Procurement and implementation of a supply chain management system

Svoboda, Vojta (1999-12)

Thesis (M.Ing) -- University of Stellenbosch, 1999.

Thesis

ENGLISH ABSTRACT: With the globalisation and internationalisation of markets and businesses, organisations have had to find new ways to not only view and run their own organisations to keep their existing markets but also to enable them to capture new markets. In the past the way to gain competitive advantage in any industry was to streamline reengineer and revolutionise your organisation's internal operations, procedures and structures. This gave rise to initiatives such as Total Quality Management (TQM), Materials Requirement Planning (MRP), Just in Time (JIT) and numerous Business Process Reengineering (BPR) projects. However, it has become increasingly more difficult to squeeze savings out of an operation. You cannot downsize forever and cannot gain new markets by growing continuously smaller. Activities and processes have some inherent inefficiencies built into them. These will remain no matter how the procedures improve e.g. set-up time of steel press will never be zero etc. The key in further improvement lies in the co-ordination and co-operation between organisations that interact with each other and provide the organisation with value adding or necessary services or products. This is currently known as supply chain management. It involves a global and holistic view of the market and the realisation that other organisations up and downstream from you do not compete with you but complement each other to provide the final product - an item sold to the consumer in the right quantity, quality, at the right price and right place, not just the item that your organisation has produced and passed on to the next organisation in the supply chain. Much of this thinking has existed for several decades but has not materialised into best practice due to a lack of technology to support and complement it. However, in the last five years technology has developed and kept pace with these principles and in fact has become one of the major driving factors that drive supply chain strategies, optimisation initiatives and development of organisational cultures. Spoor net has developed visions and strategies to take part and to become a leader in supply chain solutions in South Africa. It has actively participated in this area for a number of years. The author was part of a team that realised the need and developed the ideas of such a decision support tool for supply chain management at Spoornet. This software tool was intended to assist the Channel Manager in decision making in his/her supply chain. It would add value to the decision making process revolutionising it from a manual inaccurate task to a more automated, technical, mathematical and efficient process. This would enable the Channel Managers to concentrate on communication and the relationships with partner organisations and customers. This adds considerably more business value to Spoornet. This thesis discusses the initial development of the ideas and principles of decision support for the supply chain through to the procurement process of such technology, as well as the first pilot project and finally the complex issues that have to be considered and dealt with when these types of solutions are to be implemented and used successfully. The author was directly responsible for the development of the ideas in this thesis as well as those deployed during numerous Spoornet supply chain projects. Shortly after this development, he received a position in the Centre for Logistics Excellence (CLE) at Spoornet. The CLE was responsible for the development of logistic and supply chain strategies and competencies in Spoornet. Together with Dirk du Toit, he was responsible. for the procurement of the supply chain management tool. Soon after the procurement of the tool, Mr. Du Toit left the organisation and the responsibility for the further development and the pilot project was passed onto the author. This involved further negotiations with the supplier, clients as well as the development of future competencies and strategies by utilising the supply chain management too. The first part of the document outlines the project during which the ideas of supply chain management technology and software first came to the fore. This includes the project background, the inefficiencies of the current process and very high level specifications that would be required of the "TO-BE" software. These specifications are in terms of how the software could assist Channel Managers. This is followed by analysis (literature survey) of techniques and methods that could be potentially capable of satisfying the high level specifications. From the analysis, it was decided that the use of deterministic programming would be the most suitable approach for this type of decision making. (Especially considering current advances in software technology). More detailed specifications are then outlined by a set of process models and descriptions. A number of software tools are analysed for their suitability and capability to deliver the specifications. The CAPS toolkit of supply chain applications was the most suitable for these particular needs and requirements. This tool was chosen and purchased. The rest of the document details the customisation and development of CAPS into the tool that would be used in· projects. This includes data requirements, data collection, human competencies required to use the tool and a quick overview of how the tool would be used. An overview of the pilot project that was to be carried out is also provided. This project would be used to illustrate the benefits that could be gained from supply chain optimisation using this type of tool. Unfortunately, the author left the organisation that had purchased the tool so the pilot project was never finished. However, a number of lessons were learnt as to the factors that need to be taken into account when implementing and utilising such a tool. There are factors such as organisational structure, organisations' role in the supply chain as well as supply chain pricing. The final sections of this document outline the current thinking in terms of Supply Chain Management and related issues that are currently in the process of being addressed internationally by many logistically advanced and progressive corporations. The initial aims of the initiatives discussed in this document was to procure and implement a supply chain management system. The procurement of the tool waS successfully accomplished and Spoornet currently has licences for the CAPS toolkit. It is capable of designing and planning complex supply chains together with it clients/partners. The secondary aim discussed in this document was the implementation of the tool in terms of a pilot project. This pilot project was to illustrate the benefits and the saving that can be gained from the use of the CAPS tool in a realistic supply chain situation. This was not fully accomplished. The project team working on the pilot project lost several of its key members, including the author, and was not able to complete the pilot project with the remaining members. The parts that were accomplished were the preparatory stages of the project such as data collection and development of cost models to be used in CAPS.

