SupplyChain-Sp10 - MGMT MGMT 460 Operations Management(OM...

Unformatted text preview: MGMT MGMT 460 Operations Management (OM) Supply Chains Supplier Manufacturer Customer Secondary Supplier Tier 2 Supply Chain Management And The Beer Distribution Game Primary Supplier Tier 1 Manufacturer Distributor Retailer Consumer SupplyChain‐Sp10 1 SupplyChain‐Sp10 2 MGMT 36100 MGMT 36100 A real world Supply Chain Suppliers 46% Central Warehouse Retail Barrel/Cans 80% Bottles Retail Outlet 49% 5% Direct Business Barrel/Bottles Gastronomy Outlet Bottles/Cans 20% Supply Chain Management To provide best quality and customer service, one Primary Secondary must look beyond the Supplier Supplier manufacturing facility Manufacturer Need to manage the supply chain. Distributor Retailer Consumer Wholesale Need to look at incoming quality, logistics, stock levels for desired service levels, customer needs and so on in addition to internal working (process / quality improvements) within manufacturing facility. End Customers SupplyChain‐Sp10 3 SupplyChain‐Sp10 4 MGMT 36100 MGMT 36100 Secondary Supplier Primary Supplier Supply Chain Management Need to manage the supply chain. Manufacturer Distributor Retailer Consumer What can we do? Commitment from top management. from top management Lean manufacturing, TQM, six sigma … Incoming: Supplier partnership, supplier certification, just in time, reduce distances, logistics, tracking, .. Outgoing: Customer feedback, dealer partnerships, warehouse locations, logistics, tracking, …. SupplyChain‐Sp10 Insights form Beer Distribution Game: Bullwhip Effect (accelerator effect) (accelerator Demand change gets magnified as one goes back in the supply chain. When When demand goes up, the retailer overcompensates by ordering more to build some safety stock. The wholesaler will compensate even more and so on. Eventually the retailer will start ordering less when the stock builds up and the inventory position will swing in stock builds up and the inventory position will swing in the the other direction. direction. Brewery 5 SupplyChain‐Sp10 Distributor Wholesaler MGMT 36100 Retailer Consumer 6 MGMT 36100 SupplyChain-Sp10 1 Beer Game: very simplified supply chain 1 Brewery 1 Consumer Consumer Bullwhip Effect: simulated results Inventory Warehouse Inventory Level Brewer 50 40 30 20 10 0 -10 -20 -30 -40 -50 -60 Days Distributor Wholesaler Retailer 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 1 Distributor 1 Wholesaler 1 Retailer • 1 product no • no capacity constraints (truck, factory, warehouse). • Very well behaved consumer ! What was the consumer demand pattern? 30 25 20 Inventory Order Quantity Brewer Distributor Wholesaler Retailer 15 10 5 32 Holding Backlog Total 7 474 314 246 64 214 624 516 712 688 938 762 776 3164 0 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 Days Data for only 32 days! 8 SupplyChain‐Sp10 SupplyChain‐Sp10 MGMT 36100 MGMT 36100 Warehouse Inventory Level Brewer Distributor Warehouse Inventory Level Order Quantity Retailer Order Quantity 50 40 Inventory Brew er 300 200 100 Distributor Wholesaler Brewer Distributor Wholesaler Retailer 120 100 80 60 Inventory Brewer Distributor 140 120 100 In v e n to ry 80 60 40 20 0 1 Days Inventory 30 20 10 0 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 Days 0 1 -100 -200 -300 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 40 20 0 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 Days -20 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 -40 Days Holding Backlog Total SupplyChain‐Sp10 572 576 445 905 282 98 120 0 854 674 565 905 2998 9 Holding Backlog Total SupplyChain‐Sp10 1724 1660 3384 938 4010 4948 1644 3172 4816 849 638 1487 14635 10 MGMT 36100 MGMT 36100 Supply Chain Dynamics for Facial Tissue 9,000 – Order Quantity Package supplier’s weekly orders to cardboard supplier Manufacturer’s weekly orders to package supplier Reasons for inventory fluctuations Demand fluctuations. LeadLead-time for material / information flow. Lack of information sharing? 7,000 – 5,000 – 3,000 – 0– Consumers’ daily demand Retailers’ daily orders to manufacturer manufacturer How to improve? Reduce lead-times. leadShare information. Reduce demand fluctuations. Create additional demand during low demand period. SupplyChain‐Sp10 Time MGMT 36100 11 SupplyChain‐Sp10 12 MGMT 36100 SupplyChain-Sp10 2 ...
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