supplychainplanningoperationspart4111-240118201444-5b933709 (1).pptx

supplychainplanningoperationspart4111

1. Supply Chain Planning & Operations Part 4 Coordination in Supply Chain

2. Coordination in the Supply Chain

3. Terminal Learning Objectives At the end of this lecture, you should understand coordination in a supply chain to prevent interruption, work stoppages, and other supply chain issues.

4. Enabling Learning Objectives ▶ Describe supply chain coordination and the bullwhip effect, and their impact on supply chain performance. ▶ Identify obstacles to coordination in a supply chain. ▶ Discuss managerial levers that help achieve coordination in a supply chain. ▶ Understand the different forms of collaborative planning, forecasting, and replenishment possible in a supply chain.

5. Importance of Coordination in the Supply Chain Supply chain coordination aims at improving supply chain performance by aligning the plans and the objectives of individual enterprises . Significance of coordination for supply chain performance ▶ Minimizing inefficiencies and costs ▶ Enhancing customer service and satisfaction ▶ Improving overall supply chain performance

6. Lack of Coordination and the Bullwhip Effect ▶ The bullwhip effect occurs when small fluctuations in retail demand cause fluctuations in wholesale, distributor and manufacturer demand, resulting in inefficiency and disorganization throughout the supply chain. ▶ The bullwhip effect often occurs when retailers become highly reactive to demand, and in turn, amplify expectations around it, which causes a domino effect along the supply chain.

7. Lack of Coordination and the Bullwhip Effect ▶ Procter & Gamble first coined the phrase bullwhip effect to describe the ordering behavior witnessed between customers and suppliers of Pampers diapers. While diapers enjoy a constant consumption rate, P&G found that wholesale orders tended to fluctuate considerably over time.

8. Supply chain coordination improves if all stages of the chain. ▶ Supply chain coordination requires each stage of the supply chain to share information and consider the impact its actions have on other stages. ▶ A lack of coordination occurs either because different stages of the supply chain have objectives that conflict or because information moving between stages is delayed and distorted. ▶ Different stages of a supply chain may have conflicting objectives if each stage has a different owner.

9. Demand Fluctuations at Different Stages of a Supply Chain

10. Procter & Gamble (P&G) has observed the bullwhip

11. HP also found that the fluctuation in orders increased significantly as they moved from the resellers up the supply chain to the printer division to the integrated circuit division

12. Lack of Coordination and Manufacturing Costs ▶ Impact of lack of coordination on manufacturing costs ▶ Example: Tesla's production challenges and increased manufacturing costs

13. Tesla's production challenges and increased manufacturing costs By following these recommendations, Tesla could have avoided the challenges that they faced with the Model 3 supply chain and saved themselves a significant amount of money. ▶ Use a single source for critical components. This would reduce the number of suppliers that Tesla must deal with and make it easier to track orders and ensure that everyone is on the same page. ▶ Use a more sophisticated supply chain management system. This would allow Tesla to track orders more effectively and identify potential problems before they cause delays or quality issues. ▶ Invest in training for their supply chain staff. This would help to ensure that everyone is aware of the company's supply chain goals, and how they can contribute to achieving those goals.

14. Lack of Coordination and Inventory Costs ▶ Impact of lack of coordination on inventory costs ▶ Example: Nike's inventory management challenges and increased inventory costs

15. Nike experienced several management problems in 2020, which resulted in a lack of coordination and excess inventory. These problems included: ▶ A change in leadership. In 2019, Nike's CEO Mark Parker stepped down and was replaced by John Donahoe. This change in leadership led to some uncertainty within the company, which affected decision-making. ▶ The COVID- 19 pandemic. The COVID- 19 pandemic caused widespread disruptions to the global economy, including Nike's supply chain. This led to delays in shipments and production, which further exacerbated the lack of coordination. ▶ A focus on growth. Nike had been focused on growing its business in recent years, which led to some decisions that may have not been in the best interests of the company in the long term. For example, Nike increased its inventory levels in anticipation of increased demand, but this backfired when the pandemic caused demand to decline.

