Global Supply Chain Logistics What

Global Supply Chain Logistics

What factors other than transportation are important to logistics planning? The factors are Supply chain visibility, simultaneous resource consideration and resource utilization.

Many factors are critical to managing a successful supply chain other than simply transportation issues. One such example is Supply Chain Visibility; which is especially important since much of the manufacturing industry utilizes resources overseas which increases transit times in upwards of thirty days or more. These delays in international shipping often represent the process constraint that signifies the supply chain bottleneck. Therefore visibility of these resources in transit is of the utmost importance since the rest of the supply chain is dependent upon the success of this phase.

Technology can serve as a great asset to increase visibility. Two common systems that have been developed to help supply chains collaborate are the ASN (Advanced Shipment Notifications) and the SSM (Shipment Status Message). The ability to use technology to integrate disparate companies is a vital factor in ensuring all parties can properly react to supply chain disruptions and implement a strategy to overcome problems (Rabren, 2010). Having the proper channels for communication and collaboration can reduce the shocks incurred with problems by bringing these problems to the attention of planners ahead of time.

4. In your words, what is the primary goal of the S&OP process?

The primary goal of sales and operations planning is to provide a forecast of demand that can be translated into a successful production plan. The goal consists of both time and quantity components. If the sales forecast is accurate then this alleviates potential issues all the way down the supply chain. It is imperative that the S&OP be as accurate as possible because it may be just as detrimental to overproduce as it is to under produce in regards to the organizations competitiveness in the marketplace.

7. Identify and discuss the major forecast components? Why is it important to decompose demand into these components when developing new forecasts?

The major forecast components are composed of systematic components such as level, trend, and seasonal components coupled with a catch all factor called a random component (Chapter 7 Demand Forecasting in a Supply Chain, 2007). The systematic components generally rely on historical data (when available) to provide the foundation when available. It is important to break these components down into more manageable components because of the fluctuations in the demand due to factors such as the seasonality of the demand plus the growth or decline of the products demand in respect to the product life cycle. These factors can disaggregate the forecast into components that can it more accurately applied to the market in multiple periods.

10. Discuss how a minor change in demand at the retail level can significantly impact supply chain variation at distributors, manufacturers and suppliers.

Minor changes in demand at the retail level can cause a bullwhip effect down the entire supply chain. Demand forecasts at the retail level are hardly ever accurate. Therefore organizations utilize some amount of safety stock to account for the fluctuation in demand. When demand exceeds the capabilities of the safety stock reserves of distributors they consequently offset this to the manufacture; which turns and shares this burden with their material suppliers. Furthermore, at each step in the process the magnitude of the shock in demand increases exponentially.

Chapter 16

4. Why is it important that a firm measure customer perception as a regular part of performance measurement?

The customer is ultimately the final judge of a products quality and value. They vote on the products desirability with their pocketbooks and consequently influence the organizations bottom line. Therefore the customer perception of value is a key performance indicator (KPI) that should be monitored closely (Setijono & Dahlgaard, 2007). The customers' value of the product will vary during the stages of the product life cycle and also depending on market saturation. Therefore having a metric will provide insights that can assist demand planning as well as other strategic decisions.

5. Why are comprehensive measures of supply chain performance, such as total supply chain cost, so difficult to develop?

A comprehensive measure of supply chain performance is difficult to develop because many of the critical success factors involved with the supply chain are qualitative and not quantitative. Successful supply chain strategies will consider many factors besides price; such as quality, reliability, stability, how well their technology integrates as well as plethora of other strategic considerations. Therefore since many of these factors are intangible in nature it is hard to quantify and contrast alternate supply chain possibilities. For example, if a low cost leader supplier isn't able to meet deadlines consistently then the costs associated with the disruption may greatly exceed any benefits gained from a lower unit price. This type of consideration makes comparative models very difficult to develop.

6. Compare and contrast the contribution approach with the net profit approach in cost/revenue analysis.

The contribution approach separates costs into fixed and variable costs and is often used in variable pricing situations to analyze the benefits of differentiated pricing models. For example, if a firm produces a product for ten dollars and produces this product at ninety percent capacity and has an opportunity to use the excess capacity to produce another good that sells for five dollars per unit. If a manager were to strictly rely on the net profit approach then selling a lower priced good may not appear to be that attractive. However, since the contribution approach separates the fixed and variable costs, then helps to illustrate the benefits achieved by these measures by producing the lower priced good. The disaggregated unit cost may appear higher than the contribution approach utilization of variable cost. This could potentially result in total losses to revenue by not considering the effects of the cost savings incurred by spreading out the fixed costs by producing more units. Furthermore this approach is often used as a metric to generate custom pricing estimates on custom production items.

8. Suppose you have been asked by a firm to assess the impact on a return on assets of outsourcing transportation. Currently the firm uses a private truck fleet and is considering a switch to a for-hire transportation company. Which aspects of the strategic profit model would be affected?