dollars savings. For every dollar of inventory in a system, there are one to two dollars of hidden supply chain costs: working capital costs, asset costs, delivery costs among many others. Leaner inventories free up a large amount of capital. Nevertheless, leading companies in supply chain management performance have the ability to achieve savings equal to three to seven percent of the earnings than the median competitors. Lastly, it is very vital to understand that the success of supply chain management greatly relies on the core values of the involved companies as well as the requirements of the manufacturers and the needs and demands of the customers.  It is very challenging to know that customers expect also that the products and services are being improved   in order to value their needs and demands.  Lastly, the process and perspective of the suppliers can be associated with the buying process of the consumers. It is important to put this in mind that the evaluation of the buying process of the supply chain management  are  being stopped or hold because of the  final decision or control of the final customer or consumer.  (http://www.referenceforbusiness.com/management/Str-Ti/Supply-Chain-Management.html) References: (http://en.wikipedia.org/wiki/Supply_chain_management) (http://www.referenceforbusiness.com/management/Str-Ti/Supply-Chain-Management.html)   Credit:ivythesis.typepad.com

Supply Chain Management Activities in a Leading Retail Industry among the Business Owners, Suppliers and Customers

Supply Chain Management Activities in a Leading Retail Industry among the Business Owners, Suppliers and Customers In general, Suppl...

