Saturday, 31 January 2015

Chit Chat: 2015 Restaurant Trends Part Two

Want to know more about the restaurant trends we’re expected to see more of this year? Here are five more of our “ones to watch”.
  • Consumers enjoying bitter flavours. - Think of dark coffees, deeper chocolate and strong beers full of intense hop flavours and you’ll be on the right track. Consumers are mad about the bitter flavours and restaurants are going to give them what they want.
  • Healthier eaters. – Consumers want to live a healthier lifestyle and they care about the food they eat.  Personalised diets are expected to increase in popularity and nutrition is the keyword everyone wants to hear.
  • Local foods. - Consumers want local foods, they want to know where it comes from and that it’s a sustainable source. Chain restaurants are going to struggle with this one! It will be difficult for the chain restaurants to convince their clientele that the foods are environmentally friendly and local.
  • The human focus. -  Consumers care about the people who create and serve their food. They want them to be paid well and be a part of a sustainable food chain.
  • Generation Z. - Teens are becoming more independent in their decision making processes and it’s now time for the restaurant owners turn their focus on obtaining their custom rather than giving the millennial all of their attention.

Friday, 30 January 2015

How to Implement a Demand Driven Supply Chain

If the demand driven supply chain isn’t integrated properly the operational costs will increase and the entire chain will be inefficient. Customer satisfaction is placed as the highest goal of the organisation and this is an integral part of the implementation of the demand driven supply chain. Customer satisfaction can be obtained by focusing on on-time deliveries while maintaining the minimal inventory levels.

The sales and operation process needs to be laid out as follows:
  • Generation of the aggregate demand
  • Forecasts modification using the demand intelligence
  • Creation of consensus forecast
  • Creation of the rough cut capacity plan
  • Creation of individual item level against the level of demand
  • Performance measurement

Thursday, 29 January 2015

What are the Differences between Supply Chain and Demand Chain Management?

Demand chain management is used to help companies to be proactive despite the volatile marketplace. The demand chain is focused on the market and the consumers during the planning, production and processing. When using this method the company is able to adjust quickly to the increase or decrease in demand changes.

There are four characteristics that stand out in the demand chain, which are different compared to the supply chain:
  • Coordination – Making sure everyone is on the same playing field is essential. All parties in the demand chain have to be able to make swift adjustments and react with the consumer demand.
  • Communication – As the demand chain needs to be agile the chain has to be able to communicate excellently and quickly.
  • Capacity – The right tools and the right teams are required to make the demand driven supply chain work effectively.
  • Commitment – The demand driven supply chain has a large number of stakeholders. Each needs to be fully committed and have the patience to wait for the demand chain to be fully implemented. All leaders have to be consistent and committed to ensure their responsibilities in the chain are met.

Characteristics Comparison
Supply Chain
Demand Chain
Design focus
Differed product differentiation
Collaborative filtering
Optimisation focus
Stock (product, service, idea)
Customer demand
Customer orientation
To satisfy every order, every day at the lowest cost
To attract and retain the most profitable customer
Data requirement
Past data extraction
Real time data
Defining characteristic
Regula ted process
Control mechanism
Trust mechanism
Positioning output
End of process
Throughout the process
Information flow
Push data management
Pull data management
End to end commitment
Process vs. function source
Aligned process managed through functions/ channel to consumer real need
All time/cost that does not directly touch product or satisfy goal
Any deviation from brand experience
(Source: Demand Chain Management Model 2013)

Wednesday, 28 January 2015

Toy Supply Chain Management Practices: What are the Supply Chain Management Practices for Toy Retailers?

There are different channels of toy retailers (department stores, discounters, independent toy specialists etc.) and the different retailers use different types of supply chains. There are three supply chain options are that frequently chosen by the retailers.
  • Just in Time – Just in Time ("JIT" also known as “pull” retailers) are used by retailers that have no or limited access to a distribution warehouse. They order in small batches that are based upon the demand of the consumer. The shelves of the store are usually well stocked and the stock kept low. These JIT retailers usually have the most sophisticated IT infrastructure and implement continuous replenishment and collaborative forecast.
  • Mixed Model – Mixed model supply chain management is used by the retailers that aren’t only limited to the sale of toys. It’s a common approach used by discounters and hypermarkets that have a regional distribution warehouse. Orders are made early in exchange for discounts and there is a high variability in demand. Markdowns are common and response times are slow when using thus system.
  • One off or Push – The wholesalers, supermarkets and department stores commonly use the one off method. The range of toys is expanded over the Christmas period, concentrating on the most popular and profitable toys of the moment. These types of retailers only place orders a few times in the year and they order in large batches, with limited replenishment. Risk is high as the retailers carry the inventory and risk obsolescence.

