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SCM Case Study

DEP is currently struggling to meet GARD's delivery requirements within 9-20 days and needs to improve to meet GARD's new 0 tolerance delivery policy, issues stem from delays in warehousing, distribution and occasional production issues; using more reliable suppliers at 25% and 15% on-time delivery could help improve DEP's performance cycle if inventory costs are lower than increased material costs. Changes like reducing service windows for suppliers, implementing just-in-time concepts, improving warehouse and shipment efficiency, and more frequent deliveries over 200 miles could help DEP incorporate the improvements required to remain GARD's polymer supplier.

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shuchi_sharma
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946 views

SCM Case Study

DEP is currently struggling to meet GARD's delivery requirements within 9-20 days and needs to improve to meet GARD's new 0 tolerance delivery policy, issues stem from delays in warehousing, distribution and occasional production issues; using more reliable suppliers at 25% and 15% on-time delivery could help improve DEP's performance cycle if inventory costs are lower than increased material costs. Changes like reducing service windows for suppliers, implementing just-in-time concepts, improving warehouse and shipment efficiency, and more frequent deliveries over 200 miles could help DEP incorporate the improvements required to remain GARD's polymer supplier.

Uploaded by

shuchi_sharma
Copyright
© Attribution Non-Commercial (BY-NC)
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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SCM Case Study

Case Summary
• Richard Binish new purchasing manager at GARD, succeeds Mike O’Leary
• To continue being polymer supplier for GARD, DEP needs to improve
material delivery performance
• It is expected that gradually (after 3 years)GARD will follow 0 tolerance
policy for the delivery of material. This means that it will follow exact day
delivery with 96.5 percent service capability
• DEP’s current performance cycle ranges between 9 and 20 days
• DEP is efficient with order collection and production, but delays are
introduced in warehousing and shipment/distribution because of an
attempt to gain economies of scale
• There are sometimes delays in production, because various chemicals may
be out of stock under DEP’s current supplier arrangements, as well their
raw materials policy
DEP/GARD Supply Chain
Company 1 Company 2 Company 3 Company 4 Company 5 Company 6

A B E F A B C D A B E F C D E F C D
60 60 15 15 25 25 15 15 15 15 25 25 60 60 60 60 25 25
% % % % % % % % % % % % % % % % % %

Material
DEP receiving Inventory Manufacturing
Remote Transportation Delivery at
Material Warehouse (DEP Trucks) GARD
(7 days)
• Stages adding Value: these are the stages where product or
material is in movement
– Inbound transportation from suppliers
– DEP packaging
– Manufacturing
– Product Delivery
• Stages Not Adding Value: these are the stages in which the
material and or the product is not moving or is static
– “Dwell time ”at warehouse
– Materials Receiving
– Matching Orders to Paper Work
– Materials Inventory
Can the performance cycle be improved through the use of the 25 percent and 15 percent suppliers? What trade-offs must be
made to use these suppliers?

• Yes performance cycle can be improved using 25% and 15% suppliers. As we can see incase
that company 2 is providing better fill rate than company 1 and also the variation in the
delivery from the time of order is less for company 2 than company 1
• Reliable suppliers may be quoting higher price for material but if the inventory cost that DEP
is incurring in maintaining the inventory is more than the material cost quoted by the reliable
suppliers than DEP can opt for these suppliers and improve its performance cycle. As with the
greater certainty from the supplier will reduce the level of inventory that is required to be
maintained
Changes that can be Incorporated
• Reduce the service window
– The service window that DEP allows for its suppliers is + 2 days. As the service window for DEP is going
to reduce to 3 and then to 0 days gradually so DEP is required to change the tolerance duration with its
own suppliers
• DEP should re- think and try to implement JIT concept. This will open number of different
combinations that DEP will have as its suppliers
• Any change will face a resistance from the regular ongoing trend in the company. People
should be well trained and informed about the new changes that are going to be
implemented in the company
• If the manufacturing department is included in the current situation that DEP is facing then
they can come out with other possible solution that will reduce the over all time that is
required in manufacturing of the product. This will also help in implementing JIT as
manufacturing department will now be understanding the necessity of the model
• There is a lot of time that is consumed in warehousing and shipment. This should be reduced
• The shipment that is made for the centers beyond 200 miles radius should be made more
frequent
• The means of “selling” the idea is matter of opinion -- more of an art than science
• Regardless of the specific effort, it should demonstrate why Bininh should keep DEP as
a core GARD supplier. This will involve conveying clear guidelines for making the desired
service improvements while maintaining a competitive price -- providing Binish with the
value he demands
• By incorporating the changes that are
Qualifying and winning order
• Order qualifiers are the basic criteria that
permit the firms products to be considered as
candidates for purchase by customers
• Order winners are the criteria that
differentiates the products and services of one
firm from another

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