Supply chains cost issues

This section thus suggests that careful choice of the products that use up internal capacity vs. those that can use externally available capacity should consider the marginal benefit per unit of the bottleneck internal capacity. Such an analysis gets complicated because the bottleneck resources are, in turn, defined by the mix of products that are made vs. outsourced. The use of tools such as linear programming enables this issue to be resolved by considering the entire problem simultaneously. Such tools enable the optimal choice of bottleneck resources that minimize supply chain costs. 

Medium-Term Weekly buckets for 52 weeks Monthly Leader OPG Leader Team Demand Planner OPG team Issue Resolution President Identify medium-term supply/ demand imbalances Evaluate performance of past short- and medium-term plans Develop and implement corrective actions Demand forecasts Basehne Promotion NPIs Supply forecasts and constraints Customer service Inventory investment Asset utilization Total supply chain costs... 

Sustainable procurement includes the economic, environmental, and corporate social responsibility (CSR) dimensions. CSR aspects of sourcing often deals with assuring ethically sound relationships, establishing codes of conduct, and human rights. Environmental aspects facilitate recycling, reuse, reduction of toxicity, and reduction of resource use. In many cases, as in reduced resource use, sustainable practices can, in fact, decrease the cost in the supply chain. These issues are discussed at length in Chap. 9. 

Science (NCMS) estimated that replacing Pb in electronic assemblies will result in a material cost of US 140-900 million dollars in the United States alone, with supply chain costs likely to run in the tens of billions of dollars [66]. Cost issues are related to materials (solders, components, boards, protective atmospheres during processing, additional energy consumption due to the higher process temperatures required for most lead-free solders, and operational costs). 

Although in principle stationary and transport-specific energy chains can be analysed, here the assessment of the latter is explained in more detail, and is then referred to as well-to-wheel (WTW) analysis. The primary focus of WTW analysis in Europe is on global environmental impact, i.e., greenhouse-gas emissions expressed as C02-equivalents. Other issues of interest are (a) primary energy demand (which equals resource utilisation), (b) local pollutant emissions and (c) full energy or fuel supply costs. Well-to-wheel analysis covers the entire fuel supply chain from feedstock extraction, feedstock transportation, fuel manufacturing and fuel distribution to fuel use in a vehicle. 

It is crucial to know the requirements and service breakpoints of each customer segment (Fig. 22.3) and the related economic opportunities. Most successful players go as far as designing and tailoring differentiated supply chains and service level offers (Fig. 22.4), and tracking service levels and profitability to address service issues and extra costs. 

In the near future, the main concerns of CAPE will probably focus on issues related to product design (molecular modeling for solving function-property-composition problems), supply chain management (cost reduction of raw materials, effective use of energy and its new sources), and life cycle assessment (mitigation of climate change, process sustainability). 

There is then the challenging issue of how much of these costs can be passed on as a price rise in the supply chain, ultimately to the domestic consumer. The domestic consumer may not appreciate the environmental implications or accept the price rise as their contribution in overall responsibility for improving the environment. The implications here are for education throughout the supply chain. 

The final measure being used is price. This needs to be agreed upon but it should not be expected to be reduced every year without help to improve the suppler s producing process. Supplier development is an important issue in removing costs from the supply chain. It mnst be accomplished in a manner that will make both the customer and the supplier better. Sometimes I see this being done by customers telling the snppliers they want a 10... 

The reuse of products in secondary markets also entails some challenges for manufactorers, retailers, and even researchers. The availability of used products with lower prices in the market that compete directly with new products, the pricing of those new products, and frequency to upgrade ver-simis of a product are some of the topics that are the subject of concern for manufacturers. When e-commerce is the only source of contact with the customers, the customer service is totally dependent on the supply chain logistics. Thus, the continued process improvement, development of innovative software applications, and cost reductions become critical to compete in the current aggressive internet markets. Issues such as the impact of secondary markets in the supply chain, the impact on the strategy of original manufacturers, and retailers are topics of research interest. 

Coca-Cola learned this the hard way. Battered by retail feedback (five years of falling scores on retailer surveys in North America), declining market share, and rising costs, Coca-Cola declared, Enough It announced the repurchase of the bottler. There were three fundamental supply chain issues underlying the defeat ... 

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