Sri Lanka Institute of Information Technology

Faculty of Business
BBA Special Honors Degree in Business Management
2nd Year- 2st Semester

OPERATIONS AND SUPPLY CHAIN MANAGEMENT

PREPARED FOR:
MS. NADUNI MADHAVIKA

GROUP ASSIGNEMENT

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Group Details

Student Name Reg No

R.M.C. Nimnajith BM18519600

R.R.R.S.B. Sumanasekara BM18500172

D.K.S. Wijesinghe BM18501308

G.M.S. Tharushika BM18509182

M.B.M. Mudannayaka BM18502602

N.G.S. Hansani BM18524796

H.W Ruhunage BM12416554

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Report Introduction

Supply chain management is about planning and control of the flow of company
resources (goods, information and money) across their primary values and this applies to
all the process starts from raw material suppliers to the end customers.
This report discuss about the Supply chain strategies and how these strategies implement
in businesses, the practical way to understand how they involve and setting up these
strategies in their businesses. Further this will discuss with our selected company Ansell
Pvt Ltd which manufacturing and export Medical and Industrial gloves many countries.
Supply chain strategy has a broader meaning; this defines how the company should
operate supply chain in order to face competition and setting up policies and plans to
evaluate the cost benefit of all the operational components, these strategies integrated
with the corporate strategy of the company.
This report bring about the Theoretical background of operations and supply chain
management and also in order to discuss the practical aspect about these strategies, we
have included Ansell’s Supply chain management as a graphical presentation further we
have identified and discussed in detailed about Ansell’s supply chain strategies such as
“Multiple Locations, Internal R&D Team, Forecasting Demand Planning, Production
location benchmark, Geographical Distribution Channel etc. Each of these strategies have
stated focuses on reducing cost, maximizing efficiency, and risk associated with future
demands and other facts which has direct impact on business activities and also
considering customer satisfaction. These strategies simply based on suppliers, distributors
and customers and directly support to meet organization’s ultimate objectives.
Though we can see companies have adopted the supply chain strategies directed at their
objectives and goals still there might be gaps in order to create value in the organization
and to compete in the industry. These gaps arise due to many reasons because companies
follows different techniques and also the processes will vary with the systems they
choose for their operations, therefore there can be issues such as how efficient and how
far accurate the plans and decisions they take depend on their systems and methods, even
though they follows the same strategy.
Therefore we have discuss about the gaps in supply chain strategies implemented in
Ansell Pvt ltd and also at the end we have given some suggestions to fill those gaps and
understand how to make plans and choose methods based on strategies in order to have
positive effect on company corporate goals.

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Introduction of the company

Ansell is an Australian company. It founded 90 years ago in 1929 as Dunlop Perdriau

Ltd. It founded by Eric Norman Ansell. From 1970 to 1989, Ansell acquires industrial
glove companies and expands production in Malaysia and USA. Ansell becomes world’s
largest provider of medical, household and industrial gloves in 1991. Pacific Dunlop
splits and company name changed to Ansell limited in 2002.

It mainly manufactures protective clothing, industrial and medical gloves. Ansell has
delivered the most advanced protection solutions for 125 years. They keeping people out
of harm’s way at work and at home. It manufacturing more than 10 billion gloves per
year and providing protection solutions to more than 25 specific industries. They
protecting more than 10 million workers each day and sales activities in more than 100
countries.

Ansell mainly producing 2 products. Which are,

Gloves

 Medical gloves
 Industrial gloves
 Examination gloves
 Multi-purpose gloves

Protective clothing

 Aprons
 Coveralls
 Hoods
 Lab courts
 Over boots
 Sleeve covers

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Ansell operating various sub brands for its protective gloves product around the
world.Such as, Gammex, Encore, DermaPrene, Hyflex, Ansell Hawkeye. They mainly
operating their business operations in Sri Lanka, Malaysia, Vietnam, Thailand, and
Portugal.

Theoretical background of Operations and Supply Chain Management

 What is Supply Chain Management (SCM)?

Supply chain management is the management of the flow of goods and services and
includes all procedures that transform raw materials into final products. It involves the
dynamic streamlining of a business's supply-side tasks to maximize customer value and
gain a competitive advantage in the marketplace.

SCM constitutes an effort by suppliers to develop and execute supply chains that are as
efficient and economical as possible. Supply chains cover everything from production to
product development to the information systems needed to straight these undertakings.

 How is it Work?
Normally, SCM aims to centrally control or link the production, shipment, and
distribution of a product. By dealing the supply chain, companies are able to cut excess
costs and deliver products to the consumer faster. This is done by keeping stiffer control
of internal inventories, internal production, distribution, sales, and the inventories of
company vendors.