Supply Chain Management Practices
“Just in Time (JIT)”/ “Pull” Retailers
“Main-order”/”Mixed model” Retailers
“One-off”/ “Push” Retailers
A few toy specialists and (more advance) discounters
Mostly (more advance) department stores or supermarkets, discounters and hypermarkets
Mainly traditional wholesales, some department stores and supermarkets
Do not own a distribution warehouse
Normally own regional distribution centres (RDC)
Regional distribution centres (RDC)
Annual Retailer Demand Pattern (Approximately)
60-80% Pull
20-40% Push - (usually introduction of new productions and preparation of Christmas season)
20-40% Pull
60-80% Push – (mainly introduction of new products, promotional campaigns, preparation for Christmas seasons)
20% Pull
80% Push
Retail Strategy
Store location
- Sub-urban/high street
- High street/ sub-urban
- High street
Pricing or mark-up
- Low & medium
- Low & medium
- Medium & high
Assortment (toys)
- Deep (~10,000 SKU)
- Medium (~4,000 SKU)
- Low (seasonal)
Three main performance metrics
- Fill rate,
- Shelf-availability
- Supplier delivery reliability
-Weeks of supply availability
- Inventory turn
- Retail closing stock
-Retail closing stock
- Inventory turn
- Supplier delivery reliability
Distribution & Logistics
Delivery to
- Stores/ cross-docking
- Retailer’s Regional Distribution Centre (RDC)/ stores
- Retailer’s Regional Distribution Centre (RDC)/ / stores
Replenish freq.
- Daily (two to three times per week)
- Weekly
- Monthly
- Pushed basis
- Monthly
- Quarterly
1-7 days
1-30 days
>30 days
Order size
- Pieces
- Pieces/Carton/Pallet
- Carton/Pallet
Bullwhip effects
- Low demand variability
- Induced seasonality
- High demand variability< /p>
- Induced seasonality
- High demand variability 
- Induced seasonality
Information sharing & coordination
- Very important
- POS data are shared by all retailers
- Important
- POS data are shared by some retailers
- Not important
- POS data are shared by some retailers
Inventory & Cost Management Performance
- Low obsolete inventory
- High lost sales
- High obsolete inventory
- Markdown and lost sales
- Lower finished goods inventory
- Obsolescent
Current SCM Initiatives
- Collaborative Forecast
- Accurate response
- Collaborative Forecast
- None
Future SCM Initiatives
- Accurate Response
- Cross-docking
- Cross-docking
- Cross-docking

(Source: Supply chain management practices in toy supply chain 2005)

Tuesday, 27 January 2015

Toy Supply Chain Management Practices: What are the Special Features that Distinguish the Toy Industry from other Industries?

The toy industry is special features that make the industry different from other industries are as follows:
  • Sales seasonality. The sale of toys is concentrated into short selling windows as around 60-70 percentage of toys are sold during the last quarter of the year with seasonality factor of five to ten, according to toy manufacturers. In order for toy manufacturer to produce according to actual consumer demand, they will need five to ten times larger capacities.
  • Short life cycles. The attention span of children is now shorter resulting in shorter toy life cycles. The sales window for movie related toys used to be four to six months but now it is two months or less. The trend of play being inspired by characters and stories means toys are often popular for shorter periods of times to only while the craze lasts.
  • Competition in innovation and costs. Toys innovativeness is very important as most toys tend to fail in the market so creativity is a must for the designers as well as pricing. For some toy manufacturer, the falling price has forced them to produce more retro toys due to the already established brand awareness and lower marketing investment required.
  • Supply & demand unpredictability. The frequent changes in consumer’s preferences such as impulse buying, seasonality and price competition all contribute to the uncertainty of consumer demand thus many retailers and manufacturer order less than the actual consumer demand.
  • Intense vertical competition. Price competition has been increased thanks to higher purchasing power from discount stores and hypermarkets.

Monday, 26 January 2015

Toy Supply Chain Management Practices: What are the Characteristics of the Toy Supply Chain?

The nature of toys is extremely volatile and seasonal due to the unpredictable, irregular demands, short product life cycle and specific selling windows. The toy industry can incur high costs of obsolete inventory, lost sales and mark down when compared to other industries; thus, sourcing, production, distribution and retail practices in the toy supply chain can be very different in less volatile industries. In order for the toy industry to survive, they need to provide the right toys at the right quantity at the right stores during the short selling windows and provide creative but price competitive toys.

