Wedgwoods Supply Chain Management - Essay Example

Topic: Wedgwood's Supply Chain Management The company: Luxury ceramics are identified with Wedgwood Company, with a history of about 250 years, the company is facing the problems in operation management that is a flexible and responsive customer service. Improving the basic tasks of a company like finding raw components required for product or service, manufacture of the products or service and delivery to the customers is the arts and science of supply chain management. The five basic components of supply chain management include, (Christopher Koch, 2002) (Carlo.D.Smith pp155-178) (William C Copacino, 1997, pp.81-90) (Robert A. Rudzki et.al) Planning: A strategy is to be developed for the cost-effective utilization of resources required to develop the product that meets the demands of customer. The planning of the supply chain thus should be such that it is efficient, less costly and the products that are delivered are of high quality and value to customers. Source: The important thing is finding suppliers, who can effectively deliver the services or goods to the customers. An improvement in the relationship should be developed with the suppliers for delivery, payment process and pricing. In short, improving the processes for the management of inventories received from the suppliers including receiving, verifying shipments, transferring to the manufacturing facilities and authorizing payments to the suppliers. Making: This is the step, manufacturing step, where intensive study is required to improve the quality levels, production out-put and workers productivity. For the effective delivery of the goods, there should be scheduling of activities such as testing, packaging and preparation for the delivery. Delivering: This is referred to as logistics, there should be an improvement in the coordination of the activities such as taking the receipt of orders from customers, developing a network of warehouses, picking the carriers so that customers receive the products and setting up an effective in-voice system for payments. Returning: The most important and the problematic part of the supply chain that needs improvement is creating a network for receiving defective and excessive products from the customers and checking the delivered products which have problems and supporting customers with problems. Operation management issues at Wedgwood: The company adopted the inflexible push model which is driven by the forecasts of the expected sales which were generated centrally, and the challenge for the company is now that the company is finding hard, to match the high quality of the product with equal levels of service to the customers. According to the operations director of the company, when benchmarking was done with the other companies, they found out that there is a need for improvement in the area of customer service and responsiveness. The overdue orders were high, despite there were high inventory levels. The main objectives of the company is thus to reduce inventory, cutting the supply cycle time. The company therefore has decided to overhaul the supply chain processes to achieve the goals. As identified by the experts of operations management of the company, in three areas of the supply chain. Dealing with customers and order fulfilling is the first one, the second area is operations in the manufacturing and supply, the third one is introducing new products To tackle the problems, the company formed different teams to tackle each area, the teams were instructed to look into the key processes which are existing and bench mark them against the other parties so that they can redesign. The teams were supported by the methodology and expertise from the consultancy wing of the Texas instruments. The main objectives of the company are reducing the inventory, cutting the supply cycle time and overall improvement of the customer services. (Buy IT, 2002). Key performance objectives at Wedgwood: Existing model has been changed to the pull model driven by the real demand from the customers, even this new process involves forecasting but with a difference, in each market the forecasts are produced, and forecasts are produced by the sales people who see the market place in terms of value at a higher level. Using a centrally run tactical planning model forecasts for specific items can be created. With the break up of these items the company gets the needed information to develop plans for its factories, and to know the capacity constraints and opportunities for production. The information provides input for the inventory targets for each stock keeping unit at each stage in the supply chain; this includes work-in-progress in factories and warehouse. The factories are instructed, so that no product is made to execute the plan, that is, an order triggers a change in the stock level, the stock is replenished in line with the inventory targets of that particular item. This result in the production based on demand rather than forecasts of stocks needed, with the stocks of the finished goods acting as buffer. This approach has been applied to the company's suppliers of the raw materials, packaging and lithographic transfers that appear on the ceramic products. There was a significant improvement in this area. (Wedgwood 2000) (James.B.A, 2000, 335-341) Similar case was studied by Computer Sciences Corporation which conducts case studies for the supply chain management; it conducted a case study for a large locomotive after-market industry. The challenge for this industry was the excessive inventory, incomplete information, high logistics costs, and slow reactions which resulted in losing the profits at the retail level. The corporation worked with the industry to understand as-is conditions to develop a system of improved and stream lined process steps. This resulted in the consolidation of the shipments across the network and provided the consolidated information to all the constituents of the supply chain. The expected results of this approach are lower inventories with higher service levels and lower costs of transaction and logistics. This also provides the company with accurate information and improves the decision making process of the customer. The key performance objective of the Wedgwood Company is thus reducing the cost of inventory which reduces supply cycle. The another important objective is customer relations, in the newly introduced model the stocks are maintained based on the forecasts of the sales people who see the market, which gives a clear cut information on the demands of the customers. The approach of concentrating on the inventory thus solves the problems of the company that struggles to strike a balance between the high qualities even though the levels of inventory are high with troubled customer relations. Procedure developed by the Wedgwood Company to address the issues of supply chain management. To redesign the supply chain, there is a need for the company to introduce a range of different types of planning tools so that the new approaches to forecasting and the demand driven tactical or capacity planning are supported. The company has evaluated a number of tools to planning, and it choose Aspen technology's MIMI as the choice. MIMI is a new product and it would be risky choice to choose, MIMI was selected among the other short listed products because it offers a greater degree of configurability. The Wedgwood company was assured to see MIMI in action at the tobacco giant Philip Morris and it had a chance to gather the views of different customers on MIMI. A wide range of information was gathered from the conference of the MIMI user group. After the choice was made, the system implemented by the Wedgwood comprised of two phases, one that dealt with forecasting needs and the other with the handling of the tactical planning. For both these phages the team of the Wedgwood Company was supported by consultants from Aspen technology. The team of the company was headed by the project manager. For forecasting the phage was piloted in one market and this plan to be rolled out in the 13 markets worldwide, for each market a forecast analyst is trained so that the system is operated locally. In the tactical planning phage the team of the tactical planning is located centrally and the planning is implemented on a factory-to-factory basis, in this phage one model designed at a time so that the system is migrated to MIMI. The first models were to be developed in two factories for china production, followed by the other models for earthenware production in different factories of the Wedgwood sites. The company produces around 20,000 products, with more than one lakh inventory items for once specialist packaging, pre-printed materials, and other materials taken into account for 13 markets in ten planning periods, the planning to be passed at once became a biggest linear programming issue that is to be addressed by the MIMI. The process was very long and time consuming. The company with the support from the Aspen technology overcame this problem and now for a month the initial running of the planning was reduced to four to six hours. This was made possible by using the 200MHz Pentium running Windows NT with a GB of RAM and 27 gigabytes of RAID storage. If the initial running is completed, to run the alternative scenarios to tune the planning takes just a few minutes for every significant change. Along with changing the system the company also implemented a change in the structure. In the past structure there was only one central group that is used to handle all the planning needs and it also used to liaison with different factories and markets. In the new structure the company's structure is split into two, the sales planning which is done by managers who have a better understanding on the market and at the centre a ware house group that supports the markets. The ware house group also comprises an expedite team that is responsible to track the short term supply and the replenishment issues within the company. This keeps the managers with the up to date information on how soon these issues will be solved. Another group focuses on planning in the factories; it produces tactical capacity plans, and generates stock targets. Based on the movement of the stock targets these group issues daily production requirements. The challenging task for the company is bringing the people from their specialist roles to these multiskilled teams. This requires a lot of training and team development which involves a lot of change in culture, even though this process is difficult, the results of this effort was an outstanding success. A half-dozen traditional ware houses were replaced with the new ware houses. The complexity of the product range thus matched with the complexity of the ware houses in the country. The company has created a new team which handles the introduction of the new product; a process has been developed that brings together all the activities of planning and executing the introduction of new products. The company has focused on improving the customer service; it has introduced