GSCM 520 – Foundations in Global Supply Chain Management

COURSE PROJECT

GLOBAL SUPPLY CHAIN RESOURCE

PLANNING AND MANAGEMENT

Anthony Owens - Dritan Papazisi - Gerelsuren Zorigt

Michael Nicholas - and Rosalinda Popoca

Submitted to Professor
Alek Granderson , MBA, MPM, PMP
AGranderson@devry.edu

Sunday, December 16, 2018

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Table of Contents
Project Overview........................................................................................................................................... 3
CO1: Given the importance of operations and supply chain management, substantiate the importance of
the operational excellence in managing service and product production, recognizing that organization
structures are now much flatter and are transitioning from functional to customer and product focused.
(Case: Zappos, by Gerelsuren Zorigt) ........................................................................................................... 5
CO2: Given a requirement to globally synchronize the movement of material, information and funds,
design structural approaches to capture and analyze information, develop flexible and sustainable work
processes, and ensure organized decisions, changes and improvements. (Case: Unilever, by Anthony
Owens) .......................................................................................................................................................... 6
CO3: Given the global importance of technology across all sectors of the economy, describe the
importance of electronic commerce with respect to operations and supply chain management, and
formulate a plan for how lean supply chains and global sourcing can combine to increase the revenue of
a given firm. (Case: UPS, by Michael Nicholas) ........................................................................................... 8
CO4: Given a requirement to determine optimal inventory investment in both manufacturing and
service environments, justify the role of inventory, analyze its costs and benefits, and develop a process
to maximize inventory velocity. (Case: John Deere, by Michael Nicholas)................................................ 10
CO5: Given multiple tools and techniques for analyzing and controlling the flow of resources—
forecasting, capacity planning, queuing theory, scheduling, optimization, decision trees, select the
appropriate technique and apply it to a given problem. (Case: Nike, by Gerelsuren Zorigt) ................... 12
CO6: Given the relationship between work structures and designing efficient process flows recommend
how the concepts of capacity analysis, quality management, and Six Sigma improve productivity and
supply chain efficiency. (Case: 3M, by Rosalinda Popoca) ........................................................................ 13
CO7: Given the relationship of sharing customer service processes, purchasing, manufacturing and
distribution systems, recommend how operations and supply chain managers can directly contribute to
improving operations synergies. (Case: Walmart, by Anthony Owens) .................................................. 15
CO8: Given approaches for ensuring predictability and repeatability in operations and supply chains,
discuss the capabilities of Master Production Scheduling (MPS) and Material Requirements Planning
(MRP). (Case: Elkay Manufacturing, by Tani Papazisi) .............................................................................. 17
CO9: Given and understanding of Logistics and Distribution in supply chains, consider the major issues in
locating plant and warehouse facilities, use a factor rating systems to narrow your selections, and review
transportation models to analyze models. (Case: Coca-Cola, by Rosalinda Popoca) ................................ 18
References .................................................................................................................................................. 19

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Project Overview

This project is a group effort put together by group as requirement for GS520 class. Intent was to research and
present a case study different from the ones on the text-book, to illustrate each of the class’s learning objectives. It
was really a good learning experience to bring each of examples with critical sight, based on the literature sources
presented at the end.

