11-Supply-Chain Management

Shop Like It’s 1999!

Posted on by f1223jkundrat

In a time when pennies count, retailers are looking for any competitive advantage they can find. One way which is starting to make a comeback is the layaway program. By allowing customers the opportunity to put items on hold for a set number of weeks, it gives the consumer who may not be able to afford a purchase right now the opportunity to lock in their price. These programs have several different structures, some charge upfront fees at the beginning of the layaway period, and additionally some of which accrue interest charges.

This philosophy is nothing new in the retail world, but has seen a renaissance over the past few years, with many large retailers such as Sears, Kmart, and Toys ‘R Us pushing the programs. By offering layaway, retailers hope to boost early sales and beat their forecasts for the holiday season. Layaway does, however, have its downsides for companies since many have waived their service fees if consumers do not follow through with their purchase. This leaves merchandisers holding onto the extra inventory. Also with this new push to increase sales, retailers are adding many new items eligible for layaway. This move could prove to be both a positive and a negative. While on one hand it will bring in more shoppers to put things on layaway. If enough consumers do not follow through on their contracts and the stores took precious items off the sales floor, the results could prove costly.

By offering layaway financing through the stores themselves, it gives consumers who do not have, or might not want to use their credit cards. By allowing these consumers who might not have purchased the item otherwise to purchase from your company, it opens your profit potential that much more. Because it entails more planning on behalf of the merchandising crew, and all of the other aspects listed above, the decision on whether the layaway program is beneficial to each individual company is something that is up for debate.

Question: If you had a retail company, do you believe implementing a layaway program would be a good idea? What are some other benefits and consequences in addition to the ones mentioned that might come about due to a layaway program?

http://www.cnbc.com/id/49302750

http://chainstoreage.com/article/sears-kmart-jump-layaway-bandwagon-waiving-fees

 

Drug Dealers Targeting Walgreens Supply Chain

Posted on by f1232ali

On September 14, the Drug enforcement Agency shut down shipments of oxycodone which is a controlled substance at a Walgreens facility in Florida after suspiciously detecting a high number of sales on pain killers at a half-dozen Walgreens store in the states. Like any other retail pharmacies, Walgreens would receive scam orders from customers who would come back after two weeks to refill a 30-day prescription or  ordering two different prescriptions from two different doctors. They even have customers making up their own prescriptions. In the system, the computer has the ability to track down their customers prescriptions to see how often they would come back, and their profile. The illegal diversion of oxycodone was likely the result of a person or persons trying to “game the system with fake orders,” said Brian Kilcourse, a managing partner for retail consultant RSR Research.

I think it’s interesting how Walgreens or any other retail pharmacies has this type of technology to track down their customer’s prescription, what I don’t get is any getting the prescription several times shouldn’t the system flag the customers account to prevent them from ordering further prescriptions. I have no idea how retail pharmacy works, but as I recall revisiting the doctor a while ago, I noticed they only give you a sheet with the prescriptions they want me to pick up from any pharmacy, the only legitimate thing I saw from the piece of paper is the doctor’s name, address of the clinic, and a logo, and the drugs he told me to prescribe. I went to a Walgreens as well to drop off my prescription they just take the sheet and ask me to come back in half hour or next day pick up. I’m just curious how these a vulnerability in the supply chain management system and technology may have created an opportunity to divert oxycodone from one of the pharmacy chains and into the black market.

Patagonia & The Footprint Chronicles

Posted on by f1232skrissanov

Early this year, CEO of Patagonia, Casey Sheahan, raised a few eyebrows by introducing a “Don’t Buy This Jacket” campaign. Sheahan explained Patagonia must do the opposite of other businesses today for them to stay in business for a long time, as well as leaving an inhabitable planet for future generations. He goes on to say, “We ask you to buy less and to reflect before you spend a dime on this jacket or anything else.” Not only does this give a subtle hint that Patagonia strives for unparalleled quality, it shows the company highly values humanity and environmental consciousness.

More recently however, Patagonia has gone to new lengths to prove the ingenuity of their values and offer unprecedented transparency concerning their business operations to their customers. Patagonia has introduced The Footprint Chronicles, an interactive map of the world on their website that pinpoints all of the members of its operational supply chain, both textile mills and factories. Clicking on a pinpoint on the map brings up information on the location including what they are, their exact address, what they produce, work force, gender ratio, and how long they have worked with Patagonia.

