Lecture Eight n (1)

8/19/2019 Lecture Eight n (1)

1/61

Slack, Chambers and Johnston, Operations Management , 6th Edition,© Nigel Slack, Stuart Chambers, and Robert Johnston 2010

12.1

12.1

Chapter 12

Inventory planning and control

Photodisc. Kim Steele


2/61


12.2

12.2

esign

!lanning and

control

"#erations

strateg$

%m#ro&ement

Inventory planning and control

%n&entor$ #lanningand control

The operation supplies… the deli&er$ o' a(uantit$ o' #roducts andser&ices )hen re(uired

The market requires…a (uantit$ o' #roducts

and ser&ices at a#articular time


3/61


12.*

12.*

Key operations questions

%n Cha#ter 12 + %n&entor$ #lanning and control + Slack

et al . identi'$ the 'ollo)ing ke$ (uestions

-hat is in&entor$/

-h$ is in&entor$ necessar$/

-hat are the disad&antages o' holding in&entor$/

-o) much in&entor$ should an o#eration hold/

-hen should an o#eration re#lenish its in&entor$/

-o) can in&entor$ be controlled/


4/61


12.

12.

What is Inventory?• Inventory (stock) is stored accumulation of

material resources in a transformation system.• A manufacturing company will hold stocks of

materials.

•Inventory exists because of the difference in thetiming or rate of supply and demand.

• When the rate of supply exceeds the rate of

demand inventory increases.• When the rate of demand exceeds the rate of

supply inventory decreases


5/61


12.

12. Inventory is created to compensate or the dierences intiming !et"een supply and demand

%n#ut#rocess

%n&entor$

"ut#ut

#rocess

Rate o' su##l$ 'rom

in#ut #rocess

Rate o' demand 'romout#ut #rocess%n&entor$


6/61


12.6

12.6

!ypes of Inventory• !he various reasons for imbalance between

the rates of supply and demand at different points in any operation lead to the different

types of inventory.

•

!here are five (") types# – $uffer inventory

– %ycle inventory

–

&e'coupling inventory – Anticipation inventory

– ipeline inventory


7/61


12.3

12.3

!ypes of Inventory (contd)• $uffer inventory (safety)

–

Its purpose is to compensate for the unexpectedfluctuations in supply and demand.

– A retail store will order goods from its suppliers such

that there is always a certain amount of most items in

stock because demand might be greater than expected.

• %ycle inventory

– *ccurs when one or more stages in the process cannot

supply all the items it produces simultaneously. – +esults from producing in batches to satisfy demand

between the times when each batch is ready for sale.


8/61


12.4

12.4

!ypes of Inventory (contd)• &e'coupling inventory

–

When transformed resources move intermittently b,ndepartments that comprise similar operations.

• Anticipation inventory

– -sed to cope with seasonal demand.

– It is used when demand fluctuations are large but

relatively predictable.

• ipeline inventory

– It exists because materials (allocated to a customer)

cannot be transported instantaneously between the

point of supply and the point of demand.


9/61


12.5

12.5

&isadvantages of holding inventories

• Although inventory plays an important role

it also has disadvantages such as# – It ties up money

– It incurs storage costs

– aterials may become obsolete

– aterials may be damaged or deteriorate

– aterials may be lost

– It might be ha/ardous to store

– It uses up valuable space

– It involves administrative and insurance costs


10/61


12.10

12.10

!he position of inventory• 0upply demand imbalances also exists between

different stages in the operation.• !he simplest level is the single stage inventory system

such as a retail store which will only have one stock of

goods to manage.

• An auto motive parts distribution operation will have acentral depot and various local distribution points

which contain inventories' two'stage inventory system.

•

A television manufacturer will have a multi stageinventory system.

• A more complicated system is the multi 1echelon

inventory system


11/61


12.11

12.11

e.g. utomoti&e #arts

distributor

e.g. 7ocal retail store

Single8stagein&entor$ s$stem

Su##liers Su##liers

Stock Saleso#eration

Centralde#ot

istribution 7ocaldistribution

#oint

Saleso#eration

9)o8stage in&entor$s$stem

Single#stage and t"o#stage inventory systems


12/61


12.12

12.12

e.g. 9ele&ision manu'acturer

Su##liers

%n#ut

stockStage

1

$ multi#stage inventory system

%! Stage2

%! Stage*

:inishedgoodsstock


13/61


12.1*

12.1*

$ multi#echelon inventory system

;arn#roducers

Clothmanu'acturers


14/61


12.1

12.1

&ay to day inventory decisions• In managing day to day tasks of running the

inventory system operations managers areinvolved in three ma2or types of decision#

– 3ow much to order? (volume decision)

• 4very time a replenishment is placed how big should it be?

