CONCEPT OF THE SUPERMARKET

Operations Management: 10 Strategic Decisions & Productivity

Supermarket operations management decisions involves several approaches that are
intensely on managing the supply chain and inventory, as well as sales performance.
Effective performance in retail operations management would be companies’ success.
Optimize the company’s financial operations are strategic decision areas comes to the
subject’s managers deal with on a daily basis.

Strategic Decision Areas of Operations Management in Supermarket

The decision area of supermarket covers goods and services along with efficiency and
cost-effectiveness. The growth strategies design focus on low costs and low selling
prices. To achieve these goals the company, concentrate on maximum efficiency of its
retail service operations management.

Quality approaches makes this decision area of operations management through quality
standards. Quality management goals in the strategic decision of operations throughout
the retail business organization and it measures also to contribute to the strengths
identified by its own capabilities.
Process and Capacity- In strategic decision of operations management it make use of
behavioral analysis, forecasting, and continuous monitoring. Continuous monitoring of
store capacities, corporate managers will be involved in changing current capacity of
products.
Layout Design addresses this decision of operations management by assessing
shoppers’ behaviors for the layout design, e-commerce websites, and warehouses or
storage facilities. This design of the stores is based on consumer behavioral analysis.
supply chain management information systems are linked to the ability to minimize
costs of operations.
Inventory Management of operations management, and it concentrates on the supplier
managed inventory model and just-in-time cross-docking. In the inventory model,
suppliers access the company’s systems to choose when to deliver products based on
actual time on inventory levels. in just-in-time the retail company reduces the size of its
inventory, thereby supporting cost-minimization possibilities.
operations management objective is to minimize stockout rates in shelves. The duration
of order accomplishment is the amount of time taken to fill inventory requests.

Safety stock formula:

1. Multiply our maximum daily utilization by our maximum lead time in number of days.
2. Multiply our average daily usage by service level and profitability stock out on our
average lead time in number of days.
3. find the difference between the two to determine our Safety Stock.
Probabilistic demand

This is a method calculated on the assumption that the average demand for inventory
items is approximately constant over time. It is possible to find the probability
distribution of the demand, during replenishment lead time.

The methods are used on the continuity of order placement for purchasing inventory
and these are single period and multi-period inventory structure.

Single period refers to the condition where the inventory stock is perishable, and orders
are made once. One time ordering of seasonal products where demand exists for the
period in which it is ordered. For example, a newspaper sold today will not be sold at
the same price tomorrow.

Assessing how much to order by comparing the cost or loss of ordering one additional
unit with the cost or loss of not ordering the same at one additional unit cost.
Levels production across the budgeting time And It can get rid of the need of a forecast,
low prices, continuous large scale business, less operations cost, selection of products
and self-service, possibilities of large profit and no free services are benefits of super
market concepts.

supermarket concept in Toyota Facility

In Toyota manufacturing facility the supermarket concept developed into

the Kanban System with the addition of a production command sheet known as
the Kanban card or board designates the name, number, and quantity. This is further
modified into the Just-in-Time system, which is a method of manufacturing only what is
needed, the amount needed, creating a system that was largely approved by suppliers
also.

following this concept to assembly activities it was possible to make the required vehicle
models as per plan by attaching assembly parts in development stage and having the
assembly plant restore them. This method is introduced at the machine assembly plant
also and restored the parts it needed from the machining plant. All together the
supermarket model has created a major change for finished goods, raw materials, and
work in progress concepts in Toyota Manufacturing facility.

Inventory holding costs and logistics cost

A company’s inventory holding costs include the cost of goods damaged or spoiled, as
well as that of storage space, labor, and insurance.
Logistics costs expected in managing inventory are arranging and conducting an
inventory order management system along with vehicles or other modes of transport to
ship products to customers and from suppliers.

Example of Holding Costs

Assume that Al Suwaidi has IT hardware that is stored in a warehouse and then
delivered to retailers. To store these equipment’s Al Suwaidi should lease or purchase
warehouse space and pay utilities, insurance, and security for the premises. Al Suwaidi
also pay staff to move inventory into the store and then load the hardware onto trucks
for delivery. The company incurs some risk that the hardware may be damaged as it is
moved into and out of the warehouse.

Role of inventory in Supply Chain

Vendor relations and customer is key factor in regulating supply chain. Supply chain
relation and product flows discloses storage and inventory variations. These actions are
based on transfer, procurement, and managing inventory. Inventory is always a key
factor in supply chain and basic role of supply chain eases the demand levelling of
supply. The upstream supplier trading and downstream customer demands is managing
the reverse flows and forward movements in the supply. Maintaining reasonable supply
of materials and goods which is difficult to forecast with clarity or reliability has a
fairness between achieving the demands of customers. The basic requirement of
operations and sales is to have the demand management activities of a company
through sales forecasting, marketing together with the operations of an organization
including manufacturing, supply chain, logistics, purchase and developing strategic
plans. The retailer and vendor work together to control inventory when reordering is
essential goods to replace the inventory, specially at the distribution center level. This is
an evaluation of supply and demand due to demand information is followed to find out
when they have to have reorders depends on the time required to get the inventory to
the store facilities. The inventory commitments are used to beneficially measure when
supply inflows are required to control demand outflows.
Impact of aggregate demand by sales

 When consumers demand more products or services, the sales for those
products or services can have demand higher than usual, this does not mean
that sales should go up.
 General sales and aggregate demand is not necessarily clear or direct.
 Sales is the average of current cost between the market required goods and
services produced in the economy.
 Finished goods and services which are demanded in an economy is the
aggregate demand of an economic calculation of the total quantity of
 components and its an aggregate demand included with consumption of
spending, investment, government spending, and spending on exports minus
imports.
 An increase in aggregate demand represents with an increase in the sales level
and same time a decrease in aggregate demand represents with a lower price
level.

