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Outline
Objective of research Methodology of research Significance of research Profile of Bestway cement factory Hattar, Haripur. Analysis, discussion and results of suply chain management of Bestway Cement factory. Recommendations.
Outline
LITERATURE REVIEW
Strategic importance of supply chain Supply chain economics Outsourcing Ethics in the supply chain Strategies
Objective
Understand the concept of the supply chain, its importance, and management. How Co-ordination of activities and management of supply chain can be a source of achieving the competitive advantage through product customization, high quality, cost reduction, and quick response. Discussion and Analysis of supply chain management of Bestway.
objective
Methodology of research
The research carried out in this thesis can be characterized as deductive deductive research is a study in which a conceptual and theoretical structure is developed and then tested by empirical observation i.e moving from the general to the particular One case study was performed within this research project.
Research methodology
The empirical data in the case study have mainly been collected by semi-structured interviews. Analysis has been performed after the case study. The base for the case study was literature reviews, which have been made continuously during the whole research project and also some findings during writing the reports.
Interviews
Mr. Arshad Hameed (director coordination and procurement) Mr. Muhammad Irfan A.Sheikh (director finance and
CFO)
Secondary data
literature (books, journals, articles, magazines, thesis, and power points), Internet, and databases. lectures
Significance of research
Help the organization to revive the performance of supply chain. Research work is applicable as a generic solution to all the medium and small organizations/ companies for reducing their supply chain costs by improving coordination. It will also help organization in risk reduction, cost improvement, increasing efficiency.
Supply chain
Supply Chain refers to the flow of materials, information, payments, and services from raw materials suppliers, through factories and warehouses, to the end customers. When a supply chain is managed electronically, usually with Web based software, it is referred to as an e-supply chain.
Cyclic View of SC
Customer Order Cycle
Manufacturing Cycle
Replenishment Cycle Retail order trigger Retail order entry Retail order fulfillment Retail order receiving
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Procurement Cycle
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The function of supply chain management (SCM) is to plan, organize, and coordinate all of the supply chains activities. SCM software refers to software that supports specific segments of the supply chain, especially in manufacturing, inventory control, scheduling, and transportation.
Strategic importance
Competition is no longer between companies; it is between supply chains
The main goal of modern SCM is to reduce uncertainty and risks in the supply chain, thereby positively affecting inventory levels, cycle time, business processes, and customer service. These benefits contribute to increased profitability and competitiveness.
To
Global focus
Just-in-time Supply chain partnering Rapid product development, alliances
Mass customization
Empowered employees, teams
Supply Chain Management 17
Coordination
A supply chain is composed of trading partners that are interconnected with financial, information and product/service flows. Coordination in a supply chain means identification and classification of existing interdependencies. Interdependency can be defined as when actions taken by one referent system affect the actions or outcomes of another referent system. (McCann and Ferry) Three types of interdependencies exists:: Task/task Task/resource Resource/resource
Coordination
Benefits of coordination
All members of a decentralized distribution channel can earn, profits when all members coordinate. Supply chain coordination provides risk reduction, access to inventory resources and competitive advantage. Supply chain coordination dictates the cost improvement and value that can be gained. Inter-organizational coordination yields lower total costs and higher profits.
Price Coordination Mechanisms: A method for coordinating order quantities between a retailer and a producer.
Non-Price Coordination Mechanisms: it includes quantity flexibility contracts, allocation rules; promotional allowances, cooperative advertising and exclusive dealings/territories
Mechanism of coordination
Flow Coordination Mechanisms: Flow coordination mechanisms. are designed to manage product and information flows in supply chains.
Vendor Managed Inventory (VMI), Quick Response (QR), Collaborative Planning, Forecasting and Replenishment (CPFR), Efficient Consumer Response (ECR) Postponement
Coordination modes
four coordination modes can be identified based on the two dimensions of coordination: (1) logistics synchronization; (2) information sharing; (3) incentive alignment; and (4) collective learning.
Logistic synchorization
This typical coordination refers to the market mediation function of a supply chain that aims to match the variety of products reaching the marketplace with customer needs and wants (Fisher, 1997). Understanding customer demand and concerting inventory management, facility and transportation between partners help to realise dramatic improvements in the forms of rapid response to customer requirements, lowered inventory costs, improved product availability, minimum obsolescence and minimum variance of any unexpected events such as forecasting errors and delays that disrupt chain performance (Lambert et al., 1998).
Information sharing
The coordination of information sharing attempts to make relevant, accurate and timely information available to the decision-makers (Lee, 2000). For example, the retailer has better projected customer demand compared with the manufacturer (Lee et al., 1997). The manufacturer has better information about products, delivery lead-times and production capacity than the retailer. Traditional communication between the manufacturer and the retailer is made through periodic ordering in large batches. This ordering behavior distorts original demand information.
Incentive alignment
Incentives define how decision-makers are to be rewarded or penalized for the Decisions they make. Existing incentives influence individual member behavior and its interaction with other partners. Conflict of interest is likely to occur when the existing incentives lead to actions that maximize personal gain but often reduce the total profitability. The perverse incentives, such as local inventory cost, transportation cost and lot-size-based quantity discounts, often do not support the value creation process of improving customer services
Collective learning
The coordination of collective learning deals with how to tackle the coherency problem of initiation and diffusion of knowledge across organizational borders (Sawhney and Prandelli, 2000). It involves intensive dialogue, experimentation and discussion of data, information and knowledge to attain collective sense making The objective of the coordination of collective learning is to extend each partners capability that is useful for accomplishing ongoing improvement.
