supply chain management

How does Location Decision Impacts Supply Chain Management?

The location decision directly impacts supply chain management as it helps in minimizing the overall cost and time required for transportation.

Globalization of Operations

globalization of operations is becoming one of the crucial aspects ofthe business’s location decision.

FACTORS AFFECTING LOCATION DECISION

1. Product and Industry: The nature of the product impacts the facility’s location. For instance, poultry farms are established on the outskirts of the city.

2. Availability of Resources: The plant must be located close to the suppliers of the raw materials. This is because, it minimizes the transportation cost, time and overall cost of production.

3. Proximity to Consumers: The organizations offering services may choose to locate facilities near their target customers. Thus, providing them with an advantage over similar service providers.

4. Climate Conditions: Manufacturing of some products demands specific climatic conditions. For this reason, industries are set up in areas where suitable climatic condition exists.

5. Proximity to Market: The companies producing customized or assemble products are located near their target market. Consequently, it reduces the time required for product assembly and delivery.

6. Regulatory and Policy Issues: The political policies differ in different geographical boundaries. So, the organizations prefer locations inside open economies having favorable policies.

7. Labor Supply: Before installing the plant, companies assess the availability of skilled labor. Also, they ensure the availability of basic necessities for the employee’s survival.

8. Free Trade Zones: Free Trade Zones are areas in which one can conduct business free from customs duty. Thus, it is an essential factor when selecting asite location.

9. Infrastructure: Before the installation, industries must assess the availability of infrastructure in that region. It may include connectivity via Rail, Roads, Air and Sea.

10. Taxes: The tax rates vary within and across the regions. This factor directly impacts the organizations

Location Decision Process in order:

Investigation

Identification

Evaluation

Selection

Step 1: Investigation

Firstly, the organizations investigate their requirements regarding their location. They conduct an internal SWOT analysis and decide whether to move, expand or install a new setup.

Step 2: Identification

Post investigation, they try to identify the potential locations for locating the facility.

Step 3: Evaluation

The next step in the location decision process is evaluating the potential locations. The evaluation process may include a detailed comparison of all the alternatives available.

Step 4: Selection

Companies conduct a thorough analysis of the location and government policies in the selected region. Also, an in-depth evaluation of the merits and demerits of the chosen area. Therefore, choosing the most appropriate location of the facility for installation.

Disadvantages of Poor Location Decision

Following are the disadvantages of selecting a poor location of the facility:

The maintenance of the plant is a constant addition to the cost.

Purchase of land and construction of infrastructure is an expensive affair.

Difficulty in marketing and transportation of the products.

Dissatisfaction among employees and workers.

Abnormal wastage and delays in the processes.

Capacity Planning

Capacity planning is about making sure your business has the available resources to meet consumer demand.

Capacity planning allows you to determine your current capacity. Or, the maximum you can take on and still get the job done in the usual period of time.

Types of Capacity Planning

1. Product Capacity Planning

Product capacity planning would be how you ensure you have enough cheese, sauce, and dough to create all the pizzas customers order each day.

2. Workforce Capacity Planning

An efficient use of capacity means that you have just enough of each kind of worker at any one time so that everyone is busy and there are no lulls in the process, such as delivery staff waiting on pizzas due to a shortage of cooks on that particular day.

3. Tool Capacity Planning

Tool capacity planning focuses on the tangible equipment you need to be able to complete the production process.

4. Production Capacity

This reflects the peak production you can deliver at any one time, assuming maximum efficiency of product, workforce, and tool capacities.

Measuring Capacity

Production rates must be measured to understand capacity. The measurement of capacity then becomes a function of the following:

Design Capacity - Design capacity is considered the ideal production situation. It is the maximum output possible with production equipment and resources over a period of time.

Effective Capacity - Effective capacity considers product mix, changes in product mix, anticipated maintenance, raw material disruptions and labor issues such as absenteeism and fatigue. Effective capacity is the maximum capacity possible

- Area tune eut outfits the rate of production

Capacity Planning Strategies

The chosen capacity strategy will be accepted by supply chain and manufacturing managers to ensure that everyone is using the same numbers and methodology.

1. Lead Capacity Strategy-

A lead capacity strategy adds capacity prior to demand. It allows managers to increase capacity ahead of demand so that service levels can be met when demand hits.

Lag Capacity Strategy

A lag capacity strategy means a company adds capacity only after demand has occurred.

Match Capacity Strategy

A match capacity strategy is an incremental increase in capacity that happens as volume increases. In ideal situations it can help balance the cost of increasing capacity and act as a “pay as you go” strategy.

WEEK 10

ETHICAL AND SUSTAINABLE SOURCING

Ethical Sourcing

To establish a common ground for further discussion, it is necessary to first define and describe the origins of the terms ethical

and sustainable sourcing. TWO APPROACHES

Utilitarianism is an ethical theory that determines right from wrong by focusing on outcomes. Utilitarianism holds that the most

ethical choice is the one that will produce the greatest good for the greatest number. Rights & Duties Rights are moral claims of individuals recognized by society. Duties are moral debts or obligations of individuals

recognized by society. “Each person has a duty to uphold or respect another person's rights” Ethical Sourcing

Ethical sourcing can be defined as “That which attempts to take into account the public consequences of organizational buying or

bring about positive social change through organizational buying behavior.” Fair Trade

The purchase of fair trade products is a recent sourcing activity that is becoming increasingly popular as firms

seek to demonstrate a more ethical approach to purchasing. Sustainable Sourcing

is one activity then, within the larger umbrella term of sustainability— it includes green purchasing, some form of

financial benefit, as well as aspects of ethical sourcing. Green purchasing is a practice aimed at ensuring that purchased products or materials meet environmental objectives of the

organization such as waste reduction, hazardous material elimination, recycling, remanufacturing and material reuse.

