BTEC L3 National Extended Diploma in Business (601/7160/1) Unit 33: Supply Chain Operations Assignment Brief

BTEC Unit 33: Supply Chain Operations

Unit In Brief

Learners will examine how and why purchasing, production and distribution are coordinated to ensure the continuity of cost-effective, efficient business activities.

Unit Introduction

How do goods such as new fashion lines and upgraded computer tablets arrive in stores in sufficient quantities, on specific dates, to meet customer demand? Even though they have been designed many months previously and manufactured thousands of miles away?

In this unit, you will examine the components that make up logistical operations, such as inventory management, storage, handling and transportation. You learn how businesses buy materials and goods for their operational activities and how they organise the delivery and distribution of their output to the next stage in the production process – which may be to the final consumer. You will investigate how businesses move materials and manufactured goods from suppliers to customers, so that for all parties in the supply chain production is not interrupted and products are always in stock. You will consider how the supply chain is managed to ensure that it is fully integrated and operated reliably. You will explore how techniques such as just-in-time, controls for inventory management and technology provide real-time information to support the efficient management  of business operations.

This unit will help you to progress to further study in higher education or to professional qualifications in buying, logistics and supply chain management. The unit will also help you  to progress to employment in supply chain management.

Learning Aims

In this unit you will:

A. Examine the role of logistics operations in ensuring effective supply chain operations

B. Investigate the importance of supply chain organisation and operation to businesses

C. Examine the impact of technology on the efficient management of supply chain operations.

Summary Of Unit

Content

Learning Aim A: Examine The Role Of Logistics Operations In Ensuring Effective Supply Chain Operations

Learners will need a general understanding of the modern methods of logistics and of how businesses ensure that inventory requirements are calculated and managed so that manufacturers, national retailers and public services meet the needs of their customers.

A1 Inventory management

• Logistics activities in the supply chain, including materials handling, production, packaging, inventory management, warehousing, transportation and security of supplies.
• Purpose of inventories in providing buffers between different supply chain activities to ensure continuing supply chain operations.
• Types of inventory, including opening stock, work in progress, finished goods and safety stocks.
• Costs of carrying inventories such as acquisition and holding costs.
• Techniques for the valuation of inventory such as last in first out (LIFO), first in first out (FIFO), average cost, standard cost.
• Monitoring and controlling inventory using:
  o Pareto analysis and ABC classifications
  o dependent and independent demand
  o materials resource planning (MRP and MRP II)
  o just-in-time supply and Kanban systems
  o consignment stocking and vendor managed inventory.
• Calculating the inventory requirements recognising factors, including:
  o economic order quantity
  o reorder point
  o bullwhip effect
  o materials resource planning
  o service levels for inventory when working with manufacturing, sales and marketing
  o qualitative and quantitative approaches to forecasting.

A2 Storage and handling

• Warehouse location for ensuring efficient supply chain operations.
• Warehouse design to optimise flow, space utilisation and flexibility in handling inventories.
• Methods of efficient inventory handling such as palletisation and unit loads.
• Systems for product coding, such as bar coding and radio frequency identification (RFID), to identify and track product movement.

A3 Transportation

• Modes of freight transportation, including road, rail, air and sea and the reasons for their use.
• International transportation use of incoterms (international commercial terms).
• Techniques for optimising transportation systems and goods movement.
• Reverse logistics to recapture value, including:

o return of merchandise
o return of packaging
o refurbishment
o safe disposal.

Learning Aim B: Investigate The Importance Of Supply Chain Organisation And Operation To Businesses

Learners will need to understand how efficient supply chains are structured and how the integrated supply chain creates competitive advantage.

B1 Supply chain components

• Supply chain components, including materials handling, manufacture, packaging, inventory management, warehousing, transportation and security.
• Prioritising customer needs at each stage in supply chain operations.
• Supply chain configurations such as linear and networked, the length of supply chains in terms of the number of supply chain businesses, the location of supply chain businesses and the geographic distance between supply chain businesses.

B2 Integrating supply chains

• Linking the activities of all businesses in the supply chain by: o identifying a supply chain strategy o specifying complementary objectives and policies o developing organisational structures to bridge functional barriers o sharing requirements and needs for goods and services o integrating computer systems that use data common to all businesses o common communication standards such as electronic data interchange (EDI) o agreeing quality standards o specifying and agreeing responsibilities of individual businesses o specifying service levels.

B3 Managing the supply chain

• Performance monitoring using key performance indicators (KPIs), specific, measurable, achievable, realistic, time-constrained (SMART) targets, budgetary control.
• Sources of information, including internal, external, formal reports, ad hoc reports, anecdotal.
• Risks to supply chains, including external shocks (earthquakes, tsunami), lack of capacity by businesses in the supply chain, reliance on a single business, computer system failures (information, finance), domination of the supply chain by an individual business, poor customer service, inter-organisational conflict.
• Managerial actions to restore and improve supply chain operations.

