Pertemuan 13

--------------------------------------------------------- Managing Uncertainty in a Supply Chain: Safety Inventory

Topics The role of safety inventory in supply chain Determining the appropriate level of safety inventory Impact of supply uncertainty on safety inventory Impact of aggregation on safety inventory Impact of replenishment policies on safety inventory Managing safety inventory in a Multiechelon Supply Chain The role of IT in Inventory Management

The role of safety inventory in supply chain Safety inventory is inventory carried to satisfy demand that exceeds the amount forecasted for a given period. Safety inventory is carried because demand is uncertain, and product shortage may result if actual demand exceeds the forecast demand.

Determining the appropriate level of safety inventory The uncertainty of both demand and supply The desired level of product availability

Impact of supply uncertainty on safety inventory Supply chain must account for supply uncertainty when planning safety inventories.

Impact of aggregation on safety inventory In practice, supply chain have varying degrees of inventory aggregation. The goal is to understand how aggregation in each of these cases affects forecast accuracy and safety inventories.

Managing safety inventory in a Multiechelon Supply Chain All inventory between a stage and the final customer is called the echelon inventory. Echelon inventory at a retailer is just the inventory at the retailer or in the pipeline coming to the retailer. If the inventory is inexpensive to hold and customers are time sensitive, it is better to carry more safety inventory downstream, closer to the final customer

The role of IT in Inventory Management Two most significant contributions of IT systems can be improved inventory visibility and better coordination in the supply chain

------------------------------------------------ Sourcing Decisions in a Supply Chain

Topics The role of sourcing in a supply chain In-house or outsource Third- and Fourth-Party Logistics Providers Contract, Risk Sharing, and Supply Chain performance The procurement process Risk Management in Sourcing

The role of sourcing in a supply chain Sourcing is the entire set of business processes required to purchase goods and services.

In-house or outsource How do 3rd parties increase the supply chain surplus? Capacity aggregation Inventory aggregation Transportation aggregation by transportation intermediaries Transportation aggregation by storage intermediaries

Warehouse aggregation Procurement aggregation Information aggregation Receivable aggregation Relationship aggregation Lower costs and higher quality

Risk of Using a 3rd Party The process is broken Underestimation of the cost of coordination Reduced customer/supplier contract Loss of internal capability and growth in 3rd –party power Leakage of sensitive data and information Ineffective contracts Loss of supply chain visibility Negative reputational impact

Third- and Fourth-Party Logistics Providers

Contract, Risk Sharing, and Supply Chain performance Three contracts that increase overall profits by making the supplier share some of the buyer’s demand uncertainty are: Buyback or returns contracts Revenue-sharing contracts Quantity flexibility contracts

The procurement process There are two main categories of purchased goods: direct and indirect materials.

Risk Management in Sourcing Supply chains with single source is dangerous (refer to tsunami cases). Disruption risk can be mitigated by developing multiple sources. Carrying inventory or developing a backup source that is more responsive can mitigate delays from a supply source.