Assignment - 1
Application of Goldratt 's Replenishment Model on a supply chain
Summary
In his book "It 's Not Luck", Goldratt proposed the application of concepts and methods of the theory of constraints (TOC) on a supply chain. The theory put forward is a win-win solution mainly for the conflicts that occur in the inventory management area of a supply chain (Goldratt, Cox et al. 2012).This paper presents the application of Theory of constraints’ replenishment solution on a distribution network to ensure better performance of the supply chain. The TOC necessitates optimum stock allotment for all distributors and retailers within the distribution chain. The limitations are dealt with using the concept known as the automatic replenishment method (Cyplik P., Hadas Lukasz, Domanski R., 2009).
The typical process of the supply chain, as a whole, involves starting from raw material purchasing, to material processing or production, replenishment of inventory at various locations, distribution and delivering to the end customers through the distribution centres. The benefits for the supply chain by adopting the TOC replenishment methodology are: meeting the customers demand quickly with the lowest cost, drop in inventory levels, improvement in ROI of distributors and retailers, enhancement in customer service and sales performance.
Introduction
The business organisation on which the TOC distribution /replenishment solution is being applied is a electronic hardware manufacturing
The supply chain model places much emphasis on tracking the demands of the customers progressively to allow the generation procedure to restock the items that have been depleted productively. The supply chain model requires that the company utilizes data that has been incorporated in a database system through a data framework. The company is thus able to connect with all the stores hence is able to monitor the movement of stocks so that they are replenished before they are completely depleted. Walmart has
The supply chain process begins when the customer places an order on the website. What is invisible to the customer is the sophisticated, yet streamlined process that occurs behind the scenes in order to deliver the order as promised. Amazon used to subscribe to the pull strategy of inventory management maintaining an endless volume of on hand inventory with the intent of always being able to satisfy customer demands. Over time this process became expensive and inefficient prompting the company to review its inventory management. In 2000, Amazon made a decision to adjust its inventory management system to promote efficiency and maintain
During the game, I realized that wide gaps in orders of every role in the supply chain such as factory, distributor and retailer create inventory management challenges. For example, distributor records 0units between week1-week 4 compared to retailer within the same period. The retailer records 3units, 5units, 2units and 2units between weeks 1- week 4. The same applies to factory with 0units from weeks 2-4. Addressing inventory management problems requires developing an average unit level to avoid disappointing customers when demand
In this final paper for Managerial Finance I will attempt to show how the supply chain inventory management method can be affected depending on the situation of the retailer. Studying the control method for problems in inventory, which would include both, excesses in inventory as well as shortages, and hoping to minimize loss.
Although Alliance Supermarkets utilizes a point-of-sale system to track its inventory levels and keep constant records for each location’s on-hand quantities, the firm still experiences several problems with regards to effective and efficient inventory management. As stated in the case study, “sudden changes in demand for a particular item can catch the company by surprise as it bases inventory replenishment on historical demand patterns. Further, demand patterns and preferences may vary from one store to another depending on the customers served by each, but the inventory system groups all demand information together and treats each store equally. Finally, the manufacturers that make the products stocked by Alliance Supermarkets are
When offers of reduced pricing are accepted for equipment, meeting delivery expectations becomes an important part of enhancing the customer experience to maintain satisfied loyal customers. An inventory specialist in the current distribution center would be given the additional task of segregating and maintaining inventory levels to meet the needs of the customer loyalty department.
Somerset Furniture is a global supply chain that is experiencing an increase in economic globalization. The company is facing challenges due to globalization and offshore sourcing. The breakdown in Somerset Furniture is its business performance. The company is refining its logic on efficiently communicating. The company recognized the importance of information and product flow. Somerset Furniture is influenced by its success of supply chain management and logistic practices. In this paper Somerset Furniture quality issues will be addressed, effectiveness, innovation, and strategies.
A goal is to replace inventory with frequent communication and sophisticated information systems to provide visibility and coordination. In this way, merchandise can be replenished quickly in small lot size and arrive where and when it is needed. Quick, frequent and accurate information transfer among members of the supply chain can counteract the distortion of information (known as the bullwhip effect) as it passes up the supply chain from the end customer. A supply chain can reduce overall inventory while maximizing customer service by efficiently redistributing stock within the supply chain using effective postponement and speculation.
Barilla SpA, a large vertical integrated corporation that makes pasta and bread products is experiencing rising costs due to extreme variability in demand from its distributors. In order to improve company’s sale margins, Giorgio Magialli, the Director of Logistics at Barilla suggests to implement a Just-In-Time Distribution (JITD) system. The JITD system is a continuous replenishment distribution strategy, which the responsibility for determining inventory quantities shifts
Through the end of the 1980's, most software packages for distributors placed an emphasis on sales and accounting related modules. In the early 1990's, many distributors recognized that they needed help controlling and managing their largest asset, inventory. In response to this need, several computer software companies developed comprehensive inventory management modules and systems. These new packages include many new features, designed to help distributors effectively manage warehouse stock. But after implementing new software, many distributors don't feel that they have gained control of their inventory. These wholesalers continue to face many of the same challenges they experienced with their
As the sections we divided in Supply Chain Design paper, we have five different sections of a restaurant. They are Suppliers, Inputs, Processes, Outputs and Customers. Now we will find out two different measurements for each section.
The class text states that Supply chain management is frequently divided into supply chain planning applications, supply chain execution applications, logistics management, and warehouse management. Often when companies fail at implementing an efficient supply chain because of the planning section, or inaccurate demand forecasts. The text states electronic data interchange is one of the earliest uses of information technology for supply chain management, Electronic data interchange is the use of the Internet for everyday business transactions. “In this era of information a firm’s supply chain should operate at speed of thought and this is possible only by enhanced e-speed communications and information sharing with their critical partners.” (4)
Perhaps the inventory play the most fundamental role in supply chains is to make it easier the balance of demand and supply. In order promote and effectively manage the forward and reverse flows in the supply chain, company must deal with upstream supplier exchanges and downstream customer demands. This puts an organization in the position of trying to find a balance between fulfilling the
In order to address this issue, Brando Vitali’s has proposed a Just-in-Time Distribution (JITD) model, which is a continuous replenishment strategy under which the
DIMCO may gain many advantages by implementing supply management chain. Implementing SCM can reduce problems within the company’s internal functions, external suppliers, and external distributors. Some advantages DIMCO can gain from implementing SCM are as follows; the supply chain would improve the quality of service to the end user; reduce channel cost; and create a competitive advantage. (Reid & Sanders, 2010) The implementations of SCM will strengthen DIMCO partnership with suppliers and distributors. Supply chain management can also prevent such challenges such as the bullwhip effect, caused by erratic replenishment of orders placed on different levels in the supply chain that have no apparent link to final product demand. (Reid & Sanders, 2010) An effective and efficient SCM will allow partners to share information concerning health, safety, government regulations and environmental issues. SCM will provide a common network for communications, suggestions, and feedback. This will assist DIMCO in meeting the need of customers quickly and in an efficient manner. Overall, SCM would assist in