The New Retail Supply Chain - Essay Example

Library Research Article: “The new retail supply chain”, 2006 Introduction: This article deals with the use of emerging technology for efficient management of supply chain management so that movement of products into the retail outlet occur in concurrence with the sales of products, ensuring proper availability and movement from the warehouse to the shop floor. Since the article deals with supply chain management it is relevant to the present course. Summary: Running out of stock of any product is dreaded by any retail outlet, and it is this fear that has driven retail outlets to turn to information technology in their supply chain management to ensure the efficient flow of goods. An example of this is the use of RFID tagging and the software to manage the flow of goods. Technology by itself does not provide a solution and it is important that retail solution providers know exactly what the needs of the retail outlets are and the retail outlets use the most efficient solution. For retail outlets it is the knowledge of when products have moved from their storage points to the shop floor that helps in preventing stock outs, rather than the information of when a product has arrived and when it has been sold. This solution not only benefits in preventing stock outs, but also in preventing having excess of unnecessary inventory. This calls for a new strategy in which there is greater responsiveness of the distribution centers to the activity in the stores. In other words this means consumer demands at the stores is the driving force for replenishment activity at the distribution center. This new strategy calls for using the wealth of information available at the store level to formulate the replenishment plans. Technology needs to provide the tools to correlate the information from the stores into execution plans for replenishment at the distribution centers. This is the new demand driven supply plan strategy. Demand driven supply plan strategy makes the customer the focus of activity of not just the manufacturer, but for the retail outlet too, thus providing a true picture of demand that needs to be satisfied by the supply plan. Once the real time demand is known it is possible to utilize the components of the integrated supply system to provide for better utilization of the three pivots of supply chain, consisting of quality, costs and service by the retailer. In other words the retailer can now balance inventory carrying costs, order fulfillment costs and transportation costs based on the strategy that retail outlet operates on. The benefit of providing extra space in the retail outlet for fast moving products with immediate availability of products through the sales representative of the manufactures will ensue. In addition it becomes possible to match labor supply to the demand. The net result of using a demand driven supply plan is that there it becomes possible to optimize the inventory levels at the retail outlet, optimize labor, inventory, warehouse and transportation resources at the warehouse. Conclusion: This article provides an understanding of the issues in supply chain management at the retail outlet and how the use of demand driven supply strategy along with the requisite technological tools provides a means to address these issues efficiently. Library Research Article: Snow, Nick. “Pipelines seek new production aggregation methods”, 2005. Introduction: This article deals with the impact of growing natural gas energy demands and the manner in which gas supply transmission and storage issues will have to be addressed. The article deals with coping with supply issues of sudden surging demands, and as such is relevant to the course of study. Summary: The natural gas pipelines are being expanded with aggression in both transmission and storage capabilities to meet not only the expected surge in demand for natural gas, but also to address the fundamental shift in supply growth within the United States of America. However new strategies to aggregate production capacity are becoming more of a reality. An example of this lies in the growing Rocky Mountains production and the import of LNG, which are likely to be the mainline supplies in the near future, but there are not enough pipelines to make this available to the market. Augmentation of pipelines thus becomes a priority, but it is not enough to move from one bottle neck to another, but to have pipeline projects that alleviate the issue of bottle necks on the whole. The massive pipeline projects means injections of investment anywhere between $500 million to $3 billion. Therefore the first issue comes to the fore in that for such massive investments the developers of pipelines will require firm long-term contracts. The issues from the perspective of the supply developers need also to be taken into consideration, as they are also investing huge amounts of money in the development of the supply basins. Shippers are hesitant to commit to any large pipeline development in the early stages, especially in open season. Thus it is a few shippers in the form of “foundation shippers that share the early risks of the huge pipeline development projects and hold as major portion of its capacity. It is the FERC that lays down the policy for the pipeline development and shipping of gas. The current FERC policies encourage the development of smaller conventional projects, which will not address the issues of removal of bottlenecks in gas supply. The FERC needs to be more flexible, without giving up its control on undue discrimination, in its policies to address the issues of the “foundation shippers” and pipeline developers of the required huge pipeline projects. The flexibility required in the policies include assuring “foundation shippers” of a minimum capacity in the pipelines, allowing the “foundation shippers” to consider possible expansion in the projects at a later stage, differentiation of shippers based on commitment to the project, allowing foundation shippers to reduce their commitments to the pipeline once a minimum subscription level is attained, and allowing continued flexible negotiated rate authority to the pipeline developers. A possible means to this and bringing on small producers at a later stage is in the “aggregator proposal”. In this proposal, small time producers, who do not commit to pipeline development projects, due to other financial priorities, are assisted to aggregate royalty in-kind gas by pooling of their use or commitment. It would not be necessary for the aggregator to buy the gas of the small producers, or hold the title of it; instead the aggregator would post the list of participating small producers electronically on its bulletin. Conclusion: This article provides the understanding that innovative approaches in collaboration need to be a part of policies in the creation of huge supply potential for meeting demands, particularly so, when the scale of investment on the supply side is immense and raises issues of difficulties to meet the investment demands for the creation of supply side adequacies. Library Research Article: Schultz, Scott. “Waiting for practicality”, 2005. Introduction: This article provides insight into the practical use of seldom used theories, and for this purpose utilizes the queuing theory. The queuing theory involves “the use of mathematical models, theorems and algorithms in the analysis of systems in which some service is to be performed under conditions of randomly varying demand, and where waiting lines or queues form due to lack of control over either the demand for service or the amount of service required or both. Since the queuing theory has applications in the areas of process, operation and work studies it is relevant to the course study. Summary: Students were required to find out the existing line efficiency in a production unit and recommend methods to improve the existing line efficiency. For this purpose the students needed to collect the data of how long the production lines stopped running and the lines remained down. This was made simple as the machine controller automatically provided this data. The data collected by the students showed that there was a line efficiency rate of fifty-seven percent, a stoppage rate of two stops per hour, and an average throughput of 3,050 parts per day. Using this data and their observation of the working system of the production line, they sat sown to formulate a solution. One of the main reasons for down time of the production line was that the operator was involved in the packing too and as such found it difficult to in the middle of the process to remove the hindrance and get the machine running again. The students hit upon a plan of job re-allocation of job function as a solution for the line efficiency problem. For every three production lines one worker was assigned the function of keeping the machines running. This function included performing the set-ups, unjam the machines, and replenish materials. The other two workers would take on the inspection and packing of the three production lines. The solution was worked out by the students solely on a practical basis without the use of any theoretical frameworks. The tutor of the students decided to apply theoretical framework in the form of the queuing theory to assess how far this solution would go in solving the problem. Using the framework of the queuing theory the tutor found that by increasing the service rates through the suggestions of the students there was every possibility of increased efficiency of the production lines and hope for an improved efficiency in the range of twenty to thirty percent. Efficiency rates went up and the management impressed by the solution gradually increased the packers from two to three and then from three to four per line and finally came out with a lone of efficiency that had improved by eighty-four percent without any investment on machinery. Conclusion: This article goes to show that solutions may be arrived at by practical solutions of the observed data, but an application of the theoretical frameworks provide an understanding of the extent to which the arrived at solution will work in a given circumstances. Works Cited 1. “The new retail supply chain”. Reed Business Information. 2006 2. Snow, Nick. “Pipelines seek new production aggregation methods”. Oil & Gas Journal. 103.42 (2005): 30-31. 3. Schultz, Scott. “Waiting for practicality”. Industrial Engineer. 37.10 (2005): 31-35. Read More