This paper examines the DEP/GARD supply chain, distinguishing between value-adding activities — such as manufacturing, packaging, and inbound and outbound transportation — and non-value-adding activities, including idle inventory, manual order processing, excessive paperwork, and prolonged material receipt times. The paper evaluates how engaging higher-fill-rate suppliers (at the 25% and 15% tiers) can improve service levels and reduce carrying costs, despite increased unit costs. It also proposes systemic reforms, including an overhaul of the bidding process, proactive supplier communication, and the adoption of an internet-based order management system to drive efficiency and reduce waste across the supply chain.
The DEP/GARD supply chain process contains several areas where value is added, including the manufacturing and packaging of products supplied to GARD, as well as inbound transportation from compound suppliers and outbound transportation to GARD. However, certain stages do not add value to the supply chain. These include inventory sitting idle in DEP warehouses and the time wasted in transmitting and handling orders manually, which causes products to remain in the warehouse for unnecessarily long periods. There is also excessive paperwork involved in the current supply chain process. The extended duration required to receive materials likewise adds no value to the DEP/GARD supply chain (Slater T., 2016).
The minimum performance cycle for this supply chain is an 8-day order cycle time, while the maximum is 25 days.
Performance can be significantly improved through the use of the 25% and 15% suppliers, as doing so would provide better service levels within the supply chain and result in higher rates compared to current conditions. It is important to note, however, that the existing bidding system has focused primarily on price. Allocating greater proportions of raw material supply to the 25% and 15% suppliers would therefore increase the unit cost of compounds.
This increase in cost would be offset by the fact that selecting the 25% and 15% suppliers would ensure greater reliability in inventory availability, thereby reducing the risk of shortages due to their relatively higher fill rates. As a result, DEP could potentially reduce the supply period from 7 days to 6 or even 5 days, depending on supplier reliability. This would lower inventory carrying costs significantly, balancing out the higher unit costs and ultimately benefiting the company through greater efficiency and reliability.
Taking the perspective of Tom Lippet, there are several significant changes that should be implemented. The first is a complete overhaul of the bidding system, restructuring procurement so that DEP sources compounds exclusively from suppliers with higher fill rates and lower performance cycle uncertainty. This would reduce the duration of inventory storage. Suppliers should also be contacted well in advance of the next supply cycle to inform them of the changes taking place within the company's supply chain. It would be important to communicate clearly that high refill rates and reduced uncertainty would be key factors in determining supplier selection going forward.
"Proposes bidding overhaul and digital ordering system"
"Outlines selling points for internal stakeholders"
"Projects trends toward faster, more efficient supply chains"
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