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Supply chain management

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SUPPLY CHAIN MANAGEMENT 1. WHAT IS SUPPLY CHAIN MANAGEMENT? 2. SUPPLY CHAIN MODELS 3. COST AND VALUE vs. AVAILABILITY 4. ASSESSMENTS AND ACCREDITATION 5. QUALITY AND STANDARDS 6. IMPROVING BUYER/ SUPPLIER RELATIONS 7. GOODS TO MARKET 8. IT & ERP in SCM 9. CASE STUDY 1. WHAT IS SUPPLY CHAIN MANAGEMENT? The supply chain includes all of the organizations involved in the design, manufacture and distribution of goods to the ultimate consumer. Supply Chain Management [SCM] is a strategic (and operational) process, which directs the materials flow through the supply chain to the end user, appropriately adding value at each stage. It is, therefore, also referred to as the value chain or the demand chain. It is a powerful tool in reducing wastage and ensuring that goods arrive in the right place at the right time, with minimal cost and appropriate levels of service. In effective supply chains, all partners within the chain share the objectives and benefits. Openness and trust develop, in turn stimulating innovation and a culture of continuous improvement. Supply Chain Management includes: ?* ?Logistics ?*? Purchasing and supply ?* ?Materials management ?*? Supplier network development ?*? Communication and ?*? Manufacturing ?*? Production planning ?*? Marketing ?*? Design ?*? Facilities and resource management Supply chain management helps to: *? ?Reduce stock outs *? ?Reduce inventory levels *? ?Increase stock turn *? ?Increase sales at full margin *? ?Improve service levels *? ?Increase Return on Investment *? ?Improve flexibility All of these elements help to achieve customer satisfaction 2. SUPPLY CHAIN MODELS Every supply chain has different characteristics, but there are some models that have been identified and mapped. In reality, many companies employ a variety of different supply routes, dependent on the product and varying market demands. The following supply chain descriptions are not, therefore, mutually exclusive. DIRECT MANUFACTURE In some cases, retailers develop close relationships with a few, major suppliers which undertake most processes of product development, production, quality control and distribution. ...read more.


This is a process known as Kaizen. The principles of Kaizen include: Worker participation - everyone is involved in the process and strives to raise the standard; Small steps forward- change is almost imperceptible, but the monitoring the benefits should show a continuous improvement; Teamwork - is an essential element of problem solving, although improvements can happen at individual and company level too, and processes that are running smoothly can still be improved; Flexibility - supervision, payment systems, organizational structure and company culture must all be flexible enough to encourage worker participation. Improvements - Kaizen improves motivation and intangible rewards, improves quality, lowers costs, improves safety and reduces lead-times. Involves all - Kaizen must be prepared for at all levels, and all should be involved: - Directors incorporate Kaizen into strategy and give authority to employees; - Managers provide environment and resources needed; - Supervisors motivate workforce, lead and train workforce and ensure implementation - Workers volunteer ideas for individual and team activities. 7. GOODS TO MARKET The process of getting goods to the market place, complete and on time has become increasingly important, as retailers have reduced their stock-holding capacity. This strategy, while reducing costs, can lead to out of stock situations if failure to deliver occurs. The following activities are key to ensuring that goods reach their final distribution channels. INVENTORY MANAGEMENT An increasing number of companies manage inventory using IT systems. Some retailers have reduced inventory to virtually nil, other than goods on the shop floor. Other end-users, notably the automotive industry, demand goods to be delivered on a Just-in-Time basis Manufacturers in turn are under pressure to reduce inventory of components, work in progress, and finished goods although this is not always easy if there is the possibility of supply failure, or inflexibility to purchase small volumes of materials as the range of components required increases. LOGISTICS It is defined as the process of planning, implementation and controlling the efficient, cost effective flow and storage of materials, in process inventory, ...read more.


Subcontractors in Italy undertake most garment assembly, but overseas suppliers do produce under license to supply their respective local markets, overcoming distribution costs and trade barriers. Benetton's supply chain is regarded as a truly innovative good practice example, largely because of its flexible network of suppliers. However, in the early 1990's in response to growing competitive pressure on the company, Benetton built 2 new state of the art factories, in Northern Italy, to gain greater control over the production process of sewn products. The company had already invested in rapid response knitting plant and a sophisticated distribution center. Retailers order from the company's collections twice yearly, re-ordering regularly as sales progress. Stock requests are routed to a central computer at the Group headquarters in Ponzano, Italy. It centralizes data, and (for sewn products) instructs the state of the art cutting plant (located a few miles down the road) how many of each component (by color and size) to cut. While the computer drafts pattern pieces and lay plans, cloth for the garments is laid out. Virtually untouched by human hands, the cloth is cut by a machine controlled by the central computer. Each cut piece is assigned to a specific shop and packed in boxes ready for assembly. Cut pieces are collected by subcontractors, and taken to other parts of the region for sewing and finishing. Similarly, knitted garments are made-up in greige yarn and, upon receipt of sales data and orders, dyed and finished in response to demand. Finished products are returned a few days later to the Benetton factory for sorting. The sortation system moves goods automatically along a rail, until they reach a collection point for each particular shop. Once the shop's order is complete goods are packed and dispatched. Each box is bar-coded and moved by conveyor to the distribution center. Here a laser bar-code reader identifies boxes according to their destination store. All boxes for each store are collected together by a system of automated handling equipment and shipped by rail. Within days the goods are on sale. Only the sewing process remains labor intensive. ...read more.

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