Supply Chain Management

 Summary of SCM and description of Warner-Lambert’s supply chain strategy

 As stated in our text book, Supply Chain Management (SCM) is the management of information flows between the stages in a supply chain. Effective SCM allows for maximization of supply chain efficiency and profitability, which is the purpose of supply chain management. A supply chain consists of all directly  or indirectly involved parties in the attainment of a product or raw material. The four main drivers of SCM are: Facilities, Inventory, Transportation, and Information. An organization can use these drivers in a way to increase either the effectiveness or the efficiency of a supply chain.

The SCM components are: Plan, Source, Make, Deliver, and Return.

     1.    Plans the strategic portion.

     2.    Source involves the choosing of reliable suppliers.

     3.    Make involves manufacturing of products/service.

     4.    Deliver is often referred to as logistics. It is the set of processes deals with the efficient & effective transportation & storage of supplies.

     5.    Return is the step that involves network that receives defective or excess products and handles customer support. 

Supplier Manufacturer Distributer Retailer Customer

     1)    Raw materials are harvested in Australia.

     2)    The eucalyptus is sold to an Australian processing company.

     3)    In New Jersey, Warner-Lambert and their distributer partner buy the product from the processing company and transport it to WL’s Listerine manufacturing and distribution facility, also located in the US. During this time, in Saudi Arabia, ethanol-yielding natural gas is being drilled and then shipped to New Jersey.

Detail Warner-Lambert’s facilities:

Supply chain facility strategy processes or transforms inventory into another product, or it stores the inventory before shipping it to the next facility.

The three primary facilities components include location, capacity, and operational design.

Warner-Lambert’s facility strategy includes:-

Location efficiency – centralize the location to gain economies of scale, which increases efficiency.

Capacity effectiveness – large amounts of excess capacity which can handle wide swings in demand.

Operational design efficiency – product focus design allows the facility to become highly efficient at producing one single product, increasing efficiency.

Detail Warner-Lambert’s inventory strategy:

Cycle inventory effectiveness – holding large amounts of inventory and receiving inventory deliveries only once a month.

Inventory offsets discrepancies between supply and demand.

The two primary  inventory components include cycle inventory and safety inventory. 
Warner-Lambert’s inventory strategy includes:

Safety inventory effectiveness – holding large amounts of safety inventory.

Detail Warner-Lambert’s transportation strategy:

Transportation moves inventories between the different stages in the supply chain.The two primary inventory components include method of transportation and transportation route.Warner-Lambert’s transportation strategy includes:

Transportation route efficiency– a company can save money by shipping its products to a distributor that ships the products to its customers.

Method of transportation efficiency– choosing an inexpensive method of transportation increases efficiency,but also typically increases delivery time.

         

Detail Warner-Lambert’s information strategy:

An organization must decide how and what information it wants to share with its supply chain partners.The two primary information components include information sharing and push vs. pull strategy.The case did not discuss in detail Warner-Lambert’s information strategy, but if it focused on efficiency it would:

Information sharing efficiency – freely share lots of information to increase the speed and decrease the costs of supply chain processing.

Pull information strategy (efficiency) – supply chain partners are responsible for pulling all relevant information.

Disaster effects on Warner-Lambert’s SCM 

  A natural disaster in Saudi Arabia which depletes its natural gas would cause problems in Warner-Lambert’s supply chain. Without the natural gas that yields the synthetic alcohol, Listerine would be unable to deliver its 43-proof punch. Unless it could quickly find another vendor of the natural gas or if it had a large safety inventory, the production of Listerine would come to a complete stop.

Impact if eucalyptus crop was destroyed in a natural disaster:

A natural disaster which destroyed the entire eucalyptus crop would be devastating to Warner-Lambert's business and would cause many problems in its supply chain. The price of eucalyptus would skyrocket causing unforeseen increases in costs throughout the supply chain. Unless it could quickly find an alternative ingredient to eucalyptus, the production of Listerine would come to a complete stop.