It can be defined as “the ability to meet the needs of current supply chain members without hindering the ability to meet the

needs of future generations in terms of economic, environmental and social challenges”

WEEK 11

LEAN SUPPLY CHAIN MANAGEMENT

Origins of the Lean Manufacturing

In 1950’s to 1980’s, Toyota led Japanese automotive industry created a unique production/manufacturing system. That system was called Toyota Production System (TPS) now more commonly known as lean manufacturing. Lean manufacturing

is a comprehensive production management system and there are two major features of lean manufacturing that

distinguishes it from production are: first, increased efficiency through the reduction of waste and

error; and second, reduced carrying cost of inventories achieved by manufacturing in small “batches

TIMWOODS

Transportation- virtual conveyance of data ( reports, email, voicemail)

Inventory -unread requirements,concepts, design for project it initiated. Motion - navigating multiple screens to complete transaction

Waiting- Individual waiting on data/ requirements

Over Production - Designed product / solutions with no customer

Over Processing -Inspections/ Testing not funded by customer

Defects - incorrect VOC/ requirements/ specifications

Skills - not utilizing peoples knowledge and skills

8 KINDS OF WASTE

D- Defect

O – Over-production

W - Waiting

N – Non-Utilized Talents

T- Transportation

I- Inventory

M- Motion

E – Extra Processing

Defect

Whenever you manufacture a product or service that fails to meet customer specifications, you create a defected item. This creates, at the very least, a need for additional resources to correct the issue or, worst case scenario, a complete loss. Over-production

If you misjudge your supply and demand, you can overproduce. This leads to wasted resources in managing the

overflow, either by discounting it or by storing it. Waiting

Bottlenecks in your manufacturing process can generate waiting waste. This can be in the form of equipment or labor

that is not being maximally employed. Non-Utilized Talents

Managing your employees and contractors can be one of the trickiest areas to minimize waste. Transportation

Excess transportation of tools, equipment, or information can generate wasted time and effort as well as inefficient

route planning if technicians must travel between locations.

Inventory

We live in an age of just-in-time everything. That means anytime you have inventory, you have an opportunity to

reduce the waste costs associated with managing it. Motion

The movement of team members, information, parts, and equipment can generate a great deal of small waste that can

quickly add up over time. Extra Processing

Any action that does not contribute to producing your end-product or service may generate waste. Identifying those

unneeded processing steps can save time and resources. 10 LEAN PRINCIPLES

1. Supply from a smaller 1st tier

2. Develop appropriate usually close partnership

3. Supplier selection based on performance

4. Single or dual sourcing only

5. “Market price minus” rather than “Supplier cost plus” 6. Early and close engagement with suppliers for NPI

7. Synchronized flexible capacity

8. Just-in-time delivery

9. Incentive and reward alignment

10. Willingness to share a substantial part of its proprietary information

Boost Profits

Implementing a lean supply chain can reduce unnecessary processes, your need for storage, and waste. Aside from the

increased revenue this could bring to your business, it can also boost your profits too. Reduce waste

When you’re trying to make your supply chain as efficient as possible, waste is going to prevent that. Waste needs to be

disposed of, which requires processes and reports and transport. Streamline your processes

As your supply chain grew, incorporated new third parties, and became more complicated, your processes may have

naturally evolved to become complicated too. Sometimes these evolutions can bring with them inefficiencies, inherit now- defunct steps, and develop duplications. Customer Satisfaction

Removing unnecessary steps in the supply chain puts your products in your customers’ hands that much faster, boosting their satisfaction with your company and increasing the likelihood that they will become repeat customers.

LEAN PROCESS MAPPING TOOLS

Value Stream Mapping

Value Stream Mapping (or VSM) is a visual lean tool that helps organizations optimize manufacturing and production

3Ms of Lean

Muda - Waste

Muri - Overburden

Mura - Uneveness

WEEK 12

AGILE SUPPLY CHAIN MANAGEMENT

Agile

At its most basic level, an agile supply chain is one that emphasizes flexibility. Characteristics of an Agile Supply Chain

1.Accurate Information

The mantra of agile supply chain management is “You can’t control what you can’t see.” Supply chain agility requires

you to collect and act on the most relevant ant timely information.

2.Comprehensive Control

Agile supply chains strive to understand the entire supply chain. This includes the key enablers and inputs needed to

produce the best possible customer experience.

3.Rapid Decision-making

While no one can possibly predict all disruptions, having processes and technology in place that enable quick decision- making is key to building an agile supply chain, meaning it can respond quickly to the unexpected and seize new opportunities despite the uncertainty inherent in the space

Lean Strategy

A lean supply chain focuses on maximizing savings by continuous improvement coupled with minimal redundancies.

Meanwhile, a lean supply chain focuses on continuous improvement and operating with minimal dependencies and safety measures.

Agile Strategy

An agile supply chain focuses onf lexibility and the ability to handlec hanges in demand and sudden crises.

Agile supply chain management ensures the supply chain can easily handle any s urprises that occur.

How to Create an Agile Supply Chain Model

Relationship

□ High Communication

□ High Collaboration

□ High Coordination

Shared Belief

Sensitivity

□ High alertness

□ Market Sensing

□ Quick Reaction

Process

Leverage Postponement

Capacity

High Process Integration

□ Joint Design

□ Joint Product Development

□ Co-managed inventory

Information

High Information Sharing

High Connectivity

Flexibility

□ Ability to quickly change

□ Modify Operations

□ Responsive