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Supply Chain Management

Supply Chain Management (SCM): Focuses on managing the flow of goods and services and information through the supply chain in order to attain the level of synchronization that will make it more responsive to customer needs while lowering total costs.

Keys to an effective Supply Chain management are: Information Communication Cooperation Trust

Supply Chain Management (SCM): Focuses on managing the flow of goods and services and information through the supply chain in order to attain the level of synchronization that will make it more responsive to customer needs while lowering total costs.

Keys to an effective Supply Chain management are: Information Communication Cooperation Trust

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Dr. Aboolian HTM 305 Fall 2003

Group members Chris Jennen (Forecasting) Andres Orozco (Processing) Fernando Terrazas (Suppliers) Norberto Cullen (Purchasing)

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Overview

Briefly describe the Taco bell case. Forecasting

– Business planning– Sales mix

Suppliers– Strategic Suppliers– Best practices

Purchasing– Anticipate demand of raw materials based on forecasting– Procure raw materials

Processing– Getting suppliers approved– Identifying specifications

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Forecasting

In Supply Chain Management Forecasts of product demand determine how

much inventory is needed, how much product to make and material to purchase from suppliers to meet forecasted customer need.

Total Quality Management (TQM) Strategic Planning Forecasting Methods and Process

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Forecasting

Defined:Statements about future. A business function within a company that is

rapidly growing because of emphasis on supply chain management.

Qualitative- Managements judgment.(subjective)

Quantitative- Based on formulas

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Forecasting

Quantitative forecasting model Grilled Stuff burrito (case analysis) 6 week promotion trial 15 min intervals If one or more stock out occurs, past sales

wont truly reflect demand

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Forecasting

Qualitative Data Short on time. Economic or political uncertainties. New products Consensus forecast. (Delphi method)

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Forecasting

Decrease inventory but still meet demand. How much to keep Continuous replenishment Key to good quality service Strategic planning

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Suppliers

Companies want the materials, parts, and services necessary to produce their products to be delivered on time, high quality and with low costs.

Procurement On demand delivery Continuous replenishment Sourcing / Outsourcing

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Suppliers

THE KEY TO SUPPLY CHAIN IS QUITE SIMPLE…

Supply Demand

THE SUPPLY COMPONENT IS THE BEGINNING OF THE CHAINTHE DEMAND COMPONENT BEGINS WITH THE ORGANIZATION’SOUTPUT AND IS DELIVERED TO THE IMMEDIATE CUSTOMER

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Suppliers

THERE ARE SEVERAL UNIQUE SUPPLY CHAINS

Tier 2 suppliers

Tier 1suppliers

Producers

Distributors Customers

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Suppliers

TIER TWO SUPPLIERS FOUR OUR BUSINESS CASE

The raw material provider into our processorsThe grower or harvester of the lettuceSupply is contracted to ensure no break in

supply chain

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Suppliers

TIER ONE SUPPLIERS FOUR OUR BUSINESS CASE

The ones who store and receive the raw materialsMust forecast the future demand of the

producers of the finished goodsMust have strict quality controls when

receiving raw materialsEnsure Supply Chain is not broken

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Suppliers

PRODUCERS The actual producers of the end product

Must maintain efficient throughputs and yields

Production must match demand Must have strict quality controls in place Must have production schedules so that

Supply Chain is not broken

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Suppliers

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Suppliers

Customers The restaurants

The must have the products on hand to satisfy the ultimate customers

The restaurants need to manage inventory levels so that they are using the product prior to expiration dates

Limited time offers are extremely hard to manage from supply chain standpoint

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Purchasing

HOW THE SUPPLY CHAIN STARTS Taco Bell Caesar Grilled Stuft Burrito

– Food Innovations develops the concept– Purchasing is part of the core team to guide them– Food Innovations develops product specifications– Purchasing selects strategic suppliers to develop

the best practices in order to have the end results

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Purchasing

HOW THE SUPPLY CHAIN STARTS Taco Bell Caesar Grilled Stuft Burrito

– Purchasing works with Business planning to develop forecasting

– Purchasing communicates volume estimates to growers at least three months out for the lettuce

– Food Innovations visits individual processors to calibrate their end products and looks at samples

– Processors continue to send samples of finished product until they become approved

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Purchasing

Taco Bell Caesar Grilled Stuft Burrito– Manage inventories– Monitor Production– Make decision at what point to either stop

production or ramp up

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Processing

WHAT IS PROCESSING..Not always physicalAffects are far reaching

Public Image, goodwill

Product SpecificationStrategic Supplier CapabilitiesOn site inspections

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Processing

HOW THE SUPPLY CHAIN STARTS Taco Bell Caesar Grilled Stuft Burrito

– At 7 days out the grower harvests the lettuce – At 5 days out the processors processors the

lettuce– At 3 days out the distributor distributes the lettuce

to the restaurants with 5 days shelf life remaining– The restaurants normally use the lettuce between

2 and 3 days from receiving it

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Processing

Distributors These are the ones that get the product to

the end users… the restaurantsWe have 18 broad line distributors in our systemWe have 10 independent in regional markets Together they supply 22,000 Taco Bell

restaurants at least two times per weekMust maintain safety stocks so the Supply Chain

is not broken