Abusing the principles of flow management- 3MS- Mura – Muri-Muda - 7W

Muda
Resources without creating value for the customer between type one muda, has
activities that cannot be removed and type two muda, represents activities that can be
removed through kaizen.
An example of type two muda is variation of goods and inventories between steps in a
shop floor and assembly process. These steps can be removed in a kaizen workshop by
moving manufacturing equipment and operators into an easy flowing cell.
Mura
uneven work pace in an operation function creating operators to hurry and then wait is
MURA. Unevenness can be removed by managers through level scheduling and careful
attention to the pace of work. MURA is the dangerous of the 3 Ms
Muri
Excess overload given to a machine or operators by making them to run at a high pace
with more force and effort for a longer period than equipment designs, and appropriate
workforce management allow.
Lean manufacturing, its derived from the TPS focuses on removing waste is called Muda
— within a production system.
Overproduction
Overproduction can result in all types of wastes and results in excess inventory. Stocking
too much of a product that has unused costs: storage, wasted materials, and excessive
cost in an inventory.
Overproduction will create serious environmental effects. Excess raw materials than
required are consumed; the goods can spoil or become obsolete, which makes that it be
thrown out and, if the product has more hazardous materials than required are wasted,
resulting in emissions, costs of waste disposal, possible employee exposure, and
potential environmental problems.
Inventory
The waste produced by unprocessed inventory and this includes the waste of storage,
the waste of unprocessed inventory, transporting the inventory, the containers used to
hold inventory, the lighting of the storage space, etc. Having excess inventory can hide
the original wastes of producing actual inventory.
Motion
Motion could refer to anything from an employee bending over to take something up on
the shop floor to additional wear and tear on an equipment resulting in capital
reduction that should be replaced.
Defects
A product varies from the standards of its design or from the customer’s expectation is
called defects. Defective products must be changed, and they require documentation
and human labor to process, and this will result potentially lose customers; the
resources put into the defective product are wasted because the product is not used in
future.
Over-processing
Any component of the process of manufacture that is unnecessary is over processing.
The excess of parts, labor, and raw materials consumed in production has
environmental impact. Time, energy, and emissions are wasted when they are used to
produce something which is not necessary in a product.
Waiting
Wasted time due to halted production in one step of the manufacturing chain during a
previous step is completed is called Waiting. The production line, if one task along the
chain takes longer than another, than any time the worker in charge of the next task
creates waiting is wasted time. The task that takes extra time must be made more
effective, and other employees must be hired to level this, or the workflow must be
scheduled in order to make up for this wasted time.
Transport
Moving materials from one position to another is Transporting. The transport itself adds
no value to the goods, so reducing these costs is required. Having one plant closer to
another in the Manufacturing chain, or reducing the costs of transportation using more
efficient methods. Resources and time are used in handling material, employing workers
to operate transportation, their training, implement safety measures, and using
additional space. Transport can also cause the waste of waiting, as one part of the
manufacturing chain must wait for material to arrive.
7W is also known as TIMWODD. The dangerous of all wastes is the one we are not able
to recognize.

Replenishment Pull System Using Kanban

Pull is one of the key leading term of lean thinking. sequential pull and replenishment or
supermarket pull are two different types of pull systems:. In sequential pull, the
downstream customer pulls parts from the upstream supplying process in the sequence
in which they supply process produces; that is, the supplying process dominate the
sequence of work. In replenishment pull, the downstream customer pulls from a
supermarket according to what it requires.

significant waste in the process are as follows;

 material shortages resulting in overtime costs
 Inefficient planning for changeovers in the any department due to shifting
schedule
  Out-of-cycle work: Operators were doing their own material handling and
process.
 Excessive Work in progress
 As materials in the supermarket were consumed Or moved into assembly, a
visually indicated card or board by the number of bins remaining was reached.
When the set of point was reached, a kanban card would be pulled and delivered
to the lead.
 The upstream is the replenishment point and intermediate point is buffer and
consumption point is downstream.

Economic Batch Quantity (EBQ),

This is also known as Optimum Batch Quantity is a measure used to find out the
quantity of units that can be produced at the minimum average costs
calculating economic batch quantity.

 Demand is known and constant within a certain period of time

 Unit cost of the inventory item is constant
 Production time is known and constant
 Setup cost is constant and does not change in a given batch .

Economic order quantity is the square root of 2SD/H

D = Demand during the period
S = Cost of a set-up

H = Holding cost/unit for the period

PROCESS BATCH SIZE and TRANSFER BATCH SIZE

A transfer batch is known as the total quantity of units that has moved from one work
center to the next batch

A process batch is the total quantity of a products processed at a work center and
before that work center it is reset to produce a different products.

The transfer batch size need not, or should not be equal to the process batch size;
process batch can be equal or grater than transfer batch size.