Have the most effect on flow coordination mechanisms. As web or internet as a tools for better coordination with other members of supply chain The existence of information technology enables companies to respond customers needs more effectively. IT is more importantly viewed to have a role in supporting the collaboration and coordination of supply chains through information sharing Is reducing the friction in transactions between supply chain partners through cost-effective information flow. IT can be used for decision support
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Historically, many of the supply chain activities were managed with paper transactions, which can be slow, error prone, and inefficient The first software programs, which appeared in the 1950s and early 1960s, supported short segments along the supply chain, software was called supply chain management (SCM) software. The major objectives were to reduce cost, expedite processing, and reduce errors.
Evolution.
As early as the 1960s, the material requirements planning (MRP) model was devised. This model essentially integrates production, purchasing, and inventory management of interrelated products. manufacturing resource planning (MRP II). which adds labor requirements and financial planning to MRP. (Sheikh, 2002.) This evolution continued, leading to the enterprise resource planning (ERP) concept, which integrates the transaction processing and other routine activities of all functional areas in the entire enterprise
Bestway Cement Limited is part of the Bestway Group of the United Kingdom. amongst United Kingdoms top 10 privately owned companies. Vision To Produce High Quality Cement At The Lowest Cost
In 1994 work was started on the cement plant in the under developed area of Hattar, Haripur in the North West Frontier Province, Pakistan The contract for the supply of main plant was signed with Mitsubishi Corporation of Japan in June 1995 The suppliers sub contracted some of the equipment to other international manufacturers, namely the crushers to FAM of Germany, Cement mill to Fuller of USA and electrical and instrumentation to ABB of Switzerland and Siemens of Germany
Bestway.
Civil works started in January 1996 and the Kiln was fired in April 1998 Prior to 2001 production at Bestway Cement was being carried out using furnace oil as fuel and then converted to gas The machinery for coal conversion was procured from IPPR Engineering of China while some of the fabrication and erection work was done locally
Hattar plants initial capacity was 1.0 million tonnes per annum. In 2002, at a cost of US$20 million, plant capacity was enhanced to 1.15 million tonnes per annum Owing to the managements insight on growing market demand and the potential to export, in 2004 the plants capacity was further upgraded to 1.25 million tonnes
EXPORTS
Afghanistan and more recently in India, Africa and Middle East has made Bestway one of the largest exporters of cement in Pakistan.
A typical supply chain links a company with its suppliers, its distributors, and its customers. supply chain frequently involves three segments:
fuel cement
customer
wholesaler
Distribution
packaging
retailor
UPSTREAM
INPUTS
RAW MATERIAL
HUMAN RESOURCE
ENERGY/FUEL
INFORMATION FLOW
Upstream
internal
downstream
OUTPUTS
PRODUCTS
SERVICES
SOLID/ENERGY WASTES
WASTE HEAT
Output
List of Products:
Ordinary Portland Cement Sulphate Resistant Cement Quick Setting Cement Low Alkali Ordinary Portland Cement Clinker Other customized products may be produced
on demand
The goal:
Many suppliers
Outsourcing
For vendor development no efforts are taken except giving limited information
Distribution system
Trucking:
using traditional monitering, not any automatic system to coordinate all activities Use waterways for export to India and middle east countries. Large lots Low shipping cost
Waterways
Ordering
Both
Manual Automated
Bestway cement is using ERP for managing their supply chain but it is limited to certain departments. ERP is a software program comprising a set of applications that automate routine backend operations such as financial, inventory management, and scheduling to help enterprises handle jobs such as order fulfillment. (See OLeary, 2000.) They are using it for coordination between different departments only inside the organisation but it needs to be practised also with outsourced entiteis.
54
Benchma rk Firms
8 15 minutes
33%
1.5%
2%
.0001% 4
55
Number of shortages per 400 year Dec 16, 2009 SCM - Supply Chain Management
Investment in inventory = $4.81billion Total assets = $8.22 billion Percent invested in inventory = (4.81/8.22) x 100 = 58.5%
Dec 16, 2009 SCM - Supply Chain Management 58
59
Good coordination in supply chain can increase the sales by 15-20% (F. Haghighat, 2008). If sales can be increased upto 15% then
2.48
.23 20
CONCLUSIONS
supply chains of the future will likely focus their efforts on achieving success through process improvement and collaboration on strategic, tactical, and operational levels. Coordination between activities brings about more profitability and value added and also optimization of processes in a supply chain Effective coordination can lead to a reduction in lead times and costs, alignment of interdependent. decision-making processes, improvement in the overall performance.
conclusions
E-technologies facilitate information accessibility in order to optimized accurate programming and decision making As a result, accurate management of information by using of new technologies, result in optimized decisions , better extrinsic and intrinsic coordination.
Recommendations
Replace all paper documents that move physically with electronic documents. This change improves speed and accuracy, and the cost of document transmission is much cheaper. Provide an integrated messaging system. A single business transaction could involve many messages, totaling thousands of messages per week or even per day for a company. E-commerce can replace related faxes, telephone calls, and telegrams with an electronic messaging system at a minimal cost.
Recommendations
Enhance collaboration and information sharing among the partners in the supply chain. This can improve cooperation, coordination, and demand forecasts. Shorten the supply chain and minimize inventories. Production changes from mass production to build to order There is a strong need for logistic synchronization to minimize delays, security risks and to add value to supply chain.
vision
Facilitate customer service. Of special interest is the reduction of contact between employees and customers due to innovations such as the introduction of a Web site for frequently asked questions (FAQs) and selfservices such as the self-tracking of shipments. Introduce efficiencies. These efficiencies relate to buying and selling through the creation of e-marketplaces and e-procurement
Research direction
Feedback analysis of this research Due to shortage of time this research is not so much detailed study There is need to do research work in detail on each component of supply chain Logistic management should be revised in accordance with the modern techniques.on each of the mode of