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Chapter 13 Supply chain planning and control Key questions ➤ What is supply chain management? ➤ What are the activities of supply chain management? ➤ What are the types of relationship between operations in supply chains? ➤ How do supply chains behave in practice? ➤ How can supply chains be improved? Introduction Operations managers have to look beyond an internal view if they want to manage their operations effectively. As operations outsource many of their activities and buy more of their services and materials from outside specialists, the way they manage the supply of products and services to their operations becomes increasingly important, as does the integration of their distribution activities. Even beyond this immediate supply chain, there are benefits from managing the flow between customers’ customers and suppliers’ suppliers. This activity is now commonly termed supply chain management. In Chapter 6 we raised the strategic and structural issues of supply network management; this chapter considers the more ‘infrastructural’ issues of planning and controlling the individual chains in the supply network. Figure 13.1 This chapter covers supply chain planning and control Check and improve your understanding of this chapter using self assessment questions and a personalised study plan, audio and video downloads, and an eBook – all at www.myomlab.com.
374 Part Three Planning and control Operations in practice Siemens ‘SCOR’ a success 1 by Carsten Dittrich, University of Southern Denmark Siemens AG, with over 450,000 people, sales of around A70 billion and operating in more than 190 countries, is one of the world’s top five electrical engineering and electronics companies, producing products from mobile phones to power plants. For over a decade Siemens has used the Supply-Chain Operations Reference (SCOR) model to improve its supply chain efficiency and process performance. (The SCOR model is explained later in this chapter.) The implementation of the model was initially intended to support the company’s move to a considerably stronger focus on e-business. Teams of more than 250 internal change agents were formed to start to review strategies, opportunities and challenges. Siemens initially developed what they called their ‘Generic Business Process’ version of the SCOR model so that it could be applied in all their markets. However, Siemens soon realized that different kinds of business required different supply chain solutions. For example, Siemens used SCOR to streamline the Make-to-Order processes of its ‘Siemens Medical Solutions’ business whose computed tomography (CT) devices are made in Germany and China. This was a particularly difficult business involving ‘make-to-order’ functions such as the global management of customer orders, comprehensive and complex material management, customization and production, technical support, worldwide dispatch and logistics, and installation at the customer’s site. Yet while Siemens was the clear innovation leader, before the SCOR initiative its inflexible and bureaucratic processes had resulted in long waits for customers, high levels of inventory and high costs. The CT supply chain was not connected, with little common understanding of how processes should work or what its supply objectives should be. Internal operations managers in the supply chain answered to headquarters rather than to end-customers and conflicting performance objectives led to fluctuating demands throughout the chain. It was the SCOR process that helped Siemens tackle these problems directly. Order management and planning and control processes moved from individual and fragmented order handling to the management of all worldwide customer orders; sourcing was simplified and integrated using 22 ‘A suppliers’ rather than the 250 used previously, production of small quantities was organized according to customer specifications, strategic partnerships were developed with service providers, quick installation of systems directly delivered to customer sites using qualified CT factory personal was implemented, and ‘reverse logistics’ employed to refurbish used systems. The improvements in supply chain performance were spectacular. Order to delivery time reduced from 22 weeks to 2 weeks, the simplified and transparent order on the factories allowed two production lines to do the work of the four used previously, factory throughput time was reduced from 13 days to 6 days, flexibility was increased tremendously to a level of ± 50% orders per month, inventory levels were reduced significantly, enabling CT to divest a warehouse, direct shipments non-stop from the factory to the customer enabled delivery to customer sites within 5 working days and also allowed customers to track shipments. Source: Alamy Images
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sixth edition OperatiOns ManageMent
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Further reading in Operations Manag
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Pearson Education Limited Edinburgh
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Contents Guide to ‘operations in
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Contents ix Chapter 12 Inventory pl
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Guide to ‘operations in practice
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Guide to ‘operations in practice
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Making the most of this book and My
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Making the most of this book and My
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Preface xix Illustrations-based Ope
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To the Student . . . Making the mos
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About the authors Nigel Slack is th
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Part One INTRODUCTION This part of
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Part Four IMPROVEMENT Even the best
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cumulative representation 317-22 cu
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failures (continued) estimates of o
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mitigation of ethical practice brea
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supply chains (continued) meaning 3
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