16. Things that Nike could have done better ▶ Reducing the number of suppliers. Nike has many suppliers, which can make it difficult to manage the supply chain. Reducing the number of suppliers would make it easier to track orders and ensure that everyone is on the same page. ▶ Investing in technology. Nike could invest in new technologies, such as RFID and blockchain, to improve the visibility of its inventory. This would help the company to identify potential problems before they cause delays or quality issues. Improving communication. Nike could improve communication between different departments within the company, such as sales, marketing, and supply chain management. This would help to ensure that everyone is aware of the company's goals and how they can contribute to achieving those goals. ▶

17. Lack of Coordination and Replenishment Lead Times ▶ Impact of lack of coordination on replenishment lead times ▶ Example: Boeing's supply chain issues and increased lead times

18. Boeings 737 lack of Coordination and Replenishment Lead Times ▶ A lack of coordination in the supply chain. This led to inefficient communication, delays in supplier deliveries, and poor coordination, which extended lead times, affecting production schedules and customer satisfaction. ▶ The COVID- 19 pandemic. The COVID- 19 pandemic caused widespread disruptions to the global economy, including Boeing's supply chain. This led to delays in shipments and production, which further exacerbated the lack of coordination. ▶ The grounding of the 737 Max. The 737 Max was grounded in 2019 after two fatal crashes. This led to a decrease in demand for the aircraft, which further affected the supply chain.

19. Things that Boeing could have done better ▶ Improving communication with suppliers. Boeing could have improved communication with its suppliers to ensure that everyone was aware of the company's goals and how they could contribute to achieving those goals. ▶ Investing in technology. Boeing could have invested in new technologies, such as RFID and blockchain, to improve the visibility of its inventory. This would have helped the company to identify potential problems before they caused delays or quality issues. ▶ Reducing the number of suppliers. Boeing has a large number of suppliers, which can make it difficult to manage the supply chain. Reducing the number of suppliers would have made it easier to track orders and ensure that everyone is on the same page.

20. Lack of Coordination and Transportation Costs ▶ Impact of lack of coordination on transportation costs ▶ Example: Maersk's container shipping disruptions and increased transportation costs

21. Maersk’s challenges with Lack of Coordination and Transportation Costs ▶ Port congestion: The pandemic led to a decrease in the number of workers at ports, which caused congestion and delays. ▶ Lack of visibility: The pandemic disrupted communication between Maersk and its stakeholders, which made it difficult to track shipments and identify potential problems. ▶ Poor coordination: The pandemic caused a lack of coordination between Maersk and its suppliers, which led to delays and shortages.

22. These disruptions resulted in increased costs for Maersk, including: ▶ Rerouting costs: Maersk had to reroute shipments around congested ports, which increased transportation costs. ▶ Container shortages: The pandemic led to a shortage of containers, which increased the cost of leasing containers. ▶ Delay costs: The pandemic caused delays in shipments, which increased the cost of storage and handling.

23. Maersk could have avoided some of these problems by taking several steps, including: ▶ Working with ports to improve efficiency: Maersk could have worked with ports to improve efficiency and reduce congestion. ▶ Investing in technology: Maersk could have invested in new technologies, such as blockchain, to improve visibility and coordination. ▶ Building relationships with suppliers: Maersk could have built stronger relationships with suppliers to improve coordination and avoid shortages.

24. In addition to the steps mentioned above, Maersk could have also taken the following steps to improve its supply chain coordination: ▶ Use a single source for critical components. This would reduce the number of suppliers that Maersk must deal with and make it easier to track orders and ensure that everyone is on the same page. ▶ Use a more sophisticated supply chain management system. This would allow Maersk to track orders more effectively and identify potential problems before they cause delays or quality issues. ▶ Invest in training for their supply chain staff. This would help to ensure that everyone is aware of the company's supply chain goals, and how they can contribute to achieving those goals.

