1. Explain how P & G’s use of VMI is structured and how VMI is employed to help reduce bullwhip and improve supply chain co-ordination.
2. List using bullet points the likely reasons that resulted in demand versus supply variance at Cisco. Draw a diagram of the new supply chain arrangement. Tabulate the possible advantages and disadvantages of this new approach?
3. Identify a key order winner for HP, P & G and Xilinx. Explain how the supply chain for each organisation is constructed (or could be constructed) to support this order winner.
1. Procter and Gamble (P&G), founded in the year 1837 in Cincinnati, of Ohio, leads in the production of everyday used products worldwide. It has almost 129,000 employees working globally serving people with almost 300 brands (Pgeveryday.com, 2015). The company deals with the manufacture of cosmetics, beauty products, deodorants and antiperspirants, hair care products, personal cleansing products, hair colour, skin care products and hair styling products as well. Few of the recognised brands under P&G are Wella, Pantene, and Olay (Pgshop.com, 2016). It also provides personal care products for men, products related to health care, household products, products for family care and fabric care. The company functions in 180 countries approximately through the retailers (Pg.com, 2016).
Recently, the managers of the supply chain noticed demand fluctuations on a high note for various key brands that included diapers Pampers as well. After proper examination by the managers, it was found that though the consumer purchase rate was relatively constant, the order variability increased upstream at a significant rate.
For the betterment of supply within the chain, P&G brought in a new system known as the vendor-managed inventory system (VMI). This strategy is widely accepted and has gained much popularity within the industry of consumer goods (Esper and Russell Crook, 2014). P&G is a recognisable company among the other goods industry selling consumer products. It has utilised VMI to ensure proper customer coordination for 30 years or more. By the introduction of this system, the sale of diapers reached 75000 per week from 25000 per week within a period of three weeks (P&G bizjournals, 2015). This system provides ample beneficial opportunities to the manufacturers as well as the retailers (Ross, 2013).
P&G is always focused on improvement and that is why they decided to shift to a modernized VMI platform and chose Data alliance as the partner because it provides a cost-effective and flexible solution. P&G is devoted to increased sales value within the integrated supply chain, and VMI, being an important element plays a vital part in achieving the desired objective (Esper and Russell Crook, 2014).
Bullwhip effect states that the variability in demand increases as someone moves upward in a supply chain. The phenomenon means that information and goods don’t move according to the quantity required within the chain of supply. VMI creates coordination between the participant and the producer (Brow, Bessant and Lamming, 2013).
2. Cisco is a major manufacturing component that produces electronic products, under the technology company, Xilinx. Previously, Xilinx supplied the components through technology business distributors like Avnet (Cisco.com, 2015).
At a certain point of their relationship, a variance was noted between quantities of components supplied and produced by Xilinx and quantities needed by Cisco through the distributors. This happened due to the following reasons:
The above mentioned factors caused a variation in the demand and supply chain (Ross, 2013).
LAM or Lean Assets Management enhances the chain of supply of Cisco through proper analysis of the process and initiation of enabled technologies that improves the level of service, costs of operation, risks and inventory investments (Heizer and Render, 2014).
The following diagram illustrates the new supply chain:
Service Level
Costs of Operation
Risks
Inventory Investments
Figure 1: New Supply Chain Model
(Wilson and Gilligan, 2012)
The advantages that can be derived from the above diagram are (Fawcett, S.E., Ellram, L.M. and Ogden, J.A., 2014):
This particular supply chain also has certain limitations (Crandall, Crandall and Chen, 2015). They are:
3. The problems of inventory reduction and time for order fulfillment faced by Hewlett-Packard (HP) were reduced by implementing Velocity Factor. The areas where the improvements were done were a reduction in inventory of raw materials, an increase in performance of on-time delivery, drop in time of fulfilling orders and reducing response time for the factories. It was realised that improvements in the above mentioned areas helped HP to maintain the top most position in the competitive sector but more actions were needed to lead the industrial era in the near future. The main problem faced by HP was coordinating supply with demand. The two key elements of this problem were firstly: components erosion over time was of high value and secondly demand pattern was inherently volatile. Most of the products had a unique pattern and these unique elements would become highly obsolete if such products were left unused. Common elements faced and suffered erosion of high value due to the high pacing industry (Bastin, 2014).
To reduce these difficulties, flexibility was required at the floor level to obtain inventory sitting as well as becoming obsolete. Hewlett-Packard needed to sketch a substitute model of production-planning in order to cope up with high variability. It was then they designed velocity factor whose underlying concepts are disaggregating the process of order fulfillment, parallel processing, outsourcing and workforce flexibility. They made a change in their process of supply chain by implementing the use of late differentiation. These changes helped HP to maintain the leading position in the target market (Esper and Russell Crook, 2014).
Now coming to the P&G group, it has its own business strategies to elude people and improve their chain of supply (Esper and Russell Crook, 2014). The core strengths of P&G are in understanding target consumers, coming out with innovative ideas, building the brand name, scaling the products, going for a proper market survey and increasing productivity (P&G Market Research, 2015).
To understand the customers and their requirements, proper research is done on a daily basis to serve them better. This helps in better communication with the target consumers (Bastin, 2014). Creating innovative products is a major component of winning a place in the market. The contributions from the external sector help the company to gain consistent recognition day by day. P&G being a leading brand, it focuses on product categories to improve them. Its main strengths have been already discussed. Across the globe, they have various recognisable brands with very high annual sales. P&G is recognised as the leader of the industry in a number of fields that include company strategies that are clear, brands with a definite purpose, business fundamentals with a strong base and innovative programs and household products. P&G has a large-scale business as it covers a wide area globally. This allows in sharing knowledge, transferring technologies, optimising the flow of resources and spending to serve customers in the best way by improving productivity and efficiency. Productivity is made systematic by improving cash performance and sales profit, enabling ongoing investment for proper business growth, creating innovative products and introducing new markets and channels (Wilson and Gilligan, 2012).
Xilinx, is a technology company in America, which supplies logic devices for programming. As the demand for logic devices continued growing, Xilinx’s profits and revenues also started growing. The company that provided funds to Xilinx was bought by Xilinx’s main competitor AMD. This resulted in the expansion of the company area to about 13,400 meter square in California to compete with companies like Apple Inc., HP, Sun Microsystems and IBM (Hoovers.com, 2015). It has tools designed in modern techniques, to provide the best results desired by the potential consumers (Xilinx.com, 2016).
For a perfect order win, all the above mentioned companies should follow few priorities in the competitive field along with the operational strategies. They should offer affordable costs, proper safety, flexibility in rules, wide range of goods, increasing demands, improved quality of goods and services, recognisable brands, speedy delivery of products, variability in the products or services sold, proper environment for selling goods, technical support and after-sales service to potential customers to gain their trust and thereby maintain long-term relationships with them. The strategies they should adopt include alternative designs and processing types, outsourcing and integration of supply chain, inventory investments, trade-off analysis and improved technology (Bowersox, 2013). Support services, work force, compensation system and innovation levels help in improving the infrastructure of these companies.
References
Brown, S., Bessant, J. and Lamming, R. (2013). Strategic Operations Management. Hoboken: Taylor and Francis.
Carter, C.R. and Liane Easton, P., 2011. Sustainable supply chain management: evolution and future directions. International Journal of Physical Distribution & Logistics Management, 41(1), pp.46-62.
Esper, T. and Russell Crook, T. (2014). Supply Chain Resources: Advancing Theoretical Foundations and Constructs. J Supply Chain Manag, p.n/a-n/a.
Fawcett, S.E., Ellram, L.M. and Ogden, J.A., 2014. Supply chain management: from vision to implementation. London: Pearson.
Hill, A. and Hill, T., 2012. Operations management. Palgrave Macmillan
Hill, C., Jones, G. and Schilling, M., 2014. Strategic management: theory: an integrated approach. Cengage Learning.
Hubbard, G., Rice, J. and Galvin, P., 2014. Strategic management. Pearson Australia.
Kovacevic, R., Pflug, G. and Vespucci, M. (2013). Handbook of risk management in energy production and trading. New York: Springer.
Quinn, J.B. and Strategy, E.S., 2013. Strategic outsourcing: leveraging knowledge capabilities. Image, 34.
Ross, D.F., 2013. Competing through supply chain management: creating market-winning strategies through supply chain partnerships. Springer Science & Business Media.
Slack, N., 2015. Operations strategy. John Wiley & Sons, Ltd.
Tayur, S., Ganeshan, R. and Magazine, M. eds., 2012. Quantitative models for supply chain management (Vol. 17). Springer Science & Business Media
Wheelen, T.L. and Hunger, J.D., 2011. Concepts in strategic management and business policy. Pearson Education India.
Wilson, R.M. and Gilligan, C., 2012. Strategic marketing management. Routledge
Essay Writing Service Features
Our Experience
No matter how complex your assignment is, we can find the right professional for your specific task. Contact Essay is an essay writing company that hires only the smartest minds to help you with your projects. Our expertise allows us to provide students with high-quality academic writing, editing & proofreading services.Free Features
Free revision policy
$10Free bibliography & reference
$8Free title page
$8Free formatting
$8How Our Essay Writing Service Works
First, you will need to complete an order form. It's not difficult but, in case there is anything you find not to be clear, you may always call us so that we can guide you through it. On the order form, you will need to include some basic information concerning your order: subject, topic, number of pages, etc. We also encourage our clients to upload any relevant information or sources that will help.
Complete the order formOnce we have all the information and instructions that we need, we select the most suitable writer for your assignment. While everything seems to be clear, the writer, who has complete knowledge of the subject, may need clarification from you. It is at that point that you would receive a call or email from us.
Writer’s assignmentAs soon as the writer has finished, it will be delivered both to the website and to your email address so that you will not miss it. If your deadline is close at hand, we will place a call to you to make sure that you receive the paper on time.
Completing the order and download