«Based on industry benchmarks, Bob’s Farm Stores is spending more than it needs to on its purchasing process. We believe that they could save a total of $1,065,462 by implementing three strategies, namely 1) implementing a mid-tier ERP system, 2)...» Document abstract
$9.95
31 word format
Language : english
logistics
presentation
date published
22/11/2006
review : not yet assessed
level : Expert
requested 20 times
SummaryBased on industry benchmarks, Bob’s Farm Stores is spending more than it needs to on its purchasing process. We believe that they could save a total of $1,065,462 by implementing three strategies, namely 1) implementing a mid-tier ERP system, 2) consolidating the number of annual purchase orders through the use of blanket purchase orders, and 3) standardizing their vendor authorization process and increasing the number of authorized vendors.
Implementing a mid-tier ERP system
Our company deals with 650 different suppliers, having each hundreds to thousands of SKU’s. The current manual ordering process is overwhelmed by the complexity of the supplier base which has resulted in severely inaccurate forecasts, redundant process and data entry, and increased lead time. With the implementation of a fairly off-the-shelf, mid-tier ERP system we believe that we can 1) Increase forecast accuracy, 2) Eliminate redundant processes, 3) Decrease the amount of labor required to generate and process each PO, and 4) Decrease the lead time by 4 days. Total net expected savings are $624,462.
PO consolidation through the use of BPO’s
By using blanket PO’s we believe that we can conservatively achieve at least a 0.5% reduction in annual materials spending per year. The risks associated with this strategy include exposing ourselves to price fluctuations (market price could drop during life of contract) and increased dependency on our forecasted demand (we may overbuy). Total net expected savings are $240,000.
Standardization of vendor authorization process
Standardization of the vendor authorization process and increasing the number of authorized vendors will decrease the negotiation and order processing time which will decrease the lead time. We expect to reduce the lead time of non-authorized vendor orders (NAVO’s) by 25% resulting in a net expected savings of $240,000.
Implementing a mid-tier ERP system
Our company deals with 650 different suppliers, having each hundreds to thousands of SKU’s. The current manual ordering process is overwhelmed by the complexity of the supplier base which has resulted in severely inaccurate forecasts, redundant process and data entry, and increased lead time. With the implementation of a fairly off-the-shelf, mid-tier ERP system we believe that we can 1) Increase forecast accuracy, 2) Eliminate redundant processes, 3) Decrease the amount of labor required to generate and process each PO, and 4) Decrease the lead time by 4 days. Total net expected savings are $624,462.
PO consolidation through the use of BPO’s
By using blanket PO’s we believe that we can conservatively achieve at least a 0.5% reduction in annual materials spending per year. The risks associated with this strategy include exposing ourselves to price fluctuations (market price could drop during life of contract) and increased dependency on our forecasted demand (we may overbuy). Total net expected savings are $240,000.
Standardization of vendor authorization process
Standardization of the vendor authorization process and increasing the number of authorized vendors will decrease the negotiation and order processing time which will decrease the lead time. We expect to reduce the lead time of non-authorized vendor orders (NAVO’s) by 25% resulting in a net expected savings of $240,000.
Table of Contents- Executive summary
- Background
- Bob’s farm stores
- Description of commodity/service to analyze
- Why this particular project
- Agreeing on a primary cost
- Identifying critical costs in the supply chain
- Process maps
- Secondary and tertiary costs
- Measuring secondary and tertiary costs
- Defining the key cost drivers and developing strategic options
- Cost drivers and functions
- Po rate
- Navo rate
- Lead time
- Reducing, changing or eliminating activities that cause costs: the strategy
- Constraints
- Strategic option: implement mid-tier erp system
- Strategic option: po consolidation through blanket po’s
- Strategic option: standardize authorization process and increase # of authorized vendor base
- Implementing
- Mid-tier erp
- Po consolidation through blanket po’s
- Standardize authorization process and increase number of authorized vendor base
«"Sourcing in China started with low-tech products but it has evolved beyond that," says Jim Hemerling, a senior vice president in The Boston Consulting Group's Shanghai office. "Now, in addition to traditional products, another huge area is consumer...» Document abstract
$9.95
50 word format
Language : english
logistics
case study
date published
22/11/2006
review : not yet assessed
level : Expert
requested 34 times
Summary"Sourcing in China started with low-tech products but it has evolved beyond that," says Jim Hemerling, a senior vice president in The Boston Consulting Group's Shanghai office. "Now, in addition to traditional products, another huge area is consumer electronics. I believe the next big wave will be industrial goods, with companies like ITT, Siemens, Honeywell and ABB leading the way."
