SUBJECT:
SUPPLY CHAIN MANAGEMENT
Total
Marks: 80
CASE - 1 (20
Marks)
E-TENDERING IN SUPPLY CHAIN
MANAGEMENT-VENDOR SELECTION
The e-tendering process has meant a transformation from a
traditional vendor selection process through tenders to an online process
making huge advances in efficiency, transparency and Data Storage solutions and
retrieval systems. Wipro Infotech Enterprise application practice through its
e-procurement application development service has ensured a smooth migration
for governments.
The e-tendering service offering allows vendors to electronically
upload and download documents, access project details as well as enabling you
to maintain a track on the overall status of the tenders.
The key benefits of our E-tendering service offering include:
Reducing collusion among vendors and making the process fair and
competitive
Enabling systematic documentation of the complete tendering process
and hence reducing administrative costs and minimising human error
Ensuring significant reduction in processing time and tender cycle
time
Ensuring timely completion of tendering process thereby resulting
in better utilisation of available funds from financial institutions
Providing onsite service and training to ensure that government
adopts the new system without any difficulties
How has technology helped SCM ?
Is e-tendering a good process to select vendors?
Supply Chain: definition of a supply chain as a
partnership of organizations sharing a common goal
of delivering a set of goods
or services to an end-customer. Thus, the supply chain includes not only
the upstream suppliers of an item and the organizations that make
the components used to create that
item, but also the downstream retailers or distributors for the
item. Other authors have called these
value chains or webs,
in an attempt to highlight the fact that supply chains don't just include
suppliers
but also their customers and that the relationships aren't always
linear but more commonly look like a
network or web.
Supply Chain Collaboration: any kind of joint, coordinated effort between two parties in a
supply chain to achieve a common
goal. Note that these words on their own give no indication of whether the effort I am talking about is at a
strategic, tactical, or operational level, what kind of business process is
involved, or the degree of collaboration. These things aren't often stated
explicitly enough when we talk about collaboration or the tools used to support
it.
Since there are numerous processes that partners can collaborate
on, it is critical that we are clear about which processes are involved in the
collaboration. On this site, we focus primarily on Collaborative Planning,
Forecasting, and Replenishment (CPFR) activities when talking about
supply chain collaboration, rather than other activities such as
collaborative design or marketing. However, once organizations begin the
strategic shift towards more collaborative relationships, it is much easier to
experience process gains in many other areas.
Questions
v Define supply chain and
supply chain collaboration?
Decisions on Three Levels
Supply chain management decisions are often said to belong to one
of three levels; the strategic, the tactical, or the operational level. Since there is no well defined and unified use
of these terms, this Section
describes the how they are used in this thesis. Figure shows the three level of
decisions as a pyramid shaped hierarchy. The decisions on a higher level in the
pyramid will set the conditions under which lower level decisions are made.
On the strategic level long term decisions are made. According to Ganeshan
and Harrison [12], these are related to
location, production, inventory, and transportation. Location decisions are
concerned with the size, number, and geographic location of the supply chain
entities, such as plants, inventories, or distribution centers. The production
decisions are meant to determine which products to produce, where to produce
them, which suppliers to use, from which plants to supply distribution centers,
and so on. Inventory decisions are concerned with the way of managing
inventories throughout the supply chain. Transport decisions are made on the
modes of transport to use.
Decisions made on the strategic level are of course interrelated.
For example decisions on mode of transport are influenced by decisions on
geographical placement of plants and warehouses, and inventory policies are
influenced by choice of suppliers and production locations. Modeling and
simulation is frequently used for analyzing these interrelations, and the
impact of making strategic level changes in the supply chain.
On the tactical level medium term decisions are made, such as
weekly demand forecasts, distribution and transportation planning, production
planning, and materials requirement planning. The operational level of supply
chain management is concerned with the very short term decisions made from day
to day. The border between the tactical and operational levels is vague. Often
no distinction is made, as will be the case in this thesis.
Questions
v Define hierarchy of decision
making in supply chain management?
Inventory is a ``Flexibility
Buffer''
A manufacturers flexibility is its ability to respond to changes in
demand. Imagine a company that can receive customer orders, order and receive
components, assemble these, fill the orders, and ship them to customers in one
single day. This company would have a total flexibility. It would be able to
respond to any unforeseen events on a daily basis, and could easily attain a
hundred percent customer satisfaction without any inventory. But this is of
course rarely the case. A supply chain may consist of many levels of production,
transportation, and warehousing, each level adding to the lead time. The time
from the first materials are ordered at the beginning of the supply chain till
the finished products reach the customer may be long. In the US apparel
industry this time is typically 58.5 weeks ! (from 1990, Flaherty.
It is evident that customers will not wait this long from order to
delivery. The manufacturer needs to plan ahead, and therefore also to estimate
future demand by making demand forecasts. If planning of production and
inventories was perfect we would be able to implement a pure Just in Time
strategy, with components arriving as they are needed, and finished goods being
shipped as they leave the assembly line. But in a supply chain there are many
events that can not be foreseen and uncertainties that need to be accounted
for. These may be: late shipments from suppliers, defect incoming material,
imperfect production yield, production process breakdown, or highly uncertain
product demands.
