rewriting work (1050 words excluding reference)

Supply Chain Constraint Study

ISCOM/370

Introduction

Ameritex International is a Los Angeles based company that has been manufacturing bedding and window treatments for the hospitality industry since 1997. They have been manufacturing bedding and window treatments for motels and/or smaller hotel chains throughout Southern California for the last 20 years. They started off with one production factory, but now they have two. This paper will discuss how the company responds to predictable variability and integrates aggregate planning into the supply chain. It will also describe how supply is managed at Ameritex and how demand is determined at this company. I will also explain how sales and operations plan of Ameritex affects its supply chain performance and maximizes the company’s profitability along with the effect of risk management processes on supply chain constraints with examples that will support my argument.

Predictable Variability

Predictable variability is change in the demand that can be forecast. Products may that undergo this type of change in demand create many issues in the supply chain, from increased levels of stockouts during peak seasons to high levels of excess inventory when demands are low. These issues increase the costs and decrease the responsiveness of the supply chain (Chopra & Meindl, 2016, Chapter 9). The company should hand predictable variability by manage supply using capacity and inventory and manage demand by using short-term price discounts and/or promotions. Ameritex is a manufacturer of bedding and window treatments. They make bedding and window treatments that is project based. Demand for bedding and window treatments is a non-seasonal demand that is mostly based on project based. Ameritex will plan to have enough manufacturing capacity to meet the demand for at least six months, since it takes 5 months to get the blackout curtains and fabric for the windows. Ameritex will have an advantage because they will incur the lowest possible inventory costs, but one great disadvantage is that they might have overstock of fabric when demand is lower.

Supply is managed at Ameritex by controlling the inventory and the production capacity. Ameritex has 2 plants there they can utilize that will have a stable output of products over time and can produce a larger volume. Supply chains can influence demand by using pricing and other various forms of promotion. When a promotion is offered during a period’s demand tends to go up. This increase in demand results from a combination of market growth, stealing share and forward buying. Ameritex offers discounts to their customers who purchase a combo of drape, blackout and scarf at the end of year. Ameritex main goal is to build demand for the following year (Chopra & Meindl, 2016, Chapter 9).

Sales and operations plan can have a big impact to the supply chain. For example, if the company offers promotions in certain months it can have an effect on the supply chain. According to the text, there can be an increase in average inventory if a promotion is run during the peak period but decrease if it ran during the off-peak period. It can also decrease the overall profitability depending on the amount of consumption. If Ameritex decides to have a 2nd promotion at the beginning of the year, it will affect their supply chain because they will not have enough fabric to produce the demand for the 2nd promotion.

Supply chain risk management (SCRM) is known as the implementation of strategies to manage both everyday and exceptional risks along the supply chain based on a continuous risk assessment with the goal of reducing vulnerability. A few ways to practice supply risk management is to automate processes to collect, analyze and manage supplier information. Have supplier performance information in the analysis for review. Identify red flags that are indicators and use technology for early detection. Integrate SCRM platforms with supply chain management software to show spending (Supply Chain Risk Management, n.d).

Ameritex can improve the following strategies to improve the overall supply chain.

They should manage their inventory better. Since it takes 5 months to receive fabric, source a different supplier with a shorter lead time. That can keep cost low by not stocking half a year’s worth of inventory that might be left over and not produced. Ameritex can also improve their distribution network. Currently they are using an outdated software program that doesn’t have real time information. Their purchasing team doesn’t communicate with the sales team or the warehouse. They should improve their distribution network by investing in a warehouse inventory software, that allows all the departments to communicate with each other. Improve and control customer cash. Ameritex recently lost a key employee in accounts receivables and have since missed receiving payments from their customer, which had a negative impact with their finances. By resolving late or missed payment issues will result in overall better control in the cash flow.

Conclusion

Ameritex has been in business since 1997, and they are steadily growing every year. They have two production plants that help them keep their cost low when it comes to inventory. Supply chains can influence demand by using pricing and other various forms of promotion. This increase in demand results from a combination of market growth, stealing share and forward buying. Ameritex can improve the following strategies to improve the overall supply chain. They should manage their inventory better. Since it takes 5 months to receive fabric, source a different supplier with a shorter lead time. That can keep cost low by not stocking half a year’s worth of inventory that might be left over and not produced. Ameritex can also improve their distribution network. Ameritex recently lost a key employee in accounts receivables and have since missed receiving payments from their customer, which had a negative impact with their finances. By resolving late or missed payment issues will result in overall better control in the cash flow. With the following improvements, Ameritex can thrive for another 20 years in the hospitability market. Ameritex plan on opening up another production facility within the next 5 years.

References

Chopra, S., & Meindl, P. (2016). Supply Chain Management (6th ed.). Retrieved from https://phoenix.vitalsource.com/#/books/9781323456842

What is Aggregate Planning? - Importance and its Strategies (n.d). Retrieved from https://www.managementstudyguide.com/aggregate-planning.htm

Murray, M. (2019). Introduction to Strategic Supply Chain Management. Retrieved from https://www.thebalancesmb.com

Supply chain risk management (SCRM) (n.d). Retrieved from https://whatis.techtarget.com/definition/supply-chain-risk-management-SCRM