– When to order? (time dimension)

• At what point in time or at what level of stock should the

replenishment order be placed?

–

3ow to control the system?• What procedures and routines should be installed to help

make those decisions? 0hould priorities be allocated to

different stock items? 3ow should stock info be stored?


15/61


12.1

12.1

• 0everal types of costs are directly associated with

order si/e.

– Inventory costs

• %ost of placing the order (transaction costs)

• rice discount costs (discounts on price for large 5uantities)

•

0tock'out costs (incurred for failing to supply customers)• Working capital costs

• 0torage costs

• *bsolescence costs

• *perating inefficiently costs

– Inventory profiles

• A visual representation of the inventory level over time.


16/61


12.13

12.13

!he economic order 5uantity (4*6)

formula• !he most common approach to deciding how much of

any particular item to order when stock needsreplenishing.

• !his approach attempts to find the best balance between

the advantages and disadvantages of holding stock.

• !o find out the best plan (order 5uantity policies) that

minimi/es the total cost of stocking the item'

– !otal cost of holding one unit in stock for a period of time

• Working capital storage and obsolescence risk costs

– and the total cost of placing an order.• %ost of placing the order and price discount costs

T"o alternative inventory plans "ith dierent


17/61


12.14

12.14 T"o alternative inventory plans "ith dierentorder quantities %Q &

9ime

% n & e n t o r

$

l e & e l !lan

Q = 00

emand >D? = 1000 items #er $ear

&erage in&entor$

'or #lan = 200

&erage in&entor$

'or #lan @ = 0

0.1 $r 0. $r

100

00

!lan @Q = 100


18/61


12.15

12.15

!he timing decision' when to place the order

• When we assume that orders arrive instantaneously and

demand is steady and predictable the decision on whento place a replenishment order is self evident.

• If replenishment orders do not arrive instantaneously but

have a lag between the order being placed and it arriving

in the inventory we can calculate the timing of the

replacement order i.e. when the demand and order lead

time are perfectly predictable' not so in most cases.

• !herefore the earlier the replacement order is placed thehigher will be the expected level of buffer or safety stock

when the replenishment order arrives.


19/61


12.20

12.20

The re#order point

00

*00

200

100 % n & e n t o r $

l e & e l

0

0 1 2 * 6 3 4

Re8order le&el

Re8order #oint

9ime

emand >D? = 100 items #er )eek

"rder lead time


20/61


12.21

12.21

!he timing decision' when to place the order (contd)

• We can calculate how much safety stock to allow by

using the lead'time usage.

– !he lead time usage distribution is a combination of the

distributions which describe lead'time variations and the

demand rate during the lead time

• Continuous review approach – +eview stock level of each item continuously and place order

when stock level reaches its re'order level.

•Periodic review approach – 0acrifices the use of a fixed order 5uantity

– Instead of ordering at a predetermined re'order level the

periodic approach orders at a fixed and regular time interval.

12 22


21/61


12.22

12.22

Inventory analysis and control systems• Inventory priorities'

–

In an inventory which contains more than one stockeditem some items will be more important to the

organisation than others.

• *ne common way of discriminating between different stock

items is to rank them by the usage value (usage rate xindividual value)

• areto 7aw' 89,:9 rule

– ;enerally a relatively small proportion of the total

range of items contained in an inventory will account

for a large proportion of the total usage value i.e.• 89< of an operations sales are accounted for by only :9< of all stocked

types.

12 2*


22/61


12.2*

12.2*

A$% inventory control system• !his allows inventory managers to concentrate

their efforts on controlling the more significantitems of stock using monetary value.

– %lass A items are those :9< or so of the high'usage'

value items which account for 89< of the total usage

value. – %lass $ items are those of medium usage usually next

=9< of items which account for around >9< of total

usage value

– %lass % are those low'usage'value items which

although comprises around "9< of the total types of

items stocked account for around >9< of the total.

12 2

I t l ii ti d


23/61


12.2

12.2

Inventory classiications and measures

Class items + the

20A or so o' high8

&alue items )hich

account 'or around

40A o' the total

stock &alue.

