1. Visit the websites of companies like Wal-Mart, Dell and Home Depot, and see if you can find discussions of their supply chain management activities. List information you can find on purchasing/supplier issues, logistics, information systems, quality and customer service. Purchasing/supplier issues: Wal-Mart always emphasized the need to reduce its purchasing costs and offer the best price to its customers. The company procured goods directly from manufacturers, bypassing all intermediaries. Wal-Mart was a tough negotiator on prices and finalized a purchase deal only when it was fully confident that the products being bought were not available elsewhere at a lower price.
Wal-Mart spent a significant amount of time meeting vendors and understanding their cost structure. By making the process transparent, the retailer could be certain that the manufacturers were doing their best to cut down costs. Once satisfied, Wal-Mart believed in establishing a long-term relationship with the vendor. In its attempt to drive hard bargains, Wal-Mart did not even spare big manufacturers like Procter & Gamble. However, the company, generally, preferred local and regional vendors and suppliers. Logistics: An important feature of Wal-Mart’s logistics infrastructure was its fast and responsive transportation system. Wal-Mart maintained a strict vigil over its drivers by keeping a record of their activities through the “Private Fleet Driver Handbook”. The purpose of the book was to educate the drivers with regard to the code of conduct.
Non-compliance to the hand book would result in the termination of the driver. To make its distribution process more efficient, Wal-Mart also made use of a logistics technique known as ‘cross docking’. In this system, the finished goods were directly supplied to the customers. The system reduced the handling and storage of finished goods, virtually eliminating the role of the distribution centers and stores. Information Systems: Wal-Mart invested heavily in IT and communications systems to effectively track sales and merchandise inventories in stores across the country. With the rapid expansion of Wal-Mart stores in the US, it was essential to have a good communication system. Wal-Mart set up its own satellite communication system in 1983.
They were able to reduce unproductive inventory by allowing stores to manage their own stocks, reducing pack sizes across many product categories, and timely price markdowns. Instead of cutting inventory across the board, Wal-Mart made full use of its IT capabilities to make more inventories available in the case of items that customers wanted most, while reducing the overall inventory levels. The order management and store replenishment of goods were entirely executed with the help of computers through the Point-of –Sales (POS) system.
Through this system it was possible to monitor and track the sales and merchandise stock levels on the store shelves. Quality and Customer Service: When Sam Walton started Wal-Mart in 1962, he felt that each Wal-Mart needed to reflect the vision of the community and the values of each customer. This way of doing business became the Wal-Mart organizational culture. Organizational culture is what a company values and this value reflects on how companies conduct their business. According to Time magazine’s website, Sam Walton believed that if you work toward excellence and show passion with your work, you will gain a loyal customer base. Wal-Mart trains employees on how to problem solve and develops each employee to focus on pleasing the customer.
The slogan of “satisfaction guaranteed” is something that Wal-Mart says it takes seriously. Wal-Mart says it trains employees to ask customers if they need assistance or tutorials on how a particular product functions. Another function of Wal-Mart customer strategies is having greeters at the door of every store. Wal-Mart management feel that if customers are greeted by a friendly face, this enhances their shopping experience. Wal-Mart says it spends time and money on its employees to ensure that the philosophy of Sam Walton is instilled into each new employee.
According to the Wal-Mart website, Wal-Mart trains its employees on excellent customer skills. Wal-Mart believes that if customers gets what they want at a good price, this will keep them coming back to the store. 2. Search on the term supply chain management. How many hits did you get? Describe five of the websites found in your search. How many hits?- only 247,000,000
5 of the websites–What is Supply Chain Management? Describing what supply chain management is. — The hot new M.B.A.: Supply-Chain Management. Goes into how universities have recently introduced undergraduate majors for supply chain management. — Council of Supply Chain management Professionals: Homepage.
They provide education, research, connections for supply chain management. — Module 1: What is Supply Chain Management? It’s a YouTube video introducing viewers to the field of SCM. — Supply Chain Management Certificate. Describes what SCM is and offers advanced professional supply chain management certificate. 3. Go to www.agrichain–centre.com (or a similar website found when searching on New Zealand supply chain management), and discuss the current state of supply chain (or value chain) management in New Zealand. – I went to the site I didn’t see anything on the current state of supply mgmt.. 4. Search for the term bullwhip effect and write a paper on the impacts of the bullwhip effect and the companies profiled in the papers you find.
