SupplyChain Design Chapter 9 To Accompany Krajewski Ritzman

Supply-Chain Design Chapter 9 To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

First-Tier Supplier Service/Product Provider Support Processes New Service/ Product Development Process Supplier Relationship Process Business-to. Business (B 2 B) Customer Relationship Process Order. Fulfillment Process External Customers External Suppliers External Value-Chain Linkages Figure 9. 1 To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

Supply Chain for a Florist Home customers Commercial customers Florist Packaging Local delivery service Fed. Ex delivery service Arrangement materials Flowers – local/ international Maintenance services Internet services Required for facilitating goods Required for implicit services Required for explicit services Required for supporting facilities Figure 9. 2 To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

Creation of Inventory Input flow of materials Inventory level Scrap flow Figure 9. 3 Output flow of materials To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

Inventory at Different Stocking Points Raw materials Supplier Work in process Manufacturing plant Finished goods Distribution center Retailer Figure 9. 4 To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

Supply Chain Customer Distribution center Manufacturer Tier 1 Tier 2 Tier 3 Figure 9. 5 Legend Supplier of services Supplier of materials To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

Supply Chain Dynamics for Facial Tissue Order Quantity 9, 000 – 7, 000 – 5, 000 – Consumers’ daily demand Retailers’ daily orders to manufacturer Manufacturer’s weekly orders to package supplier Package supplier’s weekly orders to cardboard supplier 3, 000 – 0– Figure 9. 6 Time To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

Materials Management Purchasing domain of responsibility Egg supplier Sugar supplier Flour supplier Chocolate chips supplier Maintenance services supplier Figure 9. 7 To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

Materials Management FG storage Transformation process and WIP storage Purchasing domain of responsibility Egg supplier RM storage Sugar supplier Flour supplier Chocolate chips supplier Maintenance services supplier Figure 9. 7 To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

Materials Management FG storage Production domain of responsibility Transformation process and WIP storage RM storage Egg supplier Sugar supplier Flour supplier Purchasing domain of responsibility Chocolate chips supplier Maintenance services supplier Figure 9. 7 To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

Materials Management FG storage Production domain of responsibility Transformation process and WIP storage RM storage Egg supplier Sugar supplier Flour supplier Purchasing domain of responsibility Chocolate chips supplier Maintenance services supplier Figure 9. 7 To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

Materials Management Supermarket A distribution center Distribution domain of responsibility Supermarket B distribution center FG storage Transportation services supplier Production domain of responsibility Transformation process and WIP storage RM storage Egg supplier Sugar supplier Flour supplier Purchasing domain of responsibility Chocolate chips supplier Maintenance services supplier Figure 9. 7 To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

Materials Management Supermarket A distribution center Supermarket B distribution center Distribution domain of responsibility Transportation services supplier FG storage Production domain of responsibility Transformation process and WIP storage RM storage Egg supplier Sugar supplier Flour supplier Purchasing domain of responsibility Chocolate chips supplier Maintenance services supplier Figure 9. 7 To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

Inventory Measures Average inventory = $2 million Cost of goods sold = $10 million 52 business weeks per year $2 million Weeks of supply = = 10. 4 weeks ($10 million)/(52 weeks) $10 million Inventory turns = = 5 turns/year $2 million Example 9. 1 To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

Inventory Measures Figure 9. 8 To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

Supply-Chain Process Measures TABLE 9. 1 SUPPLY–CHAIN PROCESS MEASURES Customer Relationship Order Fulfillment q Percent of orders q Percent of incomplete Supplier Relationship q Percent of orders shipped taken accurately suppliers’ deliveries q Percent of orders q Time to complete on time shipped on time the order placement q Suppliers’ lead q Time to fulfill the process times order q Customer q Percent defects in satisfaction with the q Percent of botched services and services or returned order placement purchased items process materials q Cost to produce the q Cost of services service or item and purchased q Customer satisfaction materials with the order fulfillment process To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

Supply-Chain Environments TABLE 9. 2 ENVIRONMENTS BEST SUITED FOR EFFICIENT AND RESPONSIVE SUPPLY CHAINS Factor Demand Competitive priorities New-service/ product introduction Contribution margins Product variety Efficient Supply Chains Responsive Supply Chains Predictable, low forecast errors Low cost, consistent quality, on-time delivery Infrequent Unpredictable, high forecast errors Development speed, fast delivery times, customization, volume flexibility, variety, top quality Frequent Low High To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

Supply-Chain Design TABLE 9. 3 DESIGN FEATURES FOR EFFICIENT AND RESPONSIVE SUPPLY CHAINS Factor Efficient Supply Chains Responsive Supply Chains Operation strategy Make-to-stock or standardized services; emphasize high volume, standardized services or products Low Assemble-to-order, maketo-order, or customized services; emphasize service or product variety High Low, enable high inventory turns Shorten, but do not increase costs Emphasize low prices, consistent quality, ontime delivery As needed to enable fast delivery time Shorten aggressively Capacity cushion Inventory investment Lead time Supplier selection Emphasize fast delivery time, customization, variety, volume flexibility, top quality To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

Pepperidge Farm SCM System • Order Commitment • Transportation Management • Purchasing Management • Demand Management • Vendor-Managed Inventory © • Replenishment Planning • Configuration • Material Planning • Scheduling • Master Planning • Strategic Planning To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.