Operations In Supply Management

Running Head: OPERATIONS IN SUPPLY CHAIN MANAGEMENT

Operations in Supply Chain Management

What Process Management can do for a Company

Edward Wanalista

Operations Management ASCI 641

Mr. Michael Pickett

April 15, 2008

Operations in Supply Chain Management: What Process Management can do for a Company

In an age where global economies share markets, airlines move customers to hundreds of countries around the globe, the sales of products on Internet web pages and the demand for new or improved products make for any company wishing to learn the correlations of operations and supply chain management techniques. This is no easy task for any one management team, production team, design team or financial team. The team definition in this sense has grown to include video conferencing, product monitoring data and analysis for all members of the company to decide on and give input. This research paper will accent the numerous variables needed to understand why these two services must remain joined.

Asset Management

Supply tracking - RFID tags

Where is it when it positively needs to be there by tomorrow? A Radio Frequency Identification (RFID) system is the answer to tracking products. Designed to monitor mobile assets, RFID is responsive and flexible enough to act as a вЂ?drum’ within the production system. IBM recently installed a complete RFID system for Metro Group, a world leader in retailing, for it warehouses and over 250 stores stating, “METRO will be able to track goods along the entire process chain to optimize order and inventory management, avoid out-of-stock situations and help reduce costs” (IBM, 2008). The RFID system is comprised of three components: tag, reader, and infrastructure. Monitoring large bulk movements, the RFID reader can be placed or hand carried anywhere within the company for tag detection. “Because the technology basically turns an inert object into one capable of communicating, the potential for use is enormous and limited only by our imagination and the capabilities of the technology involved” (Office of the Privacy Commission of Canada, 2006). Controlling product management also requires financial planning to sustain it.

Financial planning (short/long term)

In the current state of a global market economy, leadership decisions today will certainly affect tomorrow. Companies must manage a complex and diverse portfolio built on a long-term and a short-term forecast. Risks are taken which involve price setting, flow quantity and capacity, disruptions due to capacity-constrained resources (CCR), and strategic execution of the master production schedule (MPS). A multitude of objectives must be coordinated to prevent the MPS and the CCR from being either overloaded or under utilized. Hence, finance needs to be reactionary in principle and practice to support operations, engineering and sales functions that may reach beyond the boundaries of a national corporation, but potentially international. More than likely, financial management of company’s project, if not a core competency, may need a specialist. CERA, an advisory service “can help client’s better monitor, forecast, and manage costs within their portfolio of projects, because what was economically viable a year ago may no longer be attractive [now]” (CERA, 2008).

Quality and cost

What method of cost reduction and quality production will be used? The current philosophy is to use Six-Sigma to measure the cost of internal and external costs to poor quality as well as the cost of prevention and analysis costs of good quality products. The design and use of various charts or diagrams if properly used will help management determine poor product rates/costs as compared to good products rates/costs. Some of the issues which may surface for poor quality are delays, re-designing and production rework. This will drive complaints, loss of sales revenue and ultimately repairing or replacing warranty items. To ensure good products costs may be seen as quality improvement projects, inspection testing and product audits which will certainly keep the production rate stable and allow for positive sale growth. By “building quality into [the] process, service and products and doing things right the first time, the increase of the cost of good quality, while striving for zero defect performance, can be smoothed if processes get better” (Six Sigma, 2008).

Sourcing and inventory reduction

Obtaining the CCR and there may be many, is vital to controlling the production process. Any interrupts in delivery or availability from the supplier will force the company to add a вЂ?buffer’ portion to the assembly line or to account for a holding cost associated with storage and movement of inventory. The goal of reliable sourcing is to reduce lead times through production. This calls for each section within the company to have a continuous vision of inventory management and knowledge of product costs. “The various planners; inventory and production, need to share data until they are satisfied with forecasts, projected inventory levels, and the allocation of supply to demand” (Adexa, 2008). Calculating the reorder points and quantities at the proper time will be the biggest challenge to reducing inventory and data management is vital to this obstacle.

Data Management

Storage

When managers need data to make strategic decisions, the company’s network must be able to allow the generation of sales analysis information. This past trend or forecast analysis operation must be able to compile sales data from all customers and formulate an aggregate operations plan for each product group. The retrieval of this data needs to be remotely accessed and allow for real-time global analysis. The system must be able to convert data between different languages and currencies while “maintaining the stored original pipeline sales information unchanged” (Patent Storm, 2008). The system in place must have a backup storage area and be scalable for