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
Once they develop and implement this inventory control system, inventory records are going to be upheld truthfully and that they will get the accurate standing of the inventory up-to-date. In order to maintain the steady continuous supply for production need... ... middle of paper ... ... ory holding costs, ordering costs, and shortage costs, and have a classification system for inventory items. In conclusion, while reading the case study, I saw much disorganization throughout the company’s entire system.
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.
This can be accomplished by using disciplined delivery time windows, developing close relationships with a small group of reliable transportation carriers, and shipping only what is needed at a particular time, which means small lots being delivered more frequently often using partially filled trucks” (Taylor, 2013, p. 6).
A supply chain is a system through which organizations deliver their products and services to their customers. The network begins with the basic ingredients to start the chain of supply, which are the suppliers that supply raw materials, ingredients, and so on. From there, it will transfer the supplies to the manufacturer who builds, assembles, converts, or furnishes a product. The chain now needs to get the product to the consumer by transporting the finished product from the manufacturer through a warehouse or distribution center. An example is that Wal-Mart has a nearby distribution center where products are delivered there and then split up to be delivered to a retail Wal-Mart. “Wal-Mart will take responsibility for breaking down larger loads and delivering the product to other Wal-Mart stores” (Ehring 1).
Stock control is simply done by presuming certain amount of stock is being delivered which of course has a down side as well.
Target Corporation needs to increase product availability based on the customer needs using a forecasting and supply chain
This report has clearly in detail described the meaning, benefits as well as the need and challenges of the RFID in the supply chain system. While RFID comes with a larger magnitude of benefits than the bar code, it’s an expensive medium and comes at a price that may be prohibitive to many businesses. On the one hand, RFID is advantageous in different areas of the supply chain and does not require line-of-sight scanning; it helps in labor reduction, enhances visibility of products and processes , and helps in inventory management. On the other hand, RFID is an expensive solution, lacking benchmarks or standards, suffers from some adverse deployment issues, and suffers from major privacy concerns. However with the ultimate aim to see the establishment of item-level tracking which should act to revolutionize SCM practices, RFID is here to stay.
Kemppainen, K. and Vepsalainen, A.P. (2003), “Trends in industrial supply chains and networks”, International Journal of Physical Distribution & Logistics Management, Vol. 33 No. 8, pp. 701-20.
Sethi, S, Yan, H, & Zhang, H. (2005) Inventory And Supply Chain Management With Forecast Updates New York, NY : Springer.
In addition, at the time, the economy was doing great, therefore, using the push system to stock pile inventory was acceptable. However, during the dot-com bust of the 2000’s, its sales and the demand for its products greatly decreased. Unfortunately, during this time, Cisco discovered that it possessed an abundance of inventory, and, wrote off more than $1 billion in inventory. Consequently, the company learned that acquiring inventory in anticipation of market demand, and not factoring in the human element of its business increased its risks of failure. Obviously, Cisco wanted to meet its customer’s demands, however, the problem was that it held more inventory than what the customers were demanding. Nevertheless, afterwards, it knew that it needed to adopt a new, more efficient approach to inventory. Therefore, Cisco had to reevaluate its supply chain system and seek input from IT, customers, suppliers, and finance. Further, by including input from these sources, Cisco adopted the more efficient pull system. The pull system, is dependent upon producing smaller repeating orders. Rather than the push system, which relies on larger less repeating orders. Effective inventory management, when administered correctly, can reduce and keep the inventory to a more desired level. In addition, Cisco discovered that inventory management can reduce inventory levels, enhance cash flow and reduce overall
KLI could try a similar approach and have suppliers use the just-in-time (JIT) inventory system and keep levels high enough to sell out of products, but low enough to use residual space available.
Jacobs, F. R., & Chase, R. B. (2011). Operations and Supply Chain Management 13th Ed. New
A supply chain is a network of facilities that procure raw materials, transform them into intermediate goods and then final products, and deliver the products to customers through a distribution system [1]. The basic objective of supply chain is to “optimize performance of the chain to add as much value as possible for the least cost possible.
Local Inventory. Another approach is to have all inventory available at the store at all times. This allows for the centralization of cooking capacity. The main risk is obsolete inventory and the need for extra space.
...strategies available to an air conditioning manufacturing company. These strategies include building up stock during off season periods and increasing the manufacturing company’s production capacity in order to benefit from economies of scale. These capacity management strategies would help the air conditioning manufacturing company be able to avoid fluctuations in demand, have a smooth production line and have increased gross profits. However these strategies have drawbacks; they would add both storage and wastage cost to the air conditioning manufacturing company and orders being delayed which halts production. Although these strategy may give the air conditioning manufacturing company some additional cost but in the long run because of the products seasonal pattern in demand these strategies can be seen as reasonable tactic to uphold.