Course Objective 1 (Week 1) touching the importance of operations and supply chain management, the operational
excellence in managing service and product production, recognizing that organization structures are now much
flatter and are transitioning from functional to customer and product focused is illustrated with case of Zappos,
which has taken the approach of Holacracy to empower its people to make meaningful decisions in pursuit of
organization’s purpose, Course Objective 2 (Week 1) touching the requirement for a globally synchronized the
movement of material, information and funds, design structural approaches to capture and analyze information,
develop flexible and sustainable work processes, and ensure organized decisions, changes and improvements, is
illustrated with the case of Unilever, which has become a transnational company that targets local markets and
present that opportunities of joining forces with other brands to keep the growth of material needed to fund their
current products before allowing the merging of other companies within their spectrum. Course Objective 3 (Week
6) regarding importance of technology across all sectors of the economy, emphasizing the importance of electronic
commerce with respect to operations and supply chain management, with details how lean supply chains and global
sourcing can combine to increase the revenue of a given firm, is illustrated by the case of UPS, quoting numerous
references. Course Objective 4 (Week 6) treating the optimal inventory investment in both manufacturing and
service environments, justifying the role of inventory, its costs and benefits, with developed a processes to maximize
inventory turns is treated in extent by the case of John Deere. Steps taken by the company are nicely summarized in
a table. Course Objective 5 (Week 2) about tools and techniques used for analyzing and controlling the flow of
resources—forecasting, capacity planning, scheduling, optimization, decision trees, etc is illustrated by the case of
Nike, which has invested in developing new technologies to enhance its manufacturing business model in
automation and new technologies such as 3D printing. Course Objective 6 (Week 3) treating the close relationship
between work structures and designing efficient process flows, the concepts of capacity analysis, quality
management, and Six Sigma for improve productivity and supply chain efficiency, is illustrated with case of 3M. It is
shown that implementing Six Sigma does seem to encourage incremental innovation. Course Objective 7 (Week 4)
expanding on the relationship of sharing customer service processes, purchasing, manufacturing and distribution
systems, explaining how operations and supply chain managers can directly contribute to improving operations
synergies, is illustrated with the case of Walmart, the biggest retailer on the world. Course Objective 8 (Week 5)
regarding approaches for ensuring predictability and repeatability in operations and supply chains, with the
capabilities of Master Production Scheduling (MPS) and Material Requirements Planning (MRP), is illustrated with
the case of Elkay Manufacturing, a privately-owned company headquartered in Elk Grove Illinois. After management
embraced the S&OP approach and implemented the MPS the systems was found out that the “demand-siders” and
the “supply siders” etc, they all meaningfully “handshake” and agree on the sales, production, and inventory plan.
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Course Objective 9 (Week 7) about understanding of Logistics and Distribution in supply chains, plant and warehouse
facilities locations transportation models etc., is illustrated by the case of Coca-Cola, which operates in more than
200 countries and has been the top selling soft drink brand all over the world. Its Commercial Products Supply group
processes more than 400 daily shipments and is responsible for millions of cases in addition to more than 1,000
points of delivery, 4,000 finished goods, and 5,000 ingredients and packaging materials worldwide.

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CO1: Given the importance of operations and supply chain management, substantiate the importance of
the operational excellence in managing service and product production, recognizing that organization
structures are now much flatter and are transitioning from functional to customer and product focused.
(Case: Zappos, by Gerelsuren Zorigt)

Zappos is one of the companies that have been influenced by Brian Robertson speech on holacracy in 2012.
In January of 2014 company officially went holacratic. Since then company is sharing their thought and experience
with holacracy on their website. The holacratic movement is fairly new and there are still controversies about it.
Holacracy is a new type of organizational structure, where hierarchy of management is being replaced,
(Holacracy.org, 2018). They also add “Instead of operating top-down, power is distributed throughout the
organization, giving individuals and teams more freedom to self-manage, while staying aligned to the organization’s
purpose.” Which in theory means there would be no bosses and titles. The very idea of holacracy is foreign for us in
many ways. Our society is not used to these kinds of organization, we don’t know what it is like to have no
management above, and how to self-organize.
In many ways the idea of people working on the team instead of for someone, is fascinating. That would
mean that you could get more freedom with your ideas, and this time you can go forward with them, constantly
creating and innovating. On the other hand, how hard would it be to pull this off? We have managers to plan,
distribute the tasks and control the process that has been made, but if there are no managers and no hierarchy it
seems unachievable to finish started projects.
In January 2014 couple of weeks after Zappos went holacratic, Steve Denning published an article on
Forbes.com (Dennings, 2014), which is titled “Making Sense of Zappos And Holacracy”. This article is very important
because it gives us better idea about Holacracy is about, while also getting rid of some misconceptions. First
misconception that Steve talks about is the fact the holacracy indeed is hierarchical, in its own way. Instead of people
controlling other people, we have circles. Higher circles have complete power of lower circles, they define their
purpose and expectations, and if expectations are not met, then the circle can be changed completely or even
removed. Steve also talk about how Arthur Koestler and Ken Wilber explore the hierarchical structures in everything
around us. We have been living under these structures for a very long time, and it is natural for us to look up to
higher power.
Second misunderstanding explained in the article is the idea that there no managers in holacracy. It is true
that for most holacratic companies there are no titles, however they still need to make sure that they have there for
the outside world. That would insure that people are getting paid according to their market value. Even though there
are no titles in the company, the core roles are extremely important. There are still people who must control the
flow of work and guide other team members.
Steve also mentioned one interesting point about costumers not have their place in the hierarchy. Holacracy
seems to be concentrated on the people working there more than on the costumers. Zappos is known for their
explicit costumer service. Meaning that through all of that they have managed to keep the goal in mind. However,
the entire constitution of Holacracy is vertical and there is no place for costumer in there.