a number of key performance indicators or KPIs. These KPIs were earlier focused internally, but in the new system the focus of the KPI is business is seen through the customer's eyes and it includes measures such as replenishment and stock out rates etc. the Example of the case studies conducted by computer Sciences Corporation to achieve supply chain benefits can be cited here which include designing a new performance planning system, creating new organizational design and communication plan. The companies had considerable savings and benefits when this work stream is applied. In a study conducted by Business Logistics (a consulting company that provides solutions to the problems of supply chain management to different companies,) to streamline its supply chain for a candy manufacturer. The results were improving the communication, reduction in the costs of freight rates and increase in productivity through the better use of equipment. (case studies of Computer Science Corporation Limited, 2005) In some case studies conducted by conducted by the computer sciences corporation for reducing the cycle times and to select which ERP system is suitable for multiple vision for the supply chain management yielded good results. (Case studies of Computer Science Corporation Limited, 2005) Challenges of the future facing Wedgwood's, and the ways with which the company meets the challenges: The company should use its best people in the team to redesign the process and key stake holders should be involved. The plan process team should be allowed such that they start the new designing on a blank paper without mentioning about the existing process. The benchmark operations should be such that, they should not be limited to their own sector but also examining different examples that are relevant to the business. Advice from the consultants who went through the process is important. It is necessary to understand the advantages and disadvantages of using immature products, it is also necessary to take up product references and talking with as many users as possible. At first implementations should be piloted in one market area, this will teach valuable lessons and hidden problems can be understood. The efforts in training the staff for new methods, responsibilities and processes should be real; the staff should be made to understand clearly about the new processes. The management measures should be such that the staff are focused on the original objectives and make them confirm about the new methods when they are introduced. Striving for the improvement of the individual processes should be continued, and the culture should be such that it can cope up with the process. Other processes of the business should have necessary investment to support the new process. Bibliography: 1. Improving Supply Chain Forecasting by Carlo.D.Smith, in the book Supply Chain Management edited by John T Mentzer. Sage Publications, Inc. Published on 12/2000 2. Supply Chain Management: New Competitive Realities in the Automotive Value Chain by B. Belzowski,2004, 3. Supply chain management By William C Copacino st lucie press/ APICS series on resource management,1997 4. 5. The ABCs of Supply Chain Management By Christopher Koch January 22, 2002 available on line http://www.cio.com/research/scm/edit/012202_scm.html 6. Supply Management: Howare You Really Doing By Robert A. Rudzki, Douglas A.Smock,MichaelKatzorke,ShelleyStewartJr. Supply Chain Management Review December 1, 2005 7. Buy IT, Case study: Wedgwood supply chain management, published by the computer weekly.2002 8. Wedgwood: Supply Chain Management: IT world consultants limited 2000 9. Handbook of supply chain management,by James B A,2001 10. Supply chain management studies a case study: automotive after market industry stream lines its supply chain processes. Availableonline http://www.csc.com/solutions/supplychainmanagement/index.shtml 11. Case study :A food service distributor realizes tremendous savings in the distribution costs Corporation Limited CSC experience results.(2005) Availableonline http://www.csc.com/solutions/supplychainmanagement/index.shtml 12. Case study: A major beverage company, to improve the sharing of weekly forecasts, sales and inventory requirements with distributors. Computer Science Corporation Limited CSC experience results.(2005) Availableonline http://www.csc.com/solutions/supplychainmanagement/index.shtml 13. Case study: Redesign its supply chain network and lower logistics and operations costs. . Computer Science Corporation Limited CSC experience results.(2005) http://www.csc.com/solutions/supplychainmanagement/index.shtml 14. Electric Utility Harnesses the Power of its Supply Base Using Strategic Supply Techniques, Computer Science Corporation Limited CSC experience results results.(2005) http://www.csc.com/solutions/supplychainmanagement/index.shtml 15. Case study: Redesign its supply chain network and lower logistics and operations costs. . Computer Science Corporation Limited CSC experience results.(2005) http://www.csc.com/solutions/supplychainmanagement/index.shtml 16. A global chemical manufacturer develops a single enterprise vision & strategies and comes to consensus on a single ERP application. Computer Science Corporation Limited CSC experience results.(2005) http://www.csc.com/solutions/supplychainmanagement/index.shtml 17. Medical Component Manufacturer Reduces Cycle Times with Product Collaboration System, Computer Science Corporation Limited CSC experience results.(2005) http://www.csc.com/solutions/supplychainmanagement/index.shtml Read More