OUTLINE Questions? Comments? Any stories? Questionnaire results Last homework Next homework Chapter 2, 3 and 4 (Chopra)

Questionnaire results

Using one of the search engines on the web (Google, Yahoo, MSN, Bing, etc.), find a reference to a company that supplies software for managing supply chains. (0.1 points) Select one of the software packages offered by that company and write a page about what the software does. (0.15 points) Read chapters two and three of Chopra. Summarize (about a page or two of your opinion– not an outline) what you got out of them. This can be both positive and negative – it is OK to be critical as long as it is well reasoned. Be prepared to discuss them in class (0.25 points)

Create an Excel spreadsheet that uses a VBA Macro to calculate a repetitive problem. Display the result as a histogram of generated values. Also, an example of the lookup function to return values from a table (The interest tables from ISE460 are a good example). The grader will test the macro. (0.35 points)

Given these data, what is the unit cost of a manufactured item with $45 of material and 0.342 hours of labor? (0.15 points) Total labor hours 350,000 Total Material Cost $500,000,000 Indirect overhead (Without material overhead) $35,000,000 Material overhead $5,500,000 Direct labor cost per hour (including benefits) $32.50

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Obstacles Increasing variety Shorter life cycles Demanding customers Decreasing vertical integration Globalization

Benefits of collaboration Establishing contacts Gaining Insight Joint projects

Definition Benchmarking Identifying, understanding and adapting outstanding practices from other organizations to improve performance

International Chains – what is different?

International Chains – what is different? Greater geographic and time distances Diversity of demand and supply conditions Wage rates Taxes Incentives Political climates Exchange rates Special laws

Cycle time Definition – the total elapsed time required to complete a process (e.g. 4 years to get an engineering degree, one month to build an airplane) Little’s Law: Cycle time = Work in process/Throughput Causes of long cycle times: Waiting Old processes that don’t add value Serial vs. parallel, external vs. internal Repeated activities Batching Excessive controls

Measuring Performance What should measuring performance accomplish?

Measuring Performance What should measuring performance accomplish? Basis for understanding the system Influence behavior in the system Provide information about results Provide information that will initiate actions to improve the system Create accountability in individual operations The concept of Supply Chain Management requires that overall performance be measured, but intermediate points must also be measured to insure accountability

Measuring Performance (continued) Typical internal measures % orders on time Inventory turns Cycle time Costs/Goods sold Aging of orders

Measuring Performance (continued) Typical supply chain measurements Cycle time % orders on time (service level) or fill rate Order aging Comparisons to competitors (Bench marking) Responsiveness to changes in demand End items sold/Total costs Market Share

Chapter 4 – Designing the distribution network in a Supply Chain Move and store product between stages The structure of the network influences: Response time Variety of products Availability of products Customers’ experience Visibility of orders Returnability

Some basic relationships in a supply network Lower response times require more facilities Inventory costs increase with the number of facilities Transportation costs decrease with the number of facilities Total logistics costs vary parabolically with the number of facilities – there is an optimum number of facilities

Major types of distribution networks Definition: Inventory Turns = Annual Sales/ average inventory Manufacturing Storage with direct shipping (drop) Manufacturing Storage with direct shipping and in transit merge Distributor Storage with carrier delivery Distributor Storage with Last Mile delivery (not carrier) Manufacturer/Distributor Storage with customer pickup Retail Storage with customer pickup

Summary Who owns what matters! Choice of network has long term consequences Exclusivity Customer preference

“Mr. Osborne, may I be excused? My brain is full”