Supply Chains

Question #2-Define the supply chains for the following products from the first source of raw materials to the first customer. A) Big Mac, B) Gasoline, C) Automobile repair, D) A Text book. Supply chain, its management, performance measures and improvement approaches. As an extension of the systems point of view, the system dynamics inherent in the supply chain are illustrated and the coordination in the supply chain is emphasized. Five areas where measurement of supply chain performance should be made are discussed. The five areas are on-time delivery, quality, time (business cycle) total delivered cost and flexibility.
The first step in devising an effective supply chain is to consider the nature of demand for the product. For this many aspects are important: Product life cycle, demand predictability, product variety etc. But any product can be broadly classified into as either a Functional Product or an Innovative Product based on their demand patterns. Root cause for ineffectiveness of any supply chain is the mismatch between the type of product and the type of supply chain. Functional Products are generally staples or those generally bought from the grocery stores or retail outlets.
They have stable demands are price variations do not affect the demand drastically. Such products have long life cycles but they invite competition and usually have low profit margins. The supply chain performs two different types of functions: 1) A physical function and 2) A market mediation function. The physical function deals with production for goods, movement of raw materials etc; while the market mediation function ensures that the variety of products reaching the marketplace match those that the consumers want to buy.

Each of these functions incurs different costs. The physical costs include costs of production, inventory shortage and transportation while the market mediation costs arise when there is a mismatch between demand and supply. If supply > demand, the product has to be sold at a loss otherwise it results in loss of opportunities and dissatisfied customers. Supply chain management is planning, design and control of the flow of information and materials along the supply chain in order to meet customer requirements in an efficient manner, now and in the future.
Demand management is managing the demand for goods or services along the supply chain. Therefore, demand management is complementary to supply chain management and controls the levels of demand on the system. Big-Mac – (1) Suppliers of beef, vegetables, bread (2) Factories and distribution centers, (3) The franchises that sell Big Mac, (4) The customers. Raw materials- The raw materials are the ingredients that will go into producing the finished product. For McDonald’s, these will include the buns, beef patties, paper cups, salad ingredients and packaging.
These are delivered to the restaurants between 3 and 5 times a week. The raw materials arrive together on one heavy truck with three sections so that each product can be stored at a suitable temperature. The three sections are: frozen• chilled• ambient – which means foods that can be stored at room temperature. This applies to items such as coffee or sugar sachets. Work-in-progress (WIP) refers to stocks that are in the process of being made into finished product. A Big Mac consists of a bun, two beef patties, lettuce, cheese, pickles, onions, sauce and a small amount of seasoning.
The restaurant will only combine these items just before the customer orders them so the Big Macs are hot and fresh when served. Finished products are goods that are ready for immediate sale to a customer. At any one time, a restaurant will have a range of products ready for sale. Many of these will include finished products like Filet-o-Fish, Big Macs and side salads. At McDonald’s, all raw materials, work-in-progress and finished products are handled on first In, First out (FIFO) basis. This means raw materials are used in the order they are received. Therefore stock is always fresh because products are sold in the order they are made.
If the process First In, Last out (FILO) was used, then the finished product would be dry and unappealing because the first one prepared is the last one sold temperature. Benefits to customers and restaurants – The centralized stock management system generates many benefits. Many of these are for restaurants and Restaurant Managers. However, customers also benefit through improved customer experience – customers can eat a quality product, in a clean environment, when they want it. Benefits include: 1. Restaurants avoid running out of stock. As a result, customers can always receive what they order. 2.
