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Group Team 3 Project: Rough DraftJessica Monaco, Alexmi Lugo, Jacob Flick, Eleanor Jones, Habib KonateMGMT 651: Production and Procurement in Aviation/Aerospace IndustryEmbry-Riddle Aeronautical UniversitySECTION 1Current SituationIt is hard to think on better or more successful retailer than Wal-Mart, this large retailer has once again claimed Fortune’s 500 top company for the third straight year and 11th time overall. With earnings of $485.7 billion in revenue, Wal-Mart out earns the next Fortune 500 company by over $100 billion (O’Keefe, 2015). Many other professionals speculate that this picture of success could be deceiving, as this company faces some significant challenges to its operations. Historically, Wal-Mart has distinguished itself as one of the major leaders in supply chain management practices. They carry many efficiency and cost cutting innovations. These are the core competencies that have allowed Wal-Mart to gain the advantage over competitors by providing low cost products and services with a high variety of products and services. They continue to capitalize in the use these innovations such as automated ordering, efficient routing of trucks, and direct to shelves products that expedite transactions and save in cost. Wal-Mart reports that its inventory averages 90-95% in stock, which is an above average score when you realize the size and scope of operations (Saporito, 2013). Regardless of all of these technologies and innovations, Wal-Mart is suffering from inventory management issues that are affecting its bottom line. Wal-Mart is suffering from an above average out of stock conditions, which is when a customer is looking to buy a specific product that is normally carried by the store, but the shelves are empty and the customer is unable to buy it. It is estimated that Wal-Mart last year alone lost $3 billion in potential sales due to these out stock conditions (Souza, 2015). Another troubling factor of this situation is overall Wal-Mart reports an increase in overall inventory. Their scores for stock levels continue to remain unchanged as before this problem. This stock out problem has the company’s upper management worried. At first glance all indicators appear to show that there is no problem. These indicators, such as efficiency of deliveries, deliveries on time, efficient routing, accuracy of the auto ordering system, and stock level percentages, all appear to indicate that operations are performing the way it should, but the retailer is still plagued by a high level of out of stock missed sales. In efforts to determine the stock out root cause, improve their operations, reduce their out stock problem, and capitalize on the missed opportunities, our team will offer a fresh look at their operations. Our team will provide detail analysis of their operations and determine what possible issues in Wal-Marts operations that are causing such a significant loss. Strategy Map Work Breakdown Structure Measuring ProductivityThis study will be tackling two main problems that Wal-Mart is experiencing. First issue is the out stock condition at the stores; the second issue is the increasing inventory. The measurement of productivity will be centered towards the inventory of each of the stores. First measurement would be to track turnaround time of individual items and the lead time it takes between the reordering of the items and arrival to the store. This will allow the team to understand their ordering cycle and identify gaps in the automatic reordering and resupply. The second measurement will be to track actual time from arrival to the store, to the sale of the items. This will allow us to determine if there are delays in the processing of items that affect how fast of a transition from arrival to sales. Finally, the overall condition of the sores warehouse will be assessed looking into organization, accuracy of inventory in correlation with volume of sales, ordering points, and physical counts. This will allows us to identify any stagnant inventory, duplicate efforts and loss of items due to other factors. Tracking ProductivityProductivity will be tracked through the use of automated systems available in each Wal-Mart store and throughout the company. This study will focus in the use of data from the automated reordering system, such as inventory levels, volumes of sales, inventory turnaround times and location management of items in the warehouse. These present an accurate picture of the cycle that inventory and specific products go through. An ideal parameter would be that product turnaround average is under 30 days. This reordering point, lead delivery time and restocking time are all synchronized, and products arrive as they are needed to avoid out of stock conditions. Next, location management and warehouse organization would be scrutinized for physical product locations and numbers. This should match all Wal-Mart databases to keep unaccounted products to a minimum to cut waste. Finally, warehouse security and other procedures will not allow pilferage or destruction of products due to handling procedures.SECTION 2SIPOC ChartAs the work Combined Use of Modeling Techniques for the Development of the Conceptual Model in Simulation Projects (2008) by José Arnaldo Barra Montevechi, Rafael Florêncio da Silva Costa, Fabiano Leal, Alexandre Ferreira de Pinho, Fernando Augusto Silva Marins, Fábio Ferreira Marins, and José Tadeu de Jesus points out, SIPOC is a tool that provides the Suppliers (S), the Inputs (I), the Process (P), the Outputs (O), to the Customers (C). The SIPOC diagram is a high-level snapshot of the process being analyzed. Its primary use is to identify the relevant elements of a process improvement project. It is also useful in synthesizing complex projects, while providing a scope the team wishes to improve. This is often a first step for many lean or six sigma teams. The process portion is typically further expanded to a process flow chart or an IDEF0 diagram (Montevechi et al., 2008)A SIPOC diagram for the current situation can be mapped out using the information provided in section 1. The situation that Wal-Mart faces is primarily in their inventory control and forecasting method, with various other correlated issues. The SIPOC diagram for Wal-Mart’s inventory process is as follows: As shown above, there are many suppliers that contribute to Wal-Mart’s forecasting process. First and foremost is Information Technology (IT). A brief history of Wal-Mart’s IT prowess is given in the article Economies of IT Systems at Wal-Mart--A Historical Perspective (2006) by Jianfeng Wang. Wal-Mart recognized very early on the strategic value of data, and has since developed a very strong IT system. Forecasts are derived directly from Point of Sale (POS) data which is then used to fuel replenishment plans and forecasts (Wang, 2006). These forecasts and distribution plans are essentially considered the outputs of the system. However, data is often meaningless without interpretation, and therefore input is also sought from store managers, the distribution center, and even inventory consultant groups. They can often provide insight into stock outs and customer complaints that are not always captured in the numbers. The customers for Wal-Mart are ultimately the customers for the process, since they are the ones most affected with the product not on the shelf. Store managers and distribution center managers should also be considered a customer of this process since this affects the business they are entrusted to run. ImprovementsGoing back to the article by Wang (2006), Wal-Mart’s IT allows for a great deal of collaboration between the retailer and the supplier. This collaboration includes production planning, forecasting, package sizing, and design decisions (Wang, 2006). The benefits of collaborative forecasting are quantified in the work On the Benefits of Collaborative Forecasting Partnerships Between Retailers and Manufacturers (2007) by Yossi Aviv. While the benefits are not expressed financially in dollars, there is generally a 4 percent improvement of the overall supply chain scorecard. This is important because shortages at the retail level are more costly than shortages at the manufacturer level. It also lowers variability throughout the supply chain, and can minimize the observed bullwhip effect. ISM Analysis of CPFR Implementation Barriers (2014) by Farhad Panahifar, P.J. Byrne, and Cathal Heavey echo this sentiment, and expand by also listing the issues with the implementation of collaborative planning. The reasons that collaboration fails or is not fully realized, are due to a lack of partner trust and misaligned targets (Panahifar et al., 2014). It is mentioned that with the introduction of Retail Link 2.0, there are also new fines imposed against suppliers that do not meet the contractual dock dates. These fines can substantially affect a supplier’s bottom line and is meant to deter later deliveries. While this economic incentive may seem like a good way to recuperate the cost of lost sales and incentivize supplier performance, it could also be eroding the trust required to act as an integrated supply chain. This lack of alignment in goals and performance metrics may have a greater effect that lowers the overall supply chain surplus between the two firms. It may seem like a good idea, but it seems short sided based on the available literature. Re-evaluating, or discarding these new fines is one recommendation to be shared with Wal-Mart. Another issue that should be addressed is shrinkage. Shrinkage continues to be a pervasive problem in Wal-Mart’s supply chain. According to A Statistical Investigation of Inventory Shrinkage in a Large Retail Chain (2007) by Sydney D. Howell and Nathan C. Proudlove, shrinkage is a major cost that equates to approximately 1.5 to 2% of sales revenue for a typical U.S. retailer. It is defined as the value of inventory (including cash) that is lost through theft or through fraud by staff, customers or suppliers, or through administrative error. 14% of that loss is attributable to internal error through waste, process failures, pricing errors, or damage. The authors continue by offering in factors that contribute to shrinkage. Each factor is weighed and evaluated using multivariate analysis. For example, two factors positively associated with shrinkage are the economic standing of the local population and having a large stockroom relative to sales. Two factors that had a negative correlation with shrinkage are age of the local population (areas with high concentration of senior citizens saw less shrinkage) and faster stock turn (Howell & Proudlove, 2007). Based on the findings of their analysis, faster inventory turn would be of great benefit to improve losses due to shrinkage. This would take us to the third issue and its potential solution, inaccurate store forecasting. The last issue that should be addressed is in forecasting, particularly for new products that do not have historical sales data. The new Retail Link system being deployed by Wal-Mart does not allow for adjustments down to the store level. Since the new system seeks to manage 40 stores under one distribution center, the same amount of inventory is sent to all stores. That leaves high selling stores with stock outs while low volume stores have surpluses. While the benefits of an aggregate forecast are clear, starving one store to feed another does not seem wise. Forecasting should not stop at the distribution center to be equally spread out amongst the stores that center supports. In the article Improving the Crystal Ball: Harnessing Consumer Input to Create Retail Prediction Markets (2010), by Carol Kaufman-Scarborough, Maureen Morrin, and Eric Bradlow, they explore the notion of incorporating managerial decisions with database models. In other words, the numbers do not give the whole picture. Distribution decisions should also be coupled with what the local management and employees see as trends and future needs. This is also an area where collaborating with data from suppliers is important since their experts may see retail trends not present in Wal-Mart’s data (Kaufman-Scarborough, et al., 2010).Wal-Mart is admittedly over-SKU’ed and holds too much of the wrong inventory. If it were the right inventory, stock turns would be higher and the inventory turnover ratio would be increasing. There is an obvious issue with product mix. Kaufman-Scarborough and fellow authors go on to expand that direct consumer inputs are also required for a more accurate forecast, not just expert opinion. Crowdsourcing has suggested that utilizing the “wisdom of crowds” can also enhance forecasting accuracy. Although lacking expertise and experience, consumers bring a level of independent thinking and diversity to the data set. The issue has historically been collecting opinions in a time efficient manner to enhance decision quality (Kaufman-Scarborough, et al., 2010). However, recruiting through an established network (such as the door handlers at Wal-Mart) may be a good way to efficiently collect data without significant training or cost. An informal exit survey, even something as simple as “did you find the styles you wanted today?” could be a good measure to find where local stores are lacking.House of Quality OR Needs Analysis OR FMEA TBDSECTION 3ChangesSeveral changes will be proposed to correct the inventory issues that Wal-Mart is experiencing. Saporito states, “Wal-Mart has cut employee hours so deeply that it doesn’t have enough associates on hand to get stuff from back-of-the-store staging areas to the shelves” (Saporito, 2013). As the industry retail leader (Fortune, 2015), a recommendation to Wal-Mart will be to hire new employees and/or lengthen the hours of current ones. When consumers complain of having to go to other retail competitors to purchase products that they could previously acquire from the larger retailer of Wal-Mart, there is an issue (Dudley, 2013). Products are at Wal-Mart, however, the product mix lines the aisle in boxes and in the rear of the store, not on the shelves for the consumer (Dudley, 2013). Hiring of new stock employees or extending current employee hours will be added after the supply request have been received by the suppliers, and estimated shipment dates have been assigned in the system.Jacobs & Chase explains, “looking for ways to improve supply chain processes should be based on ideas that have been proven over time” (Jacobs & Chase, 2014). Wal-Mart has been successful in using the Just-in-Time (JIT) model by deferring large holding cost and reducing product costs with multiple vendors (Jacoby & Corvingo). The store will need to do a host of quality needs analysis for making changes in scheduling production. This concept promotes the production of manufacturing what is needed, when it is needed, and nothing extra (Jacobs & Chase, 2014). Forecasting will be conducted in each specific region, prior to submitting supplier requests on the SIPOC diagram.Shrinkage is another area of focus that will be addressed to Wal-Mart store managers. Wal-Mart has experienced thievery and must take ownership for the value of its inventory it loses from outdated products in its inventory (Monk, 2015). In an effort to solidify shrinkage issues surrounding antiquated inventory, the recommendation for Wal-Mart is to collaborate with its suppliers to influence the cost of goods sold to its stores. A successful negotiation of purchased products will results in a supplier discount (Monk, 2015). This process will take place on the improved SIPOC chart after products in the inventory has not sold. Supplier relationship concerns have surfaced between Wal-Mart and some of its suppliers. As a result of protest in multiple districts, Wal-Mart increased employee wages (Hedge, 2015). Wal-Mart has placed pressure on its suppliers to lower the costs for products in order to maintain profitability (Hedge, 2015). Jacob & Chase mentions, “strategic control refers to the degree of loss that would be incurred if the relationship with a partner is severed” (Jacobs & Chase, 2014). The competitive advantage the store has had over the competition has dwindled and a drop in market shares has been experienced as a result (Hedge, 2015).To improve the relationship issues with suppliers, we recommend Wal-Mart strengthen its strategic control by reaffirming a vertical integration (Jacob & Chase, 2014). Investing in collocations of specialized faculties will lessen the strain on suppliers and investments into brand equity of specific products will restructure and improve supplier relationships (Jacob & Chase, 2014). This is a constant for supplier growth and trust.Improved SIPOC ChartSuppliersWalmart ManagersWalmart ManagersDirect Vendors / suppliersWalmart EmployeesWalmart ManagersWalmart ManagersWalmart ManagersWalmart employeesWalmart StakeholdersWalmart StakeholdersInputs HistoricalDemand data Needs AnalysisProductsMan hours/ laborTime and effortideas and reasoning on unsold productsMFEAprotest in multiple districtsInvesting in collocations of specialized facultiesinvestment into brand equity of specific productsProcessResearch region forecasting dataOrder suppliesReceive and process inventoryStock shelvesHire new employees / extend hoursNegotiations with SuppliersEliminate ShrinkageImprove supplier relationships - (Vertical integrationImprove Supplier relationshipsImprove Supplier relationshipsOutputImproved forecastingSend Supply Request Inventory exchange / Supplies delivered Cleaner storesEmptied boxes in back of stores Discounts for obsolescence productsSupplier collaboration and discountsDiscounts for obsolescence productsQuality products at lower pricesQuality products at lower pricesCustomersWalmart customersDirect Vendors / suppliersWalmart customersWalmart ManagersWalmart customersWalmart Stakeholders / Walmart customersWalmart customersWalmart customersWalmart Stakeholders / Walmart customersDirect Vendors / suppliersWalmart customersSECTION 4Controlling ChangesWal-Mart has been experiencing a problem with controlling its inventory due to mismanaging and having minimal control. Growing change in these ideas can lead to several impacts on the organization. These issues have affected costs and risks relating to project level, and the organizational level. Wal-Mart is facing both problems, which has led to the failure of increasing revenues and to effectively manage projects.To control change, the following steps should be put into place as a positioning change. A cost avoidance technique and a risk mitigation tactic can be used as an effective approach to sharing the value of change management and gaining support for assigning the time, energy and resources to managing the people side of change (Iuliana, 2014). Wal-Mart should position their change management in such a way that it will coordinate with the management of its inventory. Choosing the right people for the jobs is the first step; choosing qualified employees will also help manage the change to avoid unnecessary costs and risks correlated with shrinkage. These activities that take place in the warehouses should be controlled carefully. Improper reporting of new inventory and arrivals can cause a downward spiral of products not being properly managed. Wal-Mart should ensure that once stock is received in the warehouse, it is properly recorded and managed. This begins the correlation to recording sales levels for proper inventory forecasting.Organizational Impact of Change The impacts of change management in an organization are based on a number of areas. For instance, there is the project level impact and an organizational level impact. These impacts correlate together to the organizations management where the costs and the risks of both are felt by the whole organization (Lex, 2000). One small change on a project level can have a domino effect within an organizational level impact as well. The example of Wal-Mart hiring more stock employees will move what inventory the store does have out quicker, letting the retailer focus on its bigger issues of forecasting and distribution.Cost saving and avoidanceAt the organizational level, the impact of change management would be evident in the area of costs. First, there will be an avoidance of unnecessary costs. When change is not managed properly, the existing costs can show decrease in productivity, loss of valued employees and reduced quality of work which could lead to reduced revenue of the company (Iuliana, 2014). A well-managed change would result in the avoidance of these unnecessary costs. This will result in higher productivity; the company would be able to retention of employees and a higher quality of work. Reduced time and future head countThe risks Wal-Mart faces due to poor change management includes negative impacts on customers, suppliers, employee work morale, legacy of failed change, stress, confusion, fatigue, and change saturation (Yu-Je, 2012). Failure to manage change would result into the reduction of the customers coming to the store, similarly the suppliers would never have faith on the store and so might not be trusted suppliers as such (Iuliana, 2014). However, if the change is properly managed some of these costs and risks are easily avoided. Tracking ChangeOrganizational change needs to be followed up over coming years. This will help instill consistency in the change system of the organization. The management of Wal-Mart stores needs to ensure that the change management strategies implemented, are tracked over a longer period of time. First, this can be done by retaining the employees that were present and helped to implement the changes at the first stage (Yu-Je, 2012). Changing employees could result into those who do not know the stores long term needs. This will also lead to less experienced employees wasting time for explanations the more experienced employees already had. Secondly, the individual employees are the custodians of change and so the workers at the store must be willing to embrace the change that is to be implemented (Lex, 2000). Change is directly tracked with to the success of the organization.ReferencesDudley, R. (2013). Customers flee Wal-Mart empty-shelves for target, Costco. BloombergBusiness. Retrieved from http://www.bloomberg.com/news/articles/2013-03-26/customers-flee-wal-mart-empty-shelves-for-target-costcoFortune. (2015). Fortune 500. Fortune.com. Retrieved from http://fortune.com/fortune500/Hedge, Z. (2015). Did Walmart close a California store to punish employees who protested wages and working conditions? Infowars.com. Retrieved from http://www.infowars.com/did-walmart-close-a-california-store-to-punish-employees-who-protested-wages-and-working-conditions/Iuliana, T. (2014). Comparative Analysis of Different Models of Organizational Change. Valahian Journal of Economic Studies, Vol.5, No.4, pp.77-86. Jacobs, F. R., & Chase, R. B. (2014). Operations and supply chain management (14th ed.). New York, NY: McGraw-Hill/Irwin.Jacoby, D., & Corvingo, M. (n.d.). Business advisor: The just-in-time model: Smart inventory management in tough economic times. Practical dermatology. Retrieved from http://practicaldermatology.com/2010/06/the-just-in-time-model-smart-inventory-management-in-tough-economic-times/Lex, D. (2000). Organizational portfolio theory: Performance-driven organizational change. Contemporary Economic Policy, Vol.18, No.4, pp.386-396.Monk, W. (2015). Honey I shrunk the inventory – Walmart woes. Perching tree Solutions. Retrieved from https://perchingtree.com/uncategorized/honey-i-shrunk-the-inventory-walmart-woes/McMillon, D. (OCT 15, 2014). Walmart CEO Outlines Growth Strategy at Annual Meeting for the Investment Community. http://news.walmart.com/news-archive/2014/10/15/walmart-ceo-outlines-growth-strategy-at-annual-meeting-for-the-investment-communityO’Keefe, B. (June 6, 2015). The man who's reinventing Walmart. Retrieved from: http://fortune.com/2015/0604/walmart-ceo-doug-mcmillon/Saporito, B. (APR 9, 2013). The Trouble Lurking on Walmart’s Empty Shelves. Retrieved from: http://business.time.com/2013/04/09/the-trouble-lurking-on-walmarts-empty-shelves/Souza, K. (FEB, 12, 2015). Wal-Mart acknowledges inventory woes in U.S. stores, seeks ‘fresh’ fix. Retrieved from: http://www.thecitywire.com/node/36451Wahba, P. (2015). Walmart U.S. CEO: Fresher food, fill empty shelves and lower prices. Fortune.com. Retrieved from http://fortune.com/2015/04/02/walmart-improvements-ceo/Yu-Je, L. (2012). A study on the influence of organizational change on organizational effectiveness of schools: Using investment for cloud computing technologies as a moderator. African Journal of Business Management, Vol.6, No.17, pp.5710-5719.
MGMT 651 ASSIGNMENTS

MGMT 651 ASSIGNMENTS

Question # 00103269 Posted By: Sirkonate Updated on: 09/15/2015 11:59 AM Due on: 09/18/2015
Subject Business Topic International Business Tutorials:
Question
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MGMT 651

I) 6.5 - Discussion: M6 Search
9 9 unread replies. 17 17 replies.

inventory.jpgConduct a literature review for the following items using the textbook, the Internet, a journal article, or other sources. Write a brief description of each and record the source of the information in the current APA format.

  • Issues in facilities locations
  • Inputs to production planning
  • Level scheduling
  • Benefits and challenges of inventory
  • MRP structure
  • Impact of inventory on company resources

Discussion

In the discussion part of this activity, address the following:

  • It is suggested that you post your initial response by mid-week of the module week. Copy and paste the brief descriptions of each of the required items in this activity in your posting. Include the location of the information (website, book, article, etc).
  • Review other postings and reply to at least two posts by the end of the module week.

 

 

CLASSMATES POSTS:

 

1) PATRICE

Issues in facilities locations

According to Chase, Jacobs, and Aquilano (2006), facility locations is a dilemma faced by both new and existing businesses. Factors that influence facility location include the proximity to customers, business climate, total costs, availability and quality of infrastructure, quality of labor, suppliers, other available facilities, free trade zones, political risk, government barriers, trading blocs, environmental regulations, the host community, and competitive advantage.

Reference

Chase, R., Jacobs, F., Aquilano, N. (2006). Facility location. Retrieved from http://highered.mheducation.com/sites/0072983906/student_view0/technical_note11/index.html

Inputs to production planning

Per the SME Toolkit (2015), inputs to production planning include materials and purchasing information, operations and manufacturing information, engineering and process designs, sales, marketing, and distribution information, financial and accounting information, and human resources information.

Reference

SME Toolkit. (2015). Preparing your production plan. Retrieved from http://www.smetoolkit.org/smetoolkit/en/content/en/907/Preparing-Your-Production-Plan

Level Scheduling

According to Demand Solutions (2015), in traditional management, level scheduling is a production schedule that generates material and labor requirements that are evenly spread over time. Finished goods inventory buffer the production system against seasonal demand. In JIT, a level schedule is typically created monthly, where customer demand is scheduled to be built on the day it will be shipped. A level scheduled is the output of the load-leveling process.

Reference

Demand Solutions. (2015). Level production schedule also level schedule. Retrieved from http://www.demandsolutions.com/resource-center/supply-chain-glossary/supply-chain-glossary-l/level-production-schedule-also-level-schedule.html

Benefits and challenges of inventory

According to AccountingTools (2015), there are a number of benefits and challenges regarding inventory in the JIT. The advantages of inventory include minimal amounts of inventory obsolesce, as the high rate of inventory turnover keeps items from remaining in stock and becoming obsolete, ease of halting production because production runs are short, inventory holding costs are minimized, firm is investing less cash in inventory, and production mistakes can be spotted more quickly and corrected, resulting in fewer defective products. The challenges of inventory include the negative impact on the production process if suppliers do not deliver on time or in the quantity needed, a natural disaster could interfere with flow of goods, may not be able to immediately meet requirements of a massive and unexpected order, because of lack of stocks of finished goods.

Reference

AccountingTools. (2015). The advantages and disadvantages of just-in-time inventory. Retrieved from http://www.accountingtools.com/questions-and-answers/the-advantages-and-disadvantages-of-just-in-time-inventory.html

MRP Structure

According to Chase, Jacobs, and Aquilano (2006), materials requirements planning or MRP is used to determine demand for lower level items. It is a logical approach to determine the number of parts, components, and materials need to produce each end item. It also provides the time schedule, specifying when each material, part, and component should be ordered or produced. Once orders are fixed, MRP creates schedules to identify the parts and materials required to produce end items, the exact numbers needed, and the dates when orders for materials should be released and be received or completed within the production cycle. The overall goals of an MRP system are to improve customer service, minimize inventory investment, and maximize production operating efficiency.

Reference

Chase, R., Jacobs, F., Aquilano, N. (2006). Materials requirements planning. Retrieved from http://highered.mheducation.com/sites/0072983906/student_view0/chapter16/index.html

Impact of inventory on company resources

According to Handfield (2002), one of the biggest opportunities for creating improved financial performance is by reducing the amount of inventory in a supply chain. The average manufacturer spends 56 cents out of every dollar of revenues on managing inventory located in warehouses, in-transit, or on location with customers. In other industries such as retail or wholesale, this amount can be even higher.

Reference

Handfield, R. (2002). The hidden impact of inventory. Retrieved from http://scm.ncsu.edu/scm-articles/article/the-hidden-impact-of-inventory

 

 

2) RICHARD

 Issues in facilities locations
The problem of facility location is faced by both new and existing businesses, and its solution is critical to a company’s eventual success. An important element in designing a company’s supply chain is the location of its facilities.

1. Proximity to Customers; Such proximity also helps ensure that customer needs are incorporated into products being developed and built.
2. Business Climate: A favorable business climate can include the presence of similar-sized businesses, the presence of companies in the same industry, and, in the case of international locations the presence of other foreign companies.
3. Total Costs; the objective is to select a site with the lowest total cost
4. Infrastructure; Adequate road, rail, air, and sea transportation are vital
5. Quality of Labor; the educational and skill levels of the labor pool must match the company’s needs. Even more important are the willingness and ability to learn.
6. Suppliers; A high-quality and competitive supplier base makes a given location suitable. The proximity of important suppliers’ plants also supports lean production methods.
7. Other Facilities; the location of other plants or distribution centers of the same company may influence a new facility’s location in the network. Issues of product mix and capacity are strongly interconnected to the location decision in this context.
8. Free Trade Zones; A foreign trade zone or a free trade zone is typically a closed facility (under the supervision of the customs department) into which foreign goods can be brought without being subject to the normal customs requirements.
9. Political Risk; The fast-changing geopolitical scenes in numerous nations present exciting, challenging opportunities.
10. Government Barriers; Barriers to enter and locate in many countries are being removed today through legislation. Yet many no legislative and cultural barriers should be considered in location planning.
11. Trading Blocs; The world of trading blocs gained a new member with the ratification of the North American Free Trade Agreement (NAFTA).
12. Environmental Regulation; The environmental regulations that impact a certain industry in a given location should be included in the location decision.
13. Host Community; The host community’s interest in having the plant in its midst is a necessary part of the evaluation process. Local educational facilities and the broader issue of quality of life are also important.
14. Competitive Advantage; An important decision for multinational companies is the nation in which to locate the home base for each distinct business.

http://www.ateneonline.it/chase2e/studenti/tn/6184-7_tn10.pdf


Inputs to production planning
Production Scheduling is the Input and Production Planning is the Output
There are essentially three productions planning strategies. These strategies involve trade-offs among the workforce size work hours, inventory, and backlogs.
1. Chase strategy. Match the production rate to the order rate by hiring and laying off employees as the order rate varies.
2. Stable workforce-variable work hours. Vary the output by varying the number of hours worked through flexible work schedules or overtime.
3. Level strategy. Maintain a stable workforce at a constant output rate.
4. Pure strategy. A simple strategy that uses just one option such as hiring and firing workers, for meeting demand
5. Mixed strategy. A more complex strategy that combines options for meeting demand
Production scheduling addresses the central questions of economics - what to produce, how to produce, where to produce, how much to produce - within the context of manufacturing plants.
Jacobs, F. R. & Chase, R. B. (2014). Operations and supply chain management (14th ed.). New
York, NY: McGraw Hill.


Level scheduling (Lean Production Schedules)

1. Level schedule. A schedule that pulls material into final assembly at a constant rate
2. Freeze windows. Refers to that period of time during which the schedule is fixed and no further changes are possible.
3. Underutilization of capacity. Are controversial features of lean production?
Jacobs, F. R. & Chase, R. B. (2014). Operations and supply chain management (14th ed.). New
York, NY: McGraw Hill.

Benefits and challenges of inventory
Top Five Benefits of a Good Inventory Management Strategy
If you are not keeping a watchful eye on your inventory or counting stock regularly, you are setting yourself up for potential inventory errors and challenges. Proper inventory management really can make or break your business! Keep the following benefits in mind as you weigh the cost of not implementing an inventory management strategy:
Benefits:
1. A good inventory management strategy improves the accuracy of inventory orders.
Proper inventory management helps you figure out exactly how much inventory you need to have on-hand. This will help prevent product shortages and allow you to keep just enough inventories without having too much in the warehouse.
2. A good inventory management strategy leads to a more organized warehouse.
A good inventory management strategy supports an organized warehouse. If your warehouse is not organized, you will have a hard time managing your inventory. Many companies choose to optimize their warehouses by putting the highest selling products together and in easily accessible places in the warehouse. This, in turn, helps speed up the order fulfillment process and keeps customers happy.
3. A good inventory management strategy helps save time and money.
Inventory management can have real time and monetary benefits. By keeping track of which products you have on-hand or ordered, you save yourself the effort of having to do an inventory recount to ensure your records are accurate. A good inventory management strategy also helps you save money that could otherwise be wasted on slow-moving products.
4. A good inventory management strategy increases efficiency and productivity.
Inventory management devices, such as bar code scanners and inventory management software, can help drastically improve your efficiency and productivity. These devices will help eliminate manual processes so your employees can focus on other – more important – areas of the business.
5. A good inventory management strategy keeps your customers coming back for more.
It’s a fact that good inventory management leads to what you are constantly striving for – repeat customers. If you want your hard-earned customers to come back for your products and services, you need to be able to meet customer demand quickly. Inventory management helps you meet this demand by allowing you to have the right products on-hand as soon as your customers need them.
Top Five Benefits of a Good Inventory Management Strategy by admin | Aug 30, 2013 | Inventory Management


Challenges:
The top five inventory management challenges for manufacturers:
1. Integrating demand planning and inventory planning
2. Training users of demand planning and inventory management software
3. Change management: Dumping those old spreadsheets and paper
4. Standardizing data
5. Choosing just the demand planning and inventory management modules that suit your business

http://searchmanufacturingerp.techtarget.com/feature/The-top-five-inventory-management- challenges-for-manufacturers-and-how-to-address-them


MRP structure
Manufacturing Resource Planning (MRP0 is the logic determining the number of parts, components, and materials needed to produce a product (Is driven by dependent demand).
Primary MRP Reports
1. Planned order to be released at a future time.
2. Order release notices to execute the planned orders.
3. Changes in due dates of open orders due to rescheduling.
4. Cancellations or suspensions of open orders due to cancellation or suspension of orders on the master production schedule.
5. Inventory status data.
Benefits of MRP
1. Better response to customer orders
2. Faster response to market changes
3. Improved utilization of facilities and labor
4. Reduced inventory levels
MRP Management

1. MRP is a dynamic system
2. Facilities replanting when changes
3. System nervousness can result from too many changes
4. Time fences put limits on replanting
5. Pegging links each item to its parent allowing effective analysis of changes

MRP Elements
1. Master Scheduling
2. Inventory Records
3. Bill of Materials (BOM)
4. Capacity Planning
5. Purchasing
6. Shops Floor Control

Jacobs, F. R. & Chase, R. B. (2014). Operations and supply chain management (14th ed.). New
York, NY: McGraw Hill.


Impact of inventory on company resources
Inventory is the stock of any item or resource used in an organization.

One of the biggest opportunities for creating improved financial performance is by reducing the amount of inventory in a supply chain. If you were to look at the financial statements of an average organization, how much would you guess the company spends on goods and services? In manufacturing, the figure is astonishingly high: the average manufacturer spends approximately 56 cents out of every dollar of revenues involves managing purchased goods and services – often in the form of inventory located in warehouses, in-transit, or even on location with customers. For some industries, such as retailing or wholesaling, this figure can be even higher. In high-tech industries, inventory obsolescence is a major problem (scm.ncsu.edu/scm).


http://scm.ncsu.edu/scm-articles/article/the-hidden-impact-of-inventory

Jacobs, F. R. & Chase, R. B. (2014). Operations and supply chain management (14th ed.). New
York, NY: McGraw Hill

 

PS: PLEASE RESPOND TO THE QUESTION THEN RESPOND TO BOTH OF MY CLASSMATES POSTS...REMEMBER YOUR REPLY POST TO THEM CAN BE NEGATIVE OR POSITIVE AND PLEASE WRITE AS YOU TALKING DIRECLTY TO THEM.

 

 

 

II) PROBLEM SET AS FIRST ATTACHMENT TO BE SOLVED.

 

 

 

 

III) Write and submit a three to four page paper on the benefits of translating, and how to translate, business plans into labor and production output plans to minimize the cost of resources.

Refer to the course textbook and at least one additional reference in your paper.

Format for Assignment:

  1. Title Page
  2. Write Questions and Answers
  3. Reference Page (If needed/add citations for every reference)

PS: WRITTEN ASSIGNMENT AGUIDELINES AS SECOND ATTACHMENT.

 

 

 

IV)

FROM PROFESSOR: The purpose of this task is to demonstrate to your instructor that your team is making progress on your project paper. By this stage, your group should have a minimum of 15 pages following the guidelines in the Group Project OverviewPreview the documentView in a new window document.

 

FROM GROUP LEADER: Hello group! Week 5 felt a little like a nice break, and unfortunately week 6 may be the worst one yet. We have 2 group projects due this week. First is rough draft number 2. There were highlighted areas in the first rough draft where we needed to elaborate more. Now that we have a rough draft 1, number 2 should be much simpler, just building! Please look in our group files for the rough draft that was submitted. Save a copy and make any changes in a different font color/highlighted to keep us on track. We need to get to 5,000 words.

 

GROUP PROJECT OVERVIEW AS ATTACHMENT 3

 

DAVID CHARLES: BASED ON THE ROUGH DRAFT AS ATTACHMENT # 4. I HAD SECTION 4, WHICH YOU COVERED SO BASED ON THE DIRECTIONS GIVEN BY MY GROUP LEADER AND PROFESSOR...IT HAS TO BE EXPANDED...AS YOU OPEING THE DOCUMENT SECTION 4 HAS SOME HIGHLIGHTED ARES THAT YOU WILL NEED TO LOOK OVER AS MY GROUP LEADER STATED.

 

 

 

 

 

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