Chapter 15- Supply Chain Management row5column <. Stop when all columns and Supply Chain (Value Chain) the sequence rows are saturated !then repeat" Transp!rtati!n M!del: /pplicati!ns: of organizations – their facilities, functions, and activities – that are involved in location decisions – compare location producing and delivering a product or alternatives in terms of their impact cost on service. Value is added as goods and the total distribution costs for the system, services progress through the chain. Typical +nvolves wor#ing through a separate model Supply Chains: every business is part of at for each location being considered, least one supply chain, many are part of production planning, capacity planning, multiple supply chains: transshipment ull*hip 2ect: =irst noticed by 27> - Suppliers storage manufacturing Supply Chain Management: Strategy storage distributor retailer customer e*ecutives e*amining the order patterns for alignment: - Suppliers storage service customer 2ampers disposable diapers. lthough the – ligning supply and distribution Supply Chain Mgmt. (SCM) – (SCM) – strategic customer demand is pretty steady, they strategies with organizational strategy. coordination of business functions within a noticed that order variation increased – (eciding on the degree to which business organization and throughout its dramatically as one moved from retailers to outsourcing will be employed. supply chain for the purpose of integrating distributors to the factory. 4etwor# conguration: (etermining the &r!'lems ! 'ull*hip eect-low eect- low service supply and demand management number and location of suppliers, Supply: from Supply: from the beginning of the chain to level !bac#orders" high inventory levels, high warehouses, production5operations facilities, cost, high demand 0uctuations !variation in the internal operations of the organization distribution centers. +nformation technology: demand along the S requires: shipment Demand: from the organizations output +ntegrating systems and sharing information capacity, production capacity, inventory delivery to its immediate customer to the !forecasts, asts, inventory status, shipments etc." capacity ?to cope with pea#s" most of the nal customer in the chain Interest in SCM: !forec throughout the S. manufacturing becomes more ecient !or time will be idle, cost and investments Strategic partnerships hoice of partners, outsourced", companies loo# for ways to attached – in the end high overall cost in level of partnership. (istribution strategy reduce costs, $eb-based models, online supply chain retailers, %&% business models !al: match entralized or decentralized distribution. +n- 3 2ect Causes: In!rmati!n (lac4 !) house distribution or third-party logistics. supply to demand as e'ectively and >ame simulates S with low levels of trust, 6ncertainty and ris# reduction eciently as possible where little information is shared among the "ey SCM Issues: (etermining appropriate +dentifying potential ris#s and deciding on parties.. @nly order amounts are perpetuated parties acceptable ris# level. apacity planning levels of outsourcing, managing up the supply chainA information about procurement## )anaging suppliers, customer ssessing long term capacity needs and the customer demand is lost upstream. $ithout procurement degree of 0e*ibility 2roducts and services relationships, ris## ris# # %eing able to quic#ly actual customer demand data, all forecasts new products and services selection and identify problems and respond to them rely solely on the incoming orders at each ,!gistics-- the part of the supply $uts!urcing: transfer or contracting !non- design. ,!gistics stage of the S. chain involved with the forward and reverse SC structure the longer the lead time the productive" internal activities !process" to 0ow of goods, services, cash, and outside vendors !e*: +, , /ogistics", stronger the bullwhip e'ect !the reorder information:: mgmt. ! inbound information inbound 7 outbound point is calculated by multiplying the utilize the eciency that comes with transportation, material handling, specialization, ma#e-or-buy analysis. forecasted demand by the lead time plus the inventory, order fulllment 7 Supplier %elati!nship Management: type warehousing, rd safety stoc#" ,!cal stoc#" ,!cal !ptimiati!n distribution, 8 party logistics, reverse of relationship is often governed by the /ocal individual cost optimization, and a lac# logistics !return from customer" duration of the trading relationship: sh!rt of cooperation. @rdering involves * cost. In+ent!ry Management- +ssues Management- +ssues in S) – here is term c!ntracts: involve competitive is an incentive incentive for individual individual players players to l!cati!n centralized inventory bidding, minimal interaction medium term: in+ent!ry l!cati!n centralized hold bac# and only place aggregate5batch !lower overall inventory, lower cost, lower ongoing relationship l!ng term: greater orders. his aggravates the problem of cooperation that evolves into a partnership. stoc#-out ris#", decentralized inventory demand forecasting as little information !faster delivery, lower shipping cost" Ch!!sing Suppliers: quality and quality about actual demand is conveyed. +el!city !the speed at which Mitigating the 3 2ect >ood supply assurance: procedures for quality assurance in+ent!ry +el!city !the and quality control 0e*ibility: for changes in goods move through a supply chain, the chain management can overcome the greater the velocity the lower the holding delivery schedules, quantity, product, or bullwhip e'ect: cost and the faster orders are fullled and In!rmati!n sharing: Beplenishment sharing: Beplenishment based service changes location: nearby1 2rice: eect: on need: !Cendor-managed inventory goods are turned into cash, 'ull*hip eect: competitiveness, competitive ness, willingne willingness ss to negotiatie negotiatie,, inventory oscillations that become cooperate to reduce prices reputation and Cendors monitor goods and replenish retail increasingly larger loo#ing bac#ward through inventories when supplies are low", /ower nancial stability: supplier reputation their the supply chain nancial stability other accounts: ordering costs Transp!rtati!n pr!'lem: nding pr!'lem: nding the Sh!rt lead times# C!!perati!n dependence on other customers and their lowest cost plan for distributing stoc#s from competition is now supply chain against priority multiple origins !supply points" to multiple Supplier &artnerships: more orgs. re supply chain and network against network Trends in SCM: SCM: measuring supply chain see#ing to establish partnerships with others destination. M!del: In!rmati!n %euirements in their supply chain – fewer suppliers, long performance – incorporating economic information requirements 9. list of the term relationships, sharing of information metrics into decision decisions s !inventory velocity, origins and their supply quantity !capacity" !forecasts, sales, data, problem alerts", inventory turnover", DgreeningE the supply per period &. list of the destination their cooperation in planning 'enets: chain- redesigning products and services to demand per period 8. he unit cost of improved operations: higher quality, reduce pollution from transportation, shipping items from each origin to each increased delivery speed and reliability, choosing DgreenE suppliers, managing lower inventories, lower costs, higher prots. destination /ssumpti!ns: transportation returns, end of life programs !appliances", remodel assumptions: 9. the items to be 3igher supplier 0e*ibility in accepting evaluating outsourcing- long lead time, shipped are homogeneous &. Shipping cost changes !delivery schedules, quality, and increased transportation costs, language, per unit is the same regardless of the quantity", suppliers can help in identifying culture, Fob loss, control loss, lower number of units shipped 8. here is only one productivity, loss of ability to perform wor# problems and o'er suggestions many ! route or mode of transportation used the 'enets g! t! the 'uyer# 'uyer# *hile internally, loss of business #nowledge, between each origin and destination much ! the in+estment alls !n the management e'orts, integrating + - Beal Minimum Cell C!st (greedy) 0euristic: 9. time data to enhance strategic planning, supplier Search for the minimum unit cost &. 2lace control costs, measure quality and min !demand, supply" 8. rase row5column productivity, respond quic#ly to problems, corresponding to min !demand, supply" ;. improve S operations , managing ris#sSubtract min !demand, supply" from paired identifying ris#s, assessing li#elihood of occurrence, potential impacts, prioritizing,
developing management strategies !avoidance, reduction, transference", adopting lean principles- eliminating non value-added processes, using DpullE systems to improve product 0ow, using fewer suppliers, continuous improvement $perati!ns Strategy: e'ective Strategy: e'ective supply chains are necessary for organizational success – requires integration of all aspects of the chain, supplier relationships are a critical component of supply chain strategy, lean operations to improve supply chain success Ch!!sing the alternati+e: alternati+e: 3 G !H per unit" !total items" hen multiply multiply by your holding holding cost cost G !3" !days58I<" his will give give you your your net savings savings
Chapter 16 7 ,ean $perati!ns 8 9IT ,ean !perati!ns: philosophy that encompasses every aspect of the process, from design to after the sale of a product. -2ursues a system that functions with minimal levels of inventory, waste, space and transactions.-- 0e*ible system of operation that uses considerably less resources !activities, people, inventory, space" than a traditional system Targets: greater productivity, lower costs, shorter cycle times, higher quality Three 'asic elements: demand when driven, focus on waste reduction, culture that is dedicated to e*cellence and continuous improvement ,ean systems !al-chieve !al-chieve a system that matches supply to customer demandA supply is synchronized to meet customer demand in a smooth, uninterrupted 0owA a balanced system ,eann Supp!rting !als – eliminate disruptions -2oor quality !lean systems do not carry e*tra inventory", equipment brea#downs, schedule changes, late deliveries, ma#e the system 0e*ible- mi* of products, levels of output, require reducing setup times and lead timesA eliminate waste 7 e*ces. +nv. 3aste: Bepresents unproductive resources Seven sources of waste in lean systems: 1. In+ent!ry +dle resource, requires space, cost . $+erpr!ducti!n @veruse of manufacturing resources ;. resources ;. 3aiting time Bequire space, $+2 6. cient *!r4 meth!ds redundancy =. redundancy Beduced productivity, increased scrap, increased $+2 ?. $+2 ?. &r!duct deects Bewor# costs, customer dissatisfa dissatisfaction ction uilding 'l!c4s – 'l!c4s – 2roduct design, 2rocess (esign !fail-safe methods, production 0e*ibility, manufacturing cells", 2ersonnel5@rganizational elements !wor#ers as assets, cost accounting, cross-trained wor#ers", )anufacturing planning and ontrol !level loading, visual systems, pull systems" &r!duct Design 6 elements- standard elements- standard parts, modular design, highly capable systems with quality built in, concurrent engineering &r!cess Design ? aspects
