Supply Chain Operations: Making and Delivery PDF

Here is the transcription of the image into a structured markdown format: ### Image Description The image shows a supply chain with three main nodes: a shopping cart, a truck, and a person's face. These nodes represent the major steps in a supply chain: sourcing and procurement, production and dist...

Here is the transcription of the image into a structured markdown format: ### Image Description The image shows a supply chain with three main nodes: a shopping cart, a truck, and a person's face. These nodes represent the major steps in a supply chain: sourcing and procurement, production and distribution, and finally, the end consumer. ## SUPPLY CHAIN OPERATIONS: ## MAKING AND DELIVERY **Chapter 3** ### Introduction Many businesses and supply chains operate with consumers in mind, who are becoming more educated and seeking higher quality of service each year. Continuous changes to operations are needed to include the efficiency and responsiveness that changing supply chains require. This chapter discusses the final two areas of supply chain operations: food production and distribution. ### Learning Objectives At the end of this chapter, you should be able to: 1. gain a fundamental knowledge of the supply chain activities involved in the manufacture and delivery of goods; 2. determine how product design impacts the supply chain that supports that product; 3. gain insight into the balancing act that is inherent in production scheduling between utilization rates, inventory levels, and customer service; 4. be able to use the four principles of effective order management in your organization; and 5. evaluate various delivery schedule alternatives and know which ones apply to your own companies. ## MAKE: Categories of Supply Chain Operations The third stage in the supply chain management process is the **production** of goods requested by the consumer. The goods are developed, crafted, checked, packed, and synced for distribution at this level. Here, it is the responsibility of the supply chain manager to prepare all the necessary activities for fabrication, testing, packaging, and distribution planning. In this phase, companies will measure the level, manufacturing output, and productivity of the workers as the most metric-intensive part of the supply chain. The three activities in this division are **product design**, **product scheduling**, and **facility management**. ### A. Product Design Product designs and component specifications are dependent on current technologies and product specification requirements. Until recently, little attention was given to how the nature of a product and the selection of its parts influence the supply chain needed to make the product. When approaching product design from a supply chain standpoint, the goal is to design products with fewer components, simple structures, and modular fabrication from common sub-assemblies. As a consequence, the components can be purchased from a select number of chosen manufacturers. Inventory should be stored in the form of standardized sub-assemblies at strategic points along the supply chain. There would be no need to have vast inventories of finished goods because consumer demand can be fulfilled easily by manufacturing final items from standardized sub-assemblies as customer orders arrive. The nature of a commodity forms the supply chain needed to sustain it. The more adaptable, responsive, and cost-effective the supply chain, the more likely the product's commercial success. Find the following example to highlight this point. Brand architecture influences the form of the supply chain, which has a direct effect on the product's cost and availability. There is a huge potential to produce products that would be competitive and sustainable if product planning, sourcing, and production people cooperated in the design of a product. People in architecture, procurement, and manufacturing have a natural propensity to have opposing interests unless their activities are planned. Designers are obsessed with satisfying the needs of their clients. Procurement personnel are involved in obtaining the highest offers from a prescreened group of chosen vendors. Manufacturing workers want quick welding and assembly processes, as well as longer production runs. A product design that does a decent job of integrating the three viewpoints, design, procurement, and manufacturing can result in a product that can be backed by an efficient supply chain. This will give the commodity a short time to market at a good price. ### B. Product Scheduling When market dynamics adjust, product scheduling becomes a constant balancing act. Development managers must meet the often contrasting demands of offering high levels of customer care while keeping inventory down and plant productivity high. The output scheduling operation is a method of finding the best possible compromise between many opposing goals. **Figure 4. Goals in Output Scheduling** The figure shows a diagram with three competing goals: * High Utilization Rates ("Long runs in management, central production, and delivery systems") * Low Levels of Inventory ("Short manufacturing processes and just-in-time raw material distribution") * High Levels of Customer Service ("Many limited manufacturing runs with high levels of inventory") To plan a product at a dedicated plant means to organize operations in the most efficient way possible and to operate the plant at the appropriate pace to satisfy the product demand. If a single installation or a single assembly line creates many separate items, this is more complicated. Each product has to be manufactured for some time and then it takes time to turn to the next product. Product scheduling is an ongoing balance between use patterns, stock levels, and the quality of customer support. ### C. Facility Management Both decisions on facilities management are taken under the limits imposed by decisions on the sites of the facility. It is generally very costly to close down an installation or to construct an additional facility, but businesses experience the implications of decisions to find their installations. Facility management of the installation takes place as a given location and works on how best to leverage existing power. Decisions need which to be taken in three areas: 1. **The Role Each Facility Will Play** This includes actions that decide the operations in which services can be carried out. The flexibility of the supply chain is greatly affected by these decisions. They define mainly how the supply chain should transform its activities to satisfy changing demand on the market. If there is only one facility or only services one particular market, it cannot typically easily be diverted to another purpose, or service another market, as the supply chain needs adjustment. 