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CO2: Given a requirement to globally synchronize the movement of material, information and funds, design
structural approaches to capture and analyze information, develop flexible and sustainable work processes,
and ensure organized decisions, changes and improvements. (Case: Unilever, by Anthony Owens)

Unilever is one of the foremost transnational companies that consist as an organization of diverse
operations around the world. Unilever was founded in 1930 as a Dutch-British company, it produced soap, processed
foods, and a wide array of other consumer goods in many countries (Maljers, 1992)

Unilever has become a transnational company that targets local markets and present that opportunities of
joining forces with other brands to keep the growth of material needed to fund their current products before
allowing the merging of other companies within their spectrum. Their “thinking transnationally” means an informal
type of worldwide cooperation among self-sufficient units.

After, doing a lot of research I notice the type of concept used is the Darwin system to help retain what is
useful and what needs to be rejected from what is no longer working with their company guidelines. The Darwin
system is an open source operating system that allows companies to make better operational decisions when it
comes to identifying methods to their operating systems usage. (Unilever, 2014)

Unilever operates in fast moving consumer goods (FMCG) markets which involve the manufacture,
distribution and marketing of their branded products. These products help to address abroad range of everyday
needs foods, refreshments, home and personal care. Unilever’s business relies on increasing rare and expensive raw
materials by pushing up the cost of their products without being more efficient of the usage of energy for production
cost helps to increase the product while being more considerable to savings from more sustainable packaging and
less waste. This type of behavior could cause and suffer in the damage of their reputation and possible serious
economic losses. That’s why sustainability is at the heart of everything by ensuring a long-term business that is
attractive to other investors. By, the merging of other companies Unilever benefit from everybody’s creativity and
experience which makes a sophisticated means of transferring information across the organization.

Unilever purpose is to make a sustainable living for the commonplace by seeing their best long-term for the
growth of their company. Unilever’s organizational structure has developed an extent through trial and error and
still have a consistent and long-standing policy. When it comes to the importance of managing people rather than
simply analyzing problems they enjoy incorporating both unity and diversity to their business strategy and structure
to always stay evolving. It was stated that Unilever’s purpose is to help remain distinct in the eyes of the consumer,
retailers and suppliers. This type of vision is why their company has double in size to help reduce the environmental
footprint while increasing their present of having a positive social impact on society.

Unilever’s sustainable living plan (USLP), is to help the operations of the essential supply chain functions
and asset of raw material supply, factories, logistics, go-to-market expertise and marketing. They invest capital to
support the assets and activities. Unilever has certainly evolved into what is now called a transnational in academic
and business policy circles, our actual progress was not made by the application of theory but through a much
messier evolution of trial and error. Yet the company has focused on two consistent and related practices to

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underpin all structural changes, recruitment and training of high-quality managers for the importance of linking and
decentralizing units through a common corporate culture.

Unilever aims for a virtuous circle of profitable volume growth which is driven by investment, innovation
and brands to deliver products to consumers for every day usage. They leverage this scale to spread fixed costs and
improve profitability while further investing in the business. This investment creates new and improved products
that are backed by marketing to create even stronger brands which then drives profitable volume growth and the
virtuous circle of continues movement of their common standards of behavior in their units. By maintaining these
standards, it help to depend on everybody that is involved in the organization to understand and accept the overall
operations.

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CO3: Given the global importance of technology across all sectors of the economy, describe the importance
of electronic commerce with respect to operations and supply chain management, and formulate a plan
for how lean supply chains and global sourcing can combine to increase the revenue of a given firm.
(Case: UPS, by Michael Nicholas)

Continual technological advances in B2B and B2C e-commerce solutions have forced businesses to
streamline operations and improve lean global supply chains to stay competitive. Finding new ways to cut costs,
increase flexibility to meet customer demands that are increasingly more customizable, and shorten delivery times
are just some ways companies are trying to gain a competitive advantage and stay profitable. Advances in
technology, e-commerce, and cloud-based solutions allow companies to share information to streamline logistics,
reduce marketing costs and improve B2B and B2C communication, and improve in-house operations. Global
sourcing and direct-to-store or direct-to-consumer demands have increased the need to create more lean supply
chains and logistics operations. To stay competitive, companies will concentrate on what they specialize in, be it
production, service, retail, logistics, etc., and are more willing to outsource needs to other companies to cut
inventory, transportation, warehousing, and customs costs wherever possible. (Karmaker, 2012, Nimna, 2017)