The system eliminates inexperience in the ordering. The system enables a new Restaurant Manager to ensure the order is right first time. 3. Time saved in ordering as the system calculates how much is required. 4. Orders are based on the current stocks. The Restaurant Manager simply inputs the current stock level. 5. Less waste means food costs are reduced. This cost saving is then passed on in better value for money for customers. 6. The amount of stock ordered for promotions is more accurate, being based on past performance. 7. There is a reduction in the need for emergency deliveries, saving money. . Stock levels are always at Optimum level, helping to ensure sales and the freshest product. 9. Stock can be reduced automatically at the end of a promotion, avoiding too much stock. Gasoline – Different stages in petroleum supply chain: Exploration > Production > Refining > marketing > Consumer. Exploration: Seismic, geophysical and geological operations. Production: Drilling, reservoir, production and facilities engineering. Refining: is a complex operation and its output is the input to marketing. Marketing: is the retail sale of gasoline, engine oil and other refined products.
Oil drilling-Before petroleum can be used, it is sent to a refinery where it is physically, thermally and chemically separated into fractions and then converted into finished products. About 90% of these products are fuels such as gasoline, aviation fuels, distillate and residual oil, liquefied petroleum gas (LPG), coke (not the refreshment) and kerosene. Refineries also produce non-fuel products, including petrochemicals, asphalt, road oil, lubricants, solvents and wax. Petrochemicals (ethylene, propylene, benzene and others) are shipped to chemical plants, where they are used to manufacture chemicals and plastics.
There are two major sectors within the oil industry, upstream and downstream. For the purposes of this tutorial we will focus on upstream, which is the process of extracting the oil and refining it. Downstream is the commercial side of the business, such as gas stations or the delivery of oil for heat. Oil Drilling and Services- Oil drilling and services are broken into two major areas: drilling and oilfield services. Drilling – Drilling companies physically drill and pump oil out of the ground. The drilling industry has always been classified as highly skilled.
The people with the skills and expertise to operate drilling equipment are in high demand, which means that for oil company to have these people on staff all the time can cost a lot. For this reason, most drilling companies are simply contractors who are hired by oil and gas producers for a specified period of time. In the drilling industry, there are several different types of rigs, each with a specialized purpose. Some of these include: Land Rigs – Drilling depths ranges from 5,000 to 30,000 feet. Submersible Rigs – Used for ocean, lake and swamp drilling.
The bottom parts of these Rigs are: submerged to the sea’s floor and the platform are on top of the water. Jack-ups – this type of rig has three legs and a triangular platform which is jacked-up above the highest anticipated waves. Drill Ships – These look like tankers/ships, but they travel the oceans in search of oil in extremely deep water. Oilfield Services – Oilfield service companies assist the drilling companies in setting up oil and gas wells. In general these companies manufacture, repair and maintain equipment used in oil extraction and transport.
More specifically, these services can include: Seismic Testing – This involves mapping the geological structure beneath the surface. Transport Services – Both land and water rigs need to be moved around at some point in time. Oil Refining – The refining business is not quite as fragmented as the drilling and services industry. This sector is dominated by a small handful of large players. In fact, much of the energy industry is ruled by large, integrated oil companies. Integrated refers to the fact that many of these companies look after all factors of production, refining and marketing.
For the most part, refining is a slow and stable business. The large amounts of capital investment means that very few companies can afford to enter this business. This handbook will try to focus more on oil equipment and services such as drilling and support services. Oil and gas: Unique supply chain – In the oil and gas supply chain, process control has historically included safety solutions, such as fire detectors and high-integrity pressure protection systems, but not physical security, such as intrusion detection, access control, and video surveillance.
Nor have these facilities employed considered abnormal situation management or cyber security. All of these elements of safety and security are important; each has unique business and technical challenges. Generally, there are no industry standards or norms for an integrated safety and security solution applied within the oil and gas supply chain. For example, there is no standard for interfacing access control or perimeter intrusion alarms with process control systems. Additionally, the systems in many facilities come from separate vendors and different business dynamics often apply.
Security technology now applied in industrial sites, for example, originates from commercial building security technology, which may not be suitable for an industrial facility or geographically distributed pipeline. There are also unique internal conditions that present challenges. These conditions include lower staff ratios, unmanned installations, widely dispersed assets, significant use of unsecured public telecommunications infrastructure, exposable products, and low technology maturity. Distribution Planning: Generating operational plans for distribution.