The longer the planning horizon, the less accurate the plans will
be. A typical US apparel manufacturer must see more than a year into the future
! For it to maintain a high level of customer service, all uncertainty of the
year must be accounted for (see Pitfall 5 below). The long lead times make the
manufacturer inflexible, and vulnerable to unforeseen changes and inaccurate
demand forecasts.
A manufacturer will account for the uncertainties and unforeseen
events by keeping safety stocks. The
safety stocks assure the necessary flexibility, or rather they act as buffers
for the lack of flexibility in the
supply chain.
As we decrease lead times in the supply chain, we decrease the
planning horizon, and thereby increase the flexibility. The need for a buffer
in the form of inventory will also diminish. In other words; higher flexibility
allows less inventory to maintain the same level of customer service.
Inventory vs. Customer
Service: A Trade-Off
If we assume lead times to be constant, the ability to fill orders
is directly dependent on the inventory levels in a supply chain. As long as
there are products in the finished goods inventory (FGI), from which products
are taken, orders can be satisfied. Other inventories, such as raw product
inventories will have a more indirect effect on customer satisfaction.
Stock-outs in any of these will obstruct production and may eventually lead to
stock-out in the FGI. For this reason, it is common in supply chain management
to keep exaggerated inventory levels. But as mentioned above inventory holding
costs are often calculated as high as 30-40% of inventory values.
While oversized inventories is a costly inventory management
strategy, low fill rates are also costly. Business may be lost through
cancelled orders, and the company's reputation may be severely damaged. It is
therefore in a company's interest to balance inventory holding cost and the
cost of imperfect customer satisfaction. The trade-off inventory vs. customer
satisfaction is one of the classic issues of logistics and supply chain
management.
Based on knowledge and experience from supply
chain management in electronics, computer, and automobile companies, Lee and
Billington [16] identify 14 pitfalls in
inventory management. Eight of which are found relevant to this project:
Pitfall
1. No
Supply Chain Metrics:
In a supply chain with multiple sites, each site will often have
its fairly autonomous management team. The objectives of the various teams may
differ, and even be conflicting. Inventory may for example be reduced at a Site
A of a supply chain, and thereby, seen from a local perspective, the
performance is enhanced. But the inventory decrease may also decrease Site A's
flexibility. Because Site A now responds more slowly to changes, Site B, which
is Site A's customer will have to increase its inventory (of Site A parts) in
order to maintain its flexibility and level of customer service. The lack of
supply chain metrics has prevented managers at Site A to see that their local
improvements has not lead to improved overall performance of the supply chain.
The objective of supply chain metrics is to give the basis for evaluations of
the performance of the whole supply chain as one system.
Pitfall
2. Inadequate
Definition of Customer Service:
Too few
and in-concise metrics for customer service. The evaluation of performance
becomes difficult, and certain aspects of customer service may be overlooked.
Pitfall
3. Inaccurate
Delivery Status Data:
Customers
are not correctly informed of delivery dates of orders and of late deliveries.
Companies can often not readily retrieve the information needed to do so.
Pitfall
4. Inefficient
Information Systems:
Databases
at different operation sites that describe system environment, inventories,
backlog, future production plans, and so on are often not linked. Information
must be retrieved manually, and this can be a long process. Planning cycles may
therefore be long, using highly uncertain demand forecasts. The wrong products
are made, and inventories and backlogs grow.
Pitfall
5. Ignoring
the Impact of Uncertainties:
Too
often supply chains do not track uncertainties such as suppliers' delivery
times, the quality of incoming materials, manufacturing process time, transit
times, and so on. This leads to non-optimal stocking levels. In some cases
uncertainties are properly tracked, but there is no follow-up.
Pitfall
6. Simplistic
Inventory Stocking Policies:
Stocking
policies are often not linked to knowledge of the uncertainties mentioned
above. Stocking policies are often based on the quantity usage of the items
stocked. This says nothing about the uncertainty associated with the usage.
Analysis show that stocking levels could be greatly reduced by transferring
stocking policies from being quantity based to being uncertainty based.
Pitfall
7. Organizational
Barriers:
Entities
in a supply chain may belong to different organizations within the same
company. The organizations will independently measure the performance of the
entities. While each entity is occupied with achieving local goals (much like
in pitfall 1), important synergies may be lost.
Supply chain managers are often focussed only on the internal
supply chain. Going beyond the internal supply chain by including external
suppliers and customers often exposes new opportunities for improving internal
operations
Questions
v
Define Inventory is a ``Flexibility Buffer’’?
v
What are the various pitfalls in inventory
management?
Supply Chain Management
1. Give methods of
coping with the bullwhip effect.
2. Write a note on
Warehouse capacities
3. Write the impact
on transportation & Fulfillment.
4. What are the
issues of 3PL implementation issues
5. What is
importance’s of business processes.
6. Write a short
note on customer value measures.
7. Write a
difficulties with the traditional beer game
8. Write a
difficulties with the traditional beer game
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