MS 55 IGNOU MBA Solved Assignment - What are supply chain performance measure systems? Discuss two frameworks that are used in measuring the performance of supply chains.

What are supply chain performance measure systems? Discuss two frameworks that are used in measuring the performance of supply chains.

Ans : Last week I conducted another Interview for the empirical part of my research. And we also discussed how to measure performance within the SC. As it turns out, multiple measures, namely service, cost, working capital are used. Sadly in literature many authors still focus on a single measure only and I wanted to know more about it. So I read an article by B. Beamon (Measuring Supply Chain Performance) to get an overview over performance measures used and how to select the right one(s)

History of Supply Chain Performance Measures

Supply chains consist of many different companies and within those, various functions. So first measures have relied on characterizing individual systems like production, distribution, or inventory management. In literature the measures have often been categorized into aspects of quality, time, flexibility, and cost.

But most often cost is used as an only measure or cost and another measure for customer responsiveness is applied. Other more qualitative measures, like customer satisfaction or concerning risk management, are seldom used due to their restricted applicability in quantitative models.

• inclusiveness (measurement of all pertinent aspects)

• universality (allow for comparison under various operating conditions)

• measurability (data required are measurable) and

• consistency (measures consistent with organization goals)

• If using only one performance measure make sure that it can adequately describe the performance of the system in focus.

• When using cost as (only) measure, be careful to include all necessary costs in the calculation. Pitfalls include cost of obsolescence or rework due to engineering changes

• Align performance measures with the strategic goals

Output can be measured quantitatively as number of items produced or number of on-time deliveries or profit; alternatively qualitative measures like customer satisfaction or quality can be used.
Flexibility is harder to measure, Beamon details on a quantitative approach for measuring it, focussing on volume, delivery, mix and new product flexibility.

Measures are generally thought of being effective if the following characteristics are fulfilled:

Performance Management System

The last bullet point highlights another topic: It is also important not only to focus on the measures used, but also to reflect on the performance measurement system as a whole. Especially, it is important to consider the effects of a specific corporate strategy on the performance measures used. Thus there are several caveats when evaluating options for performance measures:

Framework

Individual performance measures are usually non-inclusive so the goal for a performance management system should be to include more aspects. Beamon suggest to focus on measures for resources ®, output (O) and flexibility (F) (see figure 1 and 2).

Examples for resource measures are: total cost, distribution cost, inventory cost.

Different Aspects of Flexibility (Beamon 1999)

Conclusion

The use of simple performance measures is tempting, since simple measures are more easily implemented into numerical models; however, by limiting the scope of the performance measurement, these models ignore important performance trade- offs.

So it is obviously important to focus on meaningful measures. While reading the article I didn’t quite understand the authors relation to profit as a performance measure. Return on Investment for example is listed under the category cost-measures, profit itself is listed under output. Neither is really correct if you define profit as revenue minus cost since, profit affects both sides, resources and output.

MS 55 IGNOU MBA Solved Assignment - Correlate the practical problems and factors influencing the transportation of a company or carrier.

Correlate the practical problems and factors influencing the transportation of a company or carrier.

Ans :              The success of transportation depends upon the co-ordination between the three primary elements, namely the vehicles, the roadways, and the road users. Their characteristics affect the performance of the transportation system. In order to get the best we should have good understanding about them. Salient human, vehicle, and road factors affecting transportation are discussed below.

Human factors affecting transportation

Road users are drivers, passengers, and pedestrians etc. who use the haul roads. Together, they form the most complex element of the traffic system. Human performances varies from individual to individual It is said to be the most complex factor. We should deal with a variety of road user characteristics. For example, a traffic signal timed to permit an average pedestrian to cross the street safely may cause a severe hazard to an elderly person. The elderly persons, the children, the handicapped, the slow and speedy, and the good and bad drivers. The human characteristics like ability to react to a situation, vision and hearing, and other physical and psychological factors vary from person to person and depend on age, fatigue, nature of stimuli, presence of drugs/alcohol etc... The design considerations should safely and efficiently accommodate these factors.

