MBA in Supply Chain Management module Change and performance measures Essay

MBA in Supply Chain Management module Change and performance measures - Essay Example The ltter brngs fewer volumes of effectve negotton nd brgnng power nd t gurntees flexble nd quck responses for busness. n vew of bove, t s beng questoned why compnes turn to delng wth decentrlzed mngement when centrlzed procurement results n obvously domnnt effectveness. The response to ths queston wll be tht there re no dvntges of one pproch to purchsng over nother; there s one wy of effectve procurement tht gurntees successful outcome nd t by mens - blncng decentrlzed nd centrlzed pproches when dong regulr purchses n the system of supply chn mngement. Centrlzed keepng of wrehouse purchses s n effectve step towrds keepng the sfety stocks nd ncrese nventory turnover. However, whle centrlzng solves the nventory mngement problem to degree, wth very lrge number of prts the nventory mngement of slow movng prts s stll formdble chllenge. To llustrte the problem we cn use the Preto, or 20/80 rule (Donld, Bowersox, Closs, 1996), to see how lrge number of tems drve up nventory mngement costs nd undermnes the development of more cost-effectve servce strtegy. Usng the rule we cn see tht lmted number of fst movng tems - usully round 20 % of the tems - mke up 80% of sles nd profts nd only smll frcton of nventory mngement costs. These re the fst movng -prts. The rest re the B- nd C- prts tht drve hgh nventory mngement costs whle not contrbutng to the proftblty of the busness (B-prts re the 50% of the products tht mke up 15% of the sles. C-prts contrbute wth 5% of sles but mke up 30% of the tems n nventory). However, the perspectve provded by the Preto nlyss helps us see potentl soluton. Wht f t were found tht number of the slow movng B- nd C- prts fulfl the necessry techncl requrements for beng produced usng Rpd Mnufcturng f ths were the cse t would be possble to replce keepng prt n nventory wth producng t on demnd. n other words, the soluton would be to replce nventory n the centrlzed wrehouse wth Rpd Mnufcturng cpcty n connecton wth the centrlzed spre prts centre. Wht s the potentl beneft of replcng nventory holdng wth rpd mnufcturng cpcty n the centrlzed spre prts centre Currently the slow movng B- nd C- prts drve up nventory holdng nd logstcs costs tht need to be subsdzed wth profts from fst movng prts. ntroducng Rpd Mnufcturng would cut the hgh nventory holdng nd logstcs costs of the slow movng prts, nd reduce the need to subsdze the hgh costs of B- nd C-prts wth profts from fst movng prts. Ths would lso reduce the vulnerblty of the OEM's busness to rlnes nvestng n Rpd Mnufcturng cpcty on ther own. Centrlzed wrehousng combned wth centrlzed Rpd Mnufcturng for the slow movng B- nd C- prts keeps nventory low whle t the sme tme keepng nvestments n rpd mnufcturng cpcty well utlzed. Opertng stnd-lone mchnes n number of dfferent loctons s neffcent becuse the requred qulfed personnel cn not be employed very effectvely. s more prts re found where nventory holdng cn be replced wth Rpd Mnufcturng, nd the demnd for these prts exceeds the cpcty of sngle RM