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Improving Supply Chain Performance Using Sales and Operations Planning: A Case Study in a Leather Company

Rachman, Ayu Amalia LU and Paramawardhani, Herninanjati LU (2018) MTTM02 20181
Engineering Logistics
Abstract
The changing customers’ behavior nowadays strongly affects the market situation in any type of industries. Markets are demanding a shorter delivery lead time, shorter product life cycle and higher flexibility to fulfill customers’ expectation. In order to fully adapt in this kind of situation and maintain competitiveness in the market, a company need to have better collaboration internally and externally. Sales and Operations Planning (S&OP) is a process that facilitate company in better aligning supply and demand planning through intensive collaboration and information sharing within and between company along the supply chain. The research for this thesis has been conducted in Tannery A, one of the leather division in a global footwear... (More)
The changing customers’ behavior nowadays strongly affects the market situation in any type of industries. Markets are demanding a shorter delivery lead time, shorter product life cycle and higher flexibility to fulfill customers’ expectation. In order to fully adapt in this kind of situation and maintain competitiveness in the market, a company need to have better collaboration internally and externally. Sales and Operations Planning (S&OP) is a process that facilitate company in better aligning supply and demand planning through intensive collaboration and information sharing within and between company along the supply chain. The research for this thesis has been conducted in Tannery A, one of the leather division in a global footwear company. The main activity in the home organization is producing wet blue (semi-finished leather) that will be supplied to the other units and sold to the external customers. Currently, the company experiences difficulty in identifying the actual problem that causes the supply chain activities could not perform optimally. As the result, company often faces some obstacles while fulfilling customer’ orders. In addition, minimum acknowledgment of S&OP and different level of understanding between parties also influence company’s performance. These will lead to low coordination between parties and failure to achieve supply chain’s strategic objectives. The aim of the study is to identify the actual problem in the wet blue supply chain and provide a suggestion to improve the sales and operations planning in Tannery A. This research follows a single case study approach with an inductive qualitative–quantitative method. Data collection is achieved through on-site observations, questionnaires, preliminary interviews, and core interviews. There are two research questions addressed in the study. The first one is to find the actual problem in the wet blue supply chain. During the preliminary studies and data collection processes, the company indicated that the forecast bias is the main problem in the wet blue supply chain. However, after performing empirical analysis, it has been found that the main problem is imbalance between supply and demand with forecast bias only one of the factors cause it. Two main factors that cause this problem has been identified including internal (silo thinking) and external factors. After investigating the problem using cause-and-effect diagram, seven root causes were identified. A 2x2 problem-solving matrix was developed in prioritizing the cause to be improved based on its effort and significance to the whole supply chain. To answer research question number two, the S&OP pre and post maturity evaluation was conducted to assess the S&OP implementation in the company. However, there is a gap between the results and the actual conditions. Thus, initial steps are proposed to the home organization eliminate the gap. Further in the recommendation, four levels of improving S&OP, which are based on the time, resources and investments, were proposed. A consolidation framework is developed to illustrate how improving the root causes has a direct relationship in improving S&OP to accomplish better wet blue supply chain performance. (Less)
Popular Abstract
Operations in a supply chain network are not always in a steady state. As market changing rapidly, this condition creates more uncertainties to the company. It increases demand’s variation, shorter product life cycle, and shorter lead-times expectancy from the customers. Higher market flexibility, limited number of suppliers and source of materials could also add more complexity and affect supply chain performance. This research is a case study in a leather company with a complex situation. The authors aim to find actual problem in the company by identifying any possible causes of supply chain disruptions. The study also investigated the current implementation of sales and operations planning in the company. The ultimate purpose is to... (More)