2. **How Capacity Is Allocated in Each Facility** Decisions on capacity utilization result in the equipment and labor that are employed at the facility. Changing decisions on capacity allocation is better than changing decisions on a venue, but repeated allocation changes are also not cost-efficient. So, the distribution of capacity until determined greatly influences the efficiency and viability of the supply chain. To allocate very little facilities power means that demand and distribution losses cannot be achieved. Too much power within an installation leads to low use rates and increased supply chain costs. 3. **The Allocation of Suppliers and Markets to Each Facility** The first two decisions influence this. The facility needs different types of suppliers, and the goods and quantities it can allow and accommodate can serve certain types of industries, depending on the position that the facility performs and the capability it has. Decisions on distributors and markets for the plant will impact the costs of freight and transportation from facility to consumers of services to the facility and finished goods. These decisions often influence the ability to satisfy consumer requirements for the overall supply chain. ## DELIVER: Categories of Supply Chain Operations The fourth stage is the stage of delivery. In here, the goods are shipped by the retailer to the consumer at their destination. This is essentially the logistics point, where consumer orders are approved and supplies are prepared for delivery. The distribution phase is frequently known as logistics, in which companies work together to accept orders from clients, build a network of warehouses, pick up carriers to supply goods to consumers, and create a payment invoicing system. ### Rules of Order Management 1. **Enter the Order Once and Only Once** Capture the order as similar as possible to the original source remotely. Do not return the order manually. 2. **Automate Order Routing** Send orders immediately to convenient delivery points. People only handle exceptions. 3. **Make Order Status Visible** Allow consumers and service agents to immediately view the details on the order status if they choose to. 4. **Use Integrated Order Management Systems** To protect data integrity, associate order management systems electronically with other similar systems. ### Delivery Scheduling Naturally, decisions taken surrounding the mode of transportation to be used have a significant impact on the distribution scheduling process. The distribution schedule functions under the limits of transport decisions. There are two categories of distribution strategies for most modes of transport: direct deliveries and milk run deliveries. 1. **Direct Deliveries** There are deliveries from one place to the reception place. The routing is essentially the fastest route between the two places using these types of distribution. This delivery schedule includes recommendations on the amount of delivery to the individual locations and the pace of delivery. The benefits of this distribution system are the ease of procedures and the scheduling of delivery. Because this approach specifically transfers goods from where they are processed or deposited in warehouses to a place where the products are used, indirect operations that add multiple smaller shipments to one single, larger consolidated shipment are removed. 2. **Milk Run Deliveries** These are some deliveries that carry goods from a single place of origin to various receiving sites; and there are also deliveries that bring products from multiple places of origin to one receiving site. Planning milk supply is a much more difficult job than preparing direct supplies. Decisions must be taken about the supply volumes of various materials, the frequency of supply, and, above all, the routing and sequencing of pickups and supplies. The benefits of this distribution system are that the mode of transport used can be used more efficiently and that delivery costs are smaller since the place receives fewer and bigger deliveries. ### Sources of Delivery 1. **Single-Product Locations** These include plants or warehouses that are available for shipping in a particular commodity or a narrow selection of similar products. These installations are ideal if the demand for the items they sell is predictable and strong and where shipments only go to consumer sites where the goods can be shipped in huge quantities. When used successfully, they give great economies of scale. 2. **Distribution Centers** There are warehouses in which bulk commodities are transported from single-product locations. Where vendors are situated far from consumers, the use of a logistics center ensures economies of scale in long-distance shipping, bringing vast quantities of goods close to the final consumer. ### Return Processing This is often called the "reverse logistics" phase. The returns must be treated in all supply chains. This is essential since recycled items are returned, and after online e-commerce transactions, products are returned as well. Returning is critical and can be effectively managed, but also it is easier to work on ways of alleviating the root causes of commodity returns. Companies and supply chains, in general, must monitor the type of returns, their duration, and whether the rates of returns increase or decrease. Return processing can be efficient, but at the same time, note that there is no need for much return processing if all supply chain operations are successfully handled. Optimization of the return mechanism would be an effort to improve the efficiency of a process that is first of all not to take place. With the rates of return rising, identifying and disclosing the causes of the problems required are considerably more efficient.