Dealing with THE Production network.

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Each gets requests of Beer (with a delivery delay) from supplier. ... 1. Get Inventory & Advance Shipping deferrals. Manufacturing plants advance Production delays. 2. ...
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Dealing with THE SUPPLY CHAIN Vish V. Krishnan The University of Texas at Austin

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AGENDA Dynamics of Supply Chains: The Beer Game Discussing the Beer Game Supply Chain Overview and Decision Sequence Selecting the Right Supply Chain

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Orders Sold to Customers Used Order Cards Orders Placed Incoming Orders Placed Incoming Orders Placed Incoming Orders Raw Material 4 Order Cards 4 Production Delay .... RETAILER WHOLESALER DISTRIBUTOR FACTORY Current Inventory ........ ........ Current Inventory ......... ......... Current Inventory ......... ......... Current Inventory ......... ......... Creation Delay .... Shipping Delay .... Shipping Delay .... Shipping Delay .... Shipping Delay .... Shipping Delay .... Shipping Delay .... Lager Game Board

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Beer Game Instructions You are a Beer Supply Chain Retailer Wholesaler Distributor Factory Gong-Beater (distinctive) You each deal with an Inventory Each gets requests of Beer (with a delivery delay) from supplier. Production line gets its WIP (with a prodn delay). Every dispatches client\'s requests for lager Goal Minimize Costs $0.50/week/case conveying cost $1/week/case excess expense

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Beer Game (cont.) Choose a group name ONLY Retailers know purchaser arranges (No one addresses each other) Set-up 12 cases in every stock 4 in every transportation delay Sticky with "4" in every requests box Deck (DON\'T TURN OVER) before retailer You each have sticky cushion for new requests You require a record sheet for Inventory, accumulation, and so forth every week (point posn) Orders dispatched = Backlog + New Orders Do initial couple of weeks together.

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Steps of Game 1. Receive Inventory & Advance Shipping delays Factories advance Production delays 2. Fill Incoming Orders (incl Backlog) Retailer gets request card from deck & turns card face down subsequently Kill old request slips Use excess graph if necessary 3. Advance Order slips (with the exception of Factories) 4. Record Inventory/Backlog 5. Place & Record Orders Put face down, so compose on sticky side Factories Brew Put Raw Materials into first Production Delay

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Inventory/Backlog Chart Enter group name and your name up top. Circle position. Include stock and accumulation segments. Duplicate inventories by 0.50 and add to overabundances to get complete expense. Instructions to compute Backlogs: Discussion

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Order & Inventory Graphs Order diagram Enter group name and confirm position. Mark request at every week on chart Inventory diagram Do same thing, however stamp excess as negative stock Blank Customer Order chart Retailers don\'t do this (and stay silent about it!) Roughly draw out what you think purchaser request stream was.

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Beer Game Summary RANGE OF SCORES: 200 – 10000 Our reach: Game created at the System Dynamic Group at MIT and played the world over. Outlines numerous fascinating issues -Multi-level Supply Chains -Balancing Inventory costs with stockout costs -Bullwhip impact (request mutilations) How would you get reliably low scores/win?

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Lessons Learned from the Beer Game People turn into their Positions Inaction Excessive Action Information Distortion - Bullwhip

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Increasing Variability Up the Supply Chain Wholesaler Orders to Manufacturer Consumer Sales 20 15 Order Quantity 10 5 0 Time Retailer Orders to Wholesalers Manufacturer Orders to Supplier 20 15 Order Quantity 10 Quantity 10 5 0 Time Source: Lee, Padmanabhan, and Whang

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Bullwhip in Electronics Industry 1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 Order variability is opened up the inventory network Peripheral Product Consumables 45,000 40,000 350,000 35,000 300,000 30,000 250,000 25,000 20,000 200,000 15,000 150,000 10,000 100,000 5,000 50,000 Unit orders from a noteworthy retailer to maker Total unit deals at outlets of retailer Source: Lee, Padmanabhan, and Whang

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Retail Enterprise Suppliers Distributors What are Supply Chains? Production network is a specialists based perspective Across firms Beyond neighbors (more than supplier administration) Increasingly getting to be supply web mgmt.!

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Corporate Sales Office Plant Suppliers Distributors Customers Sales Office Suppliers Plant Distribution Center Customers Suppliers Supply Web Management

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Defining Supply Chain Management Supply Chain Management - Coordination and joining of the considerable number of exercises (purchase, make, move, and offer ) included in conveying an item from the\'s supplier to the\'s client. On-time conveyance of Quality Product at Low Cost. Coordinating supply and request in dubious situations. Why is Supply Chain Management difficult? Number of linkages to be coordinated. Worldwide sourcing Demanding markets Meeting fluctuating client request with steady supply. Consider an item like a Ford Explorer!

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Managing a Global Supply Chain Makes a Subassembly Moves it to a Warehouse Stores it at Warehouse Buys Components Stores it at Dealers Moves it to Dealers Final Assembly Sells it to Consumers Adapted from I2 Presentation Improved Distribution Not Better Production is Key Goal in Mergers - Wall Street Journal

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Why Supply Chain Management? Store network Management quickens the money transformation cycle and enhances ROIC. Money Conversion Cycle (CCC) : Rate at which stock is transformed into money; Time distinction between when you get installment from clients and when you pay your suppliers. Pay suppliers Get paid by clients Return on contributed capital (ROIC) has turned into the mantra in esteeming firms: ROIC = After-expense working income partitioned by [total resources less non-enthusiasm bearing current liabilities]; Removes the notions of GAAP and lets you know how well the organization is run (contrasted with ROE); Operating execution free of the financing implies. Additionally called EVA approach utilized by the creme de la creme of firms Supply chain administration quickens money transformation and drastically builds ROIC, adding to better shareholder esteem.

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The Rise of Specialization and Outsourcing Increasingly firms are swinging to suppliers for the vast majority of their worth included exercises. Esteem chain is contracting Suppliers convey segments in programming and additionally benefits In administrations, scope organization and administration plays the part of stock. Limit can\'t be included a short notice. Interest is unusual. How would you take care of fluctuating demand with almost settled limit?

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Supplier Selection Plan & Order Monitor& Improve Design Supply Chain Decision Sequence What ought to be the configuration of a store network? How would you choose when to make and when to purchase? What opportunities does innovation offer for arrangement and supplier determination? How would you screen and enhance supply chains?

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Efficiency (Low cost) Responsiveness Supply Chain Effectiveness Supply chain execution can be measured as far as their cost, lead time, on time conveyance (consistency), and other execution measures. Past a specific point, supply chains face exchange offs:

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Organizing Framework: Matching Supply Chains and Products Functional Product Innovative item Efficient Chain Responsive chain MATCH MIS MATCH MIS-MATCH

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Key Takeaways The lager amusement indicates how outsourcing does not take care of all issue – coordination inside the store network get to be foremost. Bullwhip impact or instability intensification in an inventory network. Production network administration: What is it and Why? Moves the concentrate past neighbors to the whole "esteem framework" : from supplier\'s suppliers to client\'s clients. Troublesome in light of the fact that flighty interest should frequently be coordinated with resolute supply. Pertinent in light of the fact that it can add to expanding ROIC and shareholder esteem Supply Chain Design What makes a production network proficient may make it less responsive. At the wilderness, there might be an exchange off amongst productivity and responsiveness. Guarantee there is a fit between your items/markets and the supply chains.

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