(http://knowledge.wharton.upenn.edu/index.cfm?fa=printArticle&ID=1166)
When hearing this statement, we realized how important it could be for Foxtel to source from China. After receiving some bids from 3 different suppliers, Legend, Great Wall and Panda, we compared them with our current supplier prices. We challenged our current supplier bid with the total cost of ownership (TCO) of the Chinese suppliers. The TCO not only matters with purchasing price, but also take into account all the associated costs of dealing with such a supplier.
After comparing weighted, world-wide costs per kit across suppliers, we found that Legend Supplier has the greatest potential for cost savings. We therefore recommend sourcing through Legend. We believe that Foxtel can achieve a 38% cost savings after all relevant and material cost are accounted for. This translates into a savings of $1,781 per kit or, in other words, a total annual savings of over $13 million.
While it was obvious from the very beginning that there would be a substantial material cost savings if Foxtel used a Chinese supplier, it was less obvious how additional costs, such as freight and inventory costs, would affect the Chinese suppliers’ total cost. In order to assess the total cost of sourcing from different suppliers we identified twelve relevant costs categories and estimated their impact on each sourcing option. These relevant cost categories included: import costs, ocean freight, transportation from the port to the facility, safety stock, increases in inventory holding cost, quality/warranty claims, disposal, obsolescence, EDI, extra warehouse capacity, supplier development, and increases to Foxtel’s cash-to-cash cycle. By totaling up these relevant costs per kit and then adding them to the material cost per kit, we arrived at a TCO cost per kit with which to make meaningful comparison between sourcing options. (The U.S. and Brazil costs were combined using total units manufactured at each location as a weight.)
A sensitivity analysis of the key cost driver still yielded Legend as the clearly preferred supplier, even when all cost drivers where combined into a worst case scenario. We found that changes in key cost drivers such as crude oil prices, transpiration cost, and inventory had little effect on the final outcome.
China is inherently more risky than sourcing from our current local suppliers. In fact, we estimated that sourcing from China is roughly four times as risky as sourcing locally. We believe that the risks associated with supplier reliability and intellectual property rights account for most of China’s risk. We also believe that both of these can be controlled for. First, the fluctuation in supplier reliability can be addressed by increasing Foxtel’s safety stock which, according to our sensitivity analysis, does not change the final sourcing recommendation. Second, we believe that the intellectual property risk can be mitigated by continuing to have final assembly of the finished goods outside of China. Additionally, we suggest 5 steps that can be taken to mitigate the risk of intellectual property piracy.
(http://knowledge.wharton.upenn.edu/index.cfm?fa=printArticle&ID=1166)
When hearing this statement, we realized how important it could be for Foxtel to source from China. After receiving some bids from 3 different suppliers, Legend, Great Wall and Panda, we compared them with our current supplier prices. We challenged our current supplier bid with the total cost of ownership (TCO) of the Chinese suppliers. The TCO not only matters with purchasing price, but also take into account all the associated costs of dealing with such a supplier.
After comparing weighted, world-wide costs per kit across suppliers, we found that Legend Supplier has the greatest potential for cost savings. We therefore recommend sourcing through Legend. We believe that Foxtel can achieve a 38% cost savings after all relevant and material cost are accounted for. This translates into a savings of $1,781 per kit or, in other words, a total annual savings of over $13 million.
While it was obvious from the very beginning that there would be a substantial material cost savings if Foxtel used a Chinese supplier, it was less obvious how additional costs, such as freight and inventory costs, would affect the Chinese suppliers’ total cost. In order to assess the total cost of sourcing from different suppliers we identified twelve relevant costs categories and estimated their impact on each sourcing option. These relevant cost categories included: import costs, ocean freight, transportation from the port to the facility, safety stock, increases in inventory holding cost, quality/warranty claims, disposal, obsolescence, EDI, extra warehouse capacity, supplier development, and increases to Foxtel’s cash-to-cash cycle. By totaling up these relevant costs per kit and then adding them to the material cost per kit, we arrived at a TCO cost per kit with which to make meaningful comparison between sourcing options. (The U.S. and Brazil costs were combined using total units manufactured at each location as a weight.)
A sensitivity analysis of the key cost driver still yielded Legend as the clearly preferred supplier, even when all cost drivers where combined into a worst case scenario. We found that changes in key cost drivers such as crude oil prices, transpiration cost, and inventory had little effect on the final outcome.
China is inherently more risky than sourcing from our current local suppliers. In fact, we estimated that sourcing from China is roughly four times as risky as sourcing locally. We believe that the risks associated with supplier reliability and intellectual property rights account for most of China’s risk. We also believe that both of these can be controlled for. First, the fluctuation in supplier reliability can be addressed by increasing Foxtel’s safety stock which, according to our sensitivity analysis, does not change the final sourcing recommendation. Second, we believe that the intellectual property risk can be mitigated by continuing to have final assembly of the finished goods outside of China. Additionally, we suggest 5 steps that can be taken to mitigate the risk of intellectual property piracy.
