Supply Chain Management - R Bays

Supply Chain Management - R Bays

• 1.
  Richard Bays MBA,RN, CPHQ
• 2.
  Ambulatory Surgical Centers ASC’soperate in a different environment than traditional Operate hospitals. There is less physical space for stock and cases can be scheduled with short notice. Financial constraints prevent a large buffer stock from existing. Change ASC Orders Optimize
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  Whip It ! The Bullwhip Effect (or Whiplash Effect) is an observed phenomenon in forecast-driven distribution channels. Since the oscillating demand magnification upstream a supply chain reminds someone of a cracking whip it became famous as the Bullwhip Effect.
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   Because customer demand is rarely perfectly stable, businesses must forecast demand to properly position inventory and other resources.  Forecasts are based on statistics, and they are rarely perfectly accurate. Because forecast errors are a given, companies often carry an inventory buffer called “safety stock”.  Moving up the supply chain from end-consumer to raw materials supplier, each supply chain participant has greater observed variation in demand and thus greater need for safety stock.  In periods of rising demand, down-stream participants increase orders. In periods of falling demand, orders fall or stop to reduce inventory.  The effect is that variations are amplified as one moves upstream in the supply chain (further from the customer).
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  Information Coordination: TheBullwhip Effect Consumer Sales at Retailer Retailer's Orders to Wholesaler 1000 1000 900 900 Consumer demand 800 800 Retailer Order 700 700 600 600 500 500 400 400 300 300 200 200 100 100 0 0 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 1 3 5 7 9 29 11 13 15 17 19 21 23 25 27 31 33 35 37 39 41 1 3 5 7 9 Wholesaler's Orders to Manufacturer Manufacturer's Orders with Supplier 1000 1000 Manufacturer Order 900 Wholesaler Order 900 800 800 700 700 600 600 500 500 400 400 300 300 200 200 100 100 0 0 19 11 13 15 17 21 23 25 27 29 31 33 35 37 39 41 1 3 5 7 9 13 10 16 19 22 25 28 31 34 37 40 4 1 7 5
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  Behavioral Causes  Misuseof base-stock  Panic ordering after policies unmet demand *  Misperceptions of  Perceived risk of other feedback and time players rationality delays
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  Operational Causes  DependentDemand Processing  Trade promotion and  Forecast Errors forward buying  Adjustment of parameters with each demand observation  Anticipation of shortages  Lead Time Variability (forecast  Allocation rule of suppliers error during replenishment lead  Shortage gaming time)  Lean and JIT style management  Lot-sizing/order synchronization of inventories and a chase  Consolidation of demands production strategy  Transaction motive  Quantity discount
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  Sources of Performance-CycleVariation Total Performance Cycle 5 10 40 Customer Delivery Time Range - Days Order Transmission 1/2 1 3 Time Range - Days 1/2 1 3 Time Range - Days Order Transportation Order Processing 2 4 10 Time Range - Days Order Selection 1 2 4 Time Range - Days 1 2 20 Time Range - Days
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  Supply Chain Quiz  A box of cereal spends ?  A box of cereal spends 104 days in the supply chain. days in the supply chain.  Total inventory in the  Distorted information causes pharmaceutical supply total inventory in the pharmaceutical supply chain to chain exceeds ? days and ? exceed 100 days with $11 $ in savings to be realized. billion in savings to be  Poor coordination in the realized. food industry supply chain  Poor coordination wasted $ wasted ? dollars. 30 billion annually in the food industry.  Boeing wrote-off ? dollars in 1997 due to supply chain  $ 2.6 billion is how much Boeing wrote-off in 1997 due inefficiencies. to supply chain inefficiencies  It costs, on average, ?  $80 was paid, on average, to dollars to process each process each purchase order. purchase order.
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  Time is Money…. ASC’sattempt to eliminate all work and time not bringing value. ASC’s look for suppliers who: • Integrate Customer Service • Respond to Production • Supplier Integration - Limits
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  Supply Chain PerformanceOutcomes Cost Safety Assets Responsive Sustainability Outcomes ness Customer Satisfaction Reliability Revenue
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  Urgent Need toAddress Customer Needs On average, suppliers lose the sale 41% of the time Consumer behavior when confronted with an option Delayed Other purchase 8% Did not buy product 14% Substituted another brand 10% 19% Purchased at Substituted same brand another supplier (different size) 31% 18%
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  Results of PoorASC Supply Chains Since ASC’s work on a streamlined system without the traditional buffers of hospital networks, the consequences are felt more directly Cancellation of Surgery by the facility. Physician / Patient Dissatisfaction Patient safety can be compromised Increased cost for services due to poor planning. Loss of future Business
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  Questions?? Thank You Richard Bays MBA, RN, CPHQ for [email protected] 832.316.2701 Your