Supply Chain Cost

Industry uses benchmarking for everything costs, supply chain, all those kinds of things. Maybe that is where people need to go in hiring to benchmark departments in terms of what is or is not a good environment and to look for the blind spots. We heard from folks who have a proactive department they have a critical mass of women, yet it is still perceived to be a hostile environment. Where are the blind spots Benchmarking should be able to help. 

Using the example of an industrial enterprise, I will describe how the company can implement low-cost supply chains (customer orders, material flows) on schedule, fast and flexible. The business will thereby become more profitable and attractive to customers, suppliers, investors and - our focus - to supply chain partnerships. 

Resilient supply chains may not be the lowest-cost supply chains but they are more capable of coping with the uncertain business environment. Resilient supply chains have a number of characteristics, of which the most important is a business-wide recognition of where the supply chain is at its most vulnerable. Managing the critical nodes and links of a supply chain, to be discussed further in Chapter 10, becomes a key priority. Sometimes these critical paths may be where there is dependence on a single supplier, or a supplier with long replenishment lead times, or a bottleneck in a process. 

Managing the compatibility issues is critical to lead-free transition. These include materials compatibility (solder, components and PWB), process compatibility (reflow, wave soldering, rework, equipment, and yield), design compatibility, reliability compatibility, and business compatibility (cost, supply chain, and operations). 

Inventory and warehousing include in-plant inventories, in-plant handling, plant warehouse costs, supply chain inventories, and supply chain warehousing costs. 

Tanowitz, Marc, and David Rutchik. Squeezing Opportunity Out of Higher Fuel Costs. Supply Chain Management Review (October 2008) 34-40. 

Due to increasing turbulences in today s global maikets, supply chains are exposed to numerous risks. Companies are starting to realise that SCRM can not only protect against unforeseen and costly supply chain disruptions but can even become a competitive advantage (Sheffi 2005). However, in industry and research, there is a lack of techniques and measures which meet the specific SCRM requirements of small to medium sized businesses. The chapter strives to close this research gap and presents a SCRM approach for SMEs which has been developed jointly by a project team comprising two research institutions and fom companies. 

Similarly, hazardous raw material storage should also be minimized, with greater attention being given to just in time supply. Inventory reduction lowers inventory costs, while increasing inherent safety. In determining appropriate raw material inventories, the entire raw material supply chain must be considered. Will the supplying plant have to increase inventories to provide just in time service, and will... 

Chemical companies are also weak at looking for opportunities downstream of their own operations. Whilst most would recognise the need to understand the business of their customers, few look further downstream and try and understand their customer s customer. However, if your materials can reduce energy consumption or waste production in a final product, you reduce the costs further downstream and potentially change the value distribution across the entire supply chain. If you understand how your products are used downstream, you can share that value with your customers. 

Two distinct and simple business strategies for manufacturing household furniture may be described as the provision of either low-cost, short lifespan, or expensive, long lifespan products. The decision on which strategy to take is made at the conception stage of the business and may depend upon existing supply chain links, market opportunities or available workforce skill set for example. It is unlikely that such a strategic decision would ever be made... 

In the given case study, it is possible to introduce additional terms into this comparison which may look at energy implications such as process machinery and infrastructure life cycle energy costs, warranty repair, supply chain PSS, for example, depending on the company s scope and business model. 

Most of the authors of individual chapters are senior scientists and/or industry based quality assurance specialists who have participated in the EU-funded Integrated Project (IP) QualityLowInputFood. The project aims are improving the quality and safety and reduction of cost in the organic and low input food supply chains . Several chapters in handbook report preliminary results from the IP and/or associated/linked projects supported by national governments and/or industry (see IP website www.qlif.org for further details). 

This often limited efficiency at many stages of the supply chain and increased cost. (See various papers in the special edition of Sociologia Ruralis 41(1) on Politics, ideology and practice of organic farming , and Kaltoft (1999).)... 

Sundrum A and Acosta Aragon Y (2005), Nutritional strategies to improve the sensory quality and food safety of pork while improving production efficiency within organic framework conditions , Report of the EU-project, Improving Quality and Safety and Reduction of Costs in the European Organic and Low Input Supply Chains, no. CT-2003 506358. 

The coordinated approach contracting relationships built on collaboration, trust and close interpersonal ties define the coordinated approach. This approach means that the producer inherits the responsibility and costs of social auditing as they are passed down the supply chain. This is achieved, however, within the framework of close retailer-supplier relationships. Although subcontracting exists, known networks of traceable suppliers are involved. As such, it is possible to exert considerably greater control over the ethical trading process. 

The text summarises the activities and outcome of the Organic HACCP project (www.organichaccp.org) that was completed in 2005, how a database of critical control points (CCPs) was developed for some representative supply chains and how this was used to define a set of recommendations that were then developed into leaflets with advice to producers, processors, retailers or consumers, respectively. The chapter will thus explain how companies at every step of the production chain can utilise the concepts to improve customer satisfaction in a cost-effective manner. Finally, it will describe an example of implementation in a group of collaborating companies and suggest where additional activities are needed in order to develop the concept further. 

From the consumer s perspective, cost is an important characteristic of the food and the best buy is the product that is considered to have the best ratio of quality and price. So consumers should welcome any measure that will improve quality at no extra cost or reduce the cost at no reduction in quality. In principle, using a CCP-based system at the level of a supply chain is supposed to do just that, since it will ensure that the controls are taking place at the steps where they can be implemented most effectively, thus eliminating superfluous double or triple testing of the same thing, or unnecessary waste when food is discarded because its safety is uncertain. 

If both the farms and the dairy are covered by a reliable control system, the everyday monitoring will take place at the optimal CCP at the farm and analysis of milk samples at the dairy will only be needed at low frequency for verification of the system (Principle 6). This will ensure that there are no antibiotic residues in the milk sold by the dairy, with minimal expenses for control. In fact, the most expensive item will be the cost of the unannounced inspections at the farms to monitor the integrity of the system. However, if not all the farms are covered by a sufficiently good control system, the dairy will have to add the extra costs of its own independent system, in order to be able to take responsibility for this quality aspect. So the main benefit of a supply chain-based system is that it provides full control at the lowest cost. The main drawback is that the more entities that are involved, the greater is the risk that one of them will experience a system failure and this can have disastrous consequences for all those other entities that rely on the defaulting entity for their product control. 

In another setting, the human players are provided with global information about the system. This means that all players are informed about inventory levels and orders placed for each of the components of the supply chain. Furthermore, they are encouraged to work out co-operative strategies to deal with the dynamics of the system. Compared to the local information structure, this usually results in lower inventory levels and less out-of-stock-situations for all participants. Typically, the stocks and the number of orders in this setting are much lower, resulting in much lower costs for operating the supply chain and lower costs for each player as well. 

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