!!BA#244:#Supply#Chain#Management#

Nike#

!  Outsourcing!and!Supplier!Performance!

Reminders#

!  CASE STUDY: Zara Fast Fashion

!  LinkedIn Group: Presentation Grade for Nike and Zara

Internal#Supply#Chain#

Procurement! Produc5on! Storage! Distribu5on! Sales!and!Marke5ng!

Warehouse#

!  A!misunderstood!func5on,!yet!a!vital!link!

Just@in@Time#(JIT)#

!  developed!in!Japan!

!  highlighted!the!drawbacks!of!having!a!fully!stocked!warehouse!

!  goods!and!materials!arrive!only!when!needed,!in!the!exact!quan5ty,!and!there!are!no!unusable!surpluses!

!  Experience!in!JIT?!

Warehouse#

!  Purpose?!

Warehouse#

!  Acts!as!a!Buffer!between!Supply!and!Demand!Imbalance!due!to!seasonality!or!lead!5mes!

Warehouse#

!  Extends!Geographical!Reach,!increasing!market!share!

Warehouse#

!  Supports!Reverse!Logis5cs!e.g.!product!recalls!

Warehouse#

!  Enables!Transport!Economies!

Consolida5on!

Break!Bulk!

Distribution#Centers#

!  If!the!organiza5on!has!a!number!of!sites!(factories,!branch!offices,!retail!outlets),!it!has!2!basic!op5ons!for!geSng!the!goods!!  Mul5ple!direct!deliveries!to!each!site!!  Single!bulk!delivery!to!a!central!warehouse!or!

distribu5on!center,!and!delivering!them!to!each!of!the!sites!

Distribution#Centers#

!  Central!Distribu5on!Center!

!  Network!of!Regional!Distribu5on!Centers!(RDCs)!/!Hubs!

!  Both!

Distribution#Centers#Main#Purpose#

1.!Breaking!bulk!!  AXracts!bulk!purchase!and!transport!discounts!!  ‘Hub!and!spoke’!arrangement!

Break!Bulk!

Distribution#Centers#Main#Purpose#

2.!Consolida5ng!deliveries!!  Cuts!down!on!number!of!transport!trips;!Saves!

transport!/!fuel!costs!and!reduces!environmental!impacts!

!  Fills!up!transport!of!each!delivery!(not!was5ng!space!and!cost)!

!  ‘merge!in!transit’!arrangement!

Consolida5on!

Processes#

Orders!Products!

Receives!Orders!

Receives!Products!

Delivers!Products!

Customer)

Company)

Order!Taking!/!Entry!

Credit!Status!Stock)Availability)

Stock!Replenishment!Pick)and)Pack)

Delivery!Schedule!

Carrier!Contrac5ng!

Elapsed!Time!

Cross@docking#!  Goods!arriving!at!a!warehouse!from!a!

supplier!are!unloaded!from!a!supplier’s!truck!and!loaded!onto!outbound!trucks,!thereby!avoiding!warehouse!storage!

!  Staging!area!where!inbound!deliveries!are!sorted,!consolidated,!and!onward!delivered!

!  Reduces!inventory!holding!costs!and!lead!5mes!

!  Reduces!shipping!cost!since!suppliers!can!use!full!truckloads!instead!of!par5al!loads!

Processes#

Orders!Products!

Receives!Orders!

Receives!Products!

Delivers!Products!

Customer)

Company)

Pick)and)Pack)

Elapsed!Time!

Cross@docking:#Successful#Application#

!  reduces!the!number!of!warehouses!and!moves!towards!a!small!number!of!distribu5on!centers!

!  Each!center!usually!serves!a!par5cular!geographical!area!!

!  Can!reduce!cycle!5mes,!thus!improving!the!flexibility!and!responsiveness!of!the!distribu5on!network!

!  Requires!exact!on^5me!delivery!from!each!manufacturer!which!is!hard!to!achieve!

Cross@docking:#Case#Studies#

!  Goodyear!GB!Ltd!

!  Switching!from!the!tradi5onal!stock^holding!supply!chain!opera5ons!to!cross^docking!techniques!in!the!1990s!!  increases!of!service!levels!from!87%!to!96%!!  inventory!reduc5on!of!16%!!  cancella5on!of!more!than!135,000!square!g.!of!

warehousing!!  cancella5on!of!all!hired!vehicles!!  reduc5on!of!opera5ng!costs!in!real!terms!of!over!12%!

Where#to#Locate?#

?!

Where#to#Locate?#

!  Proximity!to!Markets!

Where#to#Locate?#

!  Proximity!to!Supply!Sources!

Where#to#Locate?#

!  Availability!&!Cost!of!Transport,!Labor,!U5li5es!

Where#to#Locate?#

!  Government!policies!

!  Environmental!regula5ons!

!  Quality!of!government!