B4 Benefits of supply chain integration

• Advantages of integrated supply chains, including:

o improved service to downstream and upstream businesses in the supply chain o harmonisation of activities between supply chain businesses o automation of activities o improved reliability and error reduction such as avoiding stock outs o reduced personnel costs o improved resource utilisation o reduced lead times through the use of just-in-time techniques o improved competitive advantage and enhanced reputation for businesses  in the supply chain.

Learning Aim C: Examine The Impact Of Technology On The Efficient Management Of Supply Chain Operations

Learners will need an understanding of technology as a business enabler in the context of supply chain management.

C1 Technologies

• Software applications, such as databases and spreadsheets, used to manage resources and processes in supply chain operations.
• Enterprise resource planning (ERP) software for the collection, storage, management and interpretation of data and information in integrated ways for supply chain operations.
• Radio-frequency identification (RFID) for identifying and tracking the progress of resources through the supply chain.
• Geographic information system (GIS) and global positioning system (GPS) in transport/logistics.
• Procurement to pay (P2P) to integrate procurement and invoicing operations.
• Communication systems for moving data and information across supply chain operations.

C2 Technology and supply chain components

• The use of technology for:
  • supply chain activities such as e-requisitioning, e-sourcing, e-ordering, e-bidding, e-auctioning, e-invoicing, e-payment
  • computer modelling o decision analysis o inventory management
  • facilities location o logistics o

C3 The impact of technology

• Managing information through the use of systems to:
  • keep supply chain stakeholders informed o synchronise activities across the supply chain o smooth fluctuations between demand and supply o reduce lead times o reduce costs o generate efficiencies across the supply chain.
• Provision of information in real time through the use of integrated, linked databases and ERP techniques to improve decision making by the businesses in the supply chain.
• Track and trace systems to determine the current and past locations of and other information about individual items in the supply chain.
• Transport planning, modelling and routing software to ensure cost effective distribution in the supply chain.
• The integration and automation of the procurement process from requirements identification through to planning, budgeting, purchasing and payment.

Assessment Criteria

Essential Information For Assignments

The recommended structure of assessment is shown in the unit summary along with suitable forms of evidence. Section 6 gives information on setting assignments and there is further information on our website.

There is a maximum number of two summative assignments for this unit. The relationship of the learning aims and criteria is:

Learning aims: A and B (A.P1, A.P2, A.M1, A.D1, B.P1, B.P2, B.M2, B.D2)

Learning aim: C (C.P5, CP6, C.M3, C.D3)

Further Information For Teachers And Assessors

Resource Requirements

Learners will need access to a range of current business information on supply chain operations from websites and printed resources.

Essential Information For Assessment Decisions

Learning aims A and B

Learners should produce a report that explains how a supply chain is organised and how effective supply chains are key to gaining competitive advantage. Learners should use diagrams of the supply chains of two successful businesses trading nationally and internationally to support their descriptions. Learners need to include clear explanations of different activities that link all the businesses in the specified supply chains, including how the efficiency of the supply chains meets customer needs.

Learners should explore the specific considerations when increasing warehouse capabilities, including handling and transportation, and the different modes of transportation, along with the principles of reverse logistics.

For distinction standard, learners will evaluate the use of different inventory management methods in two contrasting businesses, including a range of monitoring and control techniques, with justification and relevant references presented in the report.

Learners will provide a comprehensive evaluation of the integrated supply chain in a specific organisation, comparing and contrasting the transferable benefits for businesses.

For merit standard, learners will assess how inventory requirements of two businesses can be calculated. Learners will explore and analyse activities that can be used to integrate the supply chain. From this, learners will assess the appropriateness of these activities for the two selected businesses.

For pass standard, learners will define logistics and describe how logistics contribute to an effective supply chain operation, using relevant examples of businesses operating nationally and internationally.

Learning aim C

For distinction standard, learners will evaluate the effectiveness of supply chain operations management, including the use of technology, for a chosen successful business. Learners will provide clear examples of increased efficiencies and the information and systems utilised.

For merit standard, learners will analyse the technological impact on the management of supply chain operations for two contrasting businesses. Learners will assess examples of specific technological advancements and their implementation in the two businesses and link them to business improvements.

For pass standard, learners will describe the range of technologies available for two contrasting businesses and why these businesses used each of the technologies to support their supply chain operation. Learners will explain how the technologies identified contribute to improving both businesses’ supply chain operations.

Links To Other Units

This unit links to:

• Unit 1: Exploring Business
• Unit 15: Investigating Retail Business
• Unit 27: Work Experience in Business
• Unit 32: Buying for Business.

Employer Involvement

This unit would benefit from employer involvement in the form of:

• work experience
• business material as exemplars
• participation in audience assessment of presentations
• opportunities to visit suitable businesses.