Supply Chain Management

1. Supply Chain Management AG BM 460

2. Introduction Hanover Foods – 95% of output is produced under contract Contract w/ store or industrial customer or food service company including important variables Then plan production Then contract w/ farmers to get what you need – including all important variables

9. Some examples Inventory – independent or system-wide – supermarket buys 6 months of detergent on sale and stores it rather than work out a delivery schedule to get it as needed Costs – minimize your costs or system-wide costs – sale in Denver region so buy detergent for whole country there and haul it back to where it is needed or work out a delivery schedule from plant to local warehouses

10. Some examples Short or long term focus – are you making optimal decisions for today or for longer term – hog plant that underpays farmers today may find them out of business tomorrow and then no hog plant Information sharing – current transaction or broadly – are you working together to both succeed or just for short term gain

11. Some examples Corporate philosophies – working together requires recognition of other’s perspective, if not compatible philosophies – Hershey & WalMart Each out for himself or sharing risks and rewards – Hershey managing candy section for WalMart

12. Information Systems Non compatible systems once were the standard Now, electronic ordering – sharing scanner data – electronic invoicing – need compatible systems

17. Mike Villa’s Produce Activities Contract with WalMart to supply produce over next 6 months Cost targets Quality targets Delivery targets Inventory targets

18. Consider a single product - onions Different sources Storable to a degree Planning ahead Managing logistics Dealing with surprises