Name: Gokwo P. Chirtau
Student Number: 16030241050
CHAPTER 3 DISSCUSSION QUESTION
How could a grocery retailer use inventory to increase the responsiveness of the company's supply chain?
This can be done by locating large amounts of inventory close to the customer.This can be done by increasing the cycle inventory or reducing the cycle time.Keeping in mind that some items have a shelf life time or expiry date which should not exceeded
How could an Auto manufacturer use transportation to increase the efficiency of its supply chain?
This can be done through reducing transportation costs by choosing cheap modes of transportation, designing an efficient transportation network. Transportation can be done in-house or outsourced
How could a bicycle manufacturer increase responsiveness through its facilities?
Building more facilities will improve responsiveness, to keep efficiency as high as possible have warehouses near the high demand markets and ship the bicycles parts' to them from the main factories and then reassemble parts in the retailers place.
How could an industrial supplies distributor use information to increase its responsiveness?
Firstly, it is important to have a good forecasting technique in order to estimate future sales or market conditions. Then the management has to decide for another technology to collect data for itself and exchange data with manufacturers or warehouses who supply goods. This technology may include EDI (electronic data interchange), internet, ERP (enterprise resource planning), SCM (supply chain management) software or even RFID (radio frequency identification) in order to communicate market data in a proper and fast way so not run into shortage
Motorola has gone from manufacturing all its cell phones in house to almost completely outsourcing the manufacturing. What are the pros and cons of the two approaches?
The pros of out sourcing is using low cost labor in foreign countries, which can greatly reduce operating cost. The cons is increased lead-time, it usually will take several weeks to move products form the manufacturing site to the market place. Goods that have an unpredictable demand are at an even greater disadvantage by outsourcing, if there is a surge in sells inventory cannot be quickly replaced due to transportation time between the markets and manufacturing locations. When companies choose to outsource they also give up some control over the manufacturing process and possibly some of its design talent and assembly expertise because it felt that the supplier could provide product of an appropriate level of quality with the responsiveness necessary.
How can a home-delivery company like Peapod use pricing of its delivery services to improve its profitability?
Peapod can use everyday low pricing of its products to ensure stability in the supply chain, but can influence demand by varying the delivery charges. For example, by establishing a minimum order amount of $50 and charging $10 to deliver an order under $75, Peapod provides an incentive for a customer to pile on additional items to save on per unit shipping. An order over $100 incurs a delivery fee of $7, which is the lowest delivery charge for a residential customer. Peapod also varies delivery charges by time of day; evening delivery times on weekdays and morning deliveries on Sunday within narrow windows cost an extra dollar, wider delivery windows are $1 less. The delivery latitude allows Peapod's delivery drivers to schedule more efficiently thereby increasing profitability.
What are some industries in which products have proliferated and life cycles have shortened? How have the supply chains in these industries adapted?
In the textbook, shoes are used as an example, from five styles of shoes in the 70s to over 300 by the 90s. An example of similar products would be electronics (phones) and beverages (soft drinks, coffees, etc.). Supply chains have leveraged information systems, recognized the need to collaborate on product and process design, and supply chain execution. The supply chain stance has shifted towards a partnership orientation from a focus on price negotiations.
How can the full set of logistical and cross-functional drivers be used to create strategic fit for a cell phone manufacturer targeting both time-sensitive and price-conscious customers?
A full set of logistical and cross-functional drivers can be used to create strategic fit for a cell phone manufacturer targeting both time sensitive and price conscious customers by using a strategy that involves facilities, inventory, transportation, information, sourcing, and pricing. The facility should have a good distribution network. Inventory should stay close to the customer. Transportation should cater to the targeted customers. Information should be updated regularly. To increase efficiency, the cell phone manufacturer could outsource a few manufacturing processes. Time sensitive customers should be charged more for the extra value being provided
On which supply chain drivers should a firm trying to shrink its cash-to-cash cycle focus?
A firm trying to shrink its cash-to-cash cycle should focus on inventory and its cash-to-cash cycle time. The cycle time includes inventories, accounts payable and receivables. The cash-to-cash cycle measures the average amount of time from when cash enters the process as cost to when it returns as collected revenue.
Would you expect a brick-and-mortar retailer or an online retailer to have a higher asset turnover? Which supply chain driver's impact asset turnover?
The supply chain drivers that affect asset turnover are accounts receivable, inventory, and facilities. I would expect an online retailer to have a higher asset turnover over a brick-and-mortar retailer because they can adapt more easily to change and can be more lenient with their prices.
CASE STUDY: SEVEN-ELEVEN JAPAN CO.
A convenience store chain attempts to be responsive and provide customers what they need, when they need it, where they need it. What are some different ways that a convenience store supply chain can be responsive? What are some risks in each case?
A convenience store can be more responsive by operating in many locations, rapid replenishment, appropriate technology deployment, and an equally responsive supplier, vertical integration for many of their SKUs. The risks associated with this system are the costs coupled with demand uncertainty. If demand patterns change dramatically, or the customer base changes, then the convenience store is left with an operation that is not needed.
