ORUNS Operating Supply Chain Scheme - Case Study Example

ORUN’S Operating Supply Chain Scheme Presentation As the owner and CEO of ORUN Company, Mr. Charles O’Run came to understand that running a supply chain is very dissimilar from managing one site firms. The inventory stocks at dissimilar operational sites around the sates have multifaceted interrelationships, which comprises of both inbound materials and finished merchandises. Well-organized and effective management of inventory all through the supply chain considerably increases the entire scope of services provided to the customer by the company. This presentation describes the many consequences of ORUN’s current managing supply chain inventories and suggests opportunities for improving management and control. In order to attain the objectives of the study, the presentation has been divided into two major parts. The first part is the identification of the triggering effect of the current supply chain management scheme and the consequences faced by this structured platform. The second part is a number of recommendations that should be done to attain the goals set by the board of directors. From the study done on the current ORUN managing supply chain scheme, observations show that there are several identifiable operational and management problems and most of them are triggered by a wide communications gap between the headquarters and the subsidiary plants of the firm. ORUN Company, just as a number of manufacturing enterprises, is structured to be among networks of manufacturing and distribution sites that acquire raw materials and transform them into similar finished goods as well as distribute them to customers. However, despite the process seeming simple, it is evident that the fact that the rates at which ORUN’s subsidiary plants have become so self-regulating from the headquarters in conducting their operations, the company ceases to support its initial ideology of a structured value added supply chain. Evidentially, ORUN supply chain management faces numerous consequences because of the lack of a redesigned supply chain scheme that integrates the independence of the subsidiary plants to their headquarter operations. Consequence 1: Lack of a Recognizable Supply Chain Metrics It has continuously been supposed that the supply chain general performance depends on the different sites combined performance though, typically, each site is managed by autonomous management conditions. This has been the case at ORUN since it is well documented that, the company’s remote operations have become very independent in their local procedures. However, these self-made objectives may have very influence to do with the supply chain general performance, which is evident from the increased confusion experienced at ORUN headquarters. It has been hard for the headquarters operator to fully comprehend what each firm is dong hence reducing the effectiveness of the company. Consequence 2: Imprecise Delivery Status Data From collected data facts, one understands that when customers place their orders, they constantly want to distinguish when their products will be at their doorstep. While the prescribed waiting period, they tend to ask for real time updates on their order delivery status, specifically when their order is late. This does not undermine the importance of on time product delivery (Shapiro 52). The current ORUN supply chain management scheme does not offer this service. The illustration below shows the common material management and control process in each of the four ORUN subsidiary firms. It is evident that it is very hard for the headquarter operators to know where their goods are if each firm autonomously ships products to customers. Consequence 3: Disorganized Information Service From the study conducted at ORUN, it is well known that so much information moves through facsimile and email and that daily operation is quite dependent on the speed and availability of these processes. Consequently, it is evident that the databases at distant operating sites that designate the company’s system environment, inventory records, and backlog position as well as upcoming production procedures are usually not interrelated. This has caused deferrals in information retrieval and communication and it makes it impossible to quote precise shipment dates to clients (as discussed in Consequence 2). These delays also discourage or disallow undersized production planning cycles leading to uncultured forecast errors and inventory as well as backorder accumulation. Pitfall 10: Improper Valuation of Inventory Costs The current supply chain scheme at the company raises a lot of management questions. In ORUN, just as in many manufacturing establishments, this subject has been debated for long periods in the academic realms. However, there is no industrial standard in the practice that has an actual reading on what should be the value of inventory. Different production periods offer dissimilar business opportunities and hence the value at one production period may be over valued at another causing high inventory backlogs that may result to unwanted costs. Consequence 5: Partial Shipment Systems Analysis Due to lack of proper coordination, facts from ORUN have shown that firms to make deliveries that include long distant flights as they receive orders from headquarters. Altering the mode of carriage can suggestively affect inventory investment and customer service delivery. However, ORUN operations suggest that carriage decisions are habitually based on economic considerations that do not take into account these important operational factors, however, this decisions take too much time since the firms operate independent of each other. Solutions to the Consequences The solutions to the above-mentioned challenges are set to attain five goals set by the directors. Being placed above the current supply chain has a number of consequences that will meet all the set objectives when well managed. Objective 1: Minimize ORUN costly inventory scheme In order to minimize the unnecessary inventory costs incurred by the company, an assimilated database all through the four subsidiary plants Supply Chain should be developed and adopted. This will solve all consequences related to lack of information diffusion in the supply chain management. Effective operational control and management of a supply chain involves an integrated coordination of vital data from the different plant functions. Crucial data that should be integrated in the new database should comprise of order estimates during different business periods, inventory position at all four sites, backlogs, production strategies, service and material provider delivery schedules, and pipeline or production scheduled inventory at all four sites. The databases should be interconnected so that managers from any of the four points in the supply chain, mostly headquarters, can access accurate information at their request. Objective 2: Improve the overall supply chain management within the company The first step in improving the overall supply chain is by restructuring the supply chain management scheme at the company considering all four plant operations. Numerous articles and theories have been documented on the restructuring of manufacturability for assembly, quality, producibility, and serviceability of current supply chain schemes. Below is an illustration of the process flow at each of the four subsidiary plants owned by ORUN Company. From the illustration, ORUN Company should include a “design for supply chain management” in their current system, consequently, product strategies ought to be valued on not only functionality (as shown from one-step to the next) and performance, nonetheless evaluation should also be based on the resulting production overheads, and service suggestions that they would have during the product’s supply chain. Furthermore, ORUN should also restructure its organizational incentives. Through diverse studies, results have revealed that most corporations use incentive systems centered on the division, group, or site functions and ORUN is no exception. These tends to deter cooperation in the pursuit to get various subsidiary plants from different regions of the nation to work together to realize a system wide success and efficiency, ORUN may need to restructure its organization and improve or create a new incentive systems. The incentives of each of the four plants should be reformatted to allow them to be independent but complement each other in terms of service delivery. Lastly, the company should institute supply chain performance measurement schemes. Recent studies have revealed that new incentives and organizational remodelling go hand in hand with new performance metrics. These metrics must take the supply chain perceptions and inventory should be measured across the supply chain as well as over-all response time instead of individual sites’ lead times. This means instead of each of the four plants being accountable for their own set of metrics, all entities should take ownership of the supply chain metrics and all managers should all be held answerable to the overall performance hence they should measure performance regularly and frequently. Objective 3: Ensure demand requirements are met, avoiding stock outs, and reducing overall cost With an integrated database, it is easy to ensure that the demands for ORUN products around the country are well committed. This also allows the headquarter offices to allocate customer orders according to production capabilities taking away backlogs and overstored raw material inventories. Objective 4: Standardize business practices among plants with a given supplier. By integrating management and planning support systems, ORUN can standardize business practices among plants with a given supplier. As noted earlier, evidence from ORUN showed that production planning and inventory management decisions at one of the four sites in a supply chain affects decisions at other sites mostly at the headquarters. Decisions at the subsidiary sites should not be made independently as before. However, an overall systems approach should be taken. Current studies propose that models for assimilated control of multisite manufacturing and distribution systems are just emerging and their prototypes show promising results. Objective 5: Increase supplier efficacy with real time information on firm planned orders and forecast. Lastly, in order to increase supplier efficiency, ORUN should comprehend the desires of participants that affect the overall performance of their supply chain. This includes the conception of issues that can result in improved management targets and operating efficiencies. With this adoption, ORUN Company can also adventure into prospects outside their supply chain. A modern study revealed that U.S. numerous companies that stand apart from their aristocracies in terms of their logistics operations naturally use more data-processing skills. These businesses have a higher level of statistics system support so that they have more electronic data swapping with their suppliers and customers, which reduces or eliminates many of the administrative delays in the supply chain. In conclusion, the growth of ORUN constituted to a development of a new supply chain system that was overdue. The existence of four subsidiary plants made the companies’ supply chains to be very complex and ineffective. Just as numerous firms are vulnerable to the challenges due to overdue changes in supply chain structures, ORUN also encountered such issues in terms of operations and management. From these challenges, the presentation has come up with solutions that have allowed the company to achieve the five major goals it deems vital to remain competitive in the growing market and provide high quality customer delivery. From these recommendations, ORUN can and will achieve organisational efficiency and effectiveness. Work Cited Shapiro, Jeremy. Modeling the Supply Chain. Australia: Thomson-Brooks/Cole, 2007. Print. Read More