Transportation Planning custom essay

Transportation Planning

In addition, you know that as far as internal processes and overall supply chain management goes, that there may be opportunities for improvement. Currently, the following internal opportunities exist for possible process improvement:

• Supply Chain Management
  • The company communicates separately with each vendor; usually when a forecast or production change is made, not every vendor finds out the same day. This leads to confusion, excess inventories, and stock outs.
• Demand Planning
  • The primary method to establish the master production schedule is to use a forecast that is created prior to the beginning of the year and updated monthly using salesmen’s inputs. Invariably, the company ends up producing too much of the wrong items (not demanded) and too few of what is in demand (real customer orders).
• Multistage Inventory
  • To create ABC’s final finished product requires a multiple-step supply chain, which looks something like the following:
    • Raw material to vendors factory
    • Vendor processes raw materials to make their parts
    • Those parts are shipped to ABC’s factory
    • ABC processes purchased parts through a succession of departments, each one adding more and more vale
    • Finally, all finished components are assembled into a finished product.
  • Currently, every step in this entire supply chain is scheduled, monitored through some kind of MRP system, reported throughout the day, and seems to take an inordinate amount of system updating.
• Transportation Planning
  • ABC continues to use its own fleet to deliver finished goods all over the country and to have common carriers deliver parts from its vendors, also located all over the country.
• Process Control, Performance, and Variability
  • ABC’s own internal process seem to all of a sudden go in and out of quality specifications; the company always seems to find out too late to avoid massive amounts of scrap, rejected parts, or labor costs to rework parts.
• Negative and Positive Cash Flow
  • The company goes through frequent swings from positive to negative cash flows as inventory purchases for large lots create negative cash flows, but then using up these materials occur at a slower rate, and with less outgoing, cash flow becomes positive. The CFO really struggles with managing these cash flow swings