Modelling Procedure for Testing the Efficiency of the Different Concepts and Strategies of Supply Chain Management
CHAPTER ONE
Objectives, Scope and Limitation
The need for modeling of supply chain with the aim of determining the optimal strategy to employ in order to solve management age-long problem of supply chain which include: design of value added activities, throughput time evaluation, order management and supplier selection and development has become a thing of great necessity .Also, today’s changing industry dynamics demand that manufacturing and production processes to be in competition for the following production service level be improved upon;
- Improve customer service level
- Reduced cycle time
- Improve quality of products and services
- Reduced cost
CHAPTER TWO
LITERATURE REVIEW
General
Virtually every manufacturing or service enterprise in the world may be classified as a supply chain; an organization that supplies products and/or service to customers via a chain of facilities that work together to supply these products and/or services. In a supply chain, each link represents the flow of nationals and information that make possible the functions of procurement, processing a manufacturing, storage and distribution.
The problems of supply, production, production-distribution and inventory-distribution systems have been studied for many years. Most of these studies focus only on a single component of the overall supply production-distribution system, such as procurement, production transportation, or scheduling.
Supply chain management is a subject of increasing interest to academics, and practitioners. Supply chain management can be divided into two levels: strategic and operational. The primary objective of the strategic level is to determine the most cost effective location of facilities, distribution centers. While the main purpose of the optimization of the operational level is to determine the safety stock for each product at each location, the size and frequency of the production batches that are replenished or assembled, the replenishment of transportation and production lead times and the customer service levels.
Models have been developed for optimizing supply chain operations at these two levels. When a procedure, a model, an approach, or a case study is undertaken, generally some measure of the system’s performance is presented and analyzed. A large number of different types of performance measures have been used to characterize systems, particularly production, distribution and inventory systems. Generally, performance measurement systems that are already in use, categorizing performance measures and then studying the measures within a category and building rules of thumb or frameworks by which performance measurement systems can be developed for various types of systems. Beamon, (2000).
Beamon, (1996) presents a number of characteristics that are formal in effective performance measurement systems and can therefore be used in evaluation of these measurement systems. These characteristics include: inclusiveness (measurement of all pertinent aspects). Universality (allow for comparison under various operating conditions), measure-ability (data required is measurable), and consistency (measures consistent with organization goals).
CHAPTER THREE
SUPPLY CHAIN PERFORMANCE MEASURES
General
An important component in supply chain modelling and analysis is the establishment of appropriate performance measures: a performance measure, or a set of performance measure, is used to determine the efficiency and / or effectiveness of existing systems. Performance measures are also used to design proposed systems, by determining the values of the decision variables that yield the most desirable level(s) of performance. Available literature identifies a number of performance measures as important in the evaluation of supply chain efficiency and effectiveness. These measures, described in this section, may be categorized as either quantitative or quantitative or quantitative.
CHAPTER FOUR
MATERIALS AND METHOD
General
The Rivers Vegetable Oil Company Limited RIVOC, located in Port Harcourt, South Eastern Nigeria was privatized in 1988 by the Rivers State Government and ownership transferred to five corporate Shareholders – Nigerian Engineering works limited, United Bank for Africa Plc, Maxwell Resources Limited, Rison Palm Limited, and Konen Farms after laying dormant for 10 years.
With the expertise of the Birla group of India who acquired the shares of United Bank for Africa, revitalized the company. Between 1989 -2003, a washing soap plant, industrial margarine manufacturing plant were all installed and commissioned
CHAPTER FIVE
PERFORMANCE MEASURE ANALYSIS
RESOURCE MEASUREMENT
Resource measures include: inventory levels, personnel requirement equipment utilization, energy usage, and cost. It is used in measuring the utilization of resources used in production.
Equipment capacity utilization investigates the efficient utilization of the equipment in production process. It is a measure of the efficiency of the entire supply chain.
CHAPTER SIX
MODELLING
Supply Chain Concepts/Strategies
There are numerous concepts/strategies in supply chain management, but for the purposes of this work the following will be considered: Just in time inventory policy(JIT), echelon elimination, information integration and order quantity modification.
Just in Time Inventory Policy
In the conventional production planning, the customer orders are converted to plan and the necessary materials are purchased in order to meet the plan. Stock of material is pushed in at one end and products come out of the other. The companies usually resort to over production to meet an order. This is done to keep the machinery utilized or to try to offer better customer service by holding a high level of finished goods in stock. All this keep the working capital tired up in inventory and also involves extra storage and handling etc.
CHAPTER SEVEN
CONCLUSION
Conclusion
The relationship between the corporate survival of companies, their understanding of supply chain management and relating them to cost and services cannot be under estimated. It points an organization in the right direction to improve services and competiveness.
The supply chain performance of RIVOC was observed to have a poor customer service level. This is attributed to the inability of the supply echelon to satisfy the manufacturing echelon to full capacity, which in turn propagates to unfilled customer demand, or stockouts. This inefficiency of the system arises from poor strategies of the supply chain.
To improve on the efficiency of the system, the supply chain performance evaluations and analysis was done, which exposed areas of deficiencies resulting from fluctuating delivery from the supply echelon. This in turn was attributed to
- Bottle neck at the ports for the internationally sourced raw materials.
- Variation in season which affect the locally sourced raw material.
The modeling procedure was able to come out with the most efficient supply chain strategy (Just in time inventory policy) which when effectively applied will take care of the deficiencies in this supply chain and other supply chains.
Suggestion for Further Study
Beamon (2001), has shown that for conjoined supply chains, which typically arise in web based retail, inventory system stock out risk, the demand distribution, and transportation are important in determining the effectiveness of the supply chain. Further work on this study should look at the logistics involved in the acquisition of raw materials and distribution of finished products. It could not be accomplished in this work due to inability to acquire the relevant data.
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