25. Lack of Coordination and Labor Costs ▶ Impact of lack of coordination on labor costs associated with shipping and receiving ▶ Example: Amazon's labor challenges and increased shipping and receiving costs

26. Amazon’s Lack of Coordination and Labor Costs lead to: ▶ A high volume of orders: Amazon's peak seasons see a significant increase in the number of orders, which puts a strain on the company's workforce. ▶ A shortage of workers: Amazon has struggled to attract and retain workers during peak seasons, which has led to increased labor costs. ▶ Inefficient coordination: Amazon's labor force is often not well- coordinated, which can lead to delays and inefficiencies. ▶ Lack of cross-training: Amazon's workers are often not cross- trained, which can make it difficult to fill in for absent workers. ▶ Poor communication: Amazon's communication between workers and managers is often poor, which can lead to errors and delays.

27. These challenges resulted in increased labor costs for Amazon, including: ▶ Overtime: Amazon often has to pay overtime to its workers during peak seasons, which increases labor costs. ▶ Temporary workers: Amazon often has to hire temporary workers during peak seasons, which can increase labor costs. ▶ Training costs: Amazon has to spend a significant amount of money training new workers during peak seasons, which increases labor costs.

28. Amazon could have avoided some of these problems by taking a number of steps, including: ▶ Planning ahead: Amazon could have planned ahead for peak seasons and hired more workers in advance. ▶ Investing in technology: Amazon could have invested in new technologies, such as robotics, to automate some of its labor- intensive tasks. ▶ Improving communication: Amazon could have improved communication between workers and managers to reduce errors and delays. ▶ Cross- training workers: Amazon could have cross- trained its workers so that they could fill in for absent workers.

29. In addition to the steps mentioned above, Amazon could have also taken the following steps to improve its supply chain coordination: ▶ Use a single source for critical components. This would reduce the number of suppliers that Amazon has to deal with and make it easier to track orders and ensure that everyone is on the same page. ▶ Use a more sophisticated supply chain management system. This would allow Amazon to track orders more effectively and identify potential problems before they cause delays or quality issues. ▶ Invest in training for their supply chain staff. This would help to ensure that everyone is aware of the company's supply chain goals, and how they can contribute to achieving those goals. ▶ By taking these steps, Amazon could have significantly improved its supply chain coordination and avoided the labor challenges that it experienced during peak seasons.

30. Lack of Coordination and Product Availability ▶ Impact of lack of coordination on product availability and stockouts ▶ Example: Nintendo's supply chain struggles and increased stockouts

31. Nintendo experienced supply chain struggles in meeting the demand for its Switch gaming console in the early years of its release ▶ Inaccurate demand forecasting: Nintendo underestimated the demand for the Switch, which led to a shortage of consoles. ▶ Poor coordination with suppliers: Nintendo had difficulty coordinating with its suppliers to ensure that they had enough components to meet demand. ▶ Inadequate inventory management: Nintendo did not have an adequate inventory management system in place, which led to stockouts.

32. These factors resulted in reduced product availability and increased stockouts. This frustrated customers who were unable to find the Switch in stores. ▶ Accurate demand forecasting: Nintendo could have conducted more accurate demand forecasting to ensure that it had enough consoles to meet demand. ▶ Improved coordination with suppliers: Nintendo could have improved coordination with its suppliers to ensure that they had enough components to meet demand. ▶ Invested in inventory management: Nintendo could have invested in an adequate inventory management system to ensure that it had enough consoles in stock to meet demand.

33. Nintendo could have also taken the following steps to improve its supply chain coordination: ▶ Use a single source for critical components. This would reduce the number of suppliers that Nintendo must deal with and make it easier to track orders and ensure that everyone is on the same page. ▶ Use a more sophisticated supply chain management system. This would allow Nintendo to track orders more effectively and identify potential problems before they cause delays or quality issues. ▶ Invest in training for their supply chain staff. This would help to ensure that everyone is aware of the company's supply chain goals, and how they can contribute to achieving those goals.