Characteristics of toy supply chain

Toys are divided into different categories such as traditional toys (action figures, dolls, plush, puzzles, vehicles) to modern video games. While traditional toys have become quite stagnant in recent years, video games have been enjoying a period of steady growth.

Both of the categories share similar characteristics. The supply chain consists of:
  • Suppliers of materials and raw materials
  • Manufacturers of toys
  • Distributors and wholesalers of toys
  • Toy retailers
  • Consumers of toys
The main toys consumers are children but also include parents and grandparents along with gift buyers. Although children usually make the decisions, it is the parents and the grandparents that pay for them. When it comes to buying toys, the traditional methods remain powerful, such as the department stores, supermarkets, specialists and independent toy retailers. According to the Toy Industries Association (2004), new channels such as hypermarkets are also proving to be increasing in popularity while online sales still remain slow.

Toy sellers usually purchase toys from manufacturer or wholesalers and toy manufacturer usually have their own brands and designs.  Toys are made of different raw materials (plastic, woods, tex tile, metal), components (moulded and electronic) and packaging materials (box, can, printed material).  Manufacturing these usually requires a manual assembly process so a common strategy is usually to outsource to low-cost countries.

Toy industries face new trends these days.  According to past studies, the new toy age has been shortened to ten years of age. Kids are getting older younger (KGOY) as children usually grown out of toys by the time they reach double digits. The age between eight to ten called the “tween” demand more sophisticated and fad driven toys and entertainment as they are more fashion-conscious and fad loving.  For toy retailers, sales are increasingly dominated by mass discounters and toy superstores.

Saturday, 24 January 2015

ChitChat: 2015 Restaurant Trends Part One

2015 is here and already the restaurant trends are making themselves known. Here are the trends that are expected to continue or begin during the next 12 months.
  • Bragging Rights. - Dinners want their bragging rights when they dine out. Expect to see restaurants embrace this by working on their social media channels, especially with Twitter.
  • Smaller Menus. - Focusing on reducing the size of menus and their dining rooms but always delivering the highest menus. New tech is being used too and as a result restaurants are seeing staff layoffs.
  • Eating on the go. - Consumers are living busy lives and so the traditional sit down restaurants and no longer thriving. However, consumers are also more health conscious so expect to see fresh and healthy fast food vendors thrive.
  • It’s all about the drinks. - Beverages are no longer just the supporting act in the restaurant, they are now big business. More restaurants are expected to create their own alcoholic and non-alcoholic beverages this year.
  • Asian foods. - Watch out for more Korean and Vietnamese foods that are expected to take over the more mainstream menus.  This is a change of direction from the more Americanised versions of Asian foods.
Next time, we’ll be looking at the final five trends to watch out for in 2015.

Friday, 23 January 2015

How do Operations and Supply Strategies work in Competitive Markets? Part Three

Today is our final installment looking at how operations and supply strategies work in the competitive markets.  Don’t forget to check out our previous posts if you’ve missed them!

Notion of Trade Offs
Firms use the logic that they’re going to be unable to excel in all competitive dimensions at the same time. Therefore the management will establish the parameters of performance that are essential for success and concentrate the resources in these areas. The trade-offs happen with the activities show that more of one thing requires less of another.  Straddling happens with the firm is looking to match the benefits of a successful position while maintaining their current position.

Order Winners and Qualifiers
To understand the markets businesses need to build an interface between marking and operations. Using order winner and order qualifier, it’s possible to establish the key marking oriented dimensions for competitive success. Order winners differentiate products or services from another. Order qualifiers ensure if the products could be considered as purchases after the products or services are screened.

Thursday, 22 January 2015

How do Operations and Supply Strategies work in Competitive Markets? Part Two

Firms need to look at creating operations and supply strategies that help them to compete in the competitive markets.

Reliable Deliveries - Firms need to be able to deliver on time and when promised, if not before. Suppliers must be able to provide materials and parts on time for production. Reliable deliveries are essential.

Demand – Demand fluctuations occur in many markets and firms have to be able to respond to both increases and decreases in demand if they want to compete. When demand increases the costs can be reduced thanks to economies of scale. When the firm needs to scale back decisions must be made on how to cope and survive, such as reducing assets or cutting back employees.

Flexibility – The firm can increase their flexibility by offering multiple products to the cust omers. The firm will need to account for the time that products take to design and produce.

