Suppliers Monitoring supplier quality, delivery, and relations
Purchasing Evaluating suppliers and supporting operations
Inventory Meeting demand while managing inventory costs
Processing Controlling quality, scheduling work
Design Incorporating customer wants, mfg., and time
Forecasting Predicting quantity and timing of demand
Customers Determining what customers want
Element Typical Issues
Production and Operations Management –MGT613 VU
Logistics is the time related positioning of resources and is
commonly seen as a branch of engineering
which creates "people systems" rather than "machine systems. It
involves the integration of information,
transportation, inventory, warehousing, material handling, and
Important Characteristics of Logistics
1. Movement within the facility
2. Bar coding
3. Incoming and outgoing shipments
4. EDI (Electronic Data Interchange)
6. JIT Deliveries
Logistics: Evaluating Shipping Alternatives
L A situation that arises frequently in some businesses in making a
choice between quicker(
expensive) shipping alternatives such as overnight or 2 day air and
slower but cheaper alternatives.
The decision in such cases often focuses on the cost savings of
alternatives versus the increased
holding cost that result from using slower alternative.
h Often the supplier gets paid on delivery of the product through
EDI the very same time the order
reaches its destination.
Management uses DRP to plan and coordinate:
5. Financial flows
Electronic Data Interchange
EDI is the direct transmission of inter-organizational transactions,
purchase orders, shipping notices, and debit or credit memos.
Electronic Data Interchange gives an organization the following
benefits and advantages.
1. Increased productivity
2. Reduction of paperwork
3. Lead time and inventory reduction
4. Facilitation of just-in-time systems
5. Electronic transfer of funds
6. Improved control of operations
7. Reduction in clerical labor
8. Increased accuracy
Efficient Consumer Response
Efficient consumer response (ECR) is a supply chain management
initiative specific to the food
industry. ECR reflects companies’ efforts to achieve quick
response using EDI and bar codes.
E-Commerce: is the use of electronic technology to facilitate
Successful Supply Chain
1. Trust among trading partners
2. Effective communications
3. Supply chain visibility
4. Event-management capability
a. The ability to detect and respond to unplanned events
5. Performance metrics
Reliability On-time delivery
Order fulfillment lead time
Fill rate (fraction of demand met from
Perfect order fulfillment
Flexibility Supply chain response time
Upside production flexibility
Agility to obtain competitiveness
Expenses Supply chain management costs
Warranty cost as a percent of revenue
Value added per employee
Assets/utilization Total inventory days of supply
Cash-to-cash cycle time
Net asset turns
Supply chain response time often makes or breaks a supply chain.
CPFR is an acronym derived from the first letters of the following
phrase: Collaborative Planning,
Forecasting and Replenishment.
1. Focuses on information sharing among trading partners.
2. Forecasts can be frozen and then converted into a shipping plan.
3. Eliminates typical order processing.
CPFR Process consists of the following steps.
Step 1 – Front-end agreement
Step 2 – Joint business plan
Steps 3-5 – Sales forecast
Steps 6-8 – Order forecast collaboration
Step 9 – Order generation/delivery execution
Creating an Effective Supply Chain
1. Develop strategic objectives and tactics.
2. Integrate and coordinate activities in the internal supply chain.
3. Coordinate activities with suppliers with customers.
4. Coordinate planning and execution across the supply chain.
5. Form strategic partnerships.
Reduced holding costs Traffic congestion
Long lead times Delayed differentiation
Quick response May not be feasible. May
need absorb functions
Large number of
Modular Fewer parts
Outsourcing Reduced cost, higher
Loss of control
Variability Shorter lead times,
Able to match supply
Ideas from suppliers could lead to improved competitiveness
1. Reduce cost of making the purchase
2. Increase Revenues
3. Enhance Performance
1. Technology management
2. Strategic importance