Critical characteristics

The road user characteristics can be of two main types, some of them are quantifiable like reaction time, visual acuity etc. while some others are less quantifiable like the psychological factors, physical strength, fatigue, and dexterity.

The essence of this study is to examme the factors affecting effective performance of public enterprises. Owena Mass Transport Company, Akure was chosen as a case study on this topic. The technique used in data collection was through administration of pretested and validated structured questionnaire on the management and staff of OMTC and commuters. A total number of eighty (80) questionnaires were administered. Ten (10) copies was administered to the management, thirty (30) was administered at random to the staff of OMTC, while forty (40) questionnaires were administered to commuter chosen at random. From the analysis and investigation, finding revealed that poor management style, mismanagement of resources and corruption; government and political intervention are often the strongest factor contributing to ineffective performance of public ventures. Finding also show that fortunes of the company is fast declining due to fund constraint, ageing vehicle and facilities, the company could no longer raise capital to replace in-operative buses in the fleet. The overall performance of the company is not meeting appropriate performance indices. Consequently, for the company to meet its goals and objectives, there is need; to overhaul the management structure, to put in place effective control and monitoring measures to curb mismanagement and corruption, and to ensure management orientation towards profitability and success. Also, the need for liberized policy framework for operation, through effective market strategy, adequate remuneration to workers, improved service to customers is essential for improved performance of the company

Reaction time

The road user is subjected to a series of stimuli both expected and unexpected. The time taken to perform an action according to the stimulus involves a series of stages like:

·         Perception: Perception is the process of perceiving the sensations received through the sense organs, nerves and brains. It is actually the recognitions that a stimulus on which a reaction is to happen exists.

·         Intellection: Intellection involves the identification and understanding of stimuli.

·         Emotion: This stage involves the judgment of the appropriate response to be made on the stimuli like to stop, pass, move laterally etc.

Visual acuity and driving

The perception-reaction time depends greatly on the effectiveness of driver’s vision in perceiving the objects and traffic control measures. The PIEV time will be decreased if the vision is clear and accurate. Visual acuity relates to the field of clearest vision. The most acute vision is within a cone of 3 to 5 degrees, fairly clear vision within 10 to 12 degrees and the peripheral vision will be within 120 to 180 degrees. This is important when traffic signs and signals are placed... Glare vision and color vision are also equally important. Glare vision is greatly affected by age. Glare recovery time is the time required to recover from the effect of glare after the light source is passed, and will be higher for elderly persons. Color vision is important as it can come into picture in case of sign and signal recognition.

Other Characteristics

Hearing is required for detecting sounds, but lack of hearing acuity can be compensated by usage of hearing aids. Lot of experiments was carried out to test the drive vigilance which is the ability of a drive to discern environmental signs over a prolonged period. The results showed that the drivers who did not undergo any type of fatiguing conditions performed significantly better than those who were subjected to fatiguing conditions. But the mental fatigue is more dangerous than skill fatigue. The variability of attitude of drivers with respect to age, sex, knowledge and skill in driving etc. are also important. 

Weight, axle configuration etc.

The weight of the vehicle is a major consideration during the design of pavements both flexible and rigid. The weight of the vehicle is transferred to the pavement through the axles and so the design parameters are fixed on the basis of the number of axles. The power to weight ratio is a measure of the ease with which a vehicle can move. It determines the operating efficiency of vehicles on the road. The ratio is more important for heavy vehicles. The power to weight ratio is the major criteria which determines the length to which a positive gradient can be permitted taking into consideration the case of heavy vehicles

Turning radius and turning path

The minimum turning radius is dependent on the design and class of the vehicle. The effective width of the vehicle is increased on a turning. This is also important at an intersection, round about, terminals, and parking areas.

Visibility

The visibility of the driver is influenced by the vehicular dimensions. As far as forward visibility is concerned, the dimension of the vehicle and the slope and curvature of wind screens, windscreen wipers, door pillars, etc should be such that:

·         visibility is clear even in bad weather conditions like fog and rain;

·         It should not mask the pedestrians, cyclists or other vehicles during intersection maneuvers.