Class @ items + theneBt *0A or so o'

medium8&alue items

)hich account 'or

around 10A o' the

total stock &alue.

Class C items + the

remaining 0A or so

o' lo)8&alue items

)hich account 'oraround the last 10A

o' the total stock

&alue.

12 26


24/61


12.26

12.26

• *ther criteria used in classification of an item

–

%onse5uences of stock out• 3igh priority might be given to items that will seriously

delay or disrupt other operations or the customers when

not in stock.

– -ncertainty of supply

• 0ome items although of low value might warrant more

attention if their supply is erratic or uncertain.

– 3igh obsolescence or deterioration risk • Items which could lose value through obsolescence or

deterioration might need extra attention and monitoring.

12 23


25/61


12.23

12.23

easuring Inventory

• onetary value can also be used to measure

the absolute level of inventory at any point intime.

• !aking the number of each item in stock

multiplying it by its value and summing thevalue of all the individual items stored.

12 24


26/61


12.24

12.24

Inventory Information system

• ost inventories of any significant si/e are

managed by computeri/ed systems. – &ata capture has been made more convenient

through the use of bar'code readers and the point of

sale recording of sales transactions. – %ommon functions of commercial systems

• -pdating stock records

• ;enerating orders

• ;enerating inventory reports• forecasting

12 25

% bl i h i


27/61


12.25

12.25

%ommon problems with inventory systems

• a2ority of inventory records might not be

accurate because of the following# – @eying errors

– 6uantity errors

–

&amaged inventory not recorded as such – !he wrong item being taken out of stock but

records not being corrected

– &elays between transactions being made and

records being updated.

– Items stolen from inventory.

12 *0


28/61


12.*0

12.*0

Chapter 1'

Supply chain planning and control

Pearson (ducation )td. $rnos *esign

12.*1

S l h i l i d t l


29/61


12.*1

12.*1

esign

!lanning and

control

"#erations

strateg$

%m#ro&ement


The operation supplies

the coordinated deli&er$ o'#roducts and ser&ices

The market requiress#eci'ied time, (uantit$ and

(ualit$ o' #roducts andser&ices

Su##l$ chain

#lanning and control

12.*2

K ti ti


30/61


12.*2

Key operations questions

%n Cha#ter 1* + Su##l$ chain #lanning and control + Slack

et al . identi'$ the 'ollo)ing ke$ (uestions

-hat is su##l$ chain management/

-hat are the acti&ities o' su##l$ chain management/

-hat are the t$#es o' relationshi# bet)een o#erations

in su##l$ chains/

-o) do su##l$ chains beha&e in #ractice/

-o) can su##l$ chains be im#ro&ed/

12.**

+h t i l h i t,


31/61


12.**

‘Supply chain management is the management of

the interconnection of organizations that relate to

each other through upstream and downstreamlinkages between the processes that produce

value to the ultimate consumer in the form of

products and services’

+hat is supply chain management,

12.*


32/61


12.*

• *n going flow of goods and services

through the supply network along theindividual channels or strands of that

network.

•0upply chain refers to the strand of linkedoperations.

• 0upply chain management coordinates all

the operations on the supply side and thedemand side.

12.*

0 l h i t b2 ti


33/61

Slack, Chambers and Johnston, Operations Management , 6th

Edition,© Nigel Slack, Stuart Chambers, and Robert Johnston 2010

12.*

0upply chain management ob2ective

• All supply chain management shares one

common and central ob2ective 1 to satisfy theend customer.

• 4ach operation in the chain should be satisfying

its own customers but also making sure thateventually the end'customer is also satisfied.

• eeting the re5uirements of the end customer

re5uires the supply chain to achieve appropriatelevels the five operations performance

ob2ectives.

12.*6



34/61



12.*6

is concerned )ith managing the 'lo) o' materials and in'ormation bet)een a

string o' o#erations, that 'orm the strands or Dchains o' a su##l$ net)ork

:lo) bet)een #rocesses

:lo) bet)een #rocesses:lo) bet)een #rocesses

Su##l$ chain

management concerns

'lo) bet)een a string o'

o#erations

Su##l$ net)ork

management concerns

'lo) bet)een o#erations

:lo) bet)een #rocesses :lo) bet)een #rocesses




12.*3 Supply chains management is concerned "ith the lo" o


35/61



12.*3

pp y ginormation and the lo" o products and services

•!roducts and ser&ices•Ne) #roducts and

ser&ices•eli&er$ in'ormation•!a$ment re(uestFCredit.

