ehwlc mba operations session 7 - supply chain management

8/14/2019 EHWLC MBA Operations Session 7 - Supply Chain Management

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Operations and FunctionalOperations and FunctionalManagementManagement

in Hospitality Organisationsin Hospitality OrganisationsSession 7Session 7

Supply Chain ManagementSupply Chain ManagementEaling Hammersmith and

West London CollegeMasters of Business Administration

Hospitality Management


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After this session you should be able to

Discuss the role of supply chainmanagement in the organisation

Explain the objectives of supply chainmanagement

Discuss the advantages of single vs multisourcing options

Discuss the evolution of eprocurement Consider supply chain management in your

own organisation

Lesson objectivesLesson objectives


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Supply network all the operations linkedtogether to provide goods and services

Supply chain a strand of linkedoperations...several supply chains willcross through an operation

Supply chain pipeline a linkage orstrand of operations that provides goodand services through to end customers

Supply chain managementSupply chain management


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Quality the quality of a product or servicewhen it reaches the customer

Quality of performance of every operation inthe chain that supplied it

Every stage must take responsibility for

its own its suppliers performance

Supply Chain ObjectivesSupply Chain ObjectivesQualityQuality


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If each of 7 stages in a supply chain has a1% error rate or 93.2% of products orservices will be of good quality when theyreach the customer

Supply Chain ObjectivesSupply Chain ObjectivesQualityQuality


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Speed how fast a customer can beserved...customers can be served quicklybecause we have it in stock

Speed how fast goods and services movethrough the chain...keeping inventory lowand using working capital effectively

Balance between speed asresponsiveness and speed as fastthroughput how does the supply chainwant to compete

Supply Chain ObjectivesSupply Chain ObjectivesSpeedSpeed


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Dependability minimizing uncertainty

On time, in full deliveries

No over ordering

Supply Chain ObjectivesSupply Chain ObjectivesDependabilityDependability


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Flexibility - the ability of the supply chainto deal with changes anddisturbances...supply chain agility

Agility changing with customer demandsor the supply capacities within the chain

Supply Chain ObjectivesSupply Chain ObjectivesFlexibilityFlexibility


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Costs of each operation in the chain doingbusiness with each other

Supply Chain ObjectivesSupply Chain ObjectivesCostCost


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Costs of

Finding appropriate suppliers Setting up contracts Transporting products Monitoring performance

Supply Chain ObjectivesSupply Chain ObjectivesCostCost


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Buys in goods and services from suppliers

Purchasing / ProcurementPurchasing / Procurement


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The purchasing functionThe purchasing function

Suppliers

or specification, price, delivery etc

roduce products & services

Purchasing function

Request for quotations

Select Suppliers

Prepare Orders

The Operation

Request for products and servic

Receive products and services


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Factors for rating suppliersFactors for rating suppliers

Short-term

Range of products or servicesprovided

Quality of products & services

Responsiveness

Dependability

Delivery & volume flexibility

Total cost

Ability to supply the requiredquantity

Long-term

Potential for innovation

Ease of doing business

Willingness to share risk

Long-term commitment tosupply

Ability to transfer knowledge aswell as supply goods andservices

Technical capability

Operations, financial,managerial capability


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One supplier

Several suppliers maintaining continuousbargaining power

Single Sourcing vs.Single Sourcing vs.Multi SourcingMulti Sourcing


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Single Sourcing vs.Single Sourcing vs.Multi Sourcing AdvantagesMulti Sourcing Advantages

Single Sourcing Multi Sourcing

Potentially better qualitybecause of SQA Stronger more durable

relationships Greater dependency

more commitment and

effort Better communication New product

development Confidentiality

Scale economies

Competitive tendering

Can switch in case ofsupply

Wide sources ofknowledge andexpertise to tap-


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Single Sourcing vs.Single Sourcing vs.Multi Sourcing DisadvantagesMulti Sourcing Disadvantages

Single-sourcing Multi-sourcing

More vulnerable todisruption if supplyfails

Individual suppliermore affected byvolume fluctuations

Supplier may apply

pressure on prices

Difficult to ensurecommitment bysupplier

Less easy to develop

effective SQA

Harder tocommunicate

More difficult to obtainscale economies


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Voice partnership sourcinglong-termforecasts, R&Dlong term contracts

Exit traditional adversarial purchasing

short term relationships based on price

Unlikely operating at arms length

Stagnant strong sense of commitment,but relationship not yet at full potential

Information exchangeInformation exchangeHelper (1991)Helper (1991)