IMPACTS OF THE BULLWHIP EFFECT
From the case study, in the early 1990s, P&G faced a problem of extreme demands variation for its Pamper diapers. Although the purchase rate somehow remain steady at the customer end, it has been found that the variation of order rates amplify up the supply chain, from the retailer level to the distributor level. This phenomenon is called bullwhip effect, and the distorted information from one end of a supply chain to the other can lead to tremendous inefficiencies, such as excessive inventory investment, poor customer service, lost revenues, misguided capacity plans, inactive transportation, and missed production schedules.
What happens when a supply chain is plagued with a bullwhip effect that distorts its demand information as it is transmitted up the chain? In the past, without being able to see the sales of its products at the distribution channel stage, HP had to rely on the sales orders from the resellers to make product forecasts, plan capacity, control inventory, and schedule production.
Big variations in demand were a major problem for HP’s management. The common symptoms of such variations could be excessive inventory, poor product forecasts, insufficient or excessive capacities, poor customer service due to unavailable products or long backlogs, uncertain production planning (i.e., excessive revisions), and high costs for corrections, such as for expedited shipments and overtime.
HP’s product division was a victim of order swings that were exaggerated by the resellers relative to their sales; it, in turn, created additional exaggerations of order swings to suppliers. P&G still need to be careful when use the information sharing, because it is only an initial step to reduce the bullwhip effect within a supply chain, if use it from other stages continuously will lead to other problems. For instance, the POS data for a cosmetics store of P&G is not useful for suppliers of Pamper diapers.
Moreover, if P&G cannot ensure its short order lead time, information sharing could be redundant because its supply chain is not capable of capitalizing on that information. Coordination in the supply chain is the next primary technique. Besides the Vendor-Managed Inventory (VMI) which P&G has already applied, the Collaborative Planning, Forecasting, and Replenishment (CPFR) could also be used to moderate the bullwhip effect, as well as to reduce cost. Finally, the generous return policies that manufacturers offer retailers aggravate gaming. Without a penalty, retailers will continue to exaggerate their needs and cancel orders. Not surprisingly, some computer manufacturers are beginning to enforce more stringent cancellation policies.
The bullwhip effect results from rational decision making by members in the supply chain. Companies can effectively counteract the effect by thoroughly understanding its underlying causes. Industry leaders like Procter & Gamble are implementing innovative strategies that pose new challenges: integrating new information systems, defining new organizational relationships, and implementing new incentive and measurement systems. The choice for companies is clear: either let the bullwhip effect paralyze you or find a way to conquer it.
5. Search on the term supply chain Management software applications, and write a paper about how companies use these to improve their financial performance.
Software Application Improve Supply Chain Management Financial Performance
Supply chain management software is possibly the most fractured group of software applications on the planet. Some vendors have assembled many different chunks of software together under a single roof, but no one has a complete package that is right for every company. For example, most companies need to track demand, supply, manufacturing status, logistics (i.e. where things are in the supply chain), and distribution. They also need to share data with supply chain partners at an ever increasing rate. While products from large ERP (enterprise resource planning) vendors like SAP’s Advanced Planner and Optimizer (APO) can perform many or all of these tasks, because each industry’s supply chain has a unique set of challenges, many companies decide to go with targeted best of breed products instead, even if some integration is an inevitable consequence.
It’s worth mentioning that the old adage about systems only being as good as the information that they contain applies doubly to SCM. If the information entered into a demand forecasting application is not accurate, then you will get an inaccurate forecast. Similarly, if employees bypass the supply chain systems and try to manage things manually (using the fax machine or spreadsheets), then even the most expensive systems will provide an incomplete picture of what is happening in a company’s supply chain. Effective supply chain management boosts profitability by systematically reducing the overall costs associated with goods and services.
Using SCM Software could increase the return on your investment by using the same principles that are used in big software companies abilities; increase quality, speed production, and reduce costs, and extending them to your supply network. You collaborate with your suppliers in real time, improving the relationships and the overall management of your supply chain. SCM software manages the entire process, from requisitioning to purchase order creation, receiving, invoice payment, and the tracking of supplier performance. It supports high-volume repetitive deliveries with supplier schedules specifying date and hour of delivery. Long term plans can be shared with suppliers allowing them to order raw materials, plan production, and arrange deliveries based on accurate, reliable data.