Amazon#patents#flying#warehouse#

Amazon#patents#flying#warehouse#

!  “Airborne!Fulfillment!Center”,!patented!in!the!US!would!consist!of!a!giant!airship!that!remains!at!high!al5tude!while!drones!collect!packages!from!it!to!deliver!to!loca5ons!on!the!ground!

!  In!December!Amazon!was!reported!to!have!made!its!first!UK!delivery!by!drone!–!of!an!Amazon!Fire!TV!box!and!a!bag!of!popcorn!to!an!address!in!Cambridge!

!  The!trial!is!limited!to!day5me!deliveries!during!suitable!weather,!promising!deliveries!within!30!minutes!

Warehouse#Objectives#

!  Maximum!use!of!space!

!  High!level!of!resource!produc5vity!(labor,!equipment)!

!  Rapid!accessibility!of!materials!and!products!

!  Protec5on!of!stored!materials!and!products!

!  OTIF!delivery!

Layout#

!  Objec5ve!is!to!maximize!the!u5liza5on!of!the!total!‘cube’!i.e.!its!full!volume,!while!maintaining!low!material!handling!

Layout#

!  Frequency!of!order!!  Near!the!entrance!vs.!toward!the!rear!of!the!facility!

!  Correla5ons!between!items!!  i.e.!item!A!is!usually!ordered!with!item!B!!  Placing!them!close!together!reduces!cost!and!5me!

of!picking!(retrieving)!

!  Need!to!periodically!make!a!physical!count!of!stored!items!

Layout#

!  Height!of!storage!racks!

Layout#

!  Number!and!width!of!aisles!

Goods#Inwards#Facility#

!  Special!entry!and!access!points:!stopping,!loading,!and!unloading!space!for!vehicles,!where!they!don’t!interfere!with!general!road!traffic!

!  Materials!handling!equipment:!forklig!trucks,!cranes,!conveyor!belts!and!other!mechanical!aids!to!loading,!unloading,!and!moving!goods!into!storage!

!  Immediate!proximity!and!accessibility!to!storage!areas!and!facili5es!(to!minimize!the!movement!and!handling!of!goods!between!unloading!and!storage)!

Goods#Inwards#Facility#

Goods#Inwards#Facility#

Goods#Inwards#Facility#

!  Space!for!the!inspec5on!of!deliveries!(to!establish!that!goods!have!been!delivered!as!ordered,!in!full!and!in!good!condi5on)!

!  Space!(and/or!equipment)!for!sor5ng,!labeling,!and!other!required!handling!procedures!

!  Security!(to!protect!vehicles!and!storage!areas!from!theg!or!vandalism)!

!  A!defined!‘traffic!flow’!for!entry!and!exit!of!vehicles!

Warehouse Management Systems (WMS)#

!  advanced!technology!and!opera5ng!processes!that!op5mize!all!warehousing!func5ons!

!  offers!the!poten5al!to!manage!inventory!in!real!5me!and!provides!up^to^date!informa5on!regarding!orders,!shipments,!or!receipt!and!any!movement!in!between!

WMS: Successful Application#

!  Common!mistake!made!by!organiza5ons!when!implemen5ng!WMS!is!relying!solely!on!the!sogware!vendor!to!develop!and!administer!the!project!

!  Investments!in!WMS!can!be!returned!in!as!liXle!as!six!months;!Average!paybacks!usually!take!place!between!one!and!two!years!from!implementa5on!(Young,!2009)!

!  Significantly!reduces!the!paper!component!of!warehouse!opera5ons!as!well!as!the!costs!associated!with!data!entry!by!clerical!personnel!(Hill,!2002)!

WMS:#Case#Studies#

!  In!August!2011!SuperGroup,!owner!of!the!Superdry!brand,!implemented!an!upgrade!program!to!its!warehouse!management!systems!

!  The!total!cost!of!stock!reduc5ons!(including!addi5onal!temporary!warehousing!capability)!was!es5mated!from!£6^9m!

WMS:#Case#Studies#

!  Davant!Products!supplies!plumbing,!drainage!and!insula5on!products!

!  Davant!managed!to!reduce!stock!costs!from!£1.75m!to!£1.25m!in!11!months!!

Warehousing and Third Party Logistics#

!  Many!organiza5ons!regard!storage!and!distribu5on!as!support!func5ons,!rather!than!core!ac5vi5es!

!  Provides!access!to!specialist!exper5se!and!resources!that!it!might!not!be!able!to!afford!in^house!

!  Warehousing!facili5es,!distribu5on!centers,!and!transporta5on!fleets!with!no!need!to!commit!to!capital!expenditure!

Warehousing and Third Party Logistics#

!  May!have!separate!contracts!for!warehousing!and!logis5cs!

!  Contracts!are!usually!3^5!years,!with!1!year!no5ce!!  Procurement!process!is!5me!consuming!and!

complex!!  Difficult!to!switch!3PL!providers!

Regulations#

!  Fire!&!Safety!

!  Labor!codes!

!  “Hazmat”!Standards!

!  Sustainability!and!Environmental!requirements!

!  Disaster!Recovery!Plans!

!!End#