United Parcel Service, or UPS, is a third-party logistics company that specializes in transportation, delivery,
and facilitating international trade. (UPS.com, 2018). UPS uses cloud-based technology to facilitate transporting
packages and freight across the globe, allowing businesses to cut costs in warehousing, inventory, and transportation
across borders, track their packages/freight throughout the process, and lower delivery time dramatically. (Zaccara,
2018). Through its online options, UPS allows companies to transport goods direct-to-store over the ocean (UPS
Trade Direct Ocean), by air (UPS Trade Direct Air), and across land to different countries (UPS Trade Direct Cross
Border). UPS online services include the Quantum View Suite (Manage, Notify, Data, Custom); these options allow
companies to track shipments anywhere throughout the supply chain, coordinate with partners to manage supply
chains, integrate shipping data into existing business and accounting systems, keep customers and business partner
apprised of status changes, and customize functions specific to a business/customer.

UPS uses in-house technology tools to continue to streamline its own business and improve its on-time
delivery performance. UPS Peak Volume Alignment Tool uses analytics to coordinate volume demand with capacity.
UPS Network Planning Tools coordinates UPS truck movements between hubs to avoid bottlenecks. UPS
Harmonized Enterprise Analytics Tools forecasts processing demand at UPS sites. UPSNav is a navigation tool used
by drivers to improve efficiency. UPS Dynamic Sort Instruction simplifies the sorting process and increases employee
productivity. Technological advances extend beyond online, in-office, or warehouse options. UPS now has the
largest fleet of alternative-fuel vehicles in the transportation industry. Its fleet includes electric, hybrid electric,
compressed natural gas, propane and liquefied natural gas, and fully electric, zero emission delivery trucks. This
commitment to the environment helped UPS earn recognition in Forbes “Just 100” list in 2018 for the third
consecutive year, recognizing publicly traded companies for corporate citizenship. In addition to being recognized
as an environmentally conscious company, lower gasoline costs also augment a lean supply chain.

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Technology allows UPS to market itself through customer-based online applications that are easy to navigate. This
allows companies to save a lot of money otherwise spent on warehousing, transportation/delivery, and crossing
international borders. Companies that outsource to UPS also gain revenues through happy customers that will order
more goods, knowing they will arrive safely and in a timely manner. UPS continues to develop new technological
tools to streamline its own business as well, which will allow it to maintain its status as a reliable logistics provider.
(Zamski, 2005)

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CO4: Given a requirement to determine optimal inventory investment in both manufacturing and service
environments, justify the role of inventory, analyze its costs and benefits, and develop a process to
maximize inventory velocity. (Case: John Deere, by Michael Nicholas)

Deere and Company, or John Deere, specializes in three product lines: agricultural, commercial and
consumer, and construction and forestry. Its largest business is in agricultural machinery, and often that relied on
how well U.S. farmers were doing. To become less reliant on the fate of farmers, John Deere looked for ways to
improve its return on assets through its commercial and consumer product line by reducing inventory and supply
chain costs and improving inventory velocity. The following table summarizes the changes John Deere made in its
commercial and consumer division to improve its business and return to shareholders by way of controlling inventory
and improving supply chain management and production methods. (O’Byrne, 2018)

Original Change Made Benefit

Finished Goods inventory concentrated in 5
facilities near factories (30%) and
independent dealerships (70%)
Batch building in production lines
Higher target inventory levels
Increased production by 50% during peak
season (March through July)
John Deere’s excess inventory was primarily due to the following:
Built 5 additional regional distribution
centers, or temporary merge centers
Build every model every day, based on
updated demand forecasts
Better planning process, better sales
forecasts
Increased production by 250% during peak
season (March through July)
Decreased finished goods inventory original
distribution centers and dealerships; cut
delivery time by 50%; consolidated
shipments to dealerships; increased delivery
capacity and reduced shipments
Lower finished goods inventory (higher cost);
higher supplies/materials inventory (lower
cost)
Decreased inventory levels; inventory better
matched consumer demand
Better met consumer demand in a timely
fashion

 long wait time from the time a product was ordered until its delivery
 inaccurate sales forecasts
 seasonal demand

