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Unit 8.3

Trends in Supply Chain Management and Collaborative Commerce

IT 204: E-Commerce

Learning Objectives

By the end of this chapter, you will be able to:

  • ✅ Define and differentiate key SCM trends like JIT, Lean, and VMI.
  • ✅ Explain the core principles of a "pull" vs. "push" supply chain system.
  • ✅ Identify the seven types of waste targeted by Lean Manufacturing.
  • ✅ Analyze the specific challenges to implementing modern SCM in the context of Nepal.

Trend 1: Just-in-Time (JIT) Production

Just-in-Time (JIT): A production strategy to increase ROI by reducing in-process inventory and its associated carrying costs.

⚡ The core idea is to produce goods only as they are needed in the production process, minimizing waste and storage costs.

JIT operates on a pull system, driven by actual customer demand.

Push vs. Pull Systems

Traditional "Push" System

  • 📦 Production based on forecasts.
  • 🏭 "Pushes" products to consumers.
  • ⚠️ Risk of overproduction & high inventory costs.
  • Example: Mass-producing winter coats in summer based on last year's sales.

JIT "Pull" System

  • 🛒 Production based on actual orders.
  • 🛍️ Customer demand "pulls" products through the system.
  • ✅ Reduces inventory and waste.
  • Example: A restaurant kitchen preparing a dish only after a customer orders it.

Trend 2: Lean Manufacturing

Lean Manufacturing: A production strategy focused on maximizing value for the customer by eliminating waste.

🎯 The Goal: Remove any activity or process that does not add value to the final product.

This philosophy identifies seven key types of waste to eliminate.

The 7 Wastes of Lean Manufacturing 🔍

1. Overproduction

Producing more than is needed or before it's needed.

2. Waiting

Idle time for machines or workers waiting for the next production step.

3. Transportation

Unnecessary movement of materials or products.

4. Processing

Doing more work than necessary; over-complicating processes.

5. Inventory

Holding excess raw materials, work-in-progress, or finished goods.

6. Motion

Unnecessary movement of people (e.g., walking to get a tool).

The 7 Wastes (Cont.) & Example

7. Defects

Products that don't meet quality standards, requiring rework or scrapping.

Remember TIMWOOD:
Transportation, Inventory, Motion, Waiting, Overproduction, Over-processing, Defects.

🧠 Quick Activity

Think about a local restaurant or "momo pasal".

Where might you see the waste of Waiting or Motion?

Trend 3: Vendor-Managed Inventory (VMI)

Vendor-Managed Inventory (VMI): A model where the supplier takes full responsibility for maintaining an agreed-upon inventory of their material at the buyer's location.

  • 🤝 The supplier, not the retailer, decides when to replenish and how much to send.
  • 📊 This is enabled by the retailer sharing real-time sales and inventory data with the supplier.
  • Example: A beverage company restocking the shelves at a supermarket directly, based on the store's sales data.

Case Study: SCM in Nepal

Adoption is in the early stages.

While larger businesses are adopting modern SCM, many smaller businesses face significant hurdles.

Status of SCM Trends in Nepal

Just-in-Time (JIT)

Not widely used due to:

  • Unreliable suppliers
  • Weak transportation infrastructure

Lean Manufacturing

Not widely used due to:

  • Lack of skilled personnel
  • Developing manufacturing base

Vendor-Managed Inventory (VMI)

Not widely used due to:

  • Lack of trust between partners
  • Limited data-sharing technology

Key Challenges for SCM in Nepal

💰 Cost

High initial investment for technology and training is a barrier for SMEs.

🧑‍🏫 Lack of Skilled Personnel

A shortage of professionals trained in modern SCM principles and software.

💡 Lack of Awareness

Many businesses are unaware of the potential benefits and ROI of implementing these trends.

Key Takeaways

  • 🎯 Modern SCM focuses on efficiency, waste reduction, and customer demand.
  • ⚡ JIT uses a "pull" system to minimize inventory, contrasting with traditional "push" forecasts.
  • 🗑️ Lean Manufacturing systematically eliminates 7 types of waste (TIMWOOD) to maximize value.
  • 🤝 VMI shifts inventory responsibility to the supplier, requiring deep trust and data sharing.
  • 🇳🇵 In Nepal, adoption is slow due to challenges in infrastructure, cost, skills, and awareness.

Thank You

Any Questions?

Next Up: Unit 9.1 - E-Procurement and B2B Marketplaces

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