Equally important is the side and rear visibility when maneuvering especially at intersections when the driver adjusts his speed in order to merge or cross a traffic stream. Rear vision efficiency can be achieved by properly positioning the internal or external mirrors.

A transport strategy depends, not only on the needs within the organisation, but varies from organisation to organisation and from situation to situation. Some factors to consider when developing a transport strategy are:

• how to identify transport service providers;

• how to manage the function; i.e. whether to lease, outsource or manage own fleet;

• capacity of transport modes available;

• quantities requiring movement over a period of time;

• nature of goods/products/supplies to be transported;

• distances to be covered;

• environmental issues such as climate, government legislature, infrastructure, taxes etc;

• number of destinations, hubs and pre-positioning locations;

• origins and routes;

• available transport modes & their relative costs;

• human resources;

• terrain;

• funding;

• security; and

• circumstances – such as Nature of disaster.

• carrier characteristics and capacity;

• proven efficiency;

• timely delivery;

• known integrity, reputation and reliability;

• good relationships with others carriers;

• responsiveness to urgent needs of the organisation (if previously contracted);

• financial viability to cover costs of providing the service;

• adequate communication systems to facilitate tracking to the vehicle;

• assets to safeguard organisation cargo;

• ability to provide a multi-modal service, if need be; and

The above factors would be valid for both emergency and non-emergency situations.

Criteria influencing transport service providers

The criteria for selection will vary from organisation to organisation. Some factors that may influence the selection of transport service providers are:

presentation of timely reports and correct invoices.

MS 55 IGNOU MBA Solved Assignment - It is the integration of the business processes of all firms in the supply chain where the real gold can be found”. Do you agree or disagree? Justify your answer.

It is the integration of the business processes of all firms in the supply chain where the real gold can be found”. Do you agree or disagree? Justify your answer.

Ans :

A new Bloomberg BusinessWeek Research Services survey and report makes it clear that innovative supply chain tools are widely acknowledged to be crucial to meeting corporate goals now and in the future as supply chains grow more complex, customers become more demanding and globalization accelerates. In this context, supply chain innovation is becoming more important as companies that have invested in traditional tools are now determined to operate real-time supply chains.

Although more than three-quarters of survey respondents noted that demand and supply forecasting and planning tools are already very important, and a majority already has these tools in place, adopting newer supply chain tools that support the creation of real-time supply chains is recognized as highly important.

A real-time supply chain can sense and detect new challenges as they happen. That enables supply chain planners and practitioners to make real-time decisions based on the most up-to-date information. Companies taking this approach view the supply chain as a strategic initiative. They use their understanding of the market and fluctuating demand patterns to adjust their supply plans in real time.

In fact, the Bloomberg Businessweek Research Services survey found that the tools required for real-time supply chain management are on a fast track to adoption within the next two years. Among the real time supply chain focus areas highlighted are multi-level inventory optimization, demand signal repository, sales and operations planning, and leveraging point of sales (POS) data across the supply network.

5 Steps to a Real-Time Supply Chain

Perhaps the most critical step is enabling insightful supply chain management. Supply chain business decisions need to be made in a business context, not in a silo. Companies leveraging the wealth of performance data about their supply chains can enable that real-time analysis, gain insight into fragmented business processes and achieve deeper visibility through alerts based on key performance indicators (KPIs). The result is a transition from management by exception to management by information — a “supply chain GPS,” if you will.
To transition to a real-time supply chain, these five areas need to be tightly integrated and coordinated. Besides advanced solutions, companies need advanced analytics that can support real-time decision making. Recent advancements in the area of in-memory computing are already allowing companies to respond quickly to market dynamics with real-time visibility into customer demand. Mobile solutions, with their user-friendly interfaces, can deliver real-time optimization to all stages of the supply chain.
Supply Chain Risk a Hidden Liability for Many Companies

The second step is transitioning from traditional S&OP to sales and operations business planning. Companies cannot afford to disconnect their sales and operations business planning from tactical planning. Business priorities and operational decisions must be balanced against a clear understanding of their financial impact. Using solutions that combine operations and financial data, the business can collaboratively create scenarios and simulate the effects of decisions in real time to increase supply chain profitability.

