Process Tools for Supply Chain Management

Apparel Industry Management 3(3+0)

Process Tools for Supply Chain Management

Supply Chain Management relies on certain process tools to evaluate resource flow between suppliers and the transformed operation management systems. A such tools are focused.

  1. Make or buy decision – the operation manager must decide whether to make a given product internally or buy it from a supplier. Make or buy analysis includes a number of steps that produce a final decision.
    1. Assess the relationship of the product to the firms ore competencies
    2. Evaluate the suitability of product characteristics for outsourcing
    3. Evaluate the reasons or outsourcing
    4. Assess all relevant quantitative costs
    5. Assess all qualitative costs
    6. Review the capability to current supplier
    7. Evaluate new suppliers
    8. Make and implement a decision
    9. Monitor the decision and revise it as necessary.

    Considerations for the make-or-buy decision

    Reasons for making

    Reasons for buying

    i) Lower production cost
    ii) Unsuitable suppliers
    iii) Assure adequate supply (quality or delivery)

    iv) Utilise surplus labour and make a marginal contribution
    v) Obtain desired quality
    vi) Remove supplier collusion
    vii) Obtain unique item that would entail a prohibitive commitment for a supplier<
    viii) Maintain organizational talent and
    to avoid lay-off of personnel.
    ix) Protect proprietary design of quality
    x) Increase or maintain size of the company
    i) Lower acquisition cost
    ii) Preserve supplier commitment
    iii) Obtain technical or management ability
    iv) Inadequate capacity for inhouse manufacture
    v) Reduce inventory costs
    vi) Ensure alternate sources of supply
    vii) Inadequate technical or managerial resources
    viii) Reciprocity
    ix) Item is protected by a patent or trade secret
    x) Free management to focus on its primary business.

  2. Supplier scheduling – this controls release of order and continuing communications of priorities, needs of quantities between suppliers and the buying organization operations management system.
  3. Value analysis – it is a structural process that seeks to improve a product sig while maintaining its functional characteristics and marketing appeal to customers. There are various profits obtained by this
    1. Reduction is average purchasing costs by 25%
    2. Improved customer satisfaction
    3. Higher employee morale due to better team work and creativity

Value analysis tries to improve functional characteristics rather than to reduce costs.

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Last modified: Friday, 18 May 2012, 10:06 AM