SCM is based on the idea that nearly every product that arrives to market results from the
efforts of different firms that make up a supply chain. While supply chains have subsisted
for ages, most companies have only recently aware to them as a value-add to their
operations.

In SCM, the supply chain manager interrelates the logistics of all aspects of the supply
chain which consists of five parts:

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  The plan or strategy
 The source (of raw materials or services)
 Manufacturing (focused on productivity and efficiency)
 Delivery and logistics
 The return system (for defective or unwanted products)

The supply chain manager attempts to minimize shortages and keep costs down. The duty
is not only about logistics and purchasing inventory. Improvements in productivity and
efficiency go straight to the outcome of a company and have a real and lasting impact.
Good supply chain management keeps firms out of the headlines and away from
expensive recalls and lawsuits.

 What is supply chain management strategy?

Supply chain management (SCM) involves the development of products and services
from suppliers to distributors. SCM involves the flow of information and products
between and among supply chain stages to maximize profitability.

Procurement of raw materials, product development, marketing, operations, distribution,

finance, and customer services are the key functions intricate in SCM. Customers are an
essential part of supply chain management.

The purpose SCM is to maximize the overall value. Value is correlated to supply chain
profitability. Profitability is the variance between the total revenue generated from the
customer and the overall supply chain costs.

Strategies and designing of the supply chain include:

 Determining on the supply chain structure and the activities each stage of the
supply chain will perform
 Selecting a location and capacities of facility
 Deciding on the products that are to be made and the location where they need to
be stored
 Choosing the modes of transportation and the source from where the information
is to be collected

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Supply chain create decisions are long term projects and are expensive to reverse; so the
manager must take into account the market uncertainty.

Operations and Supply Chain Management in Ansell

Global Marketing Team

Global Demand Planning

Plant Demand Planning

Production Plan

Sourcing Manufacturing

Global Sourcing Plant Sourcing

Production

Plant Warehouse

Shipping / Distributing

Geographical Warehouse

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Customer Customer Customer

Operations and Supply Chain Management strategies adopted by the
company

 Multiple Locations

Ansell doing their operations in different locations like Sri Lanka, Malaysia, Vietnam,
Thailand, and Portugal. So they can produced same products with large amount. It will
help to accept any large amount of customer orders without having any risk. On this
strategy the company can be placed their orders on time. It lead to reduce customer back
orders and improve customer satisfaction as well. It will help to reduce shipping cost and
faster delivery times. As a result of this strategy, company can manage additional
volumes. This strategy will help to reduce cost and gain a competitive advantage.

 Internal Research and Development Team

Ansell has internal research and development team. It will lead to be benefited to the
company in several areas. Such as,

o Cost – Hiring external researches is often more costly than using your
internal employees. Holding the tasks in house also mean company can
control and examine expenses and resources in a better way.
o Flexibility – When caring out research, internal teams can be more agile.
And also the company can quickly change according to the changing
needs of the company.
o Security – Having research and development team in the company can be
helped to prevent outflow of information and intellectual property outside
of the organization.

Internal research helps to achieve long term goals like increase productivity and
profitability, improve brand and stay competitive in the market.

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  Forecasting Demand Planning

Ansell plan future operations based on previously made forecast. They use oracle demand
planning tool for forecasting future demand and use this forecasting data to create
business plans. This demand plan tool supports internet based association between uses in
various locations and departments.

Forecasting demand initiate all push–processes of Supply Chain. All push-processes of

Supply Chain beginning with demand forecasting. They mainly use “Oracle” data base to
collects the data from the market & analyses them to make a demand plan. It helps to raw
material planning, purchasing, inbound logistics, and manufacturing. Better forecasts
support them to enhance the inventory levels and capacity utilization.

Demand forecasting also help to direct all pull–processes of Supply Chain like order
management, packaging, distribution, sales & marketing plan and outbound logistics.
Better forecasts lead to enhance the distribution and logistics and buildup customer
service levels.

And also it will help to Improves supplier relations and purchasing terms. Demand
Forecasting lead the raw material planning process (sourcing) that helps to the Purchasing
Managers to issue well –timed purchase plan to suppliers. As a result of Visibility and
transparency of raw material demand lead to improve supplier relations and empowers
Purchasing Managers to cope with beneficial terms for their companies.

 Production location benchmark

Ansell has production locations around the world. Such as, Sri Lanka, Malaysia,
Vietnam, Thailand, and Portugal. They use ‘Process Benchmarking’ strategy to evaluate
various aspect of their process in relation to best practices from other branches. They
normally measured quality, time and cost by using this strategy.

