Managing Supply Chains

You probably have experienced that sometimes certain decisions (personal or business) are based on yours or someone’s subjective opinion rather than factual empirical evidence. When you decide to work off an opinion you are technically taking a chance. The probability of success in this case is 50%. A way to increase this probability is by means of “an educated guess”. If you have done your due diligence and are confident about your underlying data/information, your educated guess in most cases will have a probability of success higher than 50%. Part A: Free Data on the World Wide Web There is a plethora of information available free of charge for the avid researcher/reader if you know what you are looking for. For example, if you ever wanted to know: “In the state of California how many male white collar group workers are employed in Cabinet Level Agencies in a technical field in the age group of 25-29 years with less than 1 year of experience”, you can get to this answer within...

The Great Recession that started in 2007 is “very likely over at this point” claimed Federal Reserve Chairman Ben Bernanke during his address at The Brookings Institution.  (Refer to his address to The Brookings Institution on Tuesday, September 15, 2009). When I started my previous post on the lessons I have learned from this recession, I dwelled on the fact that the recession was affecting all equally – manufacturers and retailers, and recovery was going to be a long road. The fed chairman seems to concur and as he put it – recovery may be moderate because of the depth of the recession. There are countless articles out there talking about the need for improvement in Consumer Confidence. That makes sense. As a consumer you are worried about the decline in your net worth, the stagnation in your wage growth and the rising unemployment numbers. These issues affect your spending patterns. (Refer to my previous article on “ Bull Whip Effect ” and how your spending patterns can af...

According to Wikipedia; “The US entered a recession at the end of 2007, and 2008 saw many other nations follow suit.” Many economists believe that the recession that started in late 2007 in the US was a direct consequence of (a) the Housing Market Correction and (b) the Subprime Mortgage Crisis . What followed was a very difficult operating environment for many businesses that depended on banks for credit to keep them afloat. Credit was tight and often in many instances was being revised down – not only for businesses but also for consumers. Businesses selling high ticket items started seeing a significant decline in customers who depended on “No/Low Interest Long Term Financing Options”. Businesses were now competing based on “who could save the consumer more money”. The old adage “Shop Till You Drop” was no longer valid. Consumers started pulling back on making purchases and “bargain hunting” had become commonplace. Consequently to match this decline in demand, b...

As a kid growing up in New Delhi, I remember that every Saturday morning at around 10am we had a vegetable hawker come by our house. He would bring every vegetable my mother wanted. He would always have sufficient quantity and the right quality. The hawker was the supplier for our street which probably had close to 30-35 families. When I think about it now a few things jump out at me: (1) The options available were limited . The hawker did not bring 4 different varieties of potatoes OR 3 different varieties of peppers. Even under these limitations my mother was a happy consumer! (2) The quality was predictable . He knew that his products had to meet the highest quality standard for a guaranteed business. (3) The quantity we bought from him was predictable . Unless we had guests coming over, we would always buy a predetermined amount of vegetables from the options available. Furthermore, he always carried safety stock. (4) If he did not have something, he would take down the request ...

Have you ever wondered about how small things that we do on a daily basis can impact the supply chain of products? Here is an interesting example for you: Often times when I forget to bring lunch from home, I run to the vending machine down the hall to grab something quick. To my dismay, a majority of the items in the machine are things that I don’t really want! But, since I am pressed for time and I cannot drive to the retailer down the road – I end up buying something that “I may be OK with”. Let’s call this – “Product A”. Think about how that affects the replenishment of the products in the vending machine. The owner of the machine sees that as an increased demand for "Product A". The consequence is that you continue to see more of that product in the future! Can we assume that the Vending Machine is an approximate representation of the larger retail environment? Is it safe to say that if we are faced with certain limitations (in this example - time and/or money), and we h...

I remember when I was first introduced to this term during a Supply Chain/Operations class at the University of Wisconsin - Madison . It sounded unusual. It makes you think - "What could be the relationship between bull whips and Ford car sales?". Wikipedia defines it as follows:"The Bullwhip Effect (or Whiplash Effect) is an observed phenomenon in forecast-driven distribution channels. The concept has its roots in J Forrester's Industrial Dynamics (1961) and thus it is also known as the Forrester Effect. Since the oscillating demand magnification upstream a supply chain reminds someone of a cracking whip it became famous as the Bullwhip Effect." Feel free to read the full article on Bullwhip Effect at this link . The article is well written and provides a good high level overview. In layman terms consider the following example. You are thinking about buying a Ford Mustang - more specifically you are looking for a " Red " Ford Mustang. You go to the on...