Support – the support provided via special services can increase the competitiveness of the firm through different activities including:

·  Technical support
·  Launch date targets
·  After sales support from suppliers
·  Options in sizes, colours as well as customisation

Wednesday, 21 January 2015

How do Operations and Supply Strategies work in Competitive Markets? Part One

There are many different dimensions that determine the competitive position of a firm in the marketplace. Over the next three days, we will take a look at them.

Cheaper Services Provided by the Producer
Low cost producers provide goods at affordable rates. Lots of companies are low cost producers and they create large volumes to sell for less. It’s a fiercely competitive market and many firms fail because of this. On the opposite side of the scale are the high cost producers who focus on high quality and price that appeal to a different market.

Quality Products or Delivering Great Service
The two distinguishing characteristics of quality products or services are:

Design Quality – The higher value products use high quality materials and are designed to meet requirements of the customers.
·  Process Quality– The product or service must be reliable and defect free.

Quick Production or Service Delivery Times

It’s essential to be able to deliver quicker than the competitors. Speed can make a difference to customers and progressive companies which focus on enabling customers to receive products or services as quickly as possible.

Tuesday, 20 January 2015

Operations and Supply Strategies in Various Processes

The operations and supply strategy set in place in order to create plans and policies to ensure the firm is able to make the best use of the resources that enable their long term competitive strategy. The firm should incorporate their operations and supply strategy with the corporate strategy so they are fully integrated. It’s vital that the strategy is set up to work around any potential changes, so it’s flexible over the long term.

The operations and supply strategies that support the design process and relate to all the processes and infrastructures required. The design process involves decisions including:
  • Technology
  • Sizing of the process
  • Inventory
  • Location
Logical planning is required so that decisions can be made with the planning and control systems, approaches to control, payment structures, organisation of the operation functions and quality assurance . The operations and supply strategy are coordinated with the planning process in order to meet the long term goals of the organisation.

Monday, 19 January 2015

What are the Concepts used in Capacity Planning? Capacity Flexibility

Demands change and flexibility is required in production. The capacity flexibility allows the firm to be able to deal with fluctuations and make quick changes in the production levels or have the ability to move between different products or services. Capacity flexibility required flexible processes, workers and plants as well as strategies involving other organisations. The designing of supply chains now often involves the capacity flexibility.

Flexible plants have the ultimate goal of zero change over time. Equipment could be moved, access increased and utilities made to be re-routable so changes can be done easily.

Flexible processes require flexible manufacturing systems that can be quickly and easily moved and set up to allow for switching between products at low cost to the organisation.

Flexible workers will have lots of skills and be competent at switching between the different tasks. They require a wide level of training rather than being specialised in a specific area.

Friday, 16 January 2015

What are the Concepts used in Capacity Planning? Capacity Focus

Production facilities generally work at their best when they have a limited amount of production objectives. Companies shouldn’t be focused on mastering all aspects of the manufacturing performance, such as the costs, quality, reliability, flexibility and the speed of delivery. It’s better to focus on a smaller amount of tasks that are the most important and contribute more to the objectives of the corporation.

Having said that, in modern manufacturing there have been breakthroughs that have allowed the factory objectives to be focused upon doing well. Dealing with this contradiction involves looking at the technology the firm has in coping with the multiple objectives effectively or by looking at the practicalities to establish if the firm is in an industry that requires them to use a full range of capabilities in order to maintain and compete in the market.

The use of plants within plants can also be used as a way of using the capacity focus operation. The plants have different sub organisations and process policies along with production control methods and management policies used to create different products.

Thursday, 15 January 2015

What are the Concepts used in Capacity Planning? Economies and Diseconomies of Scales

Capacity refers to an attainable rate of output. An important measure that reveals how close a firm is to its best spending level is capacity utilization rate:

Capacity utilization rate = Capacity used/best operating level.

The cost per unit of output decreases when the size of production plant and the volume of products increase. There are a few reasons for this, such as the reduced operations and capital costs as larger equipment increases the capacity yet wouldn't necessarily cost more to run. The production plants also increase their efficiency once they are big enough to use their dedicated resources for administration support, material handling and information technology.

When a production plant becomes too big the diseconomies of scale will cause problems. For example the demand requirements required to keep the entire plant busy might involve discounting the products. Reducing the downtime of large scale equipment is necessary. 

Wednesday, 14 January 2015

What are the 3 Durations in Capacity Planning?

There are three general time durations used in capacity planning:

Long range
Long range capacity planning refers to the time period greater than one year. This is when the resources used in production take a long time to acquire or get rid of. This long range planning needs input and approval from the top management.