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They calculate cost per unit to measure productivity per unit. Then compare the
performances with other branches. In this strategy management identifies the best firm in
their industry. This strategy help them to identify how well they perform compared to
other businesses.

Ansell uses benchmarking to improve its factions, operations, products and services to
increase in sales and profits. This strategy helps to identify problem areas and selecting
top competitors. Ansell use this strategy to compare performance between product lines,
hold people more responsible for their performance, develop scandalize processes and
indemnify what make a company successes.

 Geographical Distribution Channel

This logistic strategy requires Ansell limited to develop its distribution plan. This strategy
helps to identify target customer segments though its channels. Distributors and Retailers
can efficiently manage their stocks and they can fulfill orders daily and identify when the
request larger shipments from manufactures. It help to reduce errors can be occur from
distributors and retailers.

 Warehousing Strategy

They purchase order with blind quantity check, item label barcode tracks inventory and
orders in receiving goods. They downloaded orders and orders automatically release.
Then queued to pickers in priority orders and pickers sent on most efficient pick walk.
Demand and top up pickface replenishments. They click and collect orders arriving set as
high priority. Ready for collection in as little as two minutes. All orders blind check for
accuracy prior to packing.

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Ansell use packing benches and integration with courier. Courier integration for
automatic label printing. They individually analyze their operations and report what they
need. They run from analysis system. They looking at things like pick rates for operators
and packing rates for operators. Ansell looking at stock movements and adjustments.

Ansell drives logistex WMS – Reflex system to analyze their operations in warehouses.
It helps to operate their activities in a more efficient manner. In first nine months
achieved significant efficiency gains introduce the system into Belfast site with zero
disruption the WMS can be easily replicated throughout UK and Europe.

 Procurement and Global Sourcing Team

Global Sourcing is the process of purchasing goods and services from the international
market. It expect to have global efficiencies such as, lower cost, skilled labors, cheaper
raw materials and other economic factors like tax breaks and law trade tariffs.

Ansell import their raw materials mainly from China and Brazil. Global sourcing team
helps to negotiate with main raw material suppliers. As a company they need to interact
with suppliers for various deals. The efficiency on how they negotiate with suppliers is
decide their success or failure. When the company dealing with suppliers they should
have agreements of mutual interest.

Ansell usually present their offers after understood the suppliers offer. It will help them
to make good relationship with suppliers. Then they can purchase raw materials with
competitive prices.

Sourcing Department negotiate with suppliers to have the best price with the best
condition for every item that they purchased. Ansell use this strategy to make good
supplier relationships for reducing supply risk and build value agreement with them.

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Gaps in the adopted strategies

 Forecasting errors in Demand Planning

Sometimes forecasting errors happen in Demand Planning. When they using oracle
system to estimate the demand, sometimes it occurs data entering errors. It effect to the
whole demand planning system. Because of that it lead to have gaps between actual
demand and the estimated demand. If demand planning team give inaccurate data it will
lead to happen errors in sourcing and production.

When sourcing team use inaccurate data it lead to happens errors in purchasing raw
materials. It may be a surplus of raw materials or deficit of raw materials. Therefore it
occur to increase the cost. Because of that efficiency will be decrease and profitability
also going down.

When production team use this incorrect data it will be a reason to happen changes in
production. It may be an overproduction or underproduction. If there is an
overproduction, it is an additional cost to the company. It will lead to decrease the
profitability. It there is an underproduction, they cannot fulfill the customer needs. It
reason to happen customer backorders. Therefore it occurs to decrease customer
satisfaction. It lead to fall the company profitability.

 Long Lead Time in Research and development process

Ansell takes long time period to do their research and development process. Most of
times their engineers take more time to do their innovations. Longer lead times in the
research and development process it can cause a series of negative effects for both the
customer and the seller.

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In fact, lead time is the single biggest factor influencing competition of the market. If
increasing the lead time in this process, it occurs to increasing the cost. They have pay
maintenance and license fee or royalties. Therefore it will be reason for decreasing
profitability in the company. Introducing a Research and Development part only make
sense if the market growth rate is slow or relatively moderate. In a fast stepped
environment, competitors may rush a head before research has been completed.
Therefore it may be the entire process useless.

Research and Development strategy can lead to have long time because Research and
Development team involves researches about market and customer needs to develop new
and improved products and services to match these needs. Therefore Research and
Development team takes more time and money but it doesn’t guarantee it will be
successful.