John Deere used technology and software to improve sales forecasts and update consumer demand. It might seem
that by creating additional regional distribution centers it would only increase inventory levels, but it did not. The
regional distribution centers allowed the independent dealerships to carry less inventory, so the inventory they did
carry could be based more on customer demand. The five factories now shipped to regional distribution centers, so
orders for dealerships could be consolidated at the regional center. These regional centers could then deliver to the
dealerships within 5 days, instead of a 10 day deliver from the original distribution centers, which reduced the time
it took from order to delivery by 50%. The regional centers could also consolidate all orders to a specific dealership
coming from all factories. This decreased delivery traffic at the dealerships, saving the dealership time from handling
incoming shipments. It also reduced transportation costs as the delivery trucks were filled to greater capacity for
each delivery. Inventory costs at the original distribution centers would decrease as product was shipped more
efficiently. John Deere also committed to changing its production schedule to better match demand by having its
factories produce all products each day as opposed to producing only one product for a time in a batch. Not only did
this ensure customer demand would be met faster, inventory costs at the factories changed from a large amount of

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unneeded finished goods inventory to a greater variety of supplies and materials inventory needed for production
of all products, which is less expensive to store.

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CO5: Given multiple tools and techniques for analyzing and controlling the flow of resources—forecasting,
capacity planning, queuing theory, scheduling, optimization, decision trees, select the appropriate
technique and apply it to a given problem. (Case: Nike, by Gerelsuren Zorigt)

Nike Inc. is the biggest sport wear apparel in the world and the company’s supply chain management is at
its best. It facilitates efficient production to support the global sports shoes, apparel and equipment. Nike’s
operations management aligns the supply chain with the company’s overall strategy. Supply chain automation and
optimization of transport distances among suppliers, production facilities, distributors and retailers. Most of the
manufacturers of Nike is located oversees, mostly in Asia, yet the company always delivers its promised products on
time and make it available to its consumers. In the recent years, Nike has invested in developing new technologies
to enhance its manufacturing business model in automation.
Creating a new automation technology would help Nike to make its products to reach consumers in a faster
time and more efficient. One of the hopes in automation is to help its consumers to customize (personal) their
products, especially in footwear apparel (Supply Chain 24/7, 2015). The company introduced its 3D printed footwear
this year for those athletes who run for long period of time. Nike stated that they are 3D printing their upper textiles
for those shoes, and it gives good flow of air and waterproof for those runners (Nike News, 2017). Nike’s scheduling
approach is primarily concerned with corporate operations and the coordination of the supply chain with distribution
and retail operations. To achieve this is to maximize resource utilization and Nike satisfy this goal through
automation.
The corporate office schedules are standardized, while supply chain schedules are adjusted according to
the conditions of the market. Nike applies changes to the supply chain based on market demand for its athletic
footwear, equipment and apparel. Nike would receive many benefits if they implement VMI/CRP because it makes
the supplier responsible for inventory management and product replenishment. To be effective would depend on
Nike successfully implementing their ERP software and integrating it with their suppliers to share point of sales data
and demand forecasts. Also, it would require Nike and their suppliers to exchange information on daily basis or at
least weekly basis. This would allow the manufacturer to accurately schedule its operations according to demand
forecasts and inventory requirements rather than producing some number as Nike places order. (Ferguson, 2017).

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CO6: Given the relationship between work structures and designing efficient process flows recommend
how the concepts of capacity analysis, quality management, and Six Sigma improve productivity and
supply chain efficiency. (Case: 3M, by Rosalinda Popoca)

3M company began with single technology abrasives, or sand paper. The abrasives division provides
innovative products such as tapes, adhesives, coating, and abrasives used by customers mainly in the industrial and
transportation sectors. 3M’S leaders developed strategies to improve company cultures and enable the organization
to understand the elements necessary to implement and sustain a quality culture. James McNerney, former Chief
Executive Officer, implemented the Six Sigma efficiency program to stimulate production. Overall Six Sigma did
decrease production defect and increased efficiency, although it also resulted in a loss of creativity.
James McNerney became CEO at 3M in 2000 and brought with him many practices used at General Electric
to the organization. He announced right after being appointed CEO that many changes were going to be
implemented. McNerney laid off 8,000 employees, strengthened the performance review process and decreased
expenses tightening the budget. One of the most significant changes is the implementation of Six Sigma management
technique to decrease production defects and increase efficiency. Training was given to thousands of employees to
practice Six Sigma. For a few years 3M revived, its stock increased in value and overall the company seemed to be
thriving.
There was a setback though. McNerney’s emphasis on efficiency resulted in a lack of creativity. The
company had been founded and succeeded based on its innovation. Six Sigma’s standardization to reduce variation
and eliminate defects also killed creativity. Innovation challenges existing procedures and norms. 3M’s corporate
culture was ingrained with Six Sigma initiatives. As CEO George Buckley stated, “Invention is by its nature a disorderly
process… you can’t put Six Sigma into that area…That’s not how creativity works.”
Today’s market has become idea-based and design obsessed and has shifted to dominate growth and
innovation to remain competitive. Yes, processes excellence calls for precision, consistency and repetition, but
innovation demand variation, failure and serendipity (Hindo, 2007). Six Sigma is based on data and analyses to
improve quality, reduce costs and efficiency. However, new things do not look good in such circumstances because
there are any unknowns and few facts.
Buckley struggled to stick to McNerney’s past practices and find a balance. Conventionally, 3M was an
organization to encourage its employees to pursue their own projects. Employees were able to seek funding from
company sources to start their own projects. 3M also allowed them to use 15% of their time to pursue these projects.
The company openly encouraged risk and tolerated failure. Their foundation was close to what Google currently
practices. However, these types of practices also prevented stability overall. The company was flexible in ideas but
lacked structure and inefficient workflow. When McNerney came in there occurred a complete turnaround in the
company. Six Sigma removed variation in the company’s processes decreasing errors or defects and increasing
predictability.
McNerney introduced two main tools. The first was DMAIC five steps that are define, measure, analyze,
improve and control. These five steps essential to the Six Sigma problem solving. The second tool was Design for Six
Sigma, or DFSS that systemizes a new product development process. This enables the product to be made to Six