AFRIKAANSE OPSOMMING: Die globalisering en internafionalisering van markte en besighede het organisasies genoodsaak om nuwe maniere te vind om nie net hulle eie organisosie te bestuur en bestaande mark te behou nie, maar ook om nuwe markte te teiken. Dit word progressief meer ingewikkeld om besparing vanuit operasies te bewerk. Die oplossing hiervoor is daarin gelee om koordinasie on samewerking tussen die organisasies, waf in interaksie met die organisosie staan en "n waardetoevoegende of noodsaaklike diens of produk lewer, te bewerkstellig. Tegnologie het in pas gebly met die beginsels en het een van die primere drywers geword van verskaffingskettingstrategie, optimiseringsprojekte, en kultwrontwikkelinginitiatiewe. Hierdie dokument bespreek die aanvanklike ontwikkeling van die idees en beginsels van besluitneming in terme van die verskaffingsketting, deur die aankoopproses van sulke tegnologie te ondersoek. Dit bespreek die eerste lootsprojek en die komplekse faktore waf in ag geneem moet work om hierdie tipe oplosSings te suksesvol te implementeer. Die eerste gedeelte van die verslag handel oor die projek waar die idees van die verskaffingskettingtegnologie en sogteware no' yore gekom het. Dit bespreek die agtergrond van" die projek, die oneffektiwiteit van die bestaande prosesse en hoevlak spesifikasies vereistes vir toekomstige sagteware. Hierdie spesifikasies word gespesifiseer in die mate waartoe dit die kanaalbestuurders kan ondersteun. Dit word gevolg deur die analise van metodes en tegnieke wat die potensiaal besit om aan die hoevlak spesifikasies te voldoen. Die resultaat van hierdie analise dui aan dat deterministieseprogrammering die mees gepaste benadering is tot hierdie tipe besluitneming. (Dit geld as gevolg van die huidige ontwikkeling in sagteware tegnologie). Hierna word detail spesifikasies outgestip deur 'n stel prosesmodelle en prosesbeskrywings. 'n Aantal altenatiewe sagteware oplossings word geevalueer volgens hul vermoe en kapasiteit om hieraan te voldoen. 'n Produk word gekies en aangekoop. Die CAPS pakket vir verskaffingskettingapplikasies was die mees geskikte pakket vir hierdie spesifieke behoeftes en vereistes. Die res van die dokument bespreek die aanpassing en ontwikkeling van CAPS vir die klient om sodat dit gebruik kan word in projekte. Dit beskryf die datavereistes, data insameling, vereiste personeel vermoens vir die gebruik van die pakket en 'n vinnige oor$ig oor die gebruik daarvan. 'n Oorsig oor die lootsprojek wat sou volg word ook verskaf. Hierdie projek sal gebruik word om die voordele aan te dui in die gebruik van hierdie pakket in verskaffingskettingoptimisering. Die outeur het die organisasie verlaat voor die pakket aangeskaf is en die lootsprojek is nooit voltooi nie, maar 'n aantal lesse wat geleer is en faktore wat oorweeg moet met die implementering en gebruik van so 'n pakket word bespreek. Hierdie faktore sluit die organisasiestruktuur, die organisasie se rol in die verskaffingsketting en die verskaffingsketting prysbeginsels in. Die laaste gedeelte van die dokument gee 'n oorsig oor die huidige denke in terme van Verskaffingskettingbestuur soos gevind by internationale gevorderde logistieke organisasies.

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