-*o"nstream lo" oproducts and services or

customer

Fulfilment

-/pstream lo" o

customer

Requirements

•7ong8term #lans and re(uirements•

Garket research in'ormation•%ndi&idual orders•!a$ment•!otential ne) #roducts and ser&ices.

:lo) bet)een

#rocesses

Consumer

:lo) bet)een

#rocesses

:lo) bet)een

#rocesses

"#eration 1 "#eration 2 "#eration *

12.*4

0 t d


36/61



12.*4

0ome terms used• hysical distribution management may mean

supplying immediate customers

• 7ogistics is an extension that often refers to

materials and information flow down through a

distribution channel to the retail store or

consumers.

• !hird party logistics (!7) indicates outsourcing to

a specialist logistics company.

• aterials management refers to the flow of

materials and information only through the

immediate supply chain.

12.*5



37/61



12.*5

:irst tier

su##lier

Second tier

su##lier

:irst tier

customer

Second tier

customer

End

customer

emand

side

Su##l$ side

!urchasing andsu##l$

management

!h$sical distributionmanagement

7ogistics

Gaterials management

Su##l$ chain management

%n'ormation

'lo)

!h$sical

'lo)


12.0

!he activities of supply chain management


38/61



12.0

!he activities of supply chain management

• urchasing (procurement) and supply

management

– At the supply end of the business purchasing

(procurement) buys in materials and services from

suppliers. urchasing managers provide a vital link

b,n the operation itself and its suppliers. – !hey must understand the re5uirements of all the

processes within the operation and the capabilities of

their potential suppliers.

– urchasing can have a significant impact on an

operations cost and therefore profits.

– urchase costs are a large proportion of total costs.

12.1 The purchasing unction !rings together the operation


39/61



12.1

9he o#eration!urchasing 'unctionSu##liers

Re(uest 'or

#roducts and

ser&ices

emand'rom

customers

Su##l$ tocustomers

Re(uest

'or

(uotations

!re#are

#urchase

order

!re#are(uotation 'ors#eci'ication,

#rice, deli&er$,

etc.

Re(uests

Select

su##lier>s?Huotations

!roduce

#roducts and

ser&ices

"rder Recei&e

#roducts and

ser&ices

eli&er

!iaisonbetween

purchasingand the

operation

p g g g pand its suppliers

12.2


40/61



12.2

• 0upplier selection

– %hoosing appropriate suppliers should involve trading

off attributes.

– ost businesses find it best to adopt some kind of

supplier scoring or assessment procedure capable of

rating alternative suppliers against certaincriteria,factors.

• 0ingle and multi'sourcing

–

An important decision facing most purchasingmanagers is whether to source each individual product

or service from one supplier (single sourcing) or more

than one supplier (multi'sourcing)

12.*

0actors or rating alternative suppliers


41/61



12.*

Short#term a!ility to supply )onger#term a!ility to supply

•

Range o' #roducts or ser&ices#ro&ided•

!otential 'or inno&ation

•Hualit$ o' #roducts or ser&ices •Ease o' doing business

•Res#onsi&eness •illingness to share risk

•e#endabilit$ o' su##l$ •7ong8term commitment to su##l$

•eli&er$ and &olume 'leBibilit$ • bilit$ to trans'er kno)ledge as)ell as #roducts and ser&ices

•9otal cost o' being su##lied •9echnical ca#abilit$

• bilit$ to su##l$ in the re(uired

(uantit$

•"#erations ca#abilit$

•:inancial ca#abilit$

•Ganagerial ca#abilit$

0actors or rating alternative suppliers

12.

+eighted supplier selection criteria or a hotel chain


42/61



12.

0actor +eight Supplier $ score Supplier score

Cost #er'ormance 10 4 >4 B 10 = 40? > B 10 = 0?

Hualit$ record 10 3 >3 B 10 = 30? 5 >5 B 10 = 50?

eli&er$ s#eed#romised

3 > B 3 = *? > B 3 = *?

eli&er$ s#eedachie&ed

3 > B 3 = 24? 4 >4 B 3 = 6?

e#endabilit$ record 4 6 >6 B 4 = 4? 4 >4 B 4 = 6?

Range #ro&ided 4 >4 B = 0? > B = 2?

%nno&ation ca#abilit$ 6 >6 B = 2? 5 >5 B = *6?

9otal )eighted score *2 *6

+eighted supplier selection criteria or a hotel chain

12.