Supply Chain Redesign at Finnforest Corporation

Supply Chain Redesign at Finnforest Corporation Supply Chain Management             Supply chain is the physical, financial and information networks for the logistic movement process of materials, funds and related information. It starts from acquisition of raw materials to delivery of finished products to the end user. Supply Chain Management is the methodology to improve the business efficiency in finding raw components for business products or services and delivering it to the end user. The Supply Chain Management contains five basic components: 1. Plan – Strategies for managing resources toward meeting customer demand for goods and services 2. Source – Selection of suppliers to deliver materials or services for the making of goods and services 3. Produce – Making of goods and services, which may include production, testing and packaging 4. Deliver – Coordinate orders from clients, carriers sending products and invoicing/receiving payments 5. Return – Network for receiving defective or excessive products from client                         Finnforest is a global mechanical-forest-products company. Finnforest Corporation is a € (Euro) 1.2 billion turnover timber products company, owned by about 125 000 private forest owners of Finland, with worldwide sales and operations. Here, we focus on the Corporation’s European operations, where the company undertakes primary and secondary timber manufacturing, and the supply and distribution of finished goods to three main types of customer: 1. Home improvement/DIY retailers 2. Industrial and construction companies 3. Builders and timber merchants               Strategic supply chain management means management of the complex network of supply chain operations, which gets products and services to the customer, and the physical arrangement of the supply chain operations facilities, technology and people. In the face of ever increasing complexity, and customer expectations for faster supply chain response, businesses must be able to identify the potential weaknesses of their supply chain networks and adopt appropriate supply chain analysis and redesign. Key Supply Chain Process            Diagnosing a supply chain starts by understanding the current operational system and processes. This understanding is also the first step in gaining widespread recognition of any symptoms of poor performance and helps to establish the need for change. Mapping and measuring a process establishes the performance base line that enables the effect of changes to process designs on performance to be measured. The Finnforest supply chain is diagnosed in terms of five stages shown below. This block flow diagram format uses a notation of boxes to represent each stage and arrows to represent the flow of goods between these stages. In order to gain a more thorough appreciation of the supply chain, a detailed investigation must be taken.   Finnforest’s timber products supply chain       The starting point for this supply chain is the forest in Finland where the trees are grown.             Logs from the forest are processed into timber at sawmills in Finland.             Timber is transported by sea to the UK, where a secondary manufacturing operation is undertaken to machine it into a range of consumer products.             Finished product warehouses hold the customer items until a retailer calls them off.               Finnforest delivers directly from its finished product warehouses to major DIY retail outlets.         Data Gathering             Data was gathered at each of the major steps in the process. The principal unit of measure used was time. Despite being a simple metric, time allows a rich understanding of the symptoms of poor performance and is effective in identifying and diagnosing waste. Its usefulness is based on the relative ease with which this understanding can be communicated to those involved in operating a process. it also helps in showing what and who would be affected if the process were changed. In addition to time, inventories were quantified at each step of the process. The three measures collected are the following: 1. Activity time – the time to physically undertake the activity involved in completing a process step for a single item. 2. Lead Time – the time between when the item finishes the preceding step in the process until it finishes the current step in the process, this time will include the time spent undertaking any activity 3. Inventory – the amount of inventories, raw materials, work in progress or finished goods held, measured in terms of the number of days of demand   This report will particularly focus on analyzing the supply chain and identifying the proportion of supply chain process lead–time which is made up of wasted time. The table shown below presents the supply chain process at Finnforest and includes performance measures in terms of activity time, lead-time and inventory.     Finnforest’s supply chain steps with performance measures                       Supply chain step            Activity time/days      Lead-time/days Inventory/days                     Harvest trees                                  1.0                               7.0                       14.0                   Transport logs to mill                     1.0                               2.0                         1.0                   Grade togs                                     0.1                               1.0                       10.0                   Primary manufacture                      0.1                               1.0                         1.0                   Kiln dry                                          5.0                               5.0                         2.0                   Grade                                             0.1                               0.5                         0.0                   Pack                                               0.1                               0.5                       45.0                   Transport to port                            1.0                               1.0                       10.0                   Transport to UK                           11.0                             14.0                       31.0                   Secondary manufacture                 0.1                             14.0                         1.0                   Warehouse                                      -                                   -                          46.0                   Transport to retailers                      0.5                               4.0                           -                                                     Total            20.0                             50.0                    161.0                           The table above shows that the overall lead-time products to get from the forest to the retail outlet is 50 days. Contained within the 50 day overall lead-time is 20 days of activity time, when timber is worked upon. Overall, the supply chain contains 161 days inventory. To analyze the supply chain process and the lead-time at different supply chain step a Time Based Process Map (TBPM) is presented.   Time Based Process Map             The time based process map presents data for both lead-time and activity time for every step along a process. The lead-time for each process step contains a value for the amount of activity time involved in undertaking that step. By definition, the remainder of the lead-time must consist of time where no activity was undertaken. An assumption is then made that all lead-time which has not been classified as activity time must be ‘wasted time’. Thus, the TBPM provides the means to present performance data and highlight the incidence of wasted time. Through highlighting where wasted time exists, the TBPM helps direct attention onto the most significant areas of waste. The TBPM for the Finnforest supply chain process is presented below.   Supply Chain Lead-Time             From the data presented above it is evident that steps like transportation of products to UK and secondary manufacture contain the largest amount of wasted times. The supply chain of Finnforest is still quite long and involves several intermediaries. The long distribution structure is problematic and, especially, the non-transparency of the supply chain makes it difficult for Finnforest to get real and accurate information from end markets. Various delays in supply chain and management thinking appear. Furthermore, there is an extensive capacity to stock in the supply chain. Stocks and inventories are located at many points from the forest to end-users and inventories have tended to fluctuate heavily throughout business cycles.             One of the steps in the Finnforest supply chain that has the largest amount of wasted time is the transportation of products from Finland to the United Kingdom. The transportation of products is very slow. This makes Finnforest unable to respond to market fluctuations and forces the company to increase inventory levels, extend production schedules and write unforeseen expenses. Lead times are inhibiting Finnforest’s ability to respond to customer demand. With up to 14 days of wasted times for products from Finland to United kingdom, many second manufactures are forced to stock extra product to meet unexpected market spikes. Greater inventory requirements tie up capital, countering most lean manufacturing models. Alternatively, if demand shrinks, manufacturers will continue to increase inventory levels as shipments that are at sea continue to arrive for many more weeks. To build better reliability into the supply chain, manufacturers need the right product at the right time. Due to the importance of the export trade for Finnforest, the key customers are often foreign based. Due to prevailing long supply chain and slow product transportation direct contact with these final customers remain elusive.         Credit:ivythesis.typepad.com

Supply Chain Redesign at Finnforest Corporation

Supply Chain Redesign at Finnforest Corporation Supply Chain Management Supply chain is the physical, financial and info...

