1 Supply Chain Management Supply Chain Management (SCM): Focuses on managing the flow of goods and services and information through the supply chain in order to attain the level of synchronization that will make it more responsive to customer needs while lowering total costs. Keys to an effective Supply Chain management are:  Information  Communication  Cooperation  Trust Supply Chain Management (SCM): Focuses on managing the flow of goods and services and information through the supply chain in order to attain the level of synchronization that will make it more responsive to customer needs while lowering total costs. Keys to an effective Supply Chain management are:  Information  Communication  Cooperation  Trust

2 Dr. Aboolian HTM 305 Fall 2003 Group members Chris Jennen (Forecasting) Andres Orozco (Processing) Fernando Terrazas (Suppliers) Norberto Cullen (Purchasing)

3 Overview Briefly describe the Taco bell case. Forecasting –Business planning –Sales mix Suppliers –Strategic Suppliers –Best practices Purchasing –Anticipate demand of raw materials based on forecasting –Procure raw materials Processing –Getting suppliers approved –Identifying specifications

4 Forecasting In Supply Chain Management Forecasts of product demand determine how much inventory is needed, how much product to make and material to purchase from suppliers to meet forecasted customer need.  Total Quality Management (TQM)  Strategic Planning  Forecasting Methods and Process

5 Forecasting Defined:Statements about future. A business function within a company that is rapidly growing because of emphasis on supply chain management. Qualitative- Managements judgment.(subjective) Quantitative- Based on formulas

6 Forecasting Quantitative forecasting model Grilled Stuff burrito (case analysis) 6 week promotion trial 15 min intervals If one or more stock out occurs, past sales wont truly reflect demand

7 Forecasting Qualitative Data Short on time. Economic or political uncertainties. New products Consensus forecast. (Delphi method)

8 Forecasting Decrease inventory but still meet demand. How much to keep Continuous replenishment Key to good quality service Strategic planning

9 Suppliers Companies want the materials, parts, and services necessary to produce their products to be delivered on time, high quality and with low costs.  Procurement  On demand delivery  Continuous replenishment  Sourcing / Outsourcing

10 Suppliers THE KEY TO SUPPLY CHAIN IS QUITE SIMPLE… Supply Demand THE SUPPLY COMPONENT IS THE BEGINNING OF THE CHAIN THE DEMAND COMPONENT BEGINS WITH THE ORGANIZATION’S OUTPUT AND IS DELIVERED TO THE IMMEDIATE CUSTOMER

11 Suppliers THERE ARE SEVERAL UNIQUE SUPPLY CHAINS Tier 2 suppliers Tier 1 suppliers Producers Distributors Customers

12 Suppliers TIER TWO SUPPLIERS FOUR OUR BUSINESS CASE  The raw material provider into our processors  The grower or harvester of the lettuce  Supply is contracted to ensure no break in supply chain

13 Suppliers TIER ONE SUPPLIERS FOUR OUR BUSINESS CASE  The ones who store and receive the raw materials  Must forecast the future demand of the producers of the finished goods  Must have strict quality controls when receiving raw materials  Ensure Supply Chain is not broken

14 Suppliers PRODUCERS  The actual producers of the end product  Must maintain efficient throughputs and yields  Production must match demand  Must have strict quality controls in place  Must have production schedules so that Supply Chain is not broken

15 Suppliers

16 Suppliers Customers  The restaurants  The must have the products on hand to satisfy the ultimate customers  The restaurants need to manage inventory levels so that they are using the product prior to expiration dates  Limited time offers are extremely hard to manage from supply chain standpoint

17 Purchasing HOW THE SUPPLY CHAIN STARTS Taco Bell Caesar Grilled Stuft Burrito –Food Innovations develops the concept –Purchasing is part of the core team to guide them –Food Innovations develops product specifications –Purchasing selects strategic suppliers to develop the best practices in order to have the end results

18 Purchasing HOW THE SUPPLY CHAIN STARTS Taco Bell Caesar Grilled Stuft Burrito –Purchasing works with Business planning to develop forecasting –Purchasing communicates volume estimates to growers at least three months out for the lettuce –Food Innovations visits individual processors to calibrate their end products and looks at samples –Processors continue to send samples of finished product until they become approved

19 Purchasing Taco Bell Caesar Grilled Stuft Burrito –Manage inventories –Monitor Production –Make decision at what point to either stop production or ramp up

20 Processing  WHAT IS PROCESSING..  Not always physical  Affects are far reaching  Public Image, goodwill  Product Specification  Strategic Supplier Capabilities  On site inspections

21 Processing HOW THE SUPPLY CHAIN STARTS Taco Bell Caesar Grilled Stuft Burrito –At 7 days out the grower harvests the lettuce –At 5 days out the processors processors the lettuce –At 3 days out the distributor distributes the lettuce to the restaurants with 5 days shelf life remaining –The restaurants normally use the lettuce between 2 and 3 days from receiving it

22 Processing Distributors  These are the ones that get the product to the end users… the restaurants  We have 18 broad line distributors in our system  We have 10 independent in regional markets  Together they supply 22,000 Taco Bell restaurants at least two times per week  Must maintain safety stocks so the Supply Chain is not broken