43/61



12.

• urchasing the internet and e'procurement

– Bor some years electronic means have been used by

businesses to confirm purchased orders and ensure

payment to suppliers.

– !he internet has opened up the potential for far more

fundamental changes in purchasing behaviour' supplierinformation made available through the internet.

– E- procurement is the generic term used to describe the

use of electronic methods in every stage of the

purchasing process from identification of re5uirement

through to payment and potentially to contract

management.

12.6

$ fit f t


44/61



12.6

$enefits of e'procurement• It promotes efficiency improvements in purchasing

processes.

• It improves commercial relationships with

suppliers.

• It reduces the transaction costs of doing business

for suppliers.

• It opens up the marketplace to increased

competition and therefore keeps prices

competitive

• It improves a businesss ability to manage their

chain more efficiently

12.3


45/61



12.3

• ;lobal sourcing

– !he expansion in the proportion of products and

(occasionally) services which businesses are willing

to source from outside their home country.

– It is the process of identifying evaluating

negotiating and configuring supply across multiplegeographies.

– Bactors promoting global sourcing

• !ransportation infrastructure are more sophisticated and

cheaper than they once were.

• %ompanies now source from wherever is cheapest because

competition is forcing companies to reduce total cost.

12.4


46/61



12.4

;lobal sourcing

•

0ome factors that must be understood andincluded in evaluating global sourcing are

– urchase price

– !ransportation costs

– Inventory carrying costs

– %ross'border taxes tariffs and duty costs

– Amongst others

12.5


47/61



12.5

• hysical distribution management (&) and the

internet – !ransporting tangible products to customers.

– *ne of the ma2or effects of internet communication

on & is#

• !o make information available more readily along the

distribution chain' share knowledge of where goods are in

the chain (transport companies warehouses suppliers etc.)

12.0

!ypes of relationships in supply chain


48/61


Edition,© Nigel Slack, Stuart Chambers, and Robert Johnston 201012.0

!ypes of relationships in supply chain

• $usiness or consumer relationships

–$usiness to business ($:$)• ost common in supply chain context

– $usiness to customer ($:%)

• +elationship includes retailers and online retailers.

– %ustomer to business (%:$

• +elationships involve consumers posting their needs on the

web and companies then deciding whether to offer.

–

%ustomer to customer (%:$) or peer to peer (:)• +elationships include the online exchange and auction

services and file sharing services.

12.1

Supply chain relationships


49/61



usiness to !usiness %2&

-Gost common, all but thelast link in the su##l$ chain

- "#commerce e$amples% + E% net)orks

+ @usiness in'ormation

eBchanges.

usiness to consumer %2C&

- Retail o#erations- Catalogue o#erations, etc.

-"#commerce e$amples% +%nternet retailers + maIon.com, etc.

Consumer to consumer %C2&

or -peer to peer %P2P&

-Consumers Do''er,

business res#onds

- "#commerce e$amples% + Some airline ticket o#erators + !riceline.com, etc.

Supply chain relationships

-9rading Ds)a# and

auction transactions-"#commerce e$amples%

+S#ecialist Dcollector sites +Eba$.com, etc.

Consumer to !usiness %C2&

@usiness Consumer 9o

@usiness

Consumer

:rom

12.2

!raditional market supply relationship


50/61



!raditional market supply relationship

• urchasing goods and services often seeking the best

supplier every time it is necessary to purchase instead of performing the operation in'house.

• 4ach transaction effectively becomes a separate decision.

(short term transactional relationship)

12.*


51/61


Edition,© Nigel Slack, Stuart Chambers, and Robert Johnston 201012.*

• 0ome advantages

–

!hey maintain competition b,n alternative competitors – %ustomers can simply change the number and type of

suppliers if demand changes.

– !hey help operations to concentrate on their core

activities.

• &isadvantages in buying free market manner

– !here may be supply uncertainties

– %hoosing who to buy from takes time and effort

– !here are risks in subcontracting activities to other

businesses.

12.

Cirtual operations


52/61


Edition,© Nigel Slack, Stuart Chambers, and Robert Johnston 201012.

Cirtual operations• It is an extreme form of outsourcing operational

activities

• Cirtual operations do relatively very little themselves

but rely on a network of suppliers that can provide

products and services on demand.

• A network may be formed for only one pro2ect anddisbanded once that pro2ect ends.