These modules are supported by various enablers that facilitate planning activity that include: (1) Supply Chain Database (SCD), (2) Geographical Information System (GIS), (3) Data Interfaces The production and the Supply and Distribution (S&D) structure forms the basis on which the optimized plan for the entire organization is generated. This corporate plan is communicated to distribution modules and the production planning modules to generate operational plans . The optimized plan for the entire corporation is also used as a basis for feedstock selection runs.
GIS can be used to obtain the distances between locations, which are used as a basis for freight calculation. Raw Material Supplies: Process industry has limited choice of suppliers for raw material supplies in petroleum industry are dominated by cartels. It is a sellers market where supply of raw material prices is highly unstable and fluctuating on weekly or even daily basis. Fluctuating prices directly affect the supply chain costs and prices of final product. Automobile repair- suppliers of automobile repair tools and parts: warehouses for the parts, repair shops, customers’ cars.
Raw Materials – Glass, steel, rubber, plastic, copper, lithium, silicon, aluminum. Some of the raw materials used for cars are: aluminum, steel (body parts), titanium (some exhaust systems) and platinum (inside catalytic converters). It’s always best for the translation services provider to be embedded into the manufacturing supply chain in order to be able to apply understand it from inside and accurately interpret the important aspects of the lucrative international auto parts industry and its successful marketing.
Hire professional translators that have knowledge across diverse technical fields. These fields include, but are not limited to: mechanical & electrical engineering, automation technology, electronics and microelectronics, navigation systems, board computers, wiring, air conditioning, paneling, service and diagnostics. This would ensure that all the technical terms used in the translation are in accordance to the standards familiar to the local market assembly workers, mechanics, engineers, suppliers and end-customers.
Auto parts are built or remanufactured to replace damaged or worn OE parts, while the accessories are parts sold after the original sale of a vehicle intended to add to the comfort, convenience, performance, safety or customization of that vehicle. The Auto parts are shipped using both truck transports and railroads to move vehicles to dealerships, although air freight may be used if critical parts are needed as soon as possible in order to keep an assembly line moving. Offshore exports and imports are handled by ship.
In addition to OE and OES parts, shipments also may include auto parts destined for the various national and regional parts distribution networks serving the aftermarket segments of the world. OES parts, like automobile sales, have traditionally been handled through the franchised independent dealership networks in the major markets of the world. In the United States, the National Automobile Dealers Association some franchised for car and truck dealers also separate franchises, both domestic and international.
The independent aftermarket distribution networks are much more complex. There are approximately 45,000 companies engaged in the wholesale and retail auto parts. The aftermarket has traditionally consisted of wholesalers who purchase parts and components from the manufacturers; jobbers, intermediaries between wholesale distributors and retail operation; and the retail outlets. They supply for the following areas with an emphasis on hand tools: -Engine repair – high quality engine repair, maintenance and tuning supplies. Auto body tools – tooling and accessories to get cars into shape. -Air conditioning – testing and maintaining a/c systems. -Electrical diagnostic tools – testers and diagnostic equipment for car electric systems and components. -Under-car – adjustment products to steering, brakes, clutch, etc. other Text book – Suppliers of pulp, paper manufacturer, publisher, printing press, bookstores, and customers. A book can be broadly defined as a written document of at least 49 text pages that communicates thoughts, ideas, or information.
Raw Materials-Books are made from a variety of different coated and uncoated paper stocks that differ in weight and size. In addition, different color inks may be used. Also, while front and back covers are generally made from a heavier stock of paper, they will vary in terms of weight. Pulp logs, wood chips, pulp, and recovered paper are the raw materials used to make these paper products. Pulp logs are wood destined to be made into pulp. To make paper, trees are harvested, debarked, and chipped.
For example, hardback books have a durable cardboard stock cover while paperback books are made from a thinner paper stock. Usually, cover stocks are coated with different colors or designs. Since the nineteenth century, book production has entailed the use of sophisticated machinery, including typesetting machines, a web or sheet-fed printing press, and book binding machines. Design-The process of designing a book is ongoing throughout the stages of production.