For most companies, an informational map like this could just be a marketing ploy, but for Patagonia, it is an attempt to take business practices and operations to a new level of transparency for all to see. Patagonia is well known for the labor and working condition standards it surpasses every year, but nowadays it just isn’t enough for a company to have a piece of paper saying it passed regulations. This is due to the fact that sometimes these big manufacturers seemingly meet requirements for issues surrounding labor operations and working conditions, however, they are usually the ones who end up on a negative headline about underage labor practices, poor working conditions, etc.

Patagonia has always been know to champion quality over everything; not only a quality product, but quality operations that put people and the environment over profit. According to Patagonia, there are no private/closed-off managerial offices at their locations, creating a closer link between their corporate, business, and functional levels of the company. Though it may seem Patagonia’s humanity, sustainability, and environment driven business strategy leaves little room for profit, it is not true as the company has actually doubled revenue and tripled profits since 2008 ($540 million in 12 months ending with this past April) accoring to the Los Angeles Times.

Patagonia is definitely proving that not taking the easy short-cut to profits can undoubtedly pay off in the long-run. Could this be a sign that you do not have to be inhumane, greedy, or careless of the environment for your company to turn a profit and be successful?

http://www.patagonia.com/us/footprint/

Apple’s Supply Chain Improvement post-Jobs era

Posted on by f1231malmail

When I think about Apple Inc, two relatively recent events occur to me: the death of Steve Jobs late last year and the highly anticipated release of the iPhone 5. It was speculated that disaster would occur by correlating the two previously mentioned events. With the death of Jobs, many thought that Apple’s production quality and perfectionism would suffer, including the release of one of their big sellers after Job’s death: the iPhone 5.

Tim Cook, Steve Jobs’ successor, has put people’s qualms and worries to rest following the release of the iPhone 5. Many attribute it to Tim Cook’s mastery of Apple’s supply chain. An article I read in the Huffington Post, highlighted the difference between Jobs’ revolution angle versus Cook’s evolution angle. Cook focused more on the product launch and its release as opposed to Jobs’ meticulous attention to the product itself. Cook has proven that focusing on the often burdensome task of Supply chain can in turn make or break a product’s reception and release, the company’s earnings and the company itself.

Cook’s attention to the supply chain aspect has sped up the global launch of the iPhone 5. His methods have prompted Wall Street to raise  price targets for Apple stock due to economic optimism following the launch. Under Cook’s “production vision”, the iPhone 5 will be in 100 countries by the end of the year, 30 more than the iPhone 4S in a similar period.  Cook introduced a dividend to pay out part of the more than $100 billion cash stockpile, raised salaries for the low-paid Apple workforce and sped up product rollouts. Cook has also invited business partners (investors, analysts and executives) into the “lions den” so to speak, an action not previously entertained under Steve Jobs, to have a more hands on look at the work that Apple was doing now.

Cook’s attention and focus on the supply chain management aspect of Apple, has clearly shown lucrative results. While Steve Jobs may have made Apple revolutionize the industry by focusing on the user experience, Cook has proven that dealing with all production aspects can yield loyalty, optimism and productivity from investors, partners and consumers.

I wholeheartedly think that Steve Jobs was brilliant in his tactic to surround Apple’s products with a mystique prior to their launch and releases, as well as perfecting theproducts for end users and from the user expereience. However, Cook has proven that attention to supply chain is equally as important to the company as whole, and inviting partners into the process strengthens their loyalty to the company.

Where do you stand on this matter? Do you think Jobs’ approach is superior to Cook’s? Do you think Cook’s approach can be maintained and will keep working for the years to come? Should product release come before product user experience?

Article: http://www.huffingtonpost.com/2012/09/22/apple-supply-chain-tim-cook_n_1905674.html

McDonalds Supply Chain

Posted on by f1231saddison

Over the summer, I had a chance to interview with McDonald’s supply chain department for an internship. In this interview, I gained a vast amount of information about McDonald’s supply chain. McDonald’s focuses on three main concepts in maintaining the supply chain that helps 14,000 restaurants in the United States run smoothly: ethics, environment and economies. This goes hand-in-hand with another philosophy McDonald’s has, called the three-legged stool method. This method is unique to McDonald’s business, incorporating achievement, trust and “personal”.

 

When it comes to McDonald’s supply chain, the main focus is bringing food from cow to plate. This is a short way of saying that the company wants to know every detail about how their ingredients are brought into the restaurants. McDonald’s has such a great relationship with their suppliers that they trust them enough to have no written contracts with them. Of the 14,000 United States restaurants there are, no contracts have been written up to ensure that every restaurant has beef, for example, each day. This is pretty impressive. McDonald’s also tries not to completely knock out a supplier’s entire crop and make it so they cannot work with them again. The company always tries to gain a lasting relationship with all of their suppliers; this is a great thing for the farmers and is also a positive for farmers to keep these long lasting relationships. The relationships between McDonald’s and their suppliers are the center to the three-legged stool method.

 

Another interesting aspect of McDonald’s supply chain is how they decided what menu items are available. For example, over the summer, McDonald’s offered Blueberry Banana Nut Oatmeal as a breakfast choice; however, the oatmeal has been in the works for a long time. Before it could hit the nationwide menu, though, McDonald’s needed to find enough suppliers to grow the blueberries that they would use in restaurants. Since McDonald’s is such a large market, finding some of the fresh ingredients can become a problem. For example, if McDonald’s wanted to create a Pineapple Salad, they would not be able to because the pineapple supply in the world is not large enough to supply all of McDonald’s restaurants.

http://www.aboutmcdonalds.com/mcd/sustainability/our_focus_areas/sustainable_supply_chain.html

 

 

 

 

TOMS Shoes and Sustainability

Posted on by f1232adurakovic

It is hard to find people who willingly want to make the world better. It is an even harder find to separate social entrepreneurs who are willing to do good but also make a profit on the side. Social entrepreneurs have the task of dealing with a lot of work related stress and all at a cost of nothing. Yet, in the end, the task of giving back free of charge is something to be proud of. One person who knows what exactly will come out of making the world a better place is entrepreneur Blake Mycoskie.

TOMS Shoes has been built up into this remarkably strong brand that is known to be associated to social good. However Blake did not start off with an incredibly good company. As any entrepreneur will tell you starting your own company takes some time and according to Blake it took him four start-up companies and one trip to Argentina to realize his calling. As a volunteer at a shoe drive he had this idea of selling comfortable shoes and implementing this “buy-one-get-one” sale. This type of marketing and sales plan boosted TOMS shoes sales up 10,000 units in its first year and by 2010 they reached as much as 1,000,000 donated shoes.

Of course all of Blake’s success came with some issues of social responsibility, management in global environment, and sustainability. There are a set of forces and conditions outside an organization’s boundary that affect the way TOMS shoes operates and shape its behavior. These forces such as change over time and Blake is faced with opportunities and threats. These threats can come from other companies that thrive in the shoe industry such as Nike. Another task that Blake has to deal with is finding oversea suppliers that offer the lowest-priced and highest-quality products. Once Blake faces this important task the whole global outsourcing concept is easy to manage and will result in maximum profit.

To conclude, TOMS shoes does not have an issue in terms of sustainability and that is simply because their customer base is committed and more than pleased with the company image and brand. TOMS goods and services have proven that in a world where many business elites are concerned with making a profit there are those who are still willing to better the world. In Blake Mycoskie’s terms it is one shoe at a time that will make the world a better place.

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Amazon and what an amazing Inventory tactic. VIDEO clip attached.

Posted on by radoslawt301s12

Amazon and what it is one of the most innovative inventory techniques.

PLEASE WATCH THE YOUTUBE CLIP BEFORE READING:
http://www.youtube.com/watch?v=Qt9hkZmbNfU

Amazon is such a huge global online store. It started as a bookstore, yet today you practically can buy anything. One of the main reasons why Amazon has become so successful is because of their inventory tactics and fast delivery. They have partnered up with UPS which brings out a great example of a business to business model.

In class, we focused on two questions that ties down to inventory:

1. How much to order?
2. When to order?

In addition, we discussed 4 types of inventory:

1.Raw Materials
2.Work-in-process
3.Maintence/repair/Operating
4.Finished goods

Photobucket
Amazon strictly deals with finished goods. What makes them so successful is the way the business operates. Many people would not think of amazon as an assembly line, in fact, it sort of it. The way it works is that an order is being placed. One person would tag the box with the order, the second would go around the warehouse and packaged the order goods, 3rd would label the box and drop it off at the shipping station.

In addition, many of amazon products are at your home. Customers have the option of selling their books and more through amazon. This way, amazon acts as the middle man. You are solely responsible for shipping your good. Amazon will charge you a small fee for using them as the selling vendor.  Because of the way Amazon does business, they are extremely efficient when it comes to inventory related costs. Correct me if I am wrong, but one of the only costs that Amazon may be concerned about for some items are Holding or Carrying costs. Some of the products will never sell. Will Amazon just drop the price of the product or completely destroy it because the carrying costs exceed the projected revenue?

SHOPPING CART.
Many of you may not know, however, Amazon was the inventor of the “Shopping Cart.” What a great invention that almost every online vendor took advantage of.

Lastly, I believe that Amazon sparked the popularity of online shopping. Because of the world wide shipping, convince and such a wide variety of product and low prices, there is no reason for you to leave your house to order your favorite book or DVD. Amazon actually, is one of Wal-Mart’s main competitors. I think that one day, the popularity of online shopping will exceed the need for BestBuy and Wal-Mart. It’s only the matter of time.

“Custom Building Your Dreams”

Posted on by nicholasw301s12

Elkhart, Indiana is the heart of the Unites States “RV Country,” and is home to HL Enterprise, the premier manufacturer of park trailers, travel trailers, and 5th wheels.  The company began in 1986, when industry experts Mel Hyman and Peggy Flager founded the company, but then decided to retire in 2006 and sold Evolve Capital.   Evolve Capital pushed the company into financial ruin in 2011 and the two previous owners, along with a new partner, Randy Hoff, repurchased the assets and rights to the product name in order to again bring success to the company.

HL Enterprise has a strong customer-centric focus with the idea that “H L understands what you want…and our goal is to build your dreams.”

“Their park trailers are somewhat similar to the traditional Hy-Line product lines, but with many new upgrades, Hoff explained. “The triple slide trailers feature island kitchens, Corian countertops, thermopane patio doors, cherry wood cabinets and all-tinted windows.  Most of what we’re doing now is dictated by the market,” Hoff said. “A lot of the interiors are more plush and there is more of a residential appeal in construction. We also went to a higher ceiling. It’s no longer a travel trailer (84-inch) ceiling. Now it’s a 96-inch ceiling.”

With 32 production line employees working out a 2 building, 35,000 square foot factory, this small business works hard to roll out 4 trailers daily are a retail price starting at $30,000.    The new owners, who are actually the founders, are now working hard to bring the company back to the success that it once was.

“We’re doing a lot of damage control from the previous owners,” Hoff said, without elaborating. “We didn’t buy the liabilities, but we’re working with the dealer base and customers in trying to restore their confidence.”

Recently, the company has gone global with a dealer base in 40 states, along with Canada, England, and Australia; currently the company is also looking to create operations in China!

I found the three attached articles to be very interesting because it completely focused on moving the company back into the direction of their original goal.  Creating a quality product that is desirable to the customers, while making an adequate profit.  Yet the Evolve Capital did not follow through with this goal, and in turn failed.

Do you think that most ownership companies are truly knowledgeable about the products that they are producing, or are they just hungry to acquire and build capital?  Also, how do you think the company evolves, no pun intended, when a new management team takes over and does not hold true to the original idea of the company or corporation?  It appears that stories like this seem to repeat themselves constantly in business, including Dell, Starbucks, Apple, and so many others.

http://www.rvbusiness.com/2011/02/former-hy-line-owners-repurchase-assets/

http://www.hylinetrailers.com/about-hyline.html

http://www.hylinetrailers.com/pdfs/RVB%20HyLine_Page%2026.pdf

 

 

Wal-Mart and the Successful Supply Chain Management

Posted on by levik301s12

We all know that Wal-Mart is one the most sucessful companies out there with one of the best supply chain’s ever created. The University of San Francisco wrote up an article on the techniques that Wal-Mart uses to become sucessful and they are exactly the same techniques that we learned in class.

http://www.usanfranonline.com/wal-mart-successful-supply-chain-management/

Wal-Marts cost saving methods are always passed down to the customer as the costs associated with their supply chain is minimized.