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Sigma quality right from the beginning of the process. Nearly all employees were given green belt training to explain
DMAIC and DFSS and to understand the importance of statistics and how to track data, Thousands of employees
were trained as black belts who acted as internal consultants for the company. These employees led bigger projects
triggering the such as reducing production speed or removing non-value or wasted steps. They also oversaw smaller
green belt projects like improving processes. These changes increased profits and operating margins.
However, some employees did find this constant analysis stifling. Researchers had to analyze everything with so
much data. Traditionally they had been given freedom to spend years testing products and given latitude to research
as they wished. All this was almost obsolete under McNerney.
Six Sigma does seem to encourage incremental innovation, but not blue-sky work. It is more likely to
succeed if it is based on prior work, rather than if it is based on a whole new idea. Art Fry, inventor of the Post-It
explains how he worked on the product for years before it went into full production. Under Six Sigma this would not
be allowed as it would be considered a waste. As he explains innovation is a numbers game. You have to go through
5,000 to 6,000 raw ideas to find one successful business." Six Sigma would ask, why not eliminate all that waste and
just come up with the right idea the first time?” For some this feels like an atmosphere of confinement. 3M’s
reputation as an innovator was sliding, ranking lower Boston Consulting Group's Most Innovative Companies list
(now the BusinessWeek/BCG list) every year.
Buckley did deviate a but from the Six Sigma practices as the article mentions. Implementing Six Sigma
across the organization. McNerney applied the same metrics over the whole organization and for some departments,
like the research lab, these did not make sense. Six Sigma is much more useful in the operations context for a line
manager than in a research lab. The article describes how Buckley began to invest money on R& D, acquisitions, and
capital expenditures to encourage creativity. He also reallocated funds to 3M “core” technological areas that range
from nanotechnology to abrasives to flexible electronics to inspire innovation and dream again (Hindo, 2007).
Six Sigma has been useful in improving product development, customer service accounting and many other business
functions in an effort to save time and cost, reduce waste and improve efficiency. However, there are some areas,
as in the case of 3M, that Six Sigma hinders some essential elements to maintain a competitive advantage. In this
case it is innovation. Six Sigma utilizes traditional statistical methods and quality improvement and control tools to
improve key business processes and customer requirements using clear strategies. McNerney did help 3M regain
financial stability and make the company more structured. However, this also hindered creativity.
Research and innovation cannot be clear cut or controlled. For productions and operational sectors of a
company Six Sigma makes sense and is very useful, but creativity is very subjective. Although data and statistics can
be useful in analyzing trends and costs, they do not always mesh with the human factor where creativity originates.
Yes, the morale and culture strengthened for 3M as a whole, but researchers felt restrained. It seems that for them
morale hindered affecting slumping their motivation and ideas. Implementing the same Six Sigma strategies across
the board as a one-size fits all approach was not useful as a long-term strategy and not for all parts of the company.