Table of Contents- Executive summary
- Assumptions
- Discussion of analysis results
- Summary of results
- Analysis results
- Sensitivity analysis
- Non-quantifiable risks
- Recommendation
- Initial recommendation
- Incorporating risk factors/soft costs
- Exhibits
- Process flow diagrams
- Cost category descriptions
- Spreadsheets
- Summary of tco results
- Sensitivity analysis
- Risk assessment table
- Proposed shipping routes
«The continuous increase of port congestion in the San Pedro Bay is pushing every day more importers to relocate the port of entry of their goods. However, both ports of Long Beach and Los Angeles provide facilities and service that can not be found...» Document abstract
$9.95
13 word format
Language : english
logistics
presentation
date published
21/11/2006
review : not yet assessed
level : Expert
requested 17 times
SummaryThe continuous increase of port congestion in the San Pedro Bay is pushing every day more importers to relocate the port of entry of their goods. However, both ports of Long Beach and Los Angeles provide facilities and service that can not be found in any port. This reports first aims to present a study of the different relevant factors to be considered when considering alternative ports by an importer/exporter of products currently using these 2 ports. It secondly lists and assesses the possible alternate ports according to these requirements.
4 factors have been highlighted:
1. Sea transportation, taking into account the effects of the shipping lines available at the port.
2. Port and area infrastructure, which assess the facilities and services required.
3. Lead-time, from China (major importer for these ports) to terminal dispatch.
4. Costs
The research then proposes 3 different areas where the imports can enter the continent: the Northwest Coast, the secondary ports of California, and Mexico.
The Northwest Coast ports (Vancouver, Tacoma and Seattle) provide good sea transportation, and are the closest ports from China. Being fairly large, these ports provide good infrastructures and service levels. However, the lead time is subjected to decrease if the consumption of the imported good is not in the Southwest for areas such as the East Coast or Midwest. The possible cost reduction will depend on the industry and the market in which the company operates.
In California, being fairly close to Los Angeles-Long Beach ports, Oakland and San Diego are natural alternatives to be considered. The switching costs may be smaller than relocating to the Northwest, and the move relatively easy. Some of the potential distribution centers in the Los Angeles area may still be kept under these options.
Mexican ports are increasingly being considered as real alternatives to Los Angeles port congestion. Still a relatively small port, Ensenada is expected to grow significantly, being “at the door” of the United States. The largest Mexican Pacific port, Manzanillo, although being further provides good equipment and services. Lazaro Cardenas results to be more appropriate to serve the Mexico City area.
The research concludes by giving some short and long term recommendations. In 2005, the Los Angeles Port Authorities only decided to increase the off-peak use, by offering discounts at these hours. However, companies know that this temporary adjustment may not be sustainable in the long run. Imports from Asia are expected to continue to grow at a significant rate and since areas of extension are rare in the San Pedro Bay, a relocation decision seems to be inevitable.
4 factors have been highlighted:
1. Sea transportation, taking into account the effects of the shipping lines available at the port.
2. Port and area infrastructure, which assess the facilities and services required.
3. Lead-time, from China (major importer for these ports) to terminal dispatch.
4. Costs
The research then proposes 3 different areas where the imports can enter the continent: the Northwest Coast, the secondary ports of California, and Mexico.
The Northwest Coast ports (Vancouver, Tacoma and Seattle) provide good sea transportation, and are the closest ports from China. Being fairly large, these ports provide good infrastructures and service levels. However, the lead time is subjected to decrease if the consumption of the imported good is not in the Southwest for areas such as the East Coast or Midwest. The possible cost reduction will depend on the industry and the market in which the company operates.
In California, being fairly close to Los Angeles-Long Beach ports, Oakland and San Diego are natural alternatives to be considered. The switching costs may be smaller than relocating to the Northwest, and the move relatively easy. Some of the potential distribution centers in the Los Angeles area may still be kept under these options.
Mexican ports are increasingly being considered as real alternatives to Los Angeles port congestion. Still a relatively small port, Ensenada is expected to grow significantly, being “at the door” of the United States. The largest Mexican Pacific port, Manzanillo, although being further provides good equipment and services. Lazaro Cardenas results to be more appropriate to serve the Mexico City area.
The research concludes by giving some short and long term recommendations. In 2005, the Los Angeles Port Authorities only decided to increase the off-peak use, by offering discounts at these hours. However, companies know that this temporary adjustment may not be sustainable in the long run. Imports from Asia are expected to continue to grow at a significant rate and since areas of extension are rare in the San Pedro Bay, a relocation decision seems to be inevitable.
Table of Contents- Factors to determine alternative ports.
- Alternative ports available.
- Californian alternatives: Oakland and San Diego.