Their success comes from:

  • Cross Docking
  • Demand Planning
  • Forecasting
  • Inventory Management
  • Strategic Sourcing
  • Distribution Management
I looked up cross docking to get a better understanding of what it is and how Wal-Mart uses it and it is a technique that replenishes inventory. Cross-docking is when inventory comes from the supplier directly to the retailers warehouse and then turned around and shipped out on trucks to the retailers store. This minimizes shelf time and inventory costs that Wal-Mart would of had to pay.
In addition, supply chain managers at Wal-Mart focus heavily on demand planning and forecasting like we did in class in order to acheive “lean inventory”. They focus on historical data, upcoming sales, and trends in the indsustry to predict the inventory levels they need.  They then forecast out their predicitons to make sure distributors have just the right amount of inventory on hand to reduce inventory costs.
One of the best ways Wal-Mart gets the lowest prices though is it vendor partners and the long-term contracts established with them. Since Wal-Mart is a market leader in retail sales, vendors are forced to agree to low margin, high volume sales to Wal-Mart if they want to stay on the retailers shelves.
One of my first accounting jobs was working at a online computers parts retailer/wholesaler. We had a few warehouses connected to an office and this gave me my first insight into supply chain and inventory management as I was involved in purchasing as well. Initially, our inventory system was out of date as we used a periodic system that was time-consuming and expensive. Our inventory mangement became more efficient when we ordered a SKU system to keep a perpetual count of what we had. Our hot-selling or our “A” list items were constantly being re-ordered and our inventory became much more lean to the point where we were restocking huge shelves every week. We used histroical data such as Black Friday sales and upcoming promotions to know how much to stock and also became a volume buyer to achieve the lowest prices.
Have you had experience being in a purchasing department and measure the inventory volume that needs to be purchased?

 

Everything is better with Coke

Posted on by scottc301s12

 

 

 

The Global Fund, which is a decade old government and private partnership dedicated to financing healthcare issues in impoverished areas, has recently revamped it’s supply chain and distribution processes to more closely model those of Coca-Cola.  In thinking about what aspect of discussing supply chain management might be most interesting, I came across a video made by The Global Fund.  http://www.theglobalfund.org/en/blog/29348/   The video explains an interesting solution to a common problem, the final leg of the distribution process.  Global Fund workers in Tanzania needed to find a way to distribute malaria medication to locals, but were having a great deal of difficultly.  It was then that they noticed something… There are Coca-Cola bottles everywhere.  Why can’t we distribute medication, but somehow these people have such immediate access to Coke?  It was then that The Global Fund reached out to Coca-Cola and asked for guidance to improve their supply chain and distribution management.

Coca-Cola then proceeded to improve The Global Fund’s supply chain processes through analyzing, identifying issues, maximizing effectiveness of current processes, and implementing new ones.  I think I enjoyed this article to the extent I did because of the sheer simplicity in The Global Fund’s approach to problem solving.  When thinking about a company like Coca-Cola, I think there is much to be learned.  They have not only existed, but been successful for over 100 years!  That kind of longevity is something you just don’t see much of anymore, but especially when the product remains (relatively) unchanged.  Of course Coca-Cola has introduced new products, advertising designs, and marketing campaigns, but with the exception of removing cocaine, the original formula has remain relatively intact since its inception.  I suppose we could expect a company that has been around as long as Coke to continually improve its supply chain, but I think it’s great that they share this time tested process with other entities for the betterment of others, in this case, people living in remote areas of Africa in need of malaria medication.

What are other examples of improving a supply chain management process having a direct and positive impact on you or someone else’s life?

Source:  “Home – The Global Fund to Fight AIDS, Tuberculosis and Malaria.” The Global Fund to Fight AIDS, Tuberculosis and Malaria. N.p., n.d. Web. 14 July 2012. http://www.theglobalfund.org/en/.