Initially, the author, in conjunction with an editor and book agent, will consider elements of design that pertain to the scope and purpose of the book, the desired approach to the subject matter, whether illustrations should be used, and other issues such as chapter headings and their placement. In determining those elements, the intended audience for the manuscript will be considered, along with accepted editorial standards. Other design considerations include whether a book should have a preface, a foreword, a glossary to define specific terms, an index to reference key words and concepts, and an appendix of supplementary material.
Once the book manuscript is written, editors and authors must refine the manuscript to attain a final edited version prior to production: page size and style ,typeface size and style ,the type and weight of paper for the text and cover ,use of color ,presentation of visuals/illustrations in the text, if needed ,cover art/illustrations. The Manufacturing Process -After the book is written and appropriate design elements are agreed upon, book production can begin. The first stage typesetting, pages and mechanical, filming, stripping, blueprints, plate is making and them printing Binding.
To help ensure that a quality product is produced; print shops conduct a number of periodic checks. In addition to checking blueprints for accuracy, printers will pull a press proof, or sample, before the print run is begun. If certain areas of the proof are too light or too dark, adjustments to the press may be required. After the book signatures are sewn together, the print shop will spot-check them to make sure they have been folded and sewn correctly. They will also check to see if the book covers are properly bound to prevent the books from deteriorating with use.
Because desktop publishing is relatively new, changes and enhancements continue to make the systems more user-friendly. As more people gain access to such systems, book publication and publishing in general will see more widespread use of desktop publishing in the future. 16-Explain what is meant by cross-docking, and describe the associated benefits Cross docking is a distribution system where items received at the warehouse are not received into stock, but are prepared for shipment to another location or for retail stores. Cross docking can realize a cost reduction by skipping put away and retrieval steps.
Benefits-Many companies have benefitted from using cross docking. Some of the benefits include: -Reduction in labor costs, as the products no longer requires picking and put away in the warehouse. -Reduction in the time from production to the customer, which helps improve customer satisfaction. -Reduction in the need for warehouse space, as there is no requirement to storage the products. Types of Cross Docking -There are a number of cross docking scenarios that are available to the warehouse management. Companies will use the type of cross docking that is applicable to the type of products that they are shipping. Manufacturing Cross Docking – This procedure involves the receiving of purchased and inbound products that are required by manufacturing.
The warehouse may receive the products and prepare sub-assemblies for the production orders. -Distributor Cross Docking – This process consolidates inbound products from different vendors into a mixed product pallet, which is delivered to the customer when the final item is received. For example, computer parts distributors can source their components from various vendors and combine them into one shipment for the customer. Transportation Cross Docking – This operation combines shipments from a number of different carriers in the less-than-truckload (LTL) and small package industries to gain economies of scale. -Retail Cross Docking – This process involves the receipt of products from multiple vendors and sorting onto outbound trucks for a number of retail stores. This method was used by Wal-Mart in the 1980’s. They would procure two types of products, items they sell each day of the year, called staple stock, and large quantities products which is purchased once and sold by the stores and not usually stocked again.
This second type of procurement is called direct freight and Wal-Mart minimize any warehouse costs with direct freight by using cross docking and keeping it in the warehouse for as little time as possible. -Opportunistic Cross Docking – This can be used in any warehouse, transferring a product directly from the goods receiving dock to the outbound shipping dock to meet a known demand, i. e. a customer sales order. Products Suitable for Cross Docking There are materials that are better suited to cross docking than others.
The list below shows a number of types of material that are more suited to cross docking. -Perishable items that require immediate shipment -High quality items that do not require quality inspections during goods receipt -Products that are pre-tagged (bar coded, RFID), pre-ticketed, and ready for sale at the customer -Promotional items and items that are being launched. -Staple retail products with a constant demand or low demand variance -Pre-picked, pre-packaged customer orders from another production plant or warehouse

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