Increasing customer expectations and fluctuations in demand are driving companies search for alternative strategies to operate their supply chains to make more profit now and in the future. Goldratt 's distribution replenishment model is one of such strategies that is being extensively implemented nowadays and gaining popularity throughout world (Belvedere & Grando, 2005). The model is called Theory of Constraints Supply Chain Replenishment System : TOC - SCRS. This is a replenishment method of the TOC Supply Chain Solution (Cole & Jacob, 2002; Goldratt, 1994). In this paper, I would like to give an example of a bakery and dairy products company that manufactures and distributes throughout a supply chain network consisting of Plant, Central …show more content…
What is the solution ??
Figure 2 - The Conflict Cloud
The TOC SCRS solution:
TOC-SCRS replenishment method is based on the TOC supply chain methodology by Eliyahu Goldratt 's TOC theory. TOC is a strategy that helps to focus on critical issues in the system. This model is being applied in wide range of fields such as Supply Chain, Operations, Manufacturing, Finance, Marketing, Sales and Strategy and Tactics (Blackstone, 2001; Kendall, 2006). TOC SCRS method relies on two strategies (Cole & Jacob, 2002) :
1 - Replenishment Time
2 - Buffer Management
TOC-SCRS is in fact, pull based distribution model which emphasizes on the supply side to respond as quickly as possible to the demand in the market without depending on the forecast model. The goal is to replenish more frequently and more quickly.
Key steps in achieving the desired outcome by implementing the TOC SCRS (Cole & Jacob, 2002):
Aggregate as much stock as possible at the upstream level - that is the Plant or Central Warehouse and maintaining high Buffer stock
Replenish as frequently as possible from upstream to downstream, from source to the customer preferably
Kuiper Leda lacks an effective Inventory Management to handle properly the increase in demand of stock and production. An inventory management plan would be capable of forecasting errors in production, client-required service levels, total lead time in manufacturing a unit or batch of the product, and demand priorities. Inventory control is a challenge currently because of the size of Midland Motor's order. In order to meet the demand the company needs to increase the inventory which increases the inventory costs. KL have an opportunity of using the Just - In - Time method of inventory control which eliminates waste by making the resources and labor available only in the time and amount required. It will help increase productivity, product quality and work performance while saving inventory costs for the company. (Curtin, 2008). Kuiper Leda also needs to keep in mind that they will still have to fill orders from other clients that have previously placed orders or even new customers.
Adjust the flow of product to match demand. In particular, don't trim capacity to match demand. It's a standard cost-cutting procedure, sure. But you'll need that capacity later, if you're serious about increasing throughput.
Over the years role of supply chain has been altered. The distribution has switched from shipping from one focal point, now technology has shortened the process that will to ship directly from the manufacture to the customer that will tie in to the distribution channels. Though distribution is costly, a person would think all the risk will be eliminated. Contrarily to what people may think, distribution have many risk it must account. When the product is unloaded onto the truck, it’s the trucker sole responsibility to ensure the customer receive their product. Distribution initially start at beginning when it is
WISNER, J.D., TAN, K. and LEONG, G.K., 2009. Principles of supply chain management : a balanced approach / Joel D. Wisner, Keah-Choon Tan, G. Keong Leong. Mason, OH : South-Western Cengage Learning, 2009; 2nd ed. pp 111-113,262
When analysing the actual distribution model, we find out several faults. Firstly, the inventory management is much decentralized and there are few formal replenishment methods. The regional warehouses managers just define the stock goals and call central warehouse daily with a list of restocking needs. This lack of control can lead to an excess of stock, creating a higher inventory cost, or to a situation of stock out. When the latter happens, regional warehouse manager must order the required product from central warehouse and in order to compensate costumers he offers a discount of 4.000lires per piece.
So that our decisions would lead to a better performance on the inventory levels which means a more stable inventory according our policies but our order policy based on the expected demand would not be changed while the impact of our policy on the inventory is better because our orders are met with a better
The Target process should achieve the unloading of the delivery truck and the stocking of merchandise in the most efficient and effective way possible to ensure the limited number of stock outs and exceptional customer service. The critical process is the loading of the truck at the distribution center and the stocking items on the sales floor at the retail locations. The following process map is of the current
Target Corporation needs to increase product availability based on the customer needs using a forecasting and supply chain
Setup early warning system to inform customer about a potential stock out and supplier about a delayed order from CMO. This will help in reducing stock out situations.
In the current business environment, Supply Chain Management is experiencing a period of rapid change and influence within organizations. It is no longer simply about reducing costs, but more importantly, it is about enhancing business value and embracing proven disciplines to leverage the supply chain for competitive differentiation, financial return, and demand driven operational and innovation excellence. Sears Holdings Corp.’s supply chain operations always tries to improve to meet the company’s needs in a different location, but also customers in matter of delivering the items in short time. Sears has piloted a few new supply chain models that leverage existing inventory and existing retail distribution centers, meaning a small number of store locations now fulfill online orders, and to help the company manage its distribution network. Which include forty five distribution centers and a hundred market delivery operation sites for cross-docking to ensure its almost two thousand and five hundreds retail locations remain stocked and that online orders are fulfilled. Sears now is able to ship products to about 85% of the country in two days or less. This is accomplished by making the delivery process predictable, focused and tightly controlled while simultaneously applying supply chain best practices through experienced industry professionals.
Companies are finding ways to improve its flexibility and competitiveness by changing its operation strategy, technologies that have implementation of Supply Chain Management (SCM) paradigm. For example, IKEA. It is the world’s largest home furnishing retailer having 298 stores in 37 countries with huge competitors around the world. However, it has a unique supply chain and inventory management techniques that makes it different and unique from others.
The major stumbling block for most companies that are attempting to optimize their return supply chain is the chaotic nature of reverse logistics. Volume within the return supply chain is highly variable and difficult to predict or control (O’Reilly, 2005). In addition, returning the product in a timely manner is often not of major importance to the end users and retailers. Therefore, any processes that rely on the availability of cores or supplies will have to be flexible enough to handle variations in supply.
Coyle, J., Langley, C., Gibson, B., Novack, R. and Bardi, E. (2008).Supply Chain Management: A Logistics Perspective. 8th ed. Cengage Learning, p.366.
Rapid Replenishment. Another approach is to set up rapid replenishment and supply the stores with what they need when they need it. This allows for centralization of cooking capacity and low levels of inventory, but increases the cost of replenishment and receiving.
Inventory management is a method through, which a business handles tangible resources and materials to ensure availability of resources for use. It is a collection of interdisciplinary processes including a full circle from the demand forecasting, supply chain management, inventory control and reverse logistics. Inventory management is the optimization of inventories of manufactured goods, work in progress, and raw materials. According to Doucette (2001) inventory management can be challenging at times; however, the need for effective inventory management is largely seeing more as a necessity than a mere trend when customer satisfaction and service have become a prime reason for a business to stand apart from its competition. For example, Wal-Mart’s inventory management is one of the biggest contributors to the success of the company;