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Use of the internet to organise purchasing

May include identifying potential suppliersand auctions as well as administrativetasks i.e. Issuing orders

E procurementE procurement


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Improves efficiency in purchasing processes

Improves commercial relationships

Reduces transaction costs of doing business forsuppliers

Opens up marketplace to increased competition keeps prices competitive

Improves a business capacity to manage supplychain efficiently

E procurementE procurementBenefitsBenefits


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High spend

Easily substitutable

Many competing suppliers

Relative inefficient internal processes

Scope of e-procurementScope of e-procurement


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Private

Consortium

Third party

Electronic marketplacesElectronic marketplaces


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Identifying evaluating configuring supplyacross multiple geographies

Lower trade barriers Cheaper more sophisticated transport

infrastructures Competition where can we buy it or make

it cheapest?

Global sourcingGlobal sourcing


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Purchase priceTransportation costs Inventory carrying costs storage, handling,

insurance, depreciation, obsolescence Cross-border taxes and tariffs Supply performance Supply and operational risks geopolitical

factors i.e. Changes in country leadership,war, terrorism

Considering global sourcingConsidering global sourcing


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Child / forced labour Working hours Wages and benefits Freedom of association Discrimination Health and safety

Global sourcing and CSRGlobal sourcing and CSR


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Logistics organising the integratedmovement and storage of goods

Physical distributionPhysical distributionmanagementmanagement


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Information more readily available along thechain where are my goods?

Better coordination

Back loading

Order fulfilment

Logistics and the internetLogistics and the internet


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Integrating

Purchasing Expediting Inventory management Stores management Production planning

Physical distribution Merchandising

Materials managementMaterials management


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B2B and B2C C2B and C2CB2B and B2C C2B and C2C

B2B

t common all but the last link in the supply chain

B2C

Retail

Catalogues

C2B

Consumer bids for goods i.e.

Priceline.com

C2C

Trading, swap, auctions

i.e. EBay


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Traditional market supply relationshipsTraditional market supply relationships

Advantages Disadvantages

Maintain competitionbetween suppliers

Supplier specialising in asmall number ofproducts or services

but serving a largenumber of customerscan gain economies ofscale

Flexibility Operations focus on core

activities

Supply uncertainty Choosing who to buy

from takes time andeffort

Strategic risks tosubcontractingactivities


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Compromise between vertical integrationand pure market relationships

Sharing success

Long-term expectations Multiple points of contactJoint learning Few relationships Trust Information transparency

Partnership relationshipsPartnership relationships


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Providing services and products that areexactly what your customers want

Retaining existing customers and

discovering new ones

Offering better customer service

Cross selling products more effectively

Customer relationship managementCustomer relationship management(CRM)(CRM)


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Efficient keeping inventories and workingcapital low, and fast throughput

Responsive high service levels

Bullwhip effect small disturbance at oneend causes increasingly large disturbancestowards the end...each link tries tomanage their production and inventorysensibly

Supply chain behaviourSupply chain behaviour


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Agreeing dimensions of performance i.e.response time, availability, accuracy

Agreeing how each dimension will bemeasured

Mutually agreed targets for each dimension Defining where responsibility lies for each

dimension

Service Level AgreementsService Level AgreementsSLAsSLAs


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Too few or inappropriate dimensions ofperformance

No mutually agreed targets No procedures to deal with problems Mutual benefits not identified Lack of commitment from managers

Frequent mistakes in SLAsFrequent mistakes in SLAs


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Market/salesinformationflow

Product/serviceflow

Cash flowSupply chain-related activities

Understandingcustomer needsDesigning

products &

servicesDemandforecasting

PurchasingInventory mgmtThroughput /waiting timesDistribution

SupplierpaymentsCustomerinvoicingCustomerreceipts

Beneficial effectof e-business

practices

Better CRMMonitoring realtime demandOn-linecustomizationAbility tocoordinate

output withdemand

Lowerpurchasing &admin costsBetter dealsReduced

bullwhip effectReduced

inventoryMore efficientdistribution

Fastermovement ofcashAutomated cashmovementIntegration offinancial

movement withsales andoperationsactivities

Effects of e-business onEffects of e-business onsupply chain managementsupply chain management


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Compromise between minimizing suppliers and satisfyingstakeholders

Outsourcing the procurement function

Partnering with other similar or larger businesses

Eprocurement

Bartering

Compromise between best price and local

Greening the supply chain

Trends in Supply Chain ManagementTrends in Supply Chain Management

ehwlc mba operations session 7 - supply chain management

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