- Mexican ports : Ensenada, Lazaro Cardenas and Manzanillo.
- Recommendations.
«Total Productive Maintenance (TPM) manufactures activities that are productive and implemented by everyone in the organization. The main focus of TPM is to maximize the overall equipment effectiveness of the asset which is utilized to produce the...» Document abstract
$8.95
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Language : english
logistics
case study
date published
21/11/2006
review : not yet assessed
level : Expert
requested 38 times
SummaryTotal Productive Maintenance (TPM) manufactures activities that are productive and implemented by everyone in the organization. The main focus of TPM is to maximize the overall equipment effectiveness of the asset which is utilized to produce the goods and services.
TPM focus on establishing good maintenance practice through five goals:
• Improving equipment effectiveness
TPM wants to insure the equipment can perform to design specifications. The effectiveness of facilities can be identified and examined by downtime losses, speed losses and defect losses.
• Improving maintenance effectiveness
TPM focus on maintenance activities which are carried out on the equipment are performed in a cost effective way.
• Early equipment management and maintenance prevention
This goal of TPM is to reduce maintenance activities required by the equipment. It involves the identification nature and preventive maintenance level which are required for the equipment, the creation standards for condition-based maintenance, and the respective responsibilities for both maintenance and operating staff.
• Training all staff in relevant maintenance skills
The maintenance and operating staff need to have all the necessary skills to carry out TPM. TPM emphasizes appropriate and continuous training.
• Involving Operators in Routine Maintenance
This goal is to let operators find maintenance tasks related to the equipment they perform. These tasks are about 10-40% of routine maintenance tasks performed on the equipment. Formerly engaged in these activities, maintenance resources can be redeployed in more advanced maintenance activities such as reliability focused maintenance activities or predictive maintenance.
TPM focus on establishing good maintenance practice through five goals:
• Improving equipment effectiveness
TPM wants to insure the equipment can perform to design specifications. The effectiveness of facilities can be identified and examined by downtime losses, speed losses and defect losses.
• Improving maintenance effectiveness
TPM focus on maintenance activities which are carried out on the equipment are performed in a cost effective way.
• Early equipment management and maintenance prevention
This goal of TPM is to reduce maintenance activities required by the equipment. It involves the identification nature and preventive maintenance level which are required for the equipment, the creation standards for condition-based maintenance, and the respective responsibilities for both maintenance and operating staff.
• Training all staff in relevant maintenance skills
The maintenance and operating staff need to have all the necessary skills to carry out TPM. TPM emphasizes appropriate and continuous training.
• Involving Operators in Routine Maintenance
This goal is to let operators find maintenance tasks related to the equipment they perform. These tasks are about 10-40% of routine maintenance tasks performed on the equipment. Formerly engaged in these activities, maintenance resources can be redeployed in more advanced maintenance activities such as reliability focused maintenance activities or predictive maintenance.
Table of Contents- What is TPM?.
- Benefits of TPM.
- History of TPM.
- Total productive maintenance: from 5S to the 7 pillars .
- Company experiences with TPM.
- Siemens Malacca.
- MRC Bearings’ experience.
- Agilent’s experience: pareto approach vs. TPM .
- Western vs. Japanese TPM Approach.
«SERVQUAL consists of a model developed by Parasuraman, Zeithaml and Berry (1986) which helps measure service quality through a series of steps. It concentrates on the notion of perceived quality. “Perceived quality refers to a consumer’s judgment...» Document abstract
$6.95
7 word format
Language : english
logistics
presentation
date published
21/11/2006
review : not yet assessed
level : Expert
requested 115 times
SummarySERVQUAL consists of a model developed by Parasuraman, Zeithaml and Berry (1986) which helps measure service quality through a series of steps. It concentrates on the notion of perceived quality. “Perceived quality refers to a consumer’s judgment about a product’s overall excellence” (Zeithaml). “Perceived quality is more subjective than other definitions of quality” (Zeithaml). Through research conducted with focus groups, the researchers asked about the characteristics a service provider should have in order to have high quality. They found out that consistently all of the members of the focus group had similar criteria. With these findings, they created 10 quality dimensions. Later on, researchers found that these 10 dimensions overlapped and that customers could only distinguish 5 dimensions. (4. Parasuraman, Zeithaml and Berry 1986). This perception of service quality builds up from attitudes developed by customers over time towards a product or service. The other element present is consumer satisfaction that has been achieved by the actual use of a product or service.
Table of Contents- Overview of service quality.
- What is service?.
- What is service quality?.
- What is the difference between service quality and manufacturing quality?.
- How to measure service quality?.
- Servqual.
- How the scale was determined?.
- Other tools and theories about service quality.
- Gronroos’ dimensions.
- Gummesson’s dimensions.
- Content and form.
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