LITERATURE REVIEW
Supply Chain Management is defined as a network of facilities that produce raw materials, process them into final products, and deliver those products to customers. This process includes procurement, manufacturing and distribution. The basic objective of supply chain management is to “optimize performance of the chain to add as much value as possible for the least cost possible” (Lee & Billington 1995). In simplified terms, it links all supply chain activities as a means to “maximize productivity in the supply chain and deliver the most benefits to all related parties” (Finch 2006).
In recent times, good logistics and supply chain management has increased the capability of businesses to achieve a competitive edge over its
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Jenkins and Wright (1998) derive this inelasticity from three features of the oil industry. First is the purchase of the product, which has to be determined much earlier than the actual sale. Second, the product is then distributed through fixed pipeline capacity or through fixed coastal shipping. Finally, since the depots’ capacity for the secondary distribution is limited, it has to be booked on a take-or-pay basis (Jenkins & Wright, 1998).
Vertical Integration - Supply chain in the oil sector is a vertically integrated chain combined with a push system (Stabell, 2001; Hall, 2002; Gainsborough, 2006). To enhance the customer satisfaction a reliable transportation network should be established so that the inventory is closer to the final users as the lead time is decreased and product availability increases (Hall, 2002).
Optimizing the supply chain creates a great opportunity for companies to minimize costs and improve their performance (Ratliff, 2007). The specified quantity, regular supply of raw materials (crude oil), a low lead time, lower expenses are one of the main goals of the oil supply chain (Hussain et al., 2006).
Approaches to Oil Supply Chain
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Integration - Through vertical integration MOL and its supply chain management has a significant control over the whole chain including procurement, refinery, whole sale and retailing. Integrated process also creates value by reacting quickly for changes in the market, planning costly refinery shutdowns, having quicker information flow, making better marketing and logistics solution (Sz. Szabó, personal communication, 2012-04-02).
Information Technology - MOL’s IT solution is an essential tool which integrates the inputs of each division in a single model. This includes the optimal configuration and harmonized operation of refineries, petrochemical production, optimal procurement, and transfer between the refineries, refinery inventory holding, distribution as well as marketing cost and prices. This tool is also able to handle changes by modifying variables and considering possible or expected changes. For instance it can examine how any price change affect the optimum of business activity or which price change of products or raw materials forces a necessary change in the whole optimization
In order to determine the impacts that changes in these two inputs may have in Chipotle’s valuation, a sensitivity analysis is conducted by varying the WACC and the perpetuity growth by 0.25% consecutively while keeping all other inputs constant. The next table shows how Chipotle’s price per share varies when the perpetuity
Abstract The Wilkerson Company started facing declination in profits due to the price cutting on their pumps. On the contrary, while the price pumps were decreasing to record numbers, the flow controllers, which controlled the rate and direction flow of chemicals, could increase its prices without significant loss or any competitive response. Wilkerson, his controller, and manufacturing manager developed an activity-based cost model (ABC) to better comprehend the various demands that each product line makes on the organization 's indirect and support resources. Exhibit 1 showed us our operating results, Exhibit 2 showed us our product profitability analysis, Exhibit 3 displayed our product data, and Exhibit 4 was a compilation of the monthly
Inbound Logistic Process Target is a retail store selling goods worldwide through its retail stores located at various part of the world. It purchases goods from its suppliers and ship those goods to its distribution centre and retail outlets. The continuous supply of merchandise is a tough job as the Global purchase is a difficult process to manage when; sources of supply, regional economies, and governments change in international purchasing can lead to disputes and
The concept of vertical integration received an immense
Corporate Strategies Vertical Integration Verizon implements a value chain analysis to understand the parts of the daily operations that create value, and those parts that do not. The value chain analysis is used to determine the level of competition, the type of products and services the consumer needs, and to figure out the ways that Verizon can stay sustainable and remain the market leader in the industry. This is vital because if done correctly Verizon will be able to gain high returns within the telecommunications industry by creating greater value to the customer. Verizon breaks their value chain into primary and support activities. The primary activities are research and development, infrastructure, marketing and sales, and customer
10. Forecast the demand for Woody’s products, throughout the project’s life. 11. Ensure that the current production activities are not hampered, while the project activities are carried out. d.
