Supply Chain Case Study
BUS 307 Operations Management & Quantitative Techniques
Supply Chain Case Study
In this day in age of the business world, a supply chain manager must be ready to coordinate the relationship between distributors, manufacturers, suppliers, retailers and customers to ensure the delivery of goods and services. To do so, these professionals must have organizational skills with intricate knowledge in the multiple areas of supply chain management. On a daily basis these managers must be prepared to identify problems that may arise and determine corrective actions. For this paper, I will discuss two case studies from Chapter 12 and 13 of our textbook, and with the knowledge I gained from this course my goal is to identify problems within the supply chain environment and present solutions for the same.
The Realco Breadmaster Case Study
The Realco Breadmaker has out to be a great success for the company, as this product has been a huge contribution to the gains of the company, and in comparison, to the competition is the breadmaker leads in value and features. Mr. Chang, the owner, has inquired whether these machines will be able to produce enough in a specific timeframe to meet demanding deadlines. The Master Production Schedule (MPS) specifics are shown in the chart below:
|Demand Management||WK 1||WK 2||WK 3||WK 4||WK 5||WK 6||WK 7||WK 8|
|Projected Ending inventory||3,500||500||-1,000||-1,000||-1,000||-1,000||-1,000||-1,000|
Based on the MPS, the projected ending inventory shows a surplus in the inventory to meet the demand, provided the numbers are adjusted by 20,000. Predicting the possibility, the suppliers would request more inventory this could be an accurate schedule. The Realco Company has not overpromised since the MPS shows more inventory then necessary, provided the forecast and production numbers are adjusted accurately during the production process.
Based on this information, I believe the company should update their production numbers in concern of product efficiency. Forecasting the product demand to fit consumer demand is paramount, but mass producing with the higher chance of creating unsatisfactory products is not a sound decision. Products created in mass have a much higher opportunity to be recalled due to faulty reasons and would cost the company in the long run. I would suggest the Kanban system, as this is an effective way of controlling inventory. The Kanban system is a production control approach that uses containers, cards, or visual cues to control the production and movement of goods through the supply chain based on downstream demand. The system can be used to synchronize activities between supply chains and can greatly assist in production activity control (PAC) and vendor order management systems. (Bozarth & Hanfield, 2016).
Mr. Chang’s approach to order promising is the consumer needs be met due to completion of production numbers. This is a concept of Available to Promise (ATP) which indicates the number of units that are available for sale each week, given those that have already been promised to customers (Bozarth & Hanfield, 2016). With this concept, any excess inventory would promote a guarantee of delivery to the customer. However, one major disadvantage to this the possibility to have too much inventory at any given time during off seasons. To combat this, the Kanban concept can prevent this by controlling the execution or movement of items to prevent overstock.
Master Scheduling (MPS) is a detailed planning process that tracks production output and matches this output to actual customer orders (Bozarth & Hanfield, 2016). This is extremely useful for not promising customers delivery quantities that have never been forecasted (Segerstedt, 2006). For this to work, the major change that would have to occur would be inventory scheduling and utilizing the Kanban system in combination with MPS would assist.
Refusing a customer’s order upfront would be extremely detrimental to the relationship between the customer and supplier, however I believe this is the lesser of two evils. From a manager standpoint I would appreciate honest customer service, and while my company cannot provide the required quantity of desired products, I can reveal an alternative versus making a promise to deliver only to come up short and not hold solid on my promise. With master scheduling techniques this incident could be avoided by anticipating the demand and providing a timeframe of how long production will take and when the order will be ready.
If Realco produced 20,000 breadmakers every week versus 40,000 biweekly, there would be no significant change to average inventory levels. On biweekly basis 40,000 units are created, meaning during a 1-week run only half of that quantity would be created. If the demand is at a steady flow, then so will the inventory.
Challenges in Post-Earthquake Japan Case Study
While the Japanese auto industry had the ability to produce high quality and efficient products in their manufacturing process, they faced environmental disasters such as earthquakes and tsunamis and were often forced to produce contingency plans to protect the supply chains. In turn, Toyota’s plan for a foolproof supply chain was noteworthy and consistent with Lean production philosophy. Lean production is to keep parts inventories as low as possible, calling for the limitation of resources used in various activities in the company, eliminating waste and leaving yourself a low margin of error when a supply interruption occurs (Bozarth & Handfield, 2016). Designed to eliminate unnecessary operations within an organization, Lean monitors waste which handicap the Japanese auto industry which at the time were undergoing recovery stages following the country’s emergency. Kanban’s system would be a suitable benefit to the Japanese auto industry due to its control nomenclature. With the adaptation of the Just in time (JIT) system, the auto industry would have the ability to produce the right number of products with minimal inventory, timing, labor and production costs, and Kanban would greatly compliment this process. Using the JIT, the Japanese auto industry adopted the “one at a time” concept in which parts would be ordered piece by piece, which in the long run provided the greatest benefits for both manufacturers. Smaller lot sizes indirectly improve interaction between supplier and user, and quality is improved through the elimination of large production lots high in defectives (Schonberger & Gilbert, 1983). This relationship the Japanese auto industry has made with its suppliers was extremely beneficial in providing the best quality items thus establishing long term relationships.
In the case studies of the Japanese auto industry and Realco, I’ve noticed some similarities. Forecasting is a critical step to meet consumer demand and the ability to produce said inventory must be constantly assessed and if need be, adjusted to meet the standards. Only by utilizing methods and philosophies of operations management, organizations would benefit in the advantage of meeting customer demand and maintaining a streaming supply for that demand.
Bozarth, C. C., & Handfield, R. B. (2016). Introduction to operations and supply chain management (4th ed.). Upper Saddle River, NJ: Pearson.
Schonberger, R. J., & Gilbert, J. P. (1983). Just-In-Time Purchasing: A Challenge for U.S. Industry. California Management Review, 26(1), 54. Retrieved from http://search.ebscohost.com.proxy-library.ashford.edu/login.aspx?direct=true&db=edb&AN=4763668&site=eds-live&scope=site
Segerstedt, A. (2006). Master production scheduling and a comparison of material requirements planning and cover-time planning. Selected Papers from the 18th ICPR – The Networked Enterprise: A Challenge for a Sustainable Development, (18–19), 3585. Retrieved from http://search.ebscohost.com.proxy-library.ashford.edu/login.aspx?direct=true&db=edscal&AN=edscal.18082900&site=eds-live&scope=site
Click following link to download this document
BUS 307 Week 5 Final Paper - Supply Chain Case Study.docx