Warehousing Management

Warehouses were once considered as an evil with four walls and a bunch of racks. Most organizations treat the warehouse as liability. Nowadays, warehousing has become an important element in commercial enterprises, which has brings benefits to the organizations. Introduction Warehousing was once considered as a liability to the organization as it would cost the companies much expense. Previously, in the time in which just-in time gain fame in industries, warehousing was considered a weak link in the supply chain and was thought to demise. However, currently the concept of warehousing is changing as it is now gaining an important part in the supply chain. Discussion The role of warehousing in some years before has been thought as a burden to many of the companies as it is seen to be costly to the process of supply chain. With the existence of the technology, it has been a thought that the lesser the number of the warehouse and the smaller the warehouses the better. The supply chain management has been discovering ways to improve the process of supply chain while reducing the transaction cost. And to this warehouse has tried to be eliminated in the scenario of the companies. Previously, warehouse has been thought of as a burden to the companies as it requires proper management and maintenance. Storage system is also needed especially for perishable goods. However, many of the companies today has discovered that warehousing is a source of competitive advantage  for companies and has find a new role for the warehouse. For such, Nabisco is one of the examples of companies that believe that warehouse is a source of competitive advantage for their company (2001) Past researches has thought that warehousing will diminish over time with the presence of technology and with the popularity of just-in time delivery in which products are assemble only when there is a demand to reduce warehouse costs of storing the materials. However, warehousing has instead grown in demand with the presence of this Internet. The e-commerce has realized their need to go through warehouses. Several years ago, companies thought that with a great internal supply chain and the smaller the warehouses the more the competitive the business is in the marketplace. It has been thought that with the presence of e-commerce and the tight pressures to squeeze costs out of the supply chain, it’s no longer enough to be efficient within your company’s four walls. Companies today need an efficient supply chain from end to end, that is, from the purchase of raw materials to the point where product reaches the consumer or end user. Any failure at any point along this supply chain process can cause to failure to the whole company.   However, instead, warehousing has gain its prominence with the development of e-commerce as increasingly the supply chain are now relying more on warehousing. With the more demanding consumers these days which generally demand for a faster delivery of products, warehouse has come back to importance as with the availability of the products demanded by the consumers stored in the warehouses the faster is the delivery of these products. With the products stored in the warehouses, warehouses have the ability to deliver these goods on time as what the customer demanded.  Many warehouses are ramping up to meet e-commerce needs by installing new fulfillment equipment and investing in other technologies. Picking and shipping methods are being upgraded, too. Customer service has become of the utmost importance in today’s environment, and warehouses increasingly are being tasked to manage call centers. In addition, with the increased returns generated by the Internet, they are playing a lead role in developing and executing reverse-logistics programs. In addition, warehousing is becoming prominent as more and more activities are occurring within them. It has been observed by several companies that many of the organizations are performing their warehousing functions as well as their corporate function within the warehouse. These functions included back office operations, customer service, call centers, accounting departments and editorial functions like producing manuals that go into packaging for consumer electronics products.   Conclusion Thus it can be noticed that many of these successful companies are doing warehousing. Also, with the customer pressures, warehousing has gain a new role to many organizations. With these reasons, warehousing that was once thought as a liability to the company has become an important part of the companies. Warehousing has increasing prominent to the success of any company.           Credit:ivythesis.typepad.com

Warehousing Management

Warehouses were once considered as an evil with four walls and a bunch of racks. Most organizations treat the warehouse as liability. Now...