Seven-Eleven's supply chain strategy in Japan can be described as attempting to micro-match supply and demand using rapid replenishment. What are some risks associated with this choice?
Micro-matching supply and demand using rapid replenishment assumes that each store will repeat the same demand pattern on a daily basis. The tour bus phenomenon, where a group of unanticipated customers comes to the store and buys all of a type of product will cause difficulty for regular customers. During such an event, the store will likely stock out and customers may visit the next Seven-Eleven site down the block to make their purchases. Some of this demand may permanently shift, causing a local ripple; the replenishment may be excessive at one site and insufficient at an adjacent site for the next cycle. Another possible issue would result from delays in transportation; although deliveries are scheduled for off-peak hours, a disruption in traffic flow will result in low service levels for the next wave of demand.
What has Seven-Eleven done in its choice of facility location, inventory management, transportation, and information infrastructure to develop capabilities that support its supply chain strategy in Japan?
All choices made by Seven-Eleven are structured to lower its transportation and receiving costs. For example, its area dominance strategy of opening at least 50-60 stores in an area helps with marketing but also lowers the cost of replenishment. All manufacturing facilities are centralized to get the maximum benefit of capacity aggregation and lower the inbound transportation cost from the manufacturer to the distribution center. Seven-Eleven also requires all suppliers to deliver to the distribution center where products are sorted by temperature. This reduces the outbound transportation cost because of aggregation of deliveries across multiple suppliers. It also lowers the receiving cost. The information infrastructure is set up to allow store managers to place orders based on analysis of consumption data. The information infrastructure also facilitates the sorting of an order at the distribution center and receiving of the order at the store. The key point to emphasize here is that most decisions by Seven-Eleven are structured to aggregate transportation and receiving to make both cheaper.
Seven-Eleven does not allow direct store delivery in Japan but has all products flow through its distribution center. What benefit does Seven-Eleven derive from this policy? When is direct store delivery more appropriate?
Direct store delivery would lower the utilization of the outbound trucks from the Seven-Eleven distribution center. It would also increase the receiving costs at the stores because of the increased deliveries. Thus, Seven-Eleven forces all suppliers to come in through the distribution center. Direct store delivery is most appropriate when stores are large and nearly full truckload quantities are coming from a supplier to a store. This was the case, for example, in large U.S. Home Depot stores. For smaller stores it is beneficial to have an intermediate aggregation point to lower the cost of freight.
What do you think about the 7dream concept for Seven Eleven Japan? From a supply chain perspective, is it likely to be more successful in Japan or the United States? Why?
7dream makes sense given that Japanese customers are happy to receive their shipments at the local convenience store. From a logistics perspective, online deliveries can gain from Seven-Eleven's existing distribution network in Japan. Deliveries from the online supplier can be brought to the distribution center where they are sorted along with other deliveries destined for a store. This should increase the utilization of outbound transportation allowing Seven-Eleven to offer a lower cost alternative to having a package carrier deliver the product at home. The primary negatives are that 7dream will use up storage space and require the store to be able to retrieve specific packages for customers. Another thing to consider is that the concept may be more successful in Japan because of the existing distribution network of Seven-Eleven and the frequency of visits by customers. Online delivery is able to link with the existing network. The high visit frequency ensures that packages are not occupying valuable store shelf space for a long time also; the frequent visits ensure that the marginal cost to the customer of picking up at a Japanese Seven-Eleven is small.
Seven-Eleven is attempting to duplicate the supply chain structure that has succeeded in Japan and the United States with the introduction of CDCs. What are the pros and cons of this approach? Keep in mind that wholesalers and DSD by manufacturers also replenish stores.
The difficulty of duplicating the Japan supply chain structure in the US is the fewer number of Seven-Eleven stores this is compounded by the fact that Seven-Eleven stores are getting both direct store deliveries as well as wholesaler deliveries to its stores. Setting up its own distribution centers does not allow Seven-Eleven to get the same level of transportation aggregation as it gets in Japan. Its own distribution system would help more if all wholesaler deliveries and direct store deliveries were stopped and routed through the distribution center. Even then, having its own distribution system would add much less value than in Japan given the lower density of stores and larger distance between stores.
The United States has food service distributors that also replenish convenience stores. What are the pros and cons to having a distributor replenish convenience stores versus a company like Seven-Eleven managing its own distribution function?
Given the lower density of stores, a distributor is able to aggregate deliveries across many competing stores. This allows a distributor to reach levels of aggregation that cannot be achieved by a single chain such as Seven-Eleven. The big disadvantage to having all deliveries done through a distributor is that Seven-Eleven is unable to exploit having a large number of stores. In fact, it may be argued that going through the distributor has Seven-Eleven subsidize deliveries to competing smaller chains that may also be using the same distributor.
