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Supply chain and planning and control systems in practice   academic essay assignment - www.topgradepapers.com
 

Supply chain and planning and control systems in practice academic essay assignment - www.topgradepapers.com

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    Supply chain and planning and control systems in practice   academic essay assignment - www.topgradepapers.com Supply chain and planning and control systems in practice academic essay assignment - www.topgradepapers.com Document Transcript

    • GET YOUR WORK DONE BY www.TopGradePapers.com 2009 Your Name University Name rs pe Pa de rapGTo [Supply Chain and Planning and Control Systems in Practice] Tait electronics Limited – http://www.taitworld.com GET YOUR WORK DONE BY www.TopGradePapers.com
    • GET YOUR WORK DONE BY www.TopGradePapers.com Table of Contents rs Introduction of Tait Electronics: ..................................................................................................... 3 pe Supply Chain and Planning and Control Systems .......................................................................... 3 Supply Chain Management System: ........................................................................................... 3 Vendor Managed Inventory: ........................................................................................................... 4 Pa Why VMI?................................................................................................................................... 4 Build-to-forecast: ........................................................................................................................ 5 Enterprise Resource Planning: ........................................................................................................ 5 de Why ERP? ................................................................................................................................... 6 Customer Relationship Management: ............................................................................................. 8 Why CRM? ................................................................................................................................. 8 ra Theory vs. Practice: ..................................................................................................................... 9 Bridge gap between theory and practice: .................................................................................... 9pG Reference ...................................................................................................................................... 10To 2 GET YOUR WORK DONE BY www.TopGradePapers.com
    • GET YOUR WORK DONE BY www.TopGradePapers.com Introduction of Tait Electronics: rs Tait Electronics comes to one’s mind instantly whenever mobile radio equipment is mentioned. Sir Angus Tait started Tait Electronics in 1969 as a Christchurch company. Tait is now present in pe 160 countries and employs 160 people throughout the world. Tait has sales of over $150 million – about 90% of which is exported to over 80 countries. Tait expenditure on Research & Development ranges from 10-15 percent of sales as opposed to the national average of 1%. Tait is one of key players in New Zealand’s high-tech market and its name is considered akin to Pa innovation in the radio communication market. Tait has been one of the pioneers in the analogue mobile radio technology and has offered a range of P25 products & solutions in order to suffice the needs of digital radio technology market. Tait is currently fulfilling the needs of many sectors simultaneously; the sectors include: mining, transport, public service and government, public de safety, utilities and national security. (Tait Electronics, ICT, The Smart Future) Tait, an MNE, is operating in 160 countries and in order to compete globally, it needs accurate systems in place to prop up timely decision making. Supply Chain and Planning and Control ra Systems are an integral part of an MNE these days and Tait has also deployed these systems in order to operate effectively and efficiently. I’ll examine these systems one by one – starting with Supply Chain. (Tait Electronics – CANZ)pG Supply Chain and Planning and Control SystemsTo Supply Chain Management System: Supply Chain Management is defined as: “A key value chain composed of demand planning, supply planning, and demand fulfillment” (Stair & Reynolds 2006). The definition of supply chain management is self-explanatory; it is evident from the definition that supply chain management consists of three components: 3 GET YOUR WORK DONE BY www.TopGradePapers.com
    • GET YOUR WORK DONE BY www.TopGradePapers.com  Demand planning  Supply planning  Demand fulfillment rs Vendor Managed Inventory: pe Tait Electronics has put Vendor Managed Inventory (VMI) in place as part of their supply chain management system. VMI is a system in which the supplier of a certain item maintains the inventory levels for the buyer of that item. The process works as follow: Pa The manufacturer receives data from distributor (buyer) regarding sales and stock levels using electronic or traditional means. The manufacturer then analyzes the stock levels and sales data of various items included in the product range and decides on the level of inventory. The manufacturer creates and maintains the inventory plan. It should be noted that the manufacturer de is responsible for only creating and maintaining the inventory; the ownership of the item remains with the distributor of the product. A slight variation of VMI, consignment inventory, is also available. Under consignment inventory, the manufacturer retains the ownership of the item and payment is made after the item is sold. The distributor is like a middle-man – working for a ra commission. Why VMI?pG Tait has subsidiaries and dealer networks (explained later in the text) across the globe. It manufacturers inventory at Christchurch and then ships it to various regions when their sales reach below safety stock levels. What Tait does is that it gathers data regarding sales and stockTo levels from geographical regions using its ERP system (also explained later), punches the data and forecast estimates (arrived using BTF – explained below) and customer response (gathered using CRM – explained later) into its system and comes up with a MPS (Mass Production Schedule). Tait is connected to all its geographical regions using the ERP and real-time information is available; whenever stock level reaches below safety stock, a replenishment order is triggered and production takes place at Christchurch. The shipment to regions is done from 4 GET YOUR WORK DONE BY www.TopGradePapers.com
