12. Zeco Supply Chain
●
Buy components from supplier
●
Mix and serve drinks
●
Collect money and complaints
●
Pay suppliers for more supplies
●
Inform suppliers about complaints
●
Get answers about complaints and inform customer.
18. What risk does Zeco have?
●
He might not find customers!
●
Supplies may be spoiled
●
Money may be stolen :(
19. Zeco Risk
●
Zeco transfers the risk to the customer by
adding an extra charge on the bill
●
Zeco transfers risk to the supplier by buying on
credit
20. Customer and supplier risks
●
Customer risks having to pay without being
satisfied!
●
Not to mention the risk of food poisoning!!!
●
The suppliers risk not being paid or losing their
reputation by working with Zeco.
21. Values Transfer
●
Zeco adds value to the coffee and tee by:
– Mixing and serving – Food business
– Maintaining the cafe in acceptable conditions to
attract customers – Entertainment Business
22. Note the close relation between supply chain
supply chain
and value chain
value chain!
23. Without adding value, no business will exist for
Zeco or anyone else for that matter
25. Definition
●
The management of upstream
upstream and
downstream
downstream value-added flows of materials,
final goods, and related information among
suppliers, company, resellers, and final
consumers.
WikiPedia
29. Primary and secondary targets are assigned
according to how scholars
scholars of SCM pay attention
to them
However, you can easily argue that they are both
important
important for any successful business
31. Top 3 Strategies
●
Improve Distribution Network
●
Monitor Cash Flow
●
Establish Information Conduits (channels)
Darren Woollard
32. … or 5 Strategies
●
Improve your distribution network
●
Devise a distribution strategy
●
Monitor cash flows
●
Establish information conduits
●
Track your inventory
Track your inventory
Zoe Meeken
33. We may add ...
●
Monitor and improve your suppliers’ network
suppliers’ network!
38. The most important question that YOU need to
answer is:
WHY do I need inventory?
WHY do I need inventory?
39. The motive for inventory:
●
Transaction motive
Transaction motive: Economies of scale is
achieved when the number of set-ups are
reduced or the number of transactions are
minimized.
Donglei Du
41. The motive for inventory:
●
Precautionary motive
Precautionary motive: hedge against
uncertainty, including demand uncertainty,
supply uncertainty
Donglei Du
42. What if you get to buy sugar, and your supplier is
out of it!!!
43. Or worse …
Customer have to wait until you purchase the
sugar each time a cup of coffee is ordered!!!
44. The motive for inventory:
●
Speculative motive
Speculative motive: hedge against price
increases in materials or labour
Donglei Du
45. Imagine having to say:
“Sorry sir, but the coffee price have changed
because the sugar price went up an hour ago”
47. Purpose of Inventory Management
●
The objective of inventory is to achieve
satisfactory levels of customer service while
keeping inventory costs within reasonable
inventory costs within reasonable
bounds
bounds.
Donglei Du
48. Purpose of Inventory Management
●
Level of customer service:
– (1) in-stock rate
”Yes sir, coming right-away”
”Yes sir, coming right-away”
– (2) number of back orders
”Sorry sir, you need to wait until we buy the sugar”
”Sorry sir, you need to wait until we buy the sugar”
– (3) inventory turnover rate: the ratio of average cost of
goods sold to average inventory investment
”Since we use sugar all the time, let’s build a sugar factory”
”Since we use sugar all the time, let’s build a sugar factory”
Donglei Du
49. Purpose of Inventory Management
●
Inventory cost: cost
cost of ordering
ordering and carrying
carrying
trade-off
Donglei Du
60. What is forecasting?
●
Forecasting is the process of making
statements about events whose actual
outcomes (typically) have not yet been
observed.
Wikipedia
62. Predicting the future!
What will we need tomorrow?
What will we need tomorrow?
What will the customer need next year?
What will the customer need next year?
What will the prices be next month?
What will the prices be next month?
64. Financial requirements
How much cash should I keep?
How much cash should I keep?
Should I keep that much cash?
Should I keep that much cash?
How liquid is that asset?
How liquid is that asset?
65. Shipping requirements
If I need it NOW, when should I order it?
If I need it NOW, when should I order it?
If the customer orders NOW, when should they get it?
If the customer orders NOW, when should they get it?
How much does that matter?
How much does that matter?
66. Market expectations
Are prices expected to change?
Are prices expected to change?
Is demand expected to change?
Is demand expected to change?
93. How much should the order quantity
be?
●
The larger the order quantity, the larger the total
holding cost (ch
*Average Stock)
●
The smaller the order quantity, the larger the
order cost (co
*Number of orders)
94. Where does holding cost come
from?
●
Lost investment opportunity
●
Storage rental and/or maintenance
●
Storage security
●
Material degradation due to storage
95. Where does operation cost come
from?
●
Time lost in procurement
●
Paper-work per operation
●
Risk associated with financial transactions
●
Risk of not being able to obtain the material
(delay and having to look for another supplier)
101. Static
Static Problems
●
You collect the data, and evaluate the average!
●
How much do we consume per month?
●
How long does it take the supplier to deliver?
●
This way is simple and effective on the short term
and when you do not have much data
102. Quasi-Static
Quasi-Static Problem
●
Data is accumulating …
●
What matters more: how much did we consume last year or
last month?
●
Should I completely ignore last year?
●
How about two months ago?
●
Here weighted averaging comes handy
105. Which is better?
●
On the short term, average, or even just what
happened yesterday, may be good
●
On the long term, trends and seasonality mater
more!
113. References
●
“What does a Supply Chain Engineer do?”, StepStone,
https://www.stepstone.be/career-advice/article/supply-chain-engineer/
●
“Supply Chain Engineer job description template”, Hiring Resources,
https://recruitee.com/hiring-resources/job-description-templates/supply-chain-e
ngineer/
●
“What is supply chain management (SCM)?”, TechTarget®
https://searcherp.techtarget.com/definition/supply-chain-management-SCM
●
“Supply chain management”, WikiPedia,
https://en.wikipedia.org/wiki/Supply_chain_management
●
“The three flows of supply chain”, Nifemi Aluko,
https://kpakpakpa.com/spotlight/the-three-flows-of-supply-chain/
114. References
●
“Consumer Behaviour, Brand Management, Marketing and Psychology”,
Brandalyzer,
https://brandalyzer.blog/2016/03/23/the-five-major-flows-in-supply-chain/
●
“Top 3 Strategies To Improve The Supply Chain Performance In Your Business”,
Darren Woolard,
https://www.dmg-freight.com/top-3-strategies-to-improve-supply-chain-performan
ce-in-business/
●
“5 Ways to Increase Supply Chain Performance”, Zoe Meeken,
https://www.business.org/software/supplier/ways-to-increase-supply-chain-perfor
mance/
●
“7 Tips for Effective Inventory Management in Global Supply Chain”, TradeGecko,
https://www.tradegecko.com/blog/7-tips-for-effective-inventory-management-in-a-
global-supply-chain
115. References
●
“Supply Chain Management: Inventory Management”, Donglei Du
●
“Business-Plan Forecasting”, Steven D. Peterson, Peter E. Jaret, Barbara
Findlay Schenck
●
“Excel Sales Forecasting For Dummies”, Conrad Carlberg
●
“Sales Forecasting: A Practical Guide”, Mark Blessington
●
“Sales and Operations Planning The How-To Handbook”, Thomas F.
Wallace and Robert A Stahl
●
“Introduction to Financial Forecasting in Investment Analysis”, John
Guerard