• !he advantage of virtual operations is their flexibility

and the fact that the risks of investing in production

facilities are far lower than in a conventional operation.

12.

artnership supply relationships


53/61


Edition,© Nigel Slack, Stuart Chambers, and Robert Johnston 201012.

artnership supply relationships• !hey are relatively enduring inter'firm cooperative

agreements involving flows and linkages that use

resources and,or governance structures from

autonomous organisations for the 2oint accomplishment

of individual goals linked to the corporate mission of

each sponsoring firm.

• 0uppliers and consumers are expected to cooperate even

to the extent of sharing skills and resources to achieve

2oint benefits beyond those they could have achieved by

acting alone.• 0ometimes seen as a compromise b,n vertical integration

and pure market relationships.

12.6


54/61



• artnerships are close relationships the

degree of which is influenced by a numberof factors such as#

– 0haring success

– 7ong term expectations, commitments

– Doint learning

– Doint coordination of activities

– Information transparency

– Doint problem solving

– !rust

12.3

(lements o process partnership relationships


55/61



ttitudes

ctions

Closeness o'

relationshi#

p p p p

Joint #roblem

sol&ing

Joint co8

ordination o'

acti&ities

Joint

learning

7ong8term

eB#ectations

Sharing

success

Gulti#le

#oints o'

contact

:e)

relationshi#s

%n'ormation

trans#arenc$

edicated

assets

9rust

12.4

%ustomer relationship management


56/61



%ustomer relationship management

• It is a method of learning more about customers needs

and behaviour in order to develop stronger relationshipswith them.

• It helps to understand and meet customers needs while

maximi/ing profitability.

• It helps to increase revenue by

– roviding products,services exactly what customers want

– +etaining existing customers and discovering new ones

–

*ffering better customer service – %ross'selling products more effectively

12.5

!he $ullwhip effect


57/61



!he $ullwhip effect• !his describes how a small disturbance at the

downstream end of a supply chain causesincreasingly large disturbances errors

inaccuracies and volatility as it works its way

upstream.

12.60

The !ull"hip eect


58/61



MARKET

6

5

4

3

2

1

3rd LEVEL

SUL!ER

2nd LEVEL

SUL!ER

1st LEVEL

SUL!ER

"R!#!$AL

EQU!ME$T

MF#% & E M A $ &

E R ! " &

r'dn% St'() r'dn% St'() r'dn% St'() r'dn% St'()

1** 1** 1** 1** 1**

1**

1**

1**

1**

1**

1**

1** 1**

' 2 1

ALL "ERAT!"$S +"L& "$E ER!"&S ST",K

2* 1**

6* 6* 1**

-* -* 1**

.* 1**

.5 .* 1**

.5

1-* 6* 12* 12* -*

1** 1** .* .5 .5 .5

.5

.5

6* 12*

.* .* 1**

.5 .5 .5

.5

1** .*

.5

.5 .5 .5

.5

.5 .5 .5

.5

.5 .5 .5 .5

.5 .5

.5

.5 .5 .5

.5 .5

.5

.5 .5 .5 .5 .5 .5

p

(3

12.61

The !ull"hip eect %Continued&


59/61



MARKET

6

5

4

3

2

1

3rd LEVEL

SUL!ER

2nd LEVEL

SUL!ER

1st LEVEL

SUL!ER

"R!#!$AL

EQU!ME$T

MF#% & E M A $ &

E R ! " &

r'dn% St'() r'dn% St'() r'dn% St'() r'dn% St'()

1** 1** 1** 1** 1**

1**

1**

1**

1**

1**

1**

1** 1**

' 2 1

ALL "ERAT!"$S +"L& "$E ER!"&S ST",K

p % &

(3

.5

1*5

1*5

.5

.5

12.62

The !ull"hip eect %Continued&


60/61



" r d e r s

09ime

Sales 'rom

store

Consumers

" r d e r s

09ime

Stores orders to

)holesaler

9ime

holesalers

orders to

manu'acturer

" r d e r s

0

Ganu'acturers

orders to its

su##liers

" r d e r s

09ime

4etail

store

+hole

saler

3anu

acturer Supplier

p % &

12.6*


61/61

iscommunication in the supply chain

•!here is the potential for misunderstandingand miscommunication in the supply chain.

!his may be caused by

–

Eot being sufficiently clear about what a customerexpects or what a supplier is capable of delivering

– &ifferences in perception of seemingly clear

agreements.

Documents

Lecture Eight n (1)