STRATEGIC OPERATIONS MANAGEMENT(EBUs602) ASSIGNMENT Essay

STRATEGIC OPERATIONS MANAGEMENT(EBUs602) ASSIGNMENT - Essay Example By reducing the order delivery time, they will decrease fluctuations as well as costs and inventory levels (Wangphanich, Kara, & Kayis, 2010: p4508). P&G then turned their attention to POS purchases at their main distributors and retailers to track ordering trends and preferences respectively. Using a point-of-sale system will allow P&G to identify trends and improve communication along the chain of supply (Wang et al. 2012, p. 120). P&G also sought to get the main retailers to reduce their order sizes relative to demand. Ordering according to the needs of the consumer, rather than to stock, will aid P&G in attenuating the impact of the bullwhip effect (Wangphanich, Kara, & Kayis, 2010: p4509). P&G then utilised the improved communication and forecasting to maintain consistency in price. This will prevent increased ordering when prices are low, lessening the bullwhip effect (Wang et al. 2012, p. 120). Other approaches that P&G could have taken include: Portfolio planning, in which th ey could diversify the distributor base into a group that is on long-term contract terms to meet the major demand, and others on short-term contract terms to cover any increase in demand (Gupta & Mishra 2012, p. 27). Postponement, in which they would delay delivery of the product to their distributors until they have reliable information on demand (Gupta & Mishra 2012, p. 28). Q #2 The demand–supply gap at Cisco occurred for a number of reasons: When supply is exceeded by demand, the manufacturers such as Xilinx produced more components for the consumers, who may have ordered more products than required to generate profit. After supply caters to normal demand, orders may be cancelled, which results in unwanted inventory (Thompson & Liang-Chieh 2012, p. 120). A gap between demand and forecasting may also have caused the demand–supply gap, especially if Cisco’s planning team forecasted demand through extrapolation of demand at present. Small fluctuations result fr om long lead-time extrapolation, which ends up having a huge impact on the demand–supply gap (Akkermans & Voss 2013, p. 770). Use of batch orders for small and frequent orders may have been made to reduce storage costs or logistics. This could result in increased demand variability compared to supply (Thompson & Liang-Chieh 2012, p. 121). Price fluctuations due to anticipation that there will be a price increase could have led to items being stocked up to capitalise on low prices. This leads to variation between supply and demand (Akkermans & Voss 2013, p. 771). These arrangements could have resulted in a pileup of Cisco’s inventory, as forecasters did not notice artificial inflation within their projections. Since many of the company’s clients ordered similar products from competitors so as to close the deal with the company that delivered on their orders first, Cisco’s demand forecasts were inflated by triple and double orders (Thompson & Liang-Chieh 20 12, p. 121). Their supply chain management system was unable to indicate the increased demand. This was representative of overlapping orders, leading to a vicious cycle of demand that was inflated artificially, increased costs, and poor communication along their chain of supply (Akkermans & Voss 2013, p. 771). For these reasons, it is clear that the biggest problem had to do with poor communication across the chain of supply. To counter this, Cisco integrated an