OM 12 Advantages of e Business Companies have global Presence Customers have global choice Competition and quality increases Ability to Monitor Customers choices and interests electronically Due to the ability to gather information companies can personalize products Supply chain response times are shortened Especially with goods supplied on the web ie Publishing software Disintermediation Reduction of transaction and Personnel costs Creation of virtual companies ie Amazon Playing field is leveled for small companies Enables B2B market Place financial services providence of software Order Fulfillment Engineer to Order ETO Built according to customer specifications Fulfillment time can be relatively lengthy Make to Order MTO A standard Product design is used but the final product is linked to customer specifications Boeing Aircrafts Fulfillment times generally less than ETO but is still fairly long Assemble to Order ATO Products are assembled from modular components Dell Fulfillment times are fairly short Make to Stock Production is based on a forecast department Stores Supermarkets Order fulfillment time is immediate Logistics Incoming Shipments Movement within a facility Outgoing Shipments Traffic Management Overseeing the Incoming and outgoing of Shipments Third Party Logistics 3PL the outsourcing of logistics management warehousing distribution etc o Large companies are more inclined to outsource o When a company decides to outsource they generally prefer to bundle the technology with managed services primarily from a 3PL o If a company decides to outsource just the technology a software vendor is preferred over a 3PL Reverse Logistics The process of transporting returned items Gate Keeping Screening returned goods to prevent incorrect acceptance of goods Avoidance Finding ways to minimize the number of items that are returned Closed Loop Supply chain The manufacturer controls both the forward and reverse shipment of product RFID much more reliable Active The RFID Tag is attached to a power supply are more expensive and Passive Relies on capturing and reusing the a small portion of the wake up signal s energy Incremental Holding Cost H d 365 ex P 314 H annual earning item of shipped item D difference in days between shipped alternatives Creating an Effective Supply Chain Trust Effective Communication Information Velocity the speed at which information is communicated in a supply chain Supply Chain Visibility A major trading partner can connect to its supply chain to access data in real time Event Management The ability to detect and respond to unplanned events Should have four capabilities Monitoring Notifying Simulating Measuring Performance Metrics Fill Rate The percentage of demand filled from stock on hand Strategic Sourcing Lower Costs by reducing waste and non value added activities increasing profits reducing risk and improving supplier performance Transportation Transportation to and from facilities can represent as much as 25 of product cost Total transportation cost in the U S is over 10 of GDP The importance of transportation has grown with o Increasing globalization of supply chains o Growth in e commerce and the associated home delivery of products o Rising fuel prices For global trade intermodal transportation is dominant with containers shipped via water rail truck combinations Direct shipment Items are shipped directly from suppliers to retail stores Warehousing Items are stocked in warehouses aka distribution centers and shipped to stores as required Cross docking Warehouses function as shipping coordination points rather than inventory storage points Items are transferred between trucks so outbound trucks to retailers have products from multiple suppliers Trade Offs in Distribution Network Design Choice of transportation mode s Number and location of warehouses Extent to which orders are aggregated over time before shipping OM 13 Why Make Location Decisions New company Expand markets Accommodate growth in demand Reduce costs Depletion of resources Mergers and acquisitions Process for Making Location Decisions Decide on the criteria Identify the important factors Develop location alternatives Identify a country Factors Government Labor Resources Financial incentives Market potential Cultural differences Safety Identify a general region Factors Location of raw materials Location of markets Cost and availability of labor Taxes Climate Identify a small number of community alternatives Factors Taxes and environmental regulations Enticements tax abatements low cost loans Attitude toward type of business Quality of life schools cost of living recreation Services medical fire police Cost and availability of utilities Identify site alternatives Factors Land cost conditions Room for future expansion Transportation access roads rail spurs Zoning restrictions Evaluate and make selection Center of Gravity Method p 181 184 Minimizes distribution costs Can include supplier locations x c g x iW i W i y c g i Wy i W i Factor Rating Incorporates qualitative and quantitative factors Process Selection Deciding how to organize the production of goods or services Key questions How much variety in products or services What is the expected volume What degree of flexibility will be needed JobShop Batch Customizedgoods Semi standardized Repetitive AssemblyLine Standardizedgoods Continuous Standardizedgoods goods Flexibility LowUnitCost High volumeefficient VeryEfficient Very HighVoume ModerateCostPer Unit Monderate Schedualing Complexity Bakery Movie Theater LowFlexibility HighCost ofDowntime Productionlines assemblylines pencils VeryRigid Lackof Variety Costlyto Change VeryHigh CostofDowntime Sugar Process Types p 77 78 Description Advantages Disadvantages Example AbletoHandlea WideVarietyof Work Slow HighCostper Unit Complex planningand shedualing Toolanddieshop thatisableto produceoneofa kindtools Facility Layout Production Line Assembly Line Fixed Position Layout Product remains stationary as workers equipment and materials are moved as needed Product Layout Layout that uses standardized processing operations to achieve smooth rapid high volume flow Advantages High utilization of specialized labor and equipment Low material handling cost and WIP inventory Routine scheduling accounting and inventory control Low unit cost Disadvantages Division of labor creates dull repetitive jobs Workstations are highly interdependent so are prone to shutdowns System is fairly inflexible in