A Look into Melbourne's Small Business Supply Chain Practice
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An analysis of a small business' supply chain practice. Understanding current supply chain and logistics process of maintaining, ordering and receiving stocks to exploring feasible SCM business strategy and tools that can be considered for implementation of its possible business impact.
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A Look into Melbourne's Small Business Supply Chain Practice
- 1. Supply Chain Practice of Bill’s Farm Presented by: Diamond Rose Lumba
- 3. Business Background ◉ Cheese Retailer at Queen Victoria Market for 20 years ◉ Sells: a. Cheese – 130 types b. Meat c. Antipasto ◉ Business strategy is offering Quality and Unique products 3
- 4. Business Goal To Increase Annual Sales by 10% Increase Number of Sales Decrease Operational Costs Improve Internal Process 4
- 5. Customer Segments Profile Individual/Family Restaurant Owner/Chef Competitive Low Cost Availability, Quality Product Volume Low Quantity High Quantity Demand Volatile Stable 5
- 6. Supply Chain Management Let’s take a look at Bill’s Farm more closely… 6
- 7. Who are their suppliers? Cheese 1. Bill’s Farm 2. Conga 3. Mayer 4. Basile Imports 5. Genobile Brothers 6. Calendar Cheese 7. Savour & Grace 8. That’s Amore 9. Alba 10. Tibaldi 11. Millawa Cheese 12. Dons Smallgoods Meat 1. Bill’s Farm 2. Barkly Smokehouse 3. Fabris 4. Peter Bouchier 5. Genobile Brothers 6. Janes Sausages 7. Savour & Grace 8. Lago 9. Marchetti 10. Tibaldi 11. Friend & Burrell 12. Dons Smallgoods 13. Barossa fine foods 14. Eurostore 15. PFD Foods 16. Melbourne Pantry 17. Gamekeepers 7
- 8. How do they source their products? 8
- 9. Manual Inventory Check Telephone Supplier + Cool Storage Visual Count Order Received & Entered into Bill’s Farm Account Order Order Spreadsheet Records Order Prepare order Invoice Dispatch Order with paper- based invoice Driver unloads order & hand invoice Receive order and Invoice Order Order Order Process Cash Payment Receive Cash Payment Order Invoice Store Invoice Invoice Enter Invoice every end of the day InvoiceSpreadsheet Records Invoice Bill’sFarmSupplier Sourcing Diagram 9
- 11. How are they Aligned? [HUGOS, 2011] CUSTOMER NEEDS BUSINESS CAPABILITY LEAN RESPONSIVE SUPPLY CHAIN Suppliers Many Inventory High, Wide Variety Location Accessible Transportation Fast & Flexible Information Collect Accurate Data 11
- 12. Supply Chain Issue Let’s take a look at Bill’s Farm more closely… 12
- 13. Manual Inventory Management Why is it a problem? [Kang & Gershwin, 2005] ◉ Human error ◉ Labor Intensive: Continuous Monitoring ◉ Inefficient ◉ Inaccurate Information ◉ Increased risk of experiencing Out-of- Stock 13
- 14. Plan & Control ◉ Includes collection, processing & distribution of information ◉ Reduces transaction costs ◉ Optimize inventory levels Making it Difficult to… Forecast Inventory& Stock ◉ Dynamic setting of Safety Stock & Reorder Point 14
- 15. Solution & Recommendation Let’s take at ways of improving Bill’s Farm… 15
- 16. What can be implemented? Improve SCM Competitiveness Stock Control Mobile App Simulation & Sensitivity Analysis [Vaaland & Heide, 2007] 16
- 17. Manual Inventory Check Telephone Supplier + Cool Storage Visual Count Order Received & Entered into Bill’s Farm Account Order Order Spreadsheet Records Order Prepare order Invoice Dispatch Order with paper- based invoice Driver unloads order & hand invoice Receive order and Invoice Order Order Order Process Cash Payment Receive Cash Payment Order Invoice Store Invoice Invoice Enter Invoice every end of the day InvoiceSpreadsheet Records Invoice Bill’sFarmSupplier Current Sourcing Practice 17
- 18. Business Considerations Aligned with Business Goal ◉ Improve internal process ◉ Increase sales ◉ Decrease operational cost Financial Constraint ◉ Financial control and budgeting is a priority ◉ Value in return must exceed the additional cost Compatible with Existing used tools ◉ Microsoft Excel ◉ iPhones or iPad 18
- 19. Inventory Shortage Alert Click Reorder from App + Cool Storage Order Received & Entered into Bill’s Farm Account Order Order Spreadsheet Records Order Prepare order Invoice Dispatch Order with paper- based invoice Driver unloads order & hand invoice Scan order barcode Product Process Cash Payment Receive Cash Payment Invoice Store Invoice Invoice Mobile App Bill’sFarmSupplier Implication to Sourcing Process Product Product Product Order Information 19
- 21. References Hugos, MH 2011, Essentials Of Supply Chain Management, n.p.: Hoboken, N.J. : Wiley, 2011., DEAKIN UNIV LIBRARY's Catalog, EBSCOhost, viewed 26 September 2017. Kang, Y. and Gershwin, S.B., 2005. Information inaccuracy in inventory systems: stock loss and stockout. IIE transactions, 37(9), pp.843-859. Vaaland, T.I. and Heide, M., 2007. Can the SME survive the supply chain challenges?. Supply chain management: an International Journal, 12(1), pp.20-31. 21
Editor's Notes
- We will take a look at what are the implications to the business’ logistics to keep in line with their stated business strategy
- Indiv/Fam – 1 to 2 types of cheese, same day selection & payment Restaurant Owner/Chef – 3 to 4 types of cheese, order by phone, payment by pick-up, at least 2 times a week order
- * Customer Needs – affordable, quality, wide variety of products * Business Capability – Quality, Customer Service, Flexibility * Lean because demand is predictable stable, over time. Responsive because high variety of product that must be quickly available Plan & Execute (Long Lead Time) * The drivers of the supply chain will increase throughput while simultaneously reducing inventory and operating expense
- Human error – fatigue, multitasking, emotional stress Inefficient – time it takes to complete daily Inaccurate data – information is accurate and up-to-date as the last hand count
- Transaction cost is reduced when done electronically Having inventory means tying capital. When there is timely, accurate information, business can plan for demand Safety Stock – (Max Daily Usage x Max Lead time in Days) – (Avg Daily Usage x Avg Lead time in Days) Reorder Point – Lead Time Demand x Safety Stock * Lead Time Demand – Lead time x Average Daily Usage
- Stock Control is developed by KiwiObjects that is free to download for the first 15 items but to unlock the full features, will only need to pay $10 Quantity Management with shortage alerts Item Group Management (Cheese) Categories Management (Italian –> Permigano-Reggiano) Storage Management Barcode & Reporting * Simulation & Sensitivity Analysis systems are generally designed to reduce uncertainty in a supply chain with implications for the critical balance between safety stock and delivery reliability