Supply Chain

Operations: Making and

Delivering

Chapter 3

Objectives

Exercise an executive level

understanding of operations
involved in the categories of
making products and delivering
products.
Assess supply operations in your
company that may be candidates
for outsourcing.

Make

Product design
Production scheduling
Facility management

Deliver

Order management
Delivery scheduling

Direct deliveries
Milk Run deliveries
Delivery sources

Return processing

Outsourcing Supply Chain Operations

Product Design (Make)

Product design and selections of the

components needed to build them are
based on the technology available and
product performance requirements.
When considering product design from
supply chain perspective the aim is to
design products with fewer parts, simple
designs, and modular construction from
generic sub-assemblies.
The supply chain required to support a
product is molded by the products design.

Product Design (Make)

Product design defines the shape of the

supply chain and this has a great impact
on the cost and availability of the product.
There is a natural tendency for design,
procurement, and manufacturing people
to have different agendas unless their
actions are coordinated.
A cross functional team can evaluate
existing preferred suppliers and
manufacturing facilities.

Product Scheduling
(Make)

Production scheduling allocates available

capacity to the work that needs to be done.
The goal is to use available capacity in the
most efficient and profitable manner.
Product scheduling operation is a process
of finding the right balance between high
utilization rate, low inventory levels, and
high levels of customer service.

Product Scheduling

When a single product is to be made in a

dedicated facility, scheduling means
organizing operations as efficiently as
possible and running the facility at the level
required to meet demand for the product.
When several different products are to be
made in a single facility; each product will
need to be produced for some period of
time and then time will be needed to switch
over to production of the next product.

Production Scheduling

The first step in scheduling multiproduct production is to

determine economic lot size.
Second step is to set the right
sequence of production runs for
each product.

Facility Management
(Make)

Facility management decision happen

within the constraints set by decisions
about facility locations.
Ongoing facility management takes location
as a given and focuses on how best to use
the available capacity.

Role of each facility will play

How capacity is allocated in each facility
Allocation of supplies and markets to each
facility

Order Management
(Deliver)

Order management is the process of

passing order information from
customers back through the supply
chain from retailers to distributors to
service providers and producers.
This process also includes passing
information about order delivery dates,
product substitutions, and back orders
forwards through the supply chain to
customers.

Principles of Order
Management

Enter the order data once and only

once
Automate the order handling
Make order status visible to customers
and service agents
Integrate order management systems
with other related systems to maintain
data integrity

Delivery Scheduling
(Deliver)

The delivery scheduling process

works within the constraints set
by transportation decisions.
There are two types of delivery
methods: direct deliveries and
milk run deliveries.

Direct Deliveries

Direct Deliveries: are made from one

originating location to one receiving
location.
In this methods, the routing is simply a
matter of selecting the shortest path
between the two locations.
They are efficient if the receiving
location generates economic order
quantities that are the same size as the
shipment quantities.

Milk Run Deliveries

Milk Run Deliveries: are deliveries that

are routed to either bring products from a
single originating location to multiple
receiving locations or deliveries that bring
products from multiple originating
locations to single receiving location.
There are two main techniques for routing
milk run deliveries: savings matrix and
generalized assignment techniques.

Delivery Sources

Deliveries can be made to customers

from two sources:
Single Product Locations: are facilities
such as factories or warehouses where a
single product or a narrow range of
related items are available for shipment.
Distribution centers: are facilities where
bulk shipments of products arrive from
single product locations.

Return Processing
(Deliver)

This process is also know as

reverse logistics.
Return is often difficult and
inefficient process.
Companies and supply chains as
a whole need to keep track of
kinds of returns that happen.