Supply Chain Operations: Making and Delivering

1. Supply Chain Operations: Making and Delivering Chapter – 3

2. Objectives • Exercise an executive level understanding of operations involved in the categories of making products and delivering products. • Assess supply operations in your company that may be candidates for outsourcing.

3. Make • Product design • Production scheduling • Facility management • Deliver • Order management • Delivery scheduling • Direct deliveries • Milk Run deliveries • Delivery sources • Return processing • Outsourcing Supply Chain Operations

4. Product Design (Make) • Product design and selections of the components needed to build them are based on the technology available and product performance requirements. • When considering product design from supply chain perspective the aim is to design products with fewer parts, simple designs, and modular construction from generic sub-assemblies. • The supply chain required to support a product is molded by the product’s design.

5. Product Design (Make) • Product design defines the shape of the supply chain and this has a great impact on the cost and availability of the product. • There is a natural tendency for design, procurement, and manufacturing people to have different agendas unless their actions are coordinated. • A cross functional team can evaluate existing preferred suppliers and manufacturing facilities.

6. Product Scheduling (Make) • Production scheduling allocates available capacity to the work that needs to be done. • The goal is to use available capacity in the most efficient and profitable manner. • Product scheduling operation is a process of finding the right balance between high utilization rate, low inventory levels, and high levels of customer service.

7. Product Scheduling • When a single product is to be made in a dedicated facility, scheduling means organizing operations as efficiently as possible and running the facility at the level required to meet demand for the product. • When several different products are to be made in a single facility; each product will need to be produced for some period of time and then time will be needed to switch over to production of the next product.

8. Production Scheduling • The first step in scheduling multi-product production is to determine economic lot size. • Second step is to set the right sequence of production runs for each product.

9. Facility Management (Make) • Facility management decision happen within the constraints set by decisions about facility locations. • Ongoing facility management takes location as a given and focuses on how best to use the available capacity. • Role of each facility will play • How capacity is allocated in each facility • Allocation of supplies and markets to each facility

10. Order Management (Deliver) • Order management is the process of passing order information from customers back through the supply chain from retailers to distributors to service providers and producers. • This process also includes passing information about order delivery dates, product substitutions, and back orders forwards through the supply chain to customers.

11. Principles of Order Management • Enter the order data once and only once • Automate the order handling • Make order status visible to customers and service agents • Integrate order management systems with other related systems to maintain data integrity

12. Delivery Scheduling (Deliver) • The delivery scheduling process works within the constraints set by transportation decisions. • There are two types of delivery methods: direct deliveries and milk run deliveries.

13. Direct Deliveries • Direct Deliveries: are made from one originating location to one receiving location. • In this methods, the routing is simply a matter of selecting the shortest path between the two locations. • They are efficient if the receiving location generates economic order quantities that are the same size as the shipment quantities.

14. Milk Run Deliveries • Milk Run Deliveries: are deliveries that are routed to either bring products from a single originating location to multiple receiving locations or deliveries that bring products from multiple originating locations to single receiving location. • There are two main techniques for routing milk run deliveries: savings matrix and generalized assignment techniques.

15. Delivery Sources • Deliveries can be made to customers from two sources: • Single Product Locations: are facilities such as factories or warehouses where a single product or a narrow range of related items are available for shipment. • Distribution centers: are facilities where bulk shipments of products arrive from single product locations.

16. Return Processing (Deliver) • This process is also know as reverse logistics. • Return is often difficult and inefficient process. • Companies and supply chains as a whole need to keep track of kinds of returns that happen.