Week 6 Summary

Florence Nanevi

Webster University -Leiden Campus

MBA 5400

Week 6 Summary
Week 6 Summary

Supply chain is about directly or indirectly seeing to it that customers get what they want, when

they want it and as often as they want it at a reasonable cost whiles maximizing profit. It

involves all the organization’s activities that is needed to manufacture, arrange, deliver and use

products and or services. This include retailers, customers, transporters, warehouses, suppliers

and manufacturers.

Organizations relay greatly on their supply chain to equip them with what is needed to make

the business viable. No matter the type of business one operates, it’s involved in one or more

supply chains and has a contribution to make in each of them. It is important for organizations

to know and understand the supply chain they engage in and know the part they play because

technology is changing rather quickly and how markets will evolve is unpredictable.

Organizations who build and strongly play a part in supply chain will have a competitive

advantage in their various markets with this we can say that supply chain management is a

cooperative effort of production, location, transportation, inventory among other contributors

in supply chain to achieve a common goal which is efficiency for the customers or the market

that is being served.

The concept of supply chain differs from the concept of logistics, logistics has to do with

controlling all activities involving transportation and the flow of materials within a supply chain

to achieve effective customer services at a reasonable cost. It focuses on activities like

inventory management, maintenance distribution and procurement whiles supply chain

management involves all logistics activities and other activities such as customer service, new

product development and finance. To better understand the scope of supply chain

management, there is a framework known as SCOR (supply chain operations Reference).

Week 6 Summary

supply chain operations Reference (SCOR) is a well-structured framework used to examine and

measure supply chains processes. There are five processes that are central: plan, source, make,

deliver and return.

Plan: is to regulate demand and supply to come up with a scheme that meets purchasing

requirements, manufacturing as well as distribution requirements

Source: is obtaining goods and services to meet demand

Making: is converting raw material into finished products

Delivery: is involved with transporting the finished goods

Return: is involved with the returning the finished goods as a result of any reason or problems

Even though there are well established frameworks that are used to examine and control

supply chain, organizations are still faced with risk in their various departments.

Risk can be said to be the possibility of something bad happening, in supply chain risk includes

delivering or supplying goods to customers in terms of timely delivery, production cost,

shortage of material, labor strike etc. risk can be in form of natural disasters or political

instability. For organizations to produce and deliver products effectively they must assess and

mitigate risk.

Risk Management is the act of identifying, assessing and evaluating risks that arises from

operational factors and making decisions to reduce or eliminate them.

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There are two main types of risks

 Tactical Risk and

 Strategic Risk

The following are types of Risk under Tactical Risk and how they can be mitigated

 Inventory Risk: this occurs as a result of imbalances between work centers,

inventory backorders and inventory and warehouse stockouts. This type of risk

can be mitigated by adding more inventory buffers between stages, reducing

lead time, and adding safety stock.

 Capacity Risk: capacity risk occurs when there is a shortage in employees,

equipment’s or when there is overproduction occurs. Capacity Risk can be

eliminated by scheduling overtime and undertime, adding temporary and backup

workers and multiplying suppliers.

 Logistics and scheduling Risk: this risk happens as a result of bad roads and

problem with supplier’s quality. Changing order quality and having backup plans

to transport goods by air or ship will help reduce this kind of risk.

Below are the Risks associated with strategic risk and how they can be eliminated.

 Global economic Risk: This kind of risk happens when there are tariff

laws, taxes and regulations. Having suppliers from all over the world and

promoting social sustainability in host country can help reduce this kind

of risk.
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 Government Risk: It occurs when there is a government instability, patent

rights, and other disasters such wars. To be able to mitigate this risk, an

organization must have disaster and emergency plans.

 Product Risk: product risk happens as a result of capacity shortage,

Goods and services obsolescence and product modification due to

cultural difference. Organizations can reduce this risk by hedging

inventory and having proper and better strategic planning and demand

forecasting capability.

 Security Risk: this can happen when a company faces problems like theft,

fraud and cybersecurity this risk can be mitigated by upgrading security

and backing up systems.

Supply chain in E-Commerce

E-Commerce is not all about website setting and putting products for sale online, it also involves

in supply chain management and Logistic. A well-structured supply chain management uses and

expedite E-commerce process to achieve customer expectations.

Major E-Commerce and supply chain structure

 Business to Customer

 Business to Business

 Government to Customer

 Government to Government

 Customer to Customer
Week 6 Summary

 Government to Business

Supply chain performance metrics are used when an organization wants the examine the

performance of its supply chain.

Below I have listed some metrics used in measuring supply chain performance

 Delivery reliability: It is measured by perfect order fulfillment; this is where all customer

requirements are met.

 Responsiveness: responsiveness is measured by order fulfilment lead time; this is where

customer delivery dates are met.

 Customer-related: This is where customer needs and wants are fulfilled

 Supply chain efficiency: this deals with how fast products moves through the supply

chain, the number of days inventories are in the supply chain and the total average

value of materials in the supply chain.

Resource Management

Resource management occurs when an organization’s resources are efficiently and effectively

positioned and allocated when and where they are needed.

Resource plans are major element in resource management. Resource planning in

manufacturing are broken down into three levels, these are Aggregate planning,

Disaggregation, and Execution.

Week 6 Summary

Aggregate planning: This is a procedure used to develop, maintain and analyze a preliminary

schedule of an organization’s overall operations. There are three planning strategies that can be

used by an aggregate planner, these are

chase strategy this strategy ensures that demand and capacity correspond period by period

level strategy ensures that the organization’s production rate or employment levels are stable

minimum cost strategy this strategy ensures that the total production cost is minimized.

Firms can decide to use one of these strategies or combine all of them.

Disaggregation: This process breaks higher level plans into a more detailed lower level plans

and schedules. To achieve this, three major techniques are used. These are

 Master production scheduling (MPS)

 Material requirements Planning (MRP) and

 Capacity requirement planning (CRP)

Execution: This level centers its attention on the implementation of the detailed plans made at

the Disaggregation level.

Enterprise resource planning: This system is a tool that is used by organizations to maximize

profit, increase productivity and achieve operational efficiency. For organizations to remain

agile, they need to adapt to changes in their market, they need to efficiently mechanized their

operations over several department like the accounting department, human resource, finance

etc. and this can be done using the Enterprise resource planning (ERP) software.
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One of the essential parts of the ERP solutions adopted by organizations is the supply chain

management. To be able to access the right quantity of raw materials and other resources

needed to produce goods at the right time, producers must communicate with several partners

and suppliers. This can be achieve making use the ERP system.

Scheduling and Sequencing

Scheduling and sequencing play a major role in enhancing productivity, bettering the quality of

goods and meeting market demand on time. It also helps organizations minimize cost.

Scheduling is a roster or timetable that details the start time and completion time a machine

/people (resource) is supposed to use on a job(task) example a hotel human resource manager

assigning housekeeping staff a task to lay the beds in the guest rooms form 5AM to 7AM.

whiles sequencing determining the order in which task are to be executed.

There are four scheduling applications and approaches these are scheduling Consecutive Days

off, Appointment Systems, Optimization model for staff scheduling and staff scheduling. Jobs

can done under sequencing in the following manner thus; first come first served(FCF) meaning

orders that the company received first will be the one that will be processed first, Shortest

processing time (SPT) thus task that will take a shorter time to be completed will be processed

first and Earliest due date (EDD) thus jobs that has the earliest due date will be processed first.
Week 6 Summary