34. Lack of Coordination and Supply Chain Performance ▶ Negative effects of lack of coordination on overall supply chain performance ▶ Impacts on relationships among different stages of the supply chain

35. The Effect of Lack of Coordination on Supply Chain Performance

36. Effect on Manufacturing Cost ▶ Lack of coordination increases manufacturing cost ▶ Factors contributing to increased manufacturing cost ▶ Example: Ford Motor Company's production challenges and increased manufacturing costs

37. Some of the specific challenges that Ford faced included: ▶ Shortages of semiconductors: Semiconductors are a critical component in many vehicles, and the shortage of these chips led to production delays for Ford and other automakers. ▶ Shortages of other components: Ford also faced shortages of other components, such as wiring harnesses and airbags. These shortages also led to production delays. ▶ Production delays: The production delays caused by component shortages led to increased manufacturing costs for Ford. Ford had to pay overtime to workers to make up for the lost production time, and it also had to pay for storage and handling of the incomplete vehicles.

38. Ford could have avoided some of these challenges by taking several steps, including: ▶ Improving communication with suppliers: Ford could have improved communication with its suppliers to ensure that it was aware of potential shortages and could take steps to mitigate them. ▶ Investing in technology: Ford could have invested in new technologies, such as 3D printing, to reduce its reliance on some critical components. ▶ Building relationships with suppliers: Ford could have built stronger relationships with suppliers to ensure that it was a priority for them when it came to allocating scarce components.

39. Ford could have also taken the following steps to improve its supply chain coordination: ▶ Use a single source for critical components: This would reduce the number of suppliers that Ford has to deal with and make it easier to track orders and ensure that everyone is on the same page. ▶ Use a more sophisticated supply chain management system: This would allow Ford to track orders more effectively and identify potential problems before they cause delays or quality issues. ▶ Invest in training for their supply chain staff: This would help to ensure that everyone is aware of the company's supply chain goals, and how they can contribute to achieving those goals.

40. Effect on Inventory Cost ▶ Lack of coordination increases inventory cost ▶ Factors contributing to increased inventory cost ▶ Example: Walmart's inventory management challenges and increased inventory costs

41. Walmart experienced inventory management challenges in 2013 ▶ Excess inventory: Walmart had too much inventory on hand, which tied up capital and incurred holding costs. ▶ Stockouts: Walmart also experienced stockouts of some products, which led to lost sales. ▶ Increased costs: The excess inventory and stockouts led to increased costs for Walmart, including holding costs, lost sales, and the cost of reordering products.

42. Walmart could have avoided some of these challenges by taking several steps, including: ▶ Improving demand forecasting: Walmart could have improved its demand forecasting to ensure that it had the right amount of inventory on hand. ▶ Improving coordination with suppliers: Walmart could have improved coordination with its suppliers to ensure that it was able to get the products it needed when it needed them. ▶ Improving communication: Walmart could have improved communication within the company to ensure that everyone was aware of the inventory levels and could take steps to mitigate potential problems.

43. Walmart could have also taken the following steps to improve its supply chain coordination: ▶ Use a single source for critical components: This would reduce the number of suppliers that Walmart has to deal with and make it easier to track orders and ensure that everyone is on the same page. ▶ Use a more sophisticated supply chain management system: This would allow Walmart to track orders more effectively and identify potential problems before they cause delays or quality issues. ▶ Invest in training for their supply chain staff: This would help to ensure that everyone is aware of the company's supply chain goals, and how they can contribute to achieving those goals.

44. Recommendations for how Walmart could have avoided these challenges: ▶ Use demand sensing: Demand sensing is a technique that uses real- time data to track demand and adjust inventory levels accordingly. This can help to reduce excess inventory and stockouts. ▶ Use a just-in- time (JIT) inventory system: A JIT inventory system is a system that delivers inventory to a company just in time for it to be used. This can help to reduce inventory levels and costs. ▶ Use a vendor- managed inventory (VMI) system: A VMI system is a system where the supplier manages the inventory for the company. This can help to reduce the company's workload and improve coordination with suppliers.

45. Target’s Canada Mishap