sies, goal: reduce lot size as -Small l!t sies, much as possible (ideal size is 1) %4=+S: reduced in process inventory !lower carrying costs, less storage", inspection 7 rewor# costs are lower when problems with quality occur, permits greater 0e*ibility in scheduling G better response to customer demands, less inventory to wor# o' before implementing product improvements, increased visibility of problems, increased ease of balancing operations (ideal size is 1)
reducti!n: small lot sizes and -set up and reducti!n: changing product mi*es require frequent setups unless these are quic# and ine*pensive they can be prohibitive, setup time reduction requires deliberate improvement e'orts – wor#ers are trained to do their own setups – single-minute e*change of die !S)("-a system for reducing changeover time impr!+ement: quality defects -@uality impr!+ement: during the process can disrupt the orderly 0ow of wor#, focus on nding and eliminating the causes of problems- autonomation !Fido#a"-automatic detection of defects during production. during production. 9, one mechanism for detecting defects when they occur &, another for stopping production to correct the cause of the defects !immediate attention to the problem" system: line balancing helps -/ 'alanced system: to achieve rapid wor# 0ow, wor# assigned to each wor#station must not e*ceed cycle time time)- cycle time needed to match !Takt time)customer demand for nal product, referred to as the heartbeat of a lean system, determine the net time available per shift, if there is more than one shift per day multiply the net time by the number of shifts, compute the ta#t time by dividing net available time by demand, minimizes $+2 inventory. -In+ent!ry st!rage: lean systems are designed to min. inventory !waste", inventories are bu'ers that tend to cover up recurring problems that are never resolved because they are not obvious and the presence of inventory ma#es them seem less serious, lean approach is to gradually reduce inventories in order to uncover problems /d+antages:: lower then resolve them: /d+antages carrying cost, less space, less dependence on bu'ers, less rewor#, less need use current inventory before implementing design improvements %is4s: no safety stoc#, opportunity loss when problems arise Manuacturing &lanning 8 C!ntr!l (M&C) -&ush system: wor# is pushed to the ne*t station as it is completed !without regard to the ne*t stationJs readiness", wor# may pile up at wor#stations that fall behind schedule systems: wor# moves in response to -&ull systems: wor# demand from the ne*t stage in the process, a wor#station pulls output from the preceding wor#station as it is needed, output of the nal operation is pulled by customer demand or the master schedule: require steady fow of fow of reparative wor#, large variations in variations in volume, product mi*, or product design will undermine the system c!mmunicati!n: moves backward backward through through the system from station to station: each wor#station !customer" communicates its need for more wor# to the preceding
wor#station !supplier" !assures that supply G demand" – wor# moves DFust in timeE for the ne*t operation, 0ow of wor# is coordinated, accumulation of e*cessive inventories is avoided. systems: Kanban !signal5visible -Visual systems: Kanban record": card or device that communicates demand for wor# or materials from the preceding station, paperless production control system, authority to pull, or produce, comes from a downstream process "an'an: card "an'an: card is a*ed to each container, when a wor#station needs to replenish its supply of parts, a wor#er withdraws on container, each container holds a predetermined quantity, the wor#er removes the #anban card from the container, posts it and ta#es the container to the wor#station, the posted card is pic#ed up by a stoc# person who replenishes the stoc# with another container, etc. AG total number of containers !9 card5container" D G planned usage rate of using wor# center. TGaverage waiting time for replenishment of parts L average production time for a container of parts !this is in hours so M< minutes 5 IN minutes G 9.&< hours BG policy variable set by mgmt. that re0ects possible ineciency in the system !closer to N the more ecient the system" CG capacity of standard container !should be 9NO of daily usage of the part" Cl!se Vend!r %elati!nships: relatively %elati!nships: relatively small number of suppliers, closer relationships with !certied" vendors – e*pected to provide frequent, small deliveries of high-quality goods, the burