Chapter1IntroductiontoSupplyChainManagement.ppt

Chapter 1 Introduction to Supply Chain Management Qi Xu Professor of Donghua University Tel: 座机电话号码 E-mail: xuqi@dhu.edu.cn Meditech Surgical Case describes a scenario with typical symptoms – inventories are too high and customer service is poor. Initial explanation is that the problems are due to poor forecasting of customer demand. There’s a perception that demand is highly variable and unpredictable, possibly due to irrational customer behavior, e. g., panic ordering. … if only Meditech could forecast what the customers will order, then they could improve customer service and reduce inventories…. Outline Intent – diagnosis of supply chain Business overview Supply chain Production planning What’s wrong? How to fix it? Endoscopic Surgical Instruments Permits minimally invasive surgery Market created in early 80’s, rapidly growing Old products continually updated and replaced with new product introductions Business Overview National and Meditech split the market Compete based on product innovations, customer service, cost National sells to physicians; Meditech sells to material managers Customer preferences change slowly External Supply Chain Internal Supply Chain Production Planning Production Planning What’s wrong? Poor service for new product introductions Poor forecasting? Panic ordering? And high FG inventory What is going on? Demand is quite predictable Usage in hospitals is quite stable Market share moves slowly over time With each new product, dealer must build inventory to fill pipeline Why did Meditech think demand was unpredictable? Poor information systems No one looked at demand No one had responsibility for forecast errors Tendency to shift the blame Built-in delays and monthly buckets in planning system Amplifier in planning system What to do? Recognize that demand is stable and predictable Establish accountability for forecast Eliminate planning delays and/or reduce time bucket Alternatively, put assembly within pull system and eliminate bulk