Role Of Vendors

Role of Vendors 

Central Vendor Supply of dry items to centrlised location  Located in and around delhi 

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Local Vendor  Supply

of preishable items (milk, cream, etc) locally  Citywise supply 

Food Vendors  Daily

Supply of all eatables  Cold Supply Chain maintained

Baristas Key Features Inventory costs are 2.6% of sales, while the industry average for such formats is 4.5%  Keep stocks on the road 

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more stocks moving on trucks instead of being held at a central point (inventory turnover 9 days; industry 15 days)

From a static model to a dynamic system  charged

for part-load moved rather than on a per truckload payment system

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Regionalise, rationalise  Contracts

with vendors were signed on a

Vendor Management 

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Depth of relationship: costs associated with developing and maintaining a strategic relationship with the vendor Five Steps of Vendor Management

Step 1 

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Match the vendor management model to organizational goals Creating a dedicated vendor management staff Creating a project/program management office Creating a vendor management office

Step 2 

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Categorize existing relationships Strategic, tactical, commodity, or niche players Dry, Perishable, Food, etc

Step 3 

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Establish a selection process Establishing the degree and openness of interactions with the vendor during the process Establishing proper Standards of Procedure Engaging outside consultants or legal counsel to assist in selecting the right vendor

Step 4 

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Measure, monitor, and resolve Establishing a governance structure for working with the vendor Continuous evaluation of the vendor Standards of Procedure for Evaluation Proper training of vendors Lending personnel & technical support

Step 5 

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Define the partnership Determining when to share organizational goals and future strategy Determining accountability for the overall success of the relationship Agreeing on the circumstances for terminating the relationship

Role of Inventory 

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Centralised inventory for dry items with inventory turnover of 9 days Part Load warehousing Perishable inventory sourced locally on daily basis Food inventory sourced locally on daily basis

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It is the inventory management that allows Barista to keep the operational costs down.

Inventory Model 

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Requirements Minimize Inventory Costs Keep it as fresh as possible High Inventory Turnover Solution Just in Time Inventory Model  Average

inventory required can be calculated using existing data.

Benefits of JIT   

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Improved Quality – Freshness Lower Costs – Holding costs are lowered Economic Order Quantity Savings – Lower total cost of ordering Safety Stock Reductions – Reduces lead time & varitions in lead time Vendor Managed Inventory – Regionalised contract fullfillment

Role of 3PL 

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Delivery Costs Reduced – 3PLs Core Competenct, Part Loading Liability Minimized – Warehousing & transporting done by 3PL Enables JIT inventory Helps to focus on core competency Administrative Costs Lowered Capital Investment in Vehicles Eliminated Delivery Costs Are Defined and Consistent

Evaluation of 3PL 

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Linear weighting models - place a weight on each criterion and provide a total score Artificial intelligence - expert systems and case-based reasoning (CBR) Statistical/probabilistic approaches Mathematical programming models Hybrid Intelligent Model- Combination

Hybrid Intelligent Model 

Evaluation Criteria 1 – Strategic Aspects stability  Successful track record  Similar size  Comparable culture  Similar values and goals  Fit to develop a sustainable relationship

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 Financial

Evaluation Criteria 2 – Business Aspects  Information

technology  Performance  Quality  Cost  Services 

Organizational Structure 

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Functional Structure - O rg a n ize s e m p lo ye e s a ro u n d sp e cific kn o w le d g e o r o th e r re so u rce s ( m a rke tin g , su p p ly ch a in ) Benefits   

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Permits greater specialization & simplifies training Easier supervision due to similar issues Creates an economy of scale owing to common pool of talent

Limitations    

Poorer coordination hence requires more controls Barriers in communication & cooperation Rigid and separate chains of command Response time to changes in the environment will be slow

Organizational Structure 

Decision Making Authority – Decentralised  Better

for quick decision making & empowerment

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Span of Control – Narrow  Higher

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Expenses

Formalisation – Low  Greater

Freedom but no Operating Procedures

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Departmentalisation - High  Common

Resources

Improved Organizational Structure 

Organic Structure Low horizontal differentiation  Collaboration (vertical & lateral)  Relaxed hierarchy; free flow of information  Wide span of control  Decentralized decision making  Low formalization  Informal communication, face-to-face  Teamwork  Adaptable duties 

Supply Chain Operations Reference Model (SCOR) 

The Primary Use of SCOR: 

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SCOR contains:    

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To describe, measure and evaluate supply chain configurations. Standard descriptions of management processes A framework of relationships among the standard processes Standard metrics to measure process performance Management practices that produce best-in-class performance

Enables the companies to:   

Evaluate and compare their performances with other companies effectively Identify and pursue specific competitive advantages Identify software tools best suited to their specific process requirements

SCOR Boundaries 

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SCOR spans:  All customer interactions, from order entry through paid invoice.  All product (physical material and service) transactions, from supplier’s supplier to customer’s customer, including equipment, supplies, spare parts, bulk product, software, etc.  All market interactions, from the understanding of aggregate demand to the fulfillment of each order

Five Distinct Management Process Plan-Source-Make-Deliver-Return Plan

Deliver

Supplie r’s Supplie r

Source Return

Make

Deliver Return

Supplier (Internal or External)

Sourc e Retur n

Make

Your Company

Deliv er Retur n

Source Return

Make

Deliver Return

Customer (Internal or External)

Source

Customer’ s Customer

Plan-Source-Make-Deliver-Return provide the organizational structure of the SCOR-model

Scopes of Basic Management Processes 

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Plan (Processes that balance aggregate demand and supply to develop a course of action which best meets sourcing, production and delivery requirements)  Balance resources with requirements  Establish/communicate plans for the whole supply chain Source (Processes that procure goods and services to meet planned or actual demand)  Schedule deliveries (receive, verify, transfer) Make (Processes that transform product to a finished state to meet planned or actual demand)  Schedule production Deliver (Processes that provide finished goods and services to meet planned or actual demand, typically including order management, transportation management, and distribution management)  Warehouse management from receiving and picking product to load and ship product.

Parameters for Performance Measurement    

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Outbound Freight Cost Inventory Count Accuracy Order Fill Finished Goods Inventory Turns On Time Delivery Customer Complaints Over/Short/Damaged Out of Stock Returns & Allowances Inbound Freight Cost Perfect Order Fulfillment Cost to Serve Cash to Cash Cycle time Inquiry response time Equipment utilization vs.

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Inventory Obsolescence Order Cycle Time Incoming Material Quality Overall Customer Satisfaction Inventory Carrying Cost Days Sales Outstanding Third Party Storage Cost Forecast Accuracy Invoice Accuracy Labor Utilization vs. Capacity Equipment Downtime Processing Accuracy Order processed/ Labor Unit Order processed/ Time Unit

Learnings 

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Supply Chain Management Industry Specific Overview Vendor Relationship Management Organisational Structure and its impact on SCM SWOT & PESTE Analysis and its utility IT Enabling SCM for better efficiency Inventory Models & Management Effective Utilisation of 3PL Importance of Performance Measurement Systems Flow of Information through the supply chain