SCM software helps to avoid the costly fines and penalties associated with defaults on regulatory compliance by maintaining the global knowledge necessary to fulfill cross-border transactions within governmental and customs regulations. Supply chain management (SCM) is the process of planning, implementing, and controlling the operations of the supply chain as efficiently as possible. Supply chain management goes into improving the way a company finds the raw components it needs to make a product or service and deliver it to customers. Using supply chain management software and tools can bring greater speed and accuracy to the way a company do business thereby saving you time and money.
6. Search on green supply chains, and write a paper regarding the global regulatory status of environmental legislation and how it is impacting supply chain management.
Impact of Environmental Legislation on Supply Chain Management
One of many challenges in environmental management is compliance with new environmental regulations. For instance, the EU recently requested all electrical and electronic products being exported to the region to follow the restrictions of hazardous substances (RoHS) directives in order to reduce certain substances used in products. Another regulation, waste electrical and electronic equipment (WEEE), aims at promoting reuse, recycling, and other forms of recovery in order to reduce the waste. Those regulations presented unprecedented challenges to international supply chains. Failing to comply with the regulations could result in loss of sales and reputation. For instance, in 2001, over one million SONY Play Stations were rejected by Dutch customs for containing environmentally hazardous substances.
From the perspective of supply chain management, environmental regulations impose immediate pressure on manufacturing firms from different countries along a supply chain to work together to ensure the elimination of any hazardous substances. As component suppliers revamp their products, contract manufacturers retool their manufacturing lines, and OEMs redesign many of their products.
There is an unprecedented level of change in international supply chains because of this new wave of environmental movements. In the case of regulation compliance, many small manufacturers from developing countries lack the necessary experience and resources to respond to new environmental requirements imposed by downstream partners from developed countries. As developed countries move toward higher value-adding products and services, developing countries would assume a larger share of manufacturing functions in the global supply chain, thereby shouldering greater environ- mental burden.
Whether supplier resistance will stymie progress toward green supply chain management is critical to compliance with environmental regulations. Currently, the practices of, and barriers to various supply chain parties to cope with environmental regulations are not fully understood. It is possible that the trend of globalization and the enforcement of regulations have increased the impact of “industry” on green manufacturing practices. More studies should be conducted to re-examine the effects of the cultural and industry factors.
Effort is made to ensure the quality of this case study. For example, the study selected theoretically useful cases, used multiple investigators and respondents, conducted reliability and validity tests, collected multiple sources of evidence, and systematically searched for cross-case patterns. There are still some potential shortcomings regarding the generalization of the findings. For instance, the findings confirm the value of green partnerships but not the specific involvement of individual supply chain parties.
African Journal of Business Management Vol. 5(26), pp. 10601-10614, 28 October, 2011 Available online at http://www.academicjournals.org/AJBM DOI: 10.5897/AJBM11.518 ISSN 1993-8233 ©2011 Academic Journals
Lee, Hau L., V. Padmanabhan, and Seungjin Whang. “The Bullwhip Effect In Supply Chains1.” Sloan management review 38.3 (1997): 93-102. i[ii] J. D. Sterman, “Modeling managerial behavior: misperceptions of feedback in a dynamic decision making experiment,” Management Science, vol. 35, pp. 321–339, 1989. ii[iii] Lee, H.L., V. Padmanabhan, and S. Whang. “Comments on ‘Information Distortion in a Supply Chain: The Bullwhip Effect,’” Management Science, 50(12), 1887-1893, 2004. iii[iv] Wilck, Joseph H. “Managing the Bullwhip Effect.”
Unpublished Ph. D. Dual Degree, Industrial Engineering and Operations Research, College of Engineering (available at< http://www. engr. psu. edu/symposium2006/papers/Session% 203D% 20-% 20Modeling% 20and% 20Engineering% 20Applications/Wilck. pdf>, accessed July 2009) (2006). iv[v] Gilbert, K. “An ARIMA Supply Chain Model,” Management Science, 51(2), 305-310, 2005. v[vi] Chopra, S. and P. Meindl. Supply Chain Management. Second Edition, Prentice Hall, 478-504, 2004. vi[vii]  Dejonckheere, J., S.M. Disney, M.R. Lambrecht, and D.R. Towill. “Measuring and Avoiding the Bullwhip Effect: A Control Theoretic Approach,” European Journal of Operational Research, 147, 567-590, 2003. vii[viii] Chen, Frank, et al.