Operations in a supply chain network are not always in a steady state. As market changing rapidly, this condition creates more uncertainties to the company. It increases demand’s variation, shorter product life cycle, and shorter lead-times expectancy from the customers. Higher market flexibility, limited number of suppliers and source of materials could also add more complexity and affect supply chain performance. This research is a case study in a leather company with a complex situation. The authors aim to find actual problem in the company by identifying any possible causes of supply chain disruptions. The study also investigated the current implementation of sales and operations planning in the company. The ultimate purpose is to improve the supply chain performance. The first aim of the study is to find the actual supply chain problem. The imbalance between supply and demand was identified as the actual problem in the wet blue supply chain. Two external causes and five internal causes related to silo mentality were identified from the Ishikawa diagram. In this study, authors proposed a set of recommendation such as a prioritization matrix that can be implemented by the company to address the causes based on their significance and effort. The second purpose of the study is to improve the supply chain performance based on the sales and operations planning. A consolidation framework was developed to see the relationship between cause-effect analysis and the sales and operations planning process assessments. It has been seen in this study that by solving the causes in supply chain disruptions has a direct impact in improving sales and operations planning performance. (Less)
Please use this url to cite or link to this publication:
author
Rachman, Ayu Amalia LU and Paramawardhani, Herninanjati LU
supervisor
organization
course
MTTM02 20181
year
type
H2 - Master's Degree (Two Years)
subject
keywords
Supply chain, root cause analysis, sales and operations planning
report number
5866
language
English
id
8953511
date added to LUP
2018-07-02 13:11:18
date last changed
2018-07-02 13:11:18
@misc{8953511,
  abstract     = {The changing customers’ behavior nowadays strongly affects the market situation in any type of industries. Markets are demanding a shorter delivery lead time, shorter product life cycle and higher flexibility to fulfill customers’ expectation. In order to fully adapt in this kind of situation and maintain competitiveness in the market, a company need to have better collaboration internally and externally. Sales and Operations Planning (S&OP) is a process that facilitate company in better aligning supply and demand planning through intensive collaboration and information sharing within and between company along the supply chain. The research for this thesis has been conducted in Tannery A, one of the leather division in a global footwear company. The main activity in the home organization is producing wet blue (semi-finished leather) that will be supplied to the other units and sold to the external customers. Currently, the company experiences difficulty in identifying the actual problem that causes the supply chain activities could not perform optimally. As the result, company often faces some obstacles while fulfilling customer’ orders. In addition, minimum acknowledgment of S&OP and different level of understanding between parties also influence company’s performance. These will lead to low coordination between parties and failure to achieve supply chain’s strategic objectives. The aim of the study is to identify the actual problem in the wet blue supply chain and provide a suggestion to improve the sales and operations planning in Tannery A. This research follows a single case study approach with an inductive qualitative–quantitative method. Data collection is achieved through on-site observations, questionnaires, preliminary interviews, and core interviews. There are two research questions addressed in the study. The first one is to find the actual problem in the wet blue supply chain. During the preliminary studies and data collection processes, the company indicated that the forecast bias is the main problem in the wet blue supply chain. However, after performing empirical analysis, it has been found that the main problem is imbalance between supply and demand with forecast bias only one of the factors cause it. Two main factors that cause this problem has been identified including internal (silo thinking) and external factors. After investigating the problem using cause-and-effect diagram, seven root causes were identified. A 2x2 problem-solving matrix was developed in prioritizing the cause to be improved based on its effort and significance to the whole supply chain. To answer research question number two, the S&OP pre and post maturity evaluation was conducted to assess the S&OP implementation in the company. However, there is a gap between the results and the actual conditions. Thus, initial steps are proposed to the home organization eliminate the gap. Further in the recommendation, four levels of improving S&OP, which are based on the time, resources and investments, were proposed. A consolidation framework is developed to illustrate how improving the root causes has a direct relationship in improving S&OP to accomplish better wet blue supply chain performance.},
  author       = {Rachman, Ayu Amalia and Paramawardhani, Herninanjati},
  keyword      = {Supply chain,root cause analysis,sales and operations planning},
  language     = {eng},
  note         = {Student Paper},
  title        = {Improving Supply Chain Performance Using Sales and Operations Planning: A Case Study in a Leather Company},
  year         = {2018},
}