    • GET YOUR WORK DONE BY www.TopGradePapers.com stocks maintained at Christchurch and further production takes place simultaneously to replace inventory levels. Build-to-forecast: rs Besides VMI, Tait has also deployed Build-to-forecast (BTF) system. BTF, as implied by the name, is a system in which the manufacturer performs a forecast of the future demand from the pe distributor. The manufacturer then manufactures a certain quantity of the product before the distributor places an order with the manufacturer. When the order actually arrives, the manufacturer sells items from inventory and can update his/her expectations of future orders Pa (Robinson & Elofsen). Enterprise Resource Planning: de Tait Electronics is operating in various parts of the globe. It has classified those parts, sales channels, in two categories:  Subsidiaries ra  Dealer networks If annual sales in a particular geographical region exceed $1 billion, then that region is upgradedpG to the level of a subsidiary. Else, the geographical region remains at the level of dealer network and is managed through the regional headquarter of Tait Electronics. Subsidiaries operate in two directions – they provide distribution services & product services to customers; market intelligence and customer feedback to Tait’s headquarter. Tait, currently, has subsidiaries in 11To countries and dealer networks in another 70. In order to manage such dispersed geographical areas, Tait needs a system that has the ability to integrate all the dispersed regions into one. (Tait Electronics – CANZ) ERP stands for Enterprise Resource Planning. ERP is a system that integrates all the vital operations & activities of an organization. ERP can be defined as: “A set of integrated programs capable of managing a company’s vital business operations for an entire multisite, global organization” (Stair & Reynolds 2006). 5 GET YOUR WORK DONE BY www.TopGradePapers.com
    • GET YOUR WORK DONE BY www.TopGradePapers.com Why ERP? Tait has installed an ERP suit that is used to integrate its geographically dispersed regions into one. The ERP helps regions all across the globe to see what and where Tait has got stock, what rs the status of production is and what’s in queue for production. When a region makes sales, the sold items comes out from the stock levels of Tait and a replenishment order is generated so that production is apt to maintain minimum stock levels. The correspondent at Tait gave the example pe of Europe; he mentioned that tonight when he’ll be going home, Europe will be making sales and the sold items will come out of the stocks of Tait. The correspondent also mentioned that in case of items that are sold quickly or on continuous basis, stocks are maintained at regions. When the Pa sales of a region reach below safety stock levels, it triggers a replenishment order and shipment is sent from Christchurch. Safety stock review is performed monthly. Tait electronics, has implemented the ERP system at their workplace around the globe, as they de have been operating in almost all the major regions: Asia, America, and Europe. The main feature of the ERP implemented, which also proves to be the most crucial one, is the use of forecasting models built in the system, to support inventory and procurement decisions. ra The method of forecasting for the company starts with the identification of relevant attributes and then inculcating all of them in their best form to the model build in the ERP system, which is then used to forecast for the next term. For the sake of forecasting, they divide the world in threepG major divisions: Asia, America, and Europe. Then for each of the division they find relevant attributes and multipliers for forecasting (multipliers are relevant number by which the forecasted figure will be multiplied or divided because this is the factor adjustment of the holidays, promotions, ad campaigns or other discount offers in a specified region). TheTo forecasted model will forecast a static figure for all the regions then separate distinguishing effects with the relevant adjustments will be added to them to come up with the right figure. For the sake of effective forecasting, the regions are further subdivided in their major retailers and wholesalers in the relevant division. The forecasting is the most crucial decision for a company, and most challenging for an international company, in short. Tait, as being international company has to add multiple varying factors in the forecasting, there are conditions when in one country there are holidays while other 6 GET YOUR WORK DONE BY www.TopGradePapers.com
    • GET YOUR WORK DONE BY www.TopGradePapers.com countries are having busy weekdays, or in one country some major event going on and in another one just the routine life on the move. So they have to inculcate the effects of all the factors in the forecasting to come up with the most reliable figures for divisions and further in terms of the demand from specific retailer or wholesaler. rs They divide initially according to the regions, then they make tiers according to the product line; each product has its own tiers because a product can be customized in a lot of ways, like mp3 pe player can have different body or look in terms of color, size and other features. So they also have to make forecasts for each tier of the product. They also face challenges in this highly ambiguous future predicting procedure, which in turn can save millions of dollars for a company in terms of inventory cost savings. The main challenge occurs when ad campaigns or coupons Pa are on the move, like when these kinds of deals come in, they mostly offer that buy one product and get accessory of your selection totally free, so they have to come up with the correct figures of the products taken by choice of public as a free accessory. de After making the forecasts of each product line of each region, they sum up the accessories needed to order for the mass product line (MPL); the accessories needed to make products, this is again the most