Another key driver is embracing the concept of a demand-driven supply chain. The most prevalent supply chain challenge is lack of clarity into what customers want and when they want it. In a demand-driven model, companies use POS, social media and market research data to sense customer demand signals immediately and to respond in real time to build that demand into the planning processes. This accelerates supply chain processes and reduces planning cycle times, working capital (inventory) and lead times. It also provides the opportunity to increase revenue by avoiding stock outs, increasing promotion effectiveness and optimizing new product launches.

With complex global networks, ensuring efficient execution in the areas of logistics and order fulfillment is more critical than ever. With increased supply chain complexity, it becomes more difficult to deliver the perfect order. At the same time, transportation costs are rising across more complicated supply chains. Optimizing execution requires real-time visibility into shipping processes and track-and-trace capabilities, along with automated warehouse and distribution processes and advanced transportation planning.

To close the real-time loop, companies must focus on streamlining the service supply chain. Successfully running an integrated supply chain for service parts businesses requires real-time visibility into customers, suppliers and operations. This enables companies to respond swiftly to customer requirements, procure parts earlier, plan parts inventory more effectively and unlock service parts profit potential.

Technology Enablers

The road to a real-time supply chain is getting shorter, and those who have arrived say it is well worth the journey. Those not there yet need to engage partners who will enable them to adopt and integrate these technologies in a non-disruptive way, through side-by-side deployment options and turn-key deployment projects.

Andres Botero is the Global Lead, Supply Chain Management (SCM) Marketing at SAP. He is responsible for strategy, positioning and overall marketing for all SAP SCM solutions. Previously, he led marketing for Supply Chain Execution and coordinated SAP’s global strategy, commercial execution, and marketing efforts around Auto-id technologies. Previously he held positions with Siebel Systems, StepNexus, Arthur D. Little, Mobil Oil, and Procter & Gamble.  He has 14 years of experience in enterprise software, including CRM, SCM and Business Intelligence/Analytics. Mr. Botero holds a BS in Industrial Engineering from Universidad De Los Andes and a MBA from Stanford University.

Global supply chains can increase efficiency, but they can also increase risk. Recent events—including the Japanese earthquake and tsunami, the floods in Thailand and the ash clouds caused by the Icelandic volcano—have demonstrated how far the consequences of such risks can extend. The Japanese earthquake, for example, severely affected global electronics production and led to extended business disruptions for the automotive industry.

The Thai flooding created significant shortages in the hard disk drive market that generated millions of dollars of losses for well-known electronics manufacturers. In addition to these headline events, however, the nature of supply chain risk is constantly changing. New risks and new vulnerabilities can often be better addressed if given close attention from management.

The fragility of global supply chains is related to emerging risks, but is also related to supply and network design strategies.  The integration of risk management into supply chain management has often been limited, especially for organizations that have focused on reducing costs and limiting working capital levels as a response to difficult market conditions.   Increasingly however, many companies are re-establishing the balance between risk and cost focus as they manage their global supply chain.

To address these risks, companies should consider their operating models, in an effort designed to define an optimum balance between financial efficiency and assuredness of a stable supply chain.    Companies that once maintained backup inventory and manufacturing facilities may have exposed themselves to risk as they concentrated on working with fewer redundancies, using the “Kaizen” model calling for “just in time” or even “just in sequence” production with minimal in-process inventories;  geographic and operational concentration of assembly and parts production; and a high level of subcontracting.

Many companies have switched from “local” suppliers to “low cost” (and often distant) suppliers on the basis of cost, without considering the full cost of risks associated with these changes.   As a result, the extended supply chain now has many additional points of potential failure, suggesting that new approaches to risk management can be beneficial.  Many companies face increased exposures and potentially costly logistics lead times for critical products if unforeseen events emerge – as they seemingly will.