“Quantifying the bullwhip effect in a simple supply chain: The impact of forecasting, lead times, and information.” Management science 46.3 (2000): 436-443. 1. This initiative was engineered by Kurt Salmon Associates but propelled by executives from a group of innovative companies like Procter & Gamble and Campbell Soup Company. See: Kurt Salmon Associates, “ECR: Enhancing Consumer Value in the Grocery Industry (Washington, D.C.: report, January 1993); and F.A. Crawford, “ECR: A Mandate for Food Manufacturers?” Food Processing, volume 55, February 1994, pp. 34–42. 2. J.A. Cooke, “The $30 Billion Promise,” Traffic Management, volume 32, December 1993, pp. 57–59. 3.
J. Sterman, “Modeling Managerial Behavior: Misperception of Feedback in a Dynamic Decision-Making Experiment,” Management Science, volume 35, number 3, 1989, pp. 321–339. 4. Sterman (1989); and P. Senge, The Fifth Discipline: The Art and Practice of the Learning Organization (New York: Doubleday/Currency, 1990). 5. For a theoretical treatment of this subject, see: H.L. Lee, P. Padmanabhan, and S. Whang, “Information Distortion in a Supply Chain: The Bullwhip Effect,” Management Science, 1997, forthcoming. 6. M. Millstein, “P&G to Restructure Logistics and Pricing,” Supermarket News, 27 June 1994, pp. 1, 49. 7. V. Carroll, H.L. Lee, and A.G. Rao, “Implications of Salesforce Productivity, Heterogeneity and Demotivation: A Navy Recruiter Case Study,” Management Science, volume 32, number 11, 1986, pp. 1371–1388. 8. Salmon (1993).
9. P. Sellers, “The Dumbest Marketing Ploy,” Fortune, volume 126, 5 October 1992, pp. 88–93. 10. P. Kotler, Marketing Management: Analysis, Planning, Implementation, and Control (Englewood Cliffs, New Jersey: Prentice Hall, 1997). 11. R.D. Buzzell, J.A. Quelch, and W.J. Salmon, “The Costly Bargain of Trade Promotion,” Harvard Business Review, volume 68, March–April 1990, pp. 141–148. 12. Sellers (1992).
14. Lee et al. (1997).
15. L. Lode, “The Role of Inventory in Delivery Time Competition,” Management Science, volume 38, number 2, 1992, pp. 182–197. 16. Personal communication with Hewlett-Packard.
17. K. Kelly, “Burned by Busy Signals: Why Motorola Ramped up Production Way Past Demand,” Business Week, 6 March 1995, p. 36. 18. Rory J. O’Connor, “Rumor Bolsters IBM Shares,” San Jose Mercury News, 8 October 1994, p. 9D. 19. M. Reid, “Change at the Check-Out,” The Economist, volume 334, 4 March 1995, pp. 3–18. 20. A. Clark and H. Scarf, “Optimal Policies for a Multi-Echelon Inventory Problem,” Management Science, volume 6, number 4, 1960, pp. 465–490. 21. E.K. Clemons and M. Row, “McKesson Drug Company — A Strategic Information System,” Journal of Management Information Systems, volume 5, Summer 1988, pp. 36–50. 22. Millstein (1994).
23. T. Smart, “Jack Welch’s Cyber-Czar,” Business Week, 5 August 1996, pp. 82–83. 24. G. Stern, “Retailers of P&G to Get New Plan on Bills, Shipment,” Wall Street Journal, 22 June 1994. 25. Reid (1995).
26. H.L. Richardson, “How Much Should You Outsource?,” Transportation and Distribution, volume 35, September 1994, pp. 61–62. 27. Z. Schiller, “Ed Artzt’s Elbow Grease Has P&G Shining,” Business Week, 10 October 1994, pp. 84–86. 28. R. Mathews, “CRP Moves Towards Reality,” Progressive Grocer, volume 73, July 1994, pp. 43–44.