Global Operations & Supply Chain Management

Multi-stage process
Purchasing (Procurement) – Physical Distribution (Logistics)
Supply Chain
network of facilities (purchasing raw materials – intermediate goods – final products – deliver products to customer)
Complexities
multiple stages of suppliers, locations, physical distribution
Value Chain
only processes that add value in the chain
Supply Chain Network
Supply Chain Network
Inputs -> Transformation -> Localization -> Outputs
Vertical Integration
Vertical Integration
refers to the proportion of the supply chain that the company owns

where the supply chain is owned by the company

Reasons to outsource
1. Financially Driven Reasons
– improve return on assets (reducing inventory and selling unnecessary assets)
– gain access to to new markets (developing markets)
– reduce costs

2. Improvement Driven Reasons
– improve quality and productivity
– shorten cycle time
– obtain expertise, skills & technologies that are not otherwise available
– improve risk management
– improve credibility and image

3. Organisation Driven Reasons
– focuses on what the firm does best
– increase flexibility to meet changing demand for products and services
– improving response to customer needs

Purchasing
involves buying services or materials we elect to not develop internally

Focuses on:
1. Vendor Selection & Development
2. Green Sourcing
3. Centralised, Stockless & Blanket Purchasing
4. Vendor Managed Inventory

Vendor Selection & Development
work closely with selected vendors – improving supplier operations and efficiency
Green Sourcing
environmentally responsible (expanded input from designers, engineers and marketers

reduce costs – less packaging

Centralised purchasing
Increase in purchasing power – finds the best local deals ; avoid duplicity from orders; orders in bulk = lower transportation and inventory costs
Stockless Purchasing
When a buyer purchases a large amount of a product, for example, a three-month supply, and arranges for the vendor to store it and deliver a little at a time.
Blanket Purchase Orders
a commitment to purchase specified items at designated prices from particular supplier for a set time period, often one year.

So a committed relationship between retailer and manufacturer basically buying in bulk at a discounted price

Vendor Managed Inventory
the vendor monitors and manages the inventory for the customer
Logistics
Combination of transportation, inventory, packing and damage

1. Time Utility (When) – provides goods to customers when wanted
2. Place Utility (Where) – goods are delivered where they are needed
3. Form Utility (What) – physical and chemical changes in goods

Shipping Strategies
1. Consolidating
2. Cross-Docking
3. Drop-Shipping
Consolidating Shipping
have a distribution centre consolidate to retail locations
Cross-Docking
Cross-Docking
remove the intermediate step of storage by distributing them immediately
Drop-Shipping
directly contacting the supplier as the retailer do not have in stock
**think of online shopping**
Logistics Management Strategies
i. Postponement
ii. Postponement of Place Utility
iii. Labelling Postponement
iv. Packaging Postponement
Postponement
intentional ‘delay’ – to reduce inventory costs and improve flexibility
Postponement of Place Utility
avoid committing for AS LONG AS POSSIBLE

**if inventory is held at retail stores and one has high demand while another has low demand, inventory must be ‘pulled back’, then shipped to a retailer store that needs it.

manufacturing plant -> generic 1000 -> distribution centre

Labelling Postponement
products are completed without the exception of labelling

*generic products that is sold under multiple labels – cans

Packaging Postponement
products are completed but stored in bulk without packaging.

*reduces storage space
*provides flexibility for demand fluctuations – batteries, toiletries, diapers

Third Party Logistics
outsourcing allows each partner to concentrate on what they do best and assign other aspects of their business process to another organisation who has expertise in that aspect of the business
Levels of 3rd Party Logistics
1PL – conducting all logistics internally
2PL – using a carrier to transport freight
3PL – outsourcing SOME – usually owns physical logistic assets (trucks/warehouses)
4PL – COMPLETELY outsourcing
Humanitarian Supply Chain
processes and systems involved in mobilising people, resources, skills and knowledge to help vulnerable people affected by disaster
Reverse Supply Chain
concerned with retrieving the used product from the customer and either recycling, re-using, or disposing it
Reverse Supply Chain Types
1. Product Acquisition – obtain products from end users
2. Reverse Logistics – a process of reclaiming recyclable and reusable materials, returns, and reworks from the point of consumption or use for repair, remanufacturing, redistribution, or disposal
3. Testing, Sorting & Disposition – determine the product’s condition and economically attractive re-use option
4. Refurbishing – direct re-use, repair, manufacture and recycle
5. Re-Marketing – create and exploit markets of refurbished goods
Supply Chain Performance Metrics
– # of suppliers/purchasing agent
– purchasing costs as % or purchases
– lead time
– time spent placing an order
Supply Chain Requirements
1. Trust
2. Information sharing
3. individual strengths of organisation
4. choose the right type of supply chain
5. long term relationships “Keiretsu”
Supply Chain Type & Product Characteristics
1. *Functional* – predictable demand + *Physically Efficient Process* – supply predictable products at the lowest cost
2. *Innovative* – unpredictable demand + *Market-Responsive Process* – respond quickly to unpredictable demands and minimising stockouts
Managing Supply Chain Uncertainty – SHORT TERM
depend on buffers of inventory or capacity
Managing Supply Chain Uncertainty – LONG TERM
– cutting lead times or improving flexibility of supply chain
– partnerships with other organisations
– sharing business data via electronic information flow.