We worked out and the net present values of each option and thereafter picked the option that has lower present value of cash outflows. Our NPV calculations for both options were backed with sensitivity scenario analysis of both the buy and leas options. Sensitivity Scenario Analysis Sensitivity analysis scenario is used to show how changes in one or more variables below and above the used variables would affect the intended results. I our sensitivity analysis scenario for Dragon Air lease vs buy decision we varied the cost of capital between 1% and 5% as the main driver in the case. The tables below show the results.
Johnson International Corporation (JIS) is a global company that offers logistical support to the military and private companies which employs 100 people and it is largely located in US, Europe and Far East. It has been doing business for last 15 years and it had a net income after tax of $10 million. 70 % of their business is related to military sector and its focus is to provide logical support to military and private sector. In this company the president and chief executive officer were the same person and he/she was responsible for the overall activities of the company. The company has cut the budget in various field including the budget in IT capital and human resource which includes training for employee.
This new system is often referred to as the "flexible system of production" (FSP) or the "Japanese management system” (Mansfield; 1992).flexibility have been the dominant language of organization and economic change. “Flexibility within the market and between networks is facilitated by new forms of supplier relationships. This has been associated with the Japanese, derived just in time (JIT) system. This depends on a set of relations between large corporations and suppliers normally characterized by tightly controlled multiple sources through layers of subcontractors. In this system it
Q. 2. Recent development in Technology has enabled huge global organizations to avail information easily in their premises for smooth functioning of various departments within an organization. Much of a company's success comes down to its Supply Chain Management and logistics. The development of Information Systems in SCM helps in cost reductions, customer satisfaction and productivity.
As a result of the events of Dremliner, Boeing has improved their supply chain management process by incorporating continuous improvement strategies and implementing ways to encourage open lines of communication amongst their supply base. Boeing 's supply chain management places emphasis on on-time deliveries and streamlining common standard processes across their suppliers. Boeing has developed several tool to not only monitor and audit the best practices and overall performance of the supplier, but aid in collaborative communication amongst their entire supply base.
For example, when Japan Aircraft Development Company (JADC) claimed that there could be problems while transporting body sections from Japan to Seattle, Boeing insisted to scale models of all sections and carry out a trial transportation. This trial showed that they needed to alter the plan as Japan’s roads were narrow and the parts were too big. Thus, an old steel factory closer to the shipping facilities was converted to an assembly hub of JADC. Boeing went through a major exercise to ensure that supply chain management will go as planned and that all problems be tackled before the actual execution. The learning curves along with evaluation of each activity in all angles ensured that the schedule is realistic and changes can be incorporated, as and when
The best companies in the world are discovering a powerful new source of competitive advantage. It's called supply chain management and includes all onboard activities that bring products to market and satisfied customers. The Supply Chain Management program covers topics from manufacturing operations, transportation, purchasing and physical distribution for a single program. Coordinated the successful management of the supply chain and all these activities integrated in a continuous process.
Exercise 3 Introduction Push and pull are strategic supply chain decisions can that are as a results of the impacts of operational, product and demand related variables (Wanker and Zinn, 2004). The push strategy moves products based on planning or forecasting whereas the pull strategy moves products as a results of real demand (Ballou, 1992). Thus in a push system, the products are pushed through the supply chain channel right from production to the retailer. The manufacturer builds its production based on historical ordering patterns and forecasting. Due to this it takes a longer time for this system to respond to changes in demand which results in overstocking, bottlenecks and bullwhip effect in the system.
Supply Chain Management (SCM) department encounters a number of different stakeholders. Many different working relationships take place within each individual work on, from colleagues to clients, stakeholders, and suppliers. The internal supply chain that delivers the service is complicated and requires the co-ordination and co-operation of individuals and teams who have different skills and priorities. Hence, understanding stakeholder needs and working effectively with them is critical to the success of the procurement team. Cleland (1995: 151) recognised the need to develop an organisational structure of stakeholders through understanding each stakeholder’s interests, and negotiating both individually and collectively to define the best way