Green Logistics in the Supply Chain

Introduction The goal of Supply chain management (SCM) is to improve the efficiency of a company’s supply chain operations. The supply chain runs from raw material suppliers at one end, right through all the intermediate processing stages, to the customer at the other (Mcmenamin 1999). The focus of SCM is on adding value and eliminating inefficiencies at each stage of a company’s supply chain. This will include the optimization of stock or inventory movements; planning for peak activity periods; and the organization of transport and distribution systems (Summers 1998). The process seeks to ensure that the right materials, supplies and personnel are in the right place at the right time (Nersesian 2000). The emphasis of SCM on adding value at each stage, has given rise to the term value chain. Supply chain emphasizes the strategic value-adding and financial role of a company’s entire logistics management process (Thierauf 2001). In recognition of the new emphasis on providing the best net value for the customers, logistics represents a key bundle of resources that can be applied successfully to this end (Bounds & Stahl 1991). The supply chain is an important part of business because through it a raw material can be transformed into a finished product, this product is then sold to clients for the company to gain profit.  The supply chain management like other aspects of a business is affected by global issues such as climate change and environmental awareness. The supply chain management is constantly asked to participate and change its approach on the world issues. This paper intends to determine how to create sustainable but environmental friendly supply chain or logistics system. Nature of sustainability in context of supply chain management The concept of sustainability emerged in the early 1980s. Since then the ideas of a sustainable society and sustainable development have played a key role in policy statements by national governments and the United Nations. Despite this widespread attention there is still no agreed definition of the concept, and perhaps more critically, little progress towards translating the idea of sustainability into clear policy targets (Ekins 2000). A widely quoted definition of a sustainable society is one that meets the needs of the present without compromising the ability of future generations to meet their own needs (Banister 1998). The development of a coherent and systematic strategy towards a sustainable supply chain must consider not only the objectives to be pursued and an evaluation of possible policy initiatives, but also the appropriate response and role of different institutions (Doob 1995). The scope of institutions in the context of sustainability has its range from groups like national governments, local governments, private companies and individuals.  If people will accept that the idea of that sustainable supply chain must address the increasing average haul then individuals could contribute by increasing the proportion of locally sourced goods. A major problem is the lack of information provided and the complexity of information that would be needed (Banister 1998). Sustainability is said to be the act of maintaining supplies for future generations.  Supplies do have its own limitation; it will run out of stock eventually. Through the use of sustainability companies can make sure that there can be supplies for the present and the future.  Sustainability goes with the need to have green supplies. The nature and role of green supply chain The extraordinary controversy over the use of genetically modified (GM) foods, crops and feed stocks has been a major focus of political debates and environmental and consumer activism (Banfield 19990. It has brought to the public’s attention not just the activities of research scientists in remote laboratories but also of the sourcing policies and marketing strategies of major retailers. Major corporations have had to be responsive to market pressures (Boone & Ganeshan 2002). What firms buy and from whom they buy it, and how environmental issues are included in these considerations, has become the subject of media attention (Fineman 2000). Green supply’ is the term people use to describe the web of actions that occur when firms put the environment on the agenda for procurement/supply chain/logistics and the responses this stimulates from the supply chain. It is reasonable to surmise that green supply will be a vital element in progress towards a sustainable economy. The concept of the incorporation of the environmental agenda into corporate procurement has now been promoted from a number of quarters for several years (Wheeler 2004).    Two main lessons have become apparent: first, there exists a huge range of options and tactics for organizations; second, very few organizations have really begun to exploit all the avenues that are available. The range of possibilities implied by green supply is difficult to enumerate due to the wide spread of different types of purchasing organization and the wide range of products and services secured; much of what follows will not apply to every organization (Campbell, Hamill & Purdie 2000). The simplest situation is procurement based on the choice of a greener product compared with a browner alternative. This is a straightforward choice (Boyer, Frohlich & Hult 2005). The selection may be made in the marketplace. In this case, the relationship between the buyer and seller may be at some distance, and there may be no interaction other than the transaction itself (Boyson, Corsi & Harrington 2004). The effects of this purchase decision can be considered as fourfold: first, there is the immediate environmental consequence that a green good will be disposed; second, there is the financial encouragement of an extra sale to the provider of the green good; third, there is the tacit message of the lost sale to the suppliers of conventional goods, which may promote product innovation; finally, there is the internal message in the organization to its employees and possibly customers that green issues are being taken seriously (De Lannoy, Devuyst & Hens 2001). Environmental awareness has created a need for supply chains and logistic systems to make use of ‘green’/environmental friendly supplies. Global issues have made companies take a look at their supplies and check whether the contents and components of their supplies are environmentally safe.  