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CO7: Given the relationship of sharing customer service processes, purchasing, manufacturing and
distribution systems, recommend how operations and supply chain managers can directly contribute to
improving operations synergies. (Case: Walmart, by Anthony Owens)

Walmart operations and supply chain manager’s firmly addresses the decision area of operations
management for quality management through this three-tier approach that ensures suitable quality in different
areas of Walmart’s organization. The tiers consist of lower, middle and upper which is marketed based on their
quality levels that helps to ensures suitable quality in those areas of Walmart’s organization. The management
emphasizes efficiency of movement of materials, human resources and business information throughout the
organization. (Smithson, 2017)

Walmart’s business combines the approaches that emphasize supply chain management, inventory management,
and sales and marketing to contribute to the improving of operations within their brand. Walmart uses elements of
customer service to help form point of view of the logistics function to view the way they enjoy conducting business.
Walmart customer service importance of having the right product, at the right time, in the right quantity and without
damage or loss.

Although their logistics system recognizes the aspects of customer service has a lot to do with the growing
of consumer awareness by the price quality ratio and the special needs of their consumers that always expect time
conscious and the demand of being flexible no matter what the situation that comes about. Walmart’s levels of
customer service activities are processed by a task that help accomplish the satisfy needs of the customer.

Walmart’s business combines the approaches that emphasize supply chain management, inventory
management, and sales and marketing to contribute to the improving of operations within their brand. Walmart
uses elements of customer service to help form point of view of the logistics function to view the way they enjoy
conducting business. Walmart customer service importance of having the right product, at the right time, in the right
quantity and without damage or loss. Although their logistics system recognizes the aspects of customer service has
a lot to do with the growing of consumer awareness by the price quality ratio and the special needs of their
consumers that always expect time conscious and the demand of being flexible no matter what the situation that
comes about. Walmart’s levels of customer service activities are processed by a task that help accomplish the satisfy
needs of the customer. The processing, billing, invoicing, product returns and claims are handle through the
emphasizes of performance measures such as the percentage of orders delivered on time, completed and the
number of orders processed within the limits of the time allowed.

In this regard, Walmart’s location strategy includes stores located in or near urban centers that aim to the
maximize market target. Walmart’s operations management covers a variety of approaches that are focused on
managing the supply chain and inventory, as well as sales performance. Walmart effective performance in
operations management target market are those who want lower price and those who want to bargain on the price.
It was stated that Walmart targets people who are not very wealthy like people below poverty line levels such as the
middle class, lower middle class.

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For example, based on the company’s approaches to inventory management and supply chain management,
suppliers readily respond to changes in inventory levels. As a result, this decision area of operations management
emphasizes efficiency of movement of materials, human resources and business information throughout the
organization. The logistics of physical items usually involves the integration of information flow, material handling,
production, packaging, inventory, transportation, warehousing, and often security. In this regard, Walmart’s location
strategy includes stores located in or near urban centers to help aim the maximize market for consumers within the
reach of their store. This behavior helps to provide materials and goods that are made available to the company’s
target consumers through strategic warehouse locations which helps to address the business information aspect in
this decision area of operations management. Walmart’s use of information technology and bargaining power over
suppliers successfully addresses this decision area of operations management. The company’s supply chain is
comprehensively integrated with advanced information technology. Supply chain management information systems
are directly linked to Walmart’s ability to minimize costs of operations. These systems enable managers and vendors
to collaborate in deciding when to move certain amounts of merchandise across the supply chain. Walmart’s
operations management approaches also include wielding the company’s strong bargaining power because it is the
largest retailer in the world, Walmart influences suppliers to cooperate in using these systems. (Li, 2014).

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CO8: Given approaches for ensuring predictability and repeatability in operations and supply chains,
discuss the capabilities of Master Production Scheduling (MPS) and Material Requirements Planning
(MRP). (Case: Elkay Manufacturing, by Tani Papazisi)

Elkay Manufacturing Company, is a privately held company, employing about 4000people and operates
since 1920. Over the years it has evolved as an international designer, marketer, producer, and distributor of sinks,
faucets, pressurized watercoolers, and kitchen cabinets and is headquartered in Chicago, Illinois. Products are sold
through plumbing wholesalers, mass merchants, and hardware stores. Elkay’s manufacturing strategy is largely
make-to-stock but has a considerable number of make-to-order “specials” on daily basis. Company has embraced
the principles of JIT and lean manufacturing for final assembly, which are supplied with fabricated components by
feeder departments. Since the higher management was convinced, all facilities worked on implementing point-of-
use storage, visual kanban pull systems, various quality initiatives, etc. The objective is to synchronize daily
production to customer demand as much as possible, while maintaining low cost and high delivery performance.
The primary performance measures are safety, quality, cost, delivery, and inventory. Each of these has supporting
performance measures that address specific operating objectives. These are reported by the plants daily and
reviewed with the vice president of operations weekly.