 Long Validation Process in Quality Assurance

Ansell mainly give great importance to Quality Assurance. They prioritize the quality, so
they purchase materials from regular suppliers. They generally check whether the raw
materials are in the right quality through the quality assurance process. It doesn’t matter
whether they are usual supplier or not, they should come through this process. They
accept the material stocks after the quality checking process.

It is take long time period for the validation process. They usually validate the stocks that
purchase from the general suppliers too. Sometimes it’s no need to do validation because
they are usual suppliers. But the sourcing team should have a responsibility to ensure the
all materials are in the best quality and best condition. So they normally do this process to
fulfill the company objectives. This long process lead to increase the company cost and it
occurs to decrease the profitability of the company.

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  Mono Sourcing

They have existing suppliers for raw materials purchasing who recommended by the
research and development team in the company. They generally purchase raw materials
from them. Sometimes it is a problem to sourcing process, when those existing suppliers
couldn’t supply to match with our orders. Because of that company haven’t enough
resources to continue their operations. Then whole production will go down. So it is a
risk to the company operations.

As a result of the production lost, it will affected to the company and as well as to the
customers. It occurs to decrease the company profitability and customer dissatisfaction. It
will be a reason to the company market stability.

 Warehouse Capacity Problem

They haven’t enough warehouse capacity, according to increase of production lines.

Because of that they haven’t enough space to safely store all of their stocks. As reason of
this problem it will occur inventory control problems.

Warehousing stocks in unsuitable places could lead to them getting damaged. It hard to
tracking each products individually. It will be a reason to increasing the cost and
decreasing profitability. As well as the customer dissatisfaction.

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Suggestions for the Gaps in the Company

 Suggestions for forecasting errors in Demand Planning

o Establish a standard procedures to double check all the data entry

activities carried out is a best options to tackle manual entry challenges.

o Update the automated systems – If the company uses automation for

collecting and analyzing data then its important know understand that even
systems make mistakes.

o Leverage suitable software tools – Optical Character Recognition (OCR)

and Intelligent Character Recognition (ICR) can be used to reduce the
work load of data entry activities.

o Hire experienced and specialist staff –If they hire experienced and
sufficient staff to handle operations, they can be reduce data entry errors.

 Suggestions for long Lead Time in Research and development process

o Company can do a research by doing process mapping to identify why its

take long time period to Research and Development. This is an ongoing
project that they doing on these days.

o They can hire sufficient employees to increase the efficiency of the

Research and Development process.

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  Suggestions for long Validation Process in Quality Assurance

o Pre-approved validations forms – Applying standardized and Pre-

approved validation forms. These are an efficient method to qualify
changes to current systems. It help to reduce cycle time, faster turnaround
time, only one approval cycle and it lead to reduce validation process cost.

o Can use standardized assignment tools – G&P Assessment, Part 11

Assessment, System Level Risk Assessment, System Impact-Direct or
Indirect.

 Suggestions for Mono Sourcing

o It is better to purchase raw materials from substitutes suppliers to control

the risk.

o If any delay of suppliers company should conduct a buffer stock to

continue the production process. These delay mostly happens by the
delays of shipments.

o Company should conduct a sufficient sourcing methods and team to

operate their purchasing and ensure suppliers intimacy.

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  Manage warehouse capacity problem

o It is better to facilitate warehouses facilities to match with the raw material

stocks and finished goods. They should build new warehouse to store raw
materials and finished goods.

o They should implement inventory control methods to ensure perishable

goods don’t go waste

o Company can be stored their stocks using narrow-isle equipment and it

will allow them to place racking closer together.

o Ansell can outsourcing their outflow storing until space can become
available.

o They can use Stirling warehouse management system –this system

supposed to allow them to locate and retrieve goods in an instant.

o Company can use lean manufacturing tools to reduce wastage and improve
efficiency in operations. They can implement 5S system to improve
efficiency of warehousing process and reduce wastage.

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Conclusion

The objective of this report is to illustrate the theoretical background of the Operations
and Supply Chain Management and also to understand the Supply Chain Strategies.
Further to discuss about the practical aspect of above theories we have selected a leading
manufacturing company Ansell Pvt ltd. Using this company as a sample to bring out a
better picture of how the businesses are setting up these strategies and how these
strategies give different results based on company’s own plans, policies, methods and
systems etc, have explained under the gaps of supply chain strategies adopted by Ansell
pvt Ltd . Here we have identified supply chain strategies implemented by Ansell’s and
have discussed the target objectives of those strategies. Simply the main focus of setting
up operations and supply chain management strategies in an organization is to reduce the
cost, risk and compete with other businesses also to meet corporate goals of the
organization. This report end with some suggestions to fill the gaps occurs in businesses
when they implement operations and supply chain strategies.

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References

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