This forced the need for more communication and transaction between the company and the suppliers. It forced companies to do extensive research on the supplies they use and they have.  The use of greener supplies is in connivance with the goal of companies to maintain their sustainability.  Green supply creates a better chance for the firm to extend the life span of supplies so that there will be enough supplies for future generations. General implications to the management of global supply chain Environmental consideration may be used to pre-qualify those from whom the purchaser will select. This may or may not result in a substantive environmental benefit but the supply base receives a message that environmental issues are important, and this is communicated to both successful and unsuccessful suppliers. Even without formal processes of pre-qualification, this approach to green supply allows the buyer to communicate some priorities to the vendor. Some kind of pressure is applied just by raising the issue that it is expected that potential suppliers will have an environmental policy or be pursuing the development of an environmental management system (Barrow 2005). Given possibly ambiguous signals, the supplier has to make a judgment about how serious the buyer is. Faced with this, it may be sensible for the supplier to evaluate the potential pressures which the client may face, thus weighing the relative costs of action against inaction. Purchasing behavior can influence the supply base even if environmental criteria do not become the pivotal issue in a purchasing decision. Furthermore, there is a parallel range of mechanisms which apply to existing suppliers the possibility of new work is merely translated into the prospect of keeping current business, and so on (Ebert & Ebert II 1998). The movement into green supply chain/logistics has created the need for managers to devise means to check the components of the supplies. It created the need for management change their strategies on how the logistics system/supply chain is managed.   The management of supply chains now needs to know what products are green and what are dangerous to the environment. Example of sustainable approach to supply management One example of a company having a sustainable approach to supply management is Wal-Mart. Wal-Mart’s efficient cost structure rests on several pillars.  It includes an extraordinary logistics system based on holding inventories in large warehouses, and not in the stores. Stores are for selling, not for inventories (Kennedy 2000). This improves space management, where it is most expensive. A communication system between stores, warehouses, and suppliers enables the company’s inventories to be kept to a minimum, while also facilitating identification of the best-selling products (Canals 2000).  When Wal-Mart encounters problems on inventory the company tries to check its inventory systems and the management of the inventory department. As a safety control the company constantly checks for errors in its inventory system. The company makes sure that the inventory system is constantly checked for any errors or problems.  Wal-Mart has recently introduced sustainability and greening into their supply chain. The company initially established its goals and technologies that they will use in making sure that they have sustainable supplies. The company has made sure that their supplies have been certified as environmentally sustainable.  The company is in constant communication with suppliers and they give assistance so that the suppliers will provide environmentally sustainable supplies. The company has committed to having large amounts of sustainable green supplies. The company provides incentives to suppliers who will provide them with green supplies.  The issue with the incentives to suppliers is strained relationships with some suppliers.   References Banfield, E 1999, Harnessing value in the supply chain: Strategic sourcing in action, Wiley, New York.   Banister, B (ed.) 1998, Transport policy and the environment, Routledge, London.   Barrow, CJ 2005, Environmental management and development, Routledge, London.   Boone, T & Ganeshan, R (eds.) 2002, New directions in supply-chain management: Technology, strategy, and implementation, AMACOM, New York.   Bounds, GM & Stahl, MJ (eds.) 1991, Competing globally through customer value: the management of strategic suprasystems, Quorum Books, Quorum Books.   Boyer, K, Frohlich, MT & Hult, TM 2005, Extending the supply chain: How cutting-edge companies bridge the critical last mile into customers’ homes, AMACOM, New York.   Boyson, S, Corsi, TM & Harrington, LH 2004, In real time: Managing the new supply chain, Praeger, Westport, CT.   Campbell, D, Hamill, J & Purdie, T 2000, Global and transnational business: Strategy and management, Wiley, New York.   Canals, J 2000, Managing corporate growth, Oxford University Press. Oxford, England.   De Lannoy, W, Devuyst, D & Hens, L (eds.) 2001, How green is the city? Sustainability assessment and the management of urban environments, Columbia University Press, New York.   Doob, LW 1995, Sustainers and sustainability: Attitudes, attributes, and actions for survival, Praeger Publishers, Westport, CT.   Ebert, C & Ebert II, ES 1998, The inventive mind in Science: Creative thinking activities, Teacher Ideas Press, Englewood, CO.   Ekins, P 2000, Economic growth and environmental sustainability: The prospects for green growth, Routledge, London. Fineman, S (ed.) 2000, The business of greening, Routledge, London.   Kennedy, AA 2000, The end of shareholder value: corporations at the crossroads, Perseus Books, Cambridge, MA.   Mcmenamin, J 1999, Financial management: an introduction. Routledge: London.   Nersesian, RL 2000, Trends and tools for operations management: An updated guide for executives and managers, Quorum Books, Westport, CT.   Summers, M 1998, Analyzing operations in business: Issues, tools, and techniques, Quorum Books, Westport, CT.   Thierauf, RJ 2001, Effective business intelligence systems, Quorum Books, Westport, CT.   Wheeler, SM 2004, Planning for sustainability: Creating livable, equitable, and ecological communities, Routledge, New York.   Credit:ivythesis.typepad.com

Green Logistics in the Supply Chain

Introduction The goal of Supply chain management (SCM) is to improve the efficiency of a company’s supply chain operations. The supply ch...