By 2000, Elkay Manufacturing recognized a need to further improve competitive performance in terms of
on-time delivery, fill rate, cycle time, and inventory turns. An enabling objective was to link top management
planning to the day-to-day production line capacity and priority, and to purchased material. The management
team determined that sales and operations planning was a key strategy in achieving these objectives by balancing
demand and supply on a regular basis through this high-performance top management communication process.
The vision was that S&OP would provide a “one-plan process” for synchronizing sales, finance, manufacturing,
materials, human resources, and engineering. This initiative provided the foundation architecture for using ERP to
drive seamless planning through the organization. (Wood and Boyer, 2002).
Management at Elkay had realized that to lower the cost of production while improving customer service,
the formal balance of supply and demand had to be addressed. At that time, sales produced a forecast that was
used in a variety of disconnected ways by the various manufacturing groups. Finished goods inventory was a result
of the disconnect, not strategically planned. The “demand-siders” and the “supply siders” did not have a
meaningful/formal “handshake” and agreement on the sales, production, and inventory plan. It was the
recognition of this fundamental need that drove Elkay to use S&OP as the “best practice” to balance supply and
demand. But there was more. In addition to this traditional definition of S&OP, Elkay chose to expand the
boundaries to include a systemic link to detailed scheduling and material planning, and then drill it right down to
shop floor execution and purchasing.
Results were outstanding. After implementation: Total inventory dollars was reduced 32%; Inventory
turns increased by 35%, On-time shipments improved by 25%, reaching at 91%; Backorders reduced by 35%;
Manufacturing Cycle time was reduced by 48%, reaching 7.7 days per order.

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CO9: Given and understanding of Logistics and Distribution in supply chains, consider the major issues in
locating plant and warehouse facilities, use a factor rating systems to narrow your selections, and review
transportation models to analyze models. (Case: Coca-Cola, by Rosalinda Popoca)

Coca Cola has products in high demand and prefers to maintain the products close to its customers. Thus,
needing warehouses that can allow quick and easy distribution of its products. Coca Cola has become an iconic brand
all over the world as a symbol of refreshment and a recognizable logo. The company has operations in over 200
countries and has been the top selling soft drink brand all over the world. Coca-Cola’s Commercial Products Supply
group processes more than 400 daily shipments and is responsible for millions of cases in addition to more than
1,000 points of delivery, 4,000 finished goods, and 5,000 ingredients and packaging materials worldwide (Morrison,
2018).
The company did not have a standard process for managing transportation globally. It sought to have better
understanding of its freight costs to make decisions that would support its Coca-Cola Vision 2020 business strategy
objectives. Among these were reducing inventory and increasing sales volume each year. In late 2009 Coca Cola
decided to bring Oracle partner Flo on board to support the implementation in April 2010. Both companies worked
together to design the solution, and Coca-Cola implemented the fully-integrated system, including electronic data
interchange, freight payment, and reporting, by the end of June 2011. The company continues to bring inbound and
outbound carriers online.
Coca-Cola Enterprise (CCE) has made a number of changes to its logistics practices. In 2010 for example, in
France it has taken steps to reduce carbon emissions and improve its distribution service (Montague-Jones, 2011).
The company began to partner with major supermarket leaders like Casino Carrefour, and Monoprix. It introduced
backhauling practice that trucks, having made deliveries to shops, can reload at Coca Cola sites nearby instead of
returning empty to the client warehouse. This reduced the average number of kilometers travelled per delivery and
reduced carbon dioxide emissions.
Coca Cola’s new measures and practices also allowed the company to guarantee three-day delivery since
2011. It increased improvement od delivers that arrive by due date by 1.7 percent and the right number of products
and lack of quality problems to 98.4 percent. The measures and practices that Coca Cola put in place were
(Montague-Jones, 2011).:

• Manufacturing products more frequently

• Making change to the production lines so that products can be manufactured in different sites that are
closer to customers.
• Establishing fixed daily journeys between main factories.
• Having weekly meetings between European team and the local ones to forecast production and journey
needs in the medium turn.
• Putting in place common journey indicators shared to all team members of the supply chain.

Coca-Cola Hellenic based in Athens optimized its logistical processes utilizing the support from the ORTEC
logistics company. ORTEC enables the company to have solutions available in SAP embedded and non-embedded
versions so that it can implement the same functionalities uniformly anywhere. It also standardizes the logistics
processes that are attributed in the decision-making process. SAP embedded implications allows data to be
consistent and current in all planning phases.
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