In today’s market, organizations must have the ability to meet customer’s demand, what they want and when they want it. Customer service and on-time delivery are two important factors in today’s environment. Product life cycles have shortened and customers are demanding immediate delivery. A company may have a great product, but if it is not delivered to the customer when they need it, the customer will move to the competitor and the product will fail. Organizations must recognize the importance of their supply chain and ensure that the right solutions and tools are in place.
The supply chain is a system/network that includes inventory, distribution and transportation functions and consists of raw material suppliers, producers, storage warehouses, distribution centers and retailers. The traditional methods of replenishment is push replenishment based on forecasts and long lead-times. The traditional methods cause the Bullwhip effect, which happens when variance increases in ordering patterns as you move higher up (upstream) in the supply chain. Problems with traditional methods of replenishment and forecasting errors include:
• Long lead-times – late deliveries, not able to meet customers expected delivery dates.
• Insufficient inventories – out of stock, short/insufficient shipments.
• Excess inventory – large inventories.
• Incorrect product mix – too much inventory of products that do not sell and not enough inventory of products in demand.
Managing a supply chain system based on a customer driven focus, requires the right inventory in the right place at the right time. An effective inventory replenishment method implemented in the supply chain is a key factor to maintaining low inventory and high customer ...
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...er & Gamble uses consumer demand info to drive supply network. Retrieved from, http://www.supplychainbrain.com/content/index.php?id=5032&cHash=081010&tx_ttnews[tt_news]=600
Youngman, K. J. (2014). A guide to implementing the theory of constraints (toc). Retrieved from http://www.dbrmfg.co.nz/Supply%20Chain%20Replenishment%20&%20Distribution.htm
Wu, H., Chen, C., Tsai, C., & Tsai, T. (2010). A study of an enhanced simulation model for TOC supply chain replenishment system under capacity constraint. Expert Systems with Applications, 37(9), 6435 – 6440. http://dx.doi.org.ezproxy.fau.edu/10.1016/j.eswa.2010.02.074
ExperiencePGnow (2012, December 4). P&G supply network operations (sno). Retrieved from, http://youtu.be/qfw4RmbKB-M
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