Intermediate Range
The intermediate range in capacity planning refers to the time period for of next 6 to 18 months. The capacity could be affected by the purchasing of minor equipment, labour changes and new tools.

Short Range
The short range capacity planning refers to the time period of less than a month. The short range capacity planning is worked into the daily or weekly schedules. Adjustments can be made to cope with the variances of the planned and actual outputs. Overtime, production routing changes and transfers are included as the alternatives.

Tuesday, 13 January 2015

What are the 3 Steps to Align the Supply Chain and Business Strategy? Part Two

Once the company has established the three steps to align the supply chain and business strategy as discussed in yesterday’s article, there are five drivers in the supply chain that still need to be addressed in regards to the responsiveness and efficiency of the supply chain.
  1. ProductionTo be responsive production needs to have access capacity, flexible manufacturing and lots of smaller factories. The flexible production will be able to serve customers quickly and have short lead times. For efficiency production have reduced excess capacity, narrow focus and only a few centrally located plants.
  2. Inventory can be responsive by having high inventory levels with a wide range of items. To be efficient they have low inventory levels and fewer items.
  3. Location decisions that are responsive are when the locations are chosen that are close to the customers. To be efficient only a small number of central locations that serve a wide area.
  4. Transportation uses frequent shipments that are fast and flexible to be responsive. To be efficient they ship fewer but larger shipments using slower and cheaper transportation modes.
  5. Information is responsive by collecting and sharing accurate and timely data and is efficient as the cost of information drops while other costs increase.

By working through these five drivers in the company, you will be able to complete the third step and align your supply chain together with your business strategy.

Monday, 12 January 2015

What are the 3 Steps to Align the Supply Chain and Business Strategy? Part One

The three steps that are used to align the supply chain and the business strategy are:

  1. Understanding your company’s market. What do the customers expect and want, how many products will be required? Will they want immediate delivery of goods that are ready to ship or will they be happy to wait for the product to be made or put together? How much will they be happy to pay for the product and the service they will receive? It’s also important to consider the innovation of the products being sold. Will they have a long life on the market or will the products become obsolete in a short time frame?
  2. Defining your company’s competencies. Define the strengths of your skills and where you belong in the supply chain. What type of company are you? Are you a producer, distributor, retailer or service provider? Where do you make money? By establishing answers to these questions, you can decide on the supply chain role best suited for your company.  If you serve multiple markets, it is necessary to determine and leverage the core competencies.
  3. Develop the supply chain capabilities. The development of the supply chain capabilities will support the role you play within the supply chain. This step must be completed after the first two steps so you’re fully aware of your market and the role that you play. In order to complete this step the company needs to work through the five supply chain drivers: production, inventory, location, transportation and information.

Return tomorrow when we’ll be taking a look at the five drivers used to develop the supply chain capabilities in more detail.

Saturday, 10 January 2015

Top Business Trends 2015

Now that 2015 is here, we thought we’d take a look at some of the top expected business trends that are going to be experienced this year according to experts.

Consumer Market Trends

It’s expected that the global consumer market is going to put demands on niche services and products like never before in 2015. Electronics and biotechnology markets require new intelligence assets and innovations resulting in the biggest consumer economies of scale in these areas.

With income rising in emerging markets, more demand will be placed on technological developments. Channel marketing challenges will need to be faced by those companies looking to enter the market and stiff competition will be experienced by the national manufacturers and national service providers.

2015 will see finance models changing due to the regulatory reforms that resulted from the global financial crisis of 2008. Fewer banking restrictions on consumer finance for retail business is being sought by organisations using industrial loan companies.

Strategic Sustainability
Social responsibility campaigns are critical in 2015. Companies will be focusing on their social responsibility campaigns, working the environmental concerns in the marketplace, community and the assets of the stakeholders into one clear strategy. Sustainable growth will be developed focused on the reporting of social responsibility benchmarks, cost efficiencies, developing ethics and risk management as well as making charitable contributions.

Being able to interpret key trends will have an impact on productivity and how it is management. New developments in electronic exchanges must be welcomed in.

New Enterprise Technologies

Business and technology are now as one and therefore the system approach to operations are the most influential base of business communications. By combining virtual solutions and new technology more growth will be seen in 2015.

Real time agility is expected to produce the highest yield marketing opportunities. It will shape the customer relationships, improve customer satisfaction and increase the proficiency of the proficiency of enterprise within an operational capacity.

Outsourcing is expected to continue to rise as businesses continue to measure the social impact of innovating technologies. Employees will require continual training too in order to keep on top of the latest technological solutions that will be introduced to benefit business strategies.