THE USE OF SUPPLY CHAIN MANAGEMENT IN MANUFACTURING ORGANISATION TO CONTROL INVENTORY LEVELS WHILE PROVIDING ADEQUATE SERVICE TO CUSTOMERS; A CASE STUDY OF EASTWIND FOODS

CHAPTER 1

1. 1. BACKGROUND OF THE STUDY

The fundamental objective  of supply chain management  is to "add value".

An example is the fish fingers. During the Supply Chain Management'98 conference in the United Kingdom , a participant in a supply chain management seminar stated that total time from fishing dock through manufacturing, distribution, and final sale of frozen fish fingers for his European grocery-products company was 150 days. Manufacturing took a mere 43 minutes. That suggests an enormous target for supply chain managers. During all that time, company capital is-- almost literally in this case--frozen. What is true for fish fingers is true of most products. Examine any extended supply chain, and it is likely to be a long one. James Morehouse, a vice president of consulting firm A.T. Kearney, reports that the total cycle time for corn flakes, for example, is close to a year and that the cycle times in the pharmaceutical industry average 465 days. In fact, Morehouse argues that if the supply chain, of what he calls an "extended enterprise," is encompassing, everything from initial supplier to final customer fulfillment, could be cut to 30 days, that would provide not only more inventory turns, but fresher product, an ability to customize better, and improved customer responsiveness. "All that add value," he says. And it provides a clear competitive advantage. Supply Chain Management becomes a tool to help accomplish corporate strategic objectives reducing working capital,taking assets off the balance sheet,accelerating cash-to-cash cycles,increasing inventory turns, and so on.

1.2    STATEMENT OF THE PROBLEM

       The problem confronting the research is to appraise the use of supply chain management in manufacturing organization to control inventory levels while providing adequate service to customers;A case study of  east wind foods.

1.3   RESEARCH  QUESTION

1. What is supply chain management
2. What is inventory level and how can supply chain management be used to control inventorywhile providing adequate service to customers

1.4    OBJECTIVE OF THE STUDY

1      To appraise  the nature of supply chain management.

2       To determine the use of supply chain management  to control         inventory level while providing   adequate service to customer

1.5    SIGNIFICANCE OF THE STUDY

The study shall analyze supply chain management and project its importance in controlling inventory level while providing adequate service to customers.

It shall also serve a veritable source of information  on issues on supply chain management.

1.6     STATEMENT OF THE HYPOTHESIS

1     H0    Inventory control and customer service in East-Wind                      foods is low

H1    Inventory control and customer service in East-Wind                 foodsis high

2      H0    Supply chain management  inEast-Wind foods is not                     significant

        H1    supply   chain management in East-Wind foods is                          significant

3      H0    The impact of supply chain management  on inventory                   control and customer service in east wind foods is low

H1    The impact of supply chain management on inventory           control and customer service  in east wind foods is high

1.7        SCOPE OF THE STUDY

1      The study provides an appraisal of the use of supply chain management in manufacturing organization to control inventory levels while providing adequate service to customers

1. 1. DEFINITION OF TERMS

SUPPLY CHAIN MANAGEMENT 

The supply chain encompasses all of those activities associated withmoving goods from the raw-materials stage through to the end user."

Advocates for this business process realized that significant productivity increases could only come from managing relationships, information, and material flow across enterprise borders. One of the best definitions of supply-chain management offered to date comes from Bernard J. (Bud) LaLonde, professor emeritus of Supply Chain Management at Ohio State University. LaLonde defines supply-chain management as follows: "Thedelivery of enhanced customer and economic value through synchronized management ofthe flow of physical goods and associated information from sourcing to consumption

SUPPLY CHAIN MANAGEMENT DEPARTMENTS

Company's Supply ChainManagement department functions include

??   Inventory management

??   Transportation service procurement

??   Materials handling

??   Inbound transportation

??   Transportation operations management

??   Warehousing management

Moreover, the Supply Chain Management department is expected to increase its range ofresponsibilities, most often in line with the thinking that sees the order fulfillment processas one co-ordinate set of activities. Thus the functions most often cited as planning toformally include in the Supply Chain Management department are:

??   Customer service performance monitoring

??   Order processing/customer service

??   Supply Chain Management budget forecasting

On the other hand, there are certain functions which some of us might feel logicallybelong to Supply Chain Management which companies feel are the proper domain ofother departments. Most difficult to bring under the umbrella of Supply ChainManagement are:

??   Third party invoice payment/audit

??   Sales forecasting

??   Master production planning