crucial step because here they have to order the accessories which in turn will ra prove to be the originally demanded accessories. They claim 85 % of the original forecasting and 15% of the fault in the procedure, to cope with the situation they prefer to hold some form of inventory. For this purpose they have also applied CRM at their place around the globe, they arepG open to the comments, suggestions, and claims of their customers from all over the world. They believe that customer is a building block of their business. So they cannot afford any claim which move the claimant away from the company, in terms of future sales, consequently they have decided to afford some sort of inventory cost to reduce the risk of a claimant appearing orTo product shortage. (Interview) After making the forecasts for years, months or a term (whichever the specified term is), they have to come up with the right dates of shipments or orders from the retailer or wholesalers. So they make a schedule with the name of BTO to come up with the right time, the company would need to supply their products to different regions. The challenge here is, they have to make the right schedule of products to be shipped to specified regions, because to manufacture those 7 GET YOUR WORK DONE BY www.TopGradePapers.com
    • GET YOUR WORK DONE BY www.TopGradePapers.com products they have to procure the accessories first at the right time without getting any possibility of shortage. Customer Relationship Management: rs CRM stands for Customer Relationship Management. A CRM is a system that is aimed at pe communication with the customer. A CRM system is used to manage all aspects of customer encounters; namely: marketing and advertising, sales, customer service after sale, and programs to retain loyal customers. CRM system also allows a firm to collect consumer data, contact customers, educate customers about new products, sell products and get their feedback (Stair & Pa Reynolds 2006). Why CRM? de Tait has also installed a CRM system to ensure effective communication with its customers with minimal noise. In order to ensure healthy customer relationship, Tait tries to keep some extra stock so that they don’t have to turn their customer down. Tait uses BTF and builds its inventory ra according to the forecast plus some excess reserves just in case the actual demand exceeds the forecast. Apparently, it may seem as something minor but it in fact is a very major step. Tait understands the value of customers and understands that it is pertinent to not say that “We arepG out of stock” if it wants to retain customers. In today’s global environment, the cost of retaining customers as opposed to cost of attracting new customers is much lower and the payback period of investment done to attract new customers is relatively longer; thus, the retention of customers is essential to the successful survival of an organization. Tait has understood this very basic yetTo critical point and implemented a CRM system to facilitate communication with its customers. Tait’s CRM system has two basic aspects; one aspect of Tait’s CRM has already been mentioned – keeping surplus level of stocks; the other aspect is communication from customer side. Customers are encouraged to contact Tait to inform the management about their perception of the products, quality satisfaction, availability of product, ease of use, need of technical assistance and alike via telephone or mail. Tait then incorporates the customer feedback into its forecasting process to come up with better estimates. (Interview) 8 GET YOUR WORK DONE BY www.TopGradePapers.com
    • GET YOUR WORK DONE BY www.TopGradePapers.com Theory vs. Practice: The management textbooks, journals, periodicals, blogs and other sources contain a lot of information on the aforementioned systems and their advantages. Those sources explain how to rs select a system, how to implement and how to capitalize on it. It wouldn’t be exaggeration if I say that the systems in place are a result of theory as in all fields of study, a concept is first presented in theory before it is practiced. Furthermore, with the passage of time and pe advancement in research, different scholars modify the existing models and present better versions of either the same models or new models that are free from pitfalls (or at least have less number of pitfalls) that were present in earlier models. Now let’s examine what is the situation of Pa Tait in comparison to the theory. I’ve explained systems in detail that are in place at Tait; but, the question arises whether these systems are according with the theory or they deviate from theory? The answer to this question is de that systems at Tait deviate from theory. The reason behind this deviation is that in theory we can assume Cetrus Paribus or in other words other things being equal; but, in reality things are dynamic rather than static. The correspondent at Tait explained that when operating globally in today’s environment, we cannot use static models as presented by theory; we need dynamic ra models that can absorb the ground realities so that forecasts actually help.pG Bridge gap between theory and practice: In order to bridge the gap between theory and practice at Tait, the only feasible solution would be to develop a theoretical model that is capable of being dynamic so that forecasts could beTo realistic. It will help Tait to remain competitive and help it to survive in such a global environment. The world is moving very fast and in order to keep pace with it, we have to keep our pace up to the mark, so that you do not stay behind the world. The competition is very stiff and in order to remain on cards, it’s important to implement such dynamic model. 9 GET YOUR WORK DONE BY www.TopGradePapers.com
    • GET YOUR WORK DONE BY www.TopGradePapers.com Reference  Stair and Reynolds. “Principles of Information Systems”, pg 49-50, 489, 421-423, 447- 448 rs pe  Robinson & Elofsen. “Strategies for E-Commerce”. Pg 156-157  Vendor Managed Inventory. Retrieved from: http://www.vendormanagedinventory.com/. Retrieved at 21-09-2009  JE Beasley. Pa “Master Production Schedule” Retrieved de from: http://people.brunel.ac.uk/~mastjjb/jeb/or/masprod.html Retrieved at 20-09-2009 ra  Interviews with Tait employee,(Date), Tait Electronic LtD; 175 Roydvale Ave, Christchurch, NewZealandpGTo 10 GET YOUR WORK DONE BY www.TopGradePapers.com