04 supply chain planning and control ch13 colour
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13.1
MBA Operations Management
Week 4
Nigel Slack, Stuart Chambers & Robert Johnston, 2004 Operations Management, 4E: Chapter 13
upp y a n ann ng an on ro .
Senior Lecturer: Dr. Louise Hung
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13.2
DemandSupply Coordinated delivery
of products and
Supply chain planning and control
Nigel Slack, Stuart Chambers & Robert Johnston, 2004 Operations Management, 4E: Chapter 13
Operations resources Customer requirements
supply chainThe operation The market
Required time, quantity
and quality of products
and services
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13.3
First tier
supplier
Second tier
supplier
First tier
customer
Second tier
customer
End
customer
Demand sideSupply side
Purchasin and Physical distribution
Nigel Slack, Stuart Chambers & Robert Johnston, 2004 Operations Management, 4E: Chapter 13
supply management
management
Logistics
Materialsmanagement
Supply chain management
Informationflow
Physical
flow
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13.4
Request for
uotationsRequest for
Preparequotation for Demand
Requests
The operationPurchasing functionSuppliers
The purchasing function brings together the
operation and its suppliers
Nigel Slack, Stuart Chambers & Robert Johnston, 2004 Operations Management, 4E: Chapter 13
pro ucts an
services
Produce
products andservices
Select
supplier(s)
Prepare
purchaseorder
,
price, delivery,etc.
Receive
products andservices
customers
Supply to
customers
Quotations
Order
Liaisonbetween
purchasingand the
operation
Deliver
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13.5
B2BRelationship:
Most common, all but the
last link in the supply chain
E-commerce examples:
EDI networks
Tesco Information Exchange
B2CRelationship:
Retail operations
Catalogue operations, etc.
E-commerce examples:
Internet retailers
Amazon.com, etc.
Business
Supply chain relationships
Business Consumer
Nigel Slack, Stuart Chambers & Robert Johnston, 2004 Operations Management, 4E: Chapter 13
C2BRelationship:
Consumer offer,
business responds
E-commerce examples:
Some airline ticket
operators
Priceline.com, etc.
C2CRelationship:
Trading swap and
auction transactions
E-commerce examples:
Specialist collector sites
Ebay.com, etc.
Consumer
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13.6
nalOperation
sActivity
hing
tant
Do
Everything
Scope Traditional
Supply
Management
Vertically
Integrated
Operation
Types of supply relationship
Nigel Slack, Stuart Chambers & Robert Johnston, 2004 Operations Management, 4E: Chapter 13
The
characterofInte
Do
Nothing
D
Everyt
Imp
or
Resource
Market Relationship
Transactional -
Many Suppliers
Close -
Few SuppliersType of Inter-firm Contact
Virtual
Spot
Trading
Long-term
Virtual
Operation
Partnership
Supply
Management
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13.7
Productive resources
Vertical integration
Relationship type Exchange elements Typical examples
Types of exchange
Nigel Slack, Stuart Chambers & Robert Johnston, 2004 Operations Management, 4E: Chapter 13
Goods and servicesInformation
Cash and equity
Control and reporting
Supplier Customer Multi-divisionalfirms, e.g.chemicals, food
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13.8
Design specification
Partnership relationships
Relationship type Exchange elements Typical examples
Types of exchange
Nigel Slack, Stuart Chambers & Robert Johnston, 2004 Operations Management, 4E: Chapter 13
Medium-/long-term plansGoods and services
Knowledge and
investment
Supplier Customer Co-makership,joint venture,e.g. automotive
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13.9
Capacity commitment
Long-term market relationships
Relationship type Exchange elements Typical examples
Types of exchange
Nigel Slack, Stuart Chambers & Robert Johnston, 2004 Operations Management, 4E: Chapter 13
Design specificationDemand forecasts
Blanket orders and
schedules
Supplier Customer Single/dualsource, preferredsupplier,
e.g. defence
electronics
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13.10
Short-term market relationships
Relationship type Exchange elements Typical examples
Types of exchange
Nigel Slack, Stuart Chambers & Robert Johnston, 2004 Operations Management, 4E: Chapter 13
Goods and servicesOrders and documentation
Supplier Customer Spot orders,e.g. routinestationery
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13.11
Schedule
changes impact
market faster
Forecasts
made closer to
demand time
Defects are
detected
faster
New products
and service
faster to market
so can
respond to
market changes
so improved
forecasts
so easier to
improve
quality
so fewer lost
sales from
delayed launch
so reduced
risk of
obsolescence
Supply chain time compression
The effects of supply chain compression
Nigel Slack, Stuart Chambers & Robert Johnston, 2004 Operations Management, 4E: Chapter 13
so less need
for safety
stocks
so revenuesare
maximized
so reducedstockholding
costs
so reducedwastage costs
so revenuesare
maximized
so fewerdiscounted
sales
Improved profitability
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13.12Managing the supply chain
First-tiersuppliers
Theoperation
Second-tiersuppliers
First-tiercustomers
Second-tiercustomers
Nigel Slack, Stuart Chambers & Robert Johnston, 2004 Operations Management, 4E: Chapter 13
Purchasing andsupply management
Physical distributionmanagement
Logistics
Materials management
Supply chain management
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13.13
Physical distribution management
Operationsperformancedimension
Delivery speed
Road Rail Water Air Pipeline
Mode of transport
2 3 1 5 4
Nigel Slack, Stuart Chambers & Robert Johnston, 2004 Operations Management, 4E: Chapter 13
e a y
Quality
Cost
Route flexibility
2
3
1
3
4
2
4
5
3
5
2
4
1
1
5
1 - best performance, 5 - worst performance
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13.14
Integrating the organizations functions
Options for integrating the organizations functions:
- materials management;
Nigel Slack, Stuart Chambers & Robert Johnston, 2004 Operations Management, 4E: Chapter 13
- merchandising;
- logistics;
- supply chain management.
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13.15
Increasing degrees of integration
Fully vertically integrated
Semi-hierarchy
Co-contracting
Nigel Slack, Stuart Chambers & Robert Johnston, 2004 Operations Management, 4E: Chapter 13
Co-ordinated contracting
Co-ordinated revenue links
Medium- to long-term trading commitments
Short-term trading commitments
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13.16 Motor Vehicle Parts Distribution Chains
Distribution
Chain of Parts
Distribution
Chain of
Dealer
network
Vehicle
manufacturer
Installer
Local
distributor
Area
distributor
Prime
distributor
Nigel Slack, Stuart Chambers & Robert Johnston, 2004 Operations Management, 4E: Chapter 13
Manufacturer
V.M.
Manufacturing
Chain
Supplier
Sub-supplier
Stockist
Raw materials
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13.17
2
1
3rd LEVEL
SUPPLIER
2nd LEVEL
SUPPLIER
1st LEVEL
SUPPLIER
ORIGINAL
EQUIPMENT
MFG.
Prodn. Stock Prodn. Stock Prodn. Stock Prodn. Stock
100 100 100 100 100
100
100
100
100
100
100
100
100
100
95
Nigel Slack, Stuart Chambers & Robert Johnston, 2004 Operations Management, 4E: Chapter 13
MARKET
6
5
43 95
95
95
95
3 2 1 OEM
ALL OPERATIONS HOLD ONE PERIODS STOCK
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13.18
2
1
3rd LEVEL
SUPPLIER
2nd LEVEL
SUPPLIER
1st LEVEL
SUPPLIER
ORIGINAL
EQUIPMENT
MFG.
Prodn. Stock Prodn. Stock Prodn. Stock Prodn. Stock
100 100 100 100 100
100
100
100
100
100
100
100
100
100
95
Nigel Slack, Stuart Chambers & Robert Johnston, 2004 Operations Management, 4E: Chapter 13
6
5
43 105
105
95
95
3 2 1 OEM MARKET
ALL OPERATIONS HOLD ONE PERIODS STOCK
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13.19
Leanrelationship
Price Quality Information Relationship
Planned Kaizen Transparent Integrated
The nature of the interaction between
players in supply networks is changing
Nigel Slack, Stuart Chambers & Robert Johnston, 2004 Operations Management, 4E: Chapter 13
Traditional
relationship
relationshipNegotiated
Bids
Monitored
Historical
Shared
Secretive
Cooperative
Adversarial
Time
This means higher stress levels not lower!
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13.20
Price
CostPrice
From cost driving prices up
To prices driving cost down
Nigel Slack, Stuart Chambers & Robert Johnston, 2004 Operations Management, 4E: Chapter 13
Cost
Time Time
From To
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