The DP supply chain process can !e descri!ed using the diagram !

elow"

Company# 1 2 3 4 5 6

Chemical compound# $A%&%%F' $A%&%C%D' $A%&%%F' $C%D' $%F' $C%D'

( of !usiness#
!usiness# $)*%)*%+,%+,'
$)*%)*%+,%+,' $-,%-,%+,%+,' $+,%+,%-,%-,' $)*%)*' $)*%)*' $-,%-,'

DeliveryCustomer
of Raw MaterialOrder
to the Manufacturing
Production
Facility
and conversion
Orders Arrive at the  Transportati
 T
Warehouse
ransportation
on an

When DP receives the customer order% it is electronically wired from the mar.eting

and sales departments

recorded into the information system which allows for the trac.ing and monitoring

of the shipments as they are delivered to the manufacturing facility as well as

construct optimal production schedules to reduce idle time and waste" The si/

companies listed a!ove% supply si/ di0erent chemical compounds that feed into the

production of various polymers" After receiving the raw material shipments% DP

commences the manufacturing process% following which the converted and

consolidated chemicals in the form of re1uested polymers are transported to the

warehouse where the orders are matched to their corresponding documentation%

la!eled% 2nali3ed and prepared for out!ound shipment" Delivery is then scheduled

and carried out% transportation !eing divided !etween the DP truc. 4eet and

common carriers"

 The following
following is the identi2cation
identi2cation of some
some of the value producing
producing and
and value reducing
reducing

stages of the DP supply chain operations some of which should !e continued%

improved or reconsidered#

5alue Adding 6tages#

information systems
• Production and conversion process
• Favora!le Facility locations
• Pac.aging la!eling and sorting of materials $palleti3ation% shrin. wrapping'
• Rapid delivery of produce from manufacturing to company warehouse

 5alue Compromising 6tages#

management and maintenance costs

of manufacturing documentation to the received orders" 8t can ta.e anywhere

from 9 to ) days for the order to leave the warehouse in a :ready to ship;

condition"
• Fluctuating and tentative delivery window $up to ) days' for customers

outside the -** mile reach of the DP truc. 4eet"

 The current procurement protocol of DP is to source the ) essential compounds

needed for the polymer production from 9 di0erent companies" The annual !idding

process determines the lowest cost suppliers that will get )*% -, and +, percent of

the !usiness respective to the cost of their materials and performance" The

minimum performance cycle time of the chief suppliers is < days" Considering DP=s

evaluative performance criteria% Companies < and , have a minimum delivery time

of < days from the date of the order and seem to !e the limiting factor in DP=s

supply chain performance cycle" Ta.ing into account the minimal ) days from the

order date of manufacturing% another - days are needed !efore the order is

produced and is ready to !e shipped to the warehouse" An additional 9 days from

the day the order leaves manufacturing until it is shipped from the warehouse and

the calculations show a total of > days minimum in DP=s 6C performance cycle"

?sing the same metrics descri!ed a!ove the ma/imum performance cycle will result
in -+ days $> days from the start date for the shipment of raw material to arrive% )

days !efore the order is shipped from the warehouse and a worst case scenario of )

days for the common carrier to deliver it to the customer'"

?sing the -, and +, percent vendors% the performance cycle could !e improved

favora!ly" 8n addition to ensuring a continuous supply of raw material throughout

the year% these vendors also serve as as a protective safety net against any

une/pected or unreasona!le price increases !y any individual company" Comparing

the primary with the ancillary vendors% the delivery time from order and 2ll rate is

1uite impressive for the ancillary or non7primary vendors" Considering Company -

and Company 9 particularly% the delivery of - days and the high 2ll rates are

unmatched !y the primary suppliers providing the same compounds"

 To use ancillary suppliers more e0ectively% DP should implement a more mallea!le

delivery and contractual arrangements% ma.ing primary vendors aware of the

conditions and re1uirements of @ARP=s service window and delivery thresholds and

not having to o!lige itself to any one particular supplier for an e/tended period of

time" i.ewise% the annual !idding process should move away from the myopic

lowest cost procurement strategy and view the process through the integrated TCO

lens considering factors such as service delivery% ful2llment rates and overall

performance" 8n addition% DP should develop more rigorous performance criteria%

educate suppliers a!out the newly implemented changes and wor. proactively to

develop and enhance their performance capa!ilities" Although the utili3ation of

supplementary vendors will increase the procurement costs for the company% DP

can reconsider its inveterate inventory management procedures and loo. for ways

to reduce costs associated with inventory storage and maintenance and consider a

new approach"
  This case is a perfect e/ample of what it ta.es for !usinesses to stay

competitive and how crucial and integral supply chain management has !ecome to

the success of any organi3ation" 6upply chain managers must !e a!le to adapt a

dynamic approach to the operations of their company% perceiving new trends and

mar.et changes while timely e/ecuting appropriate decisions aimed at the

prosperity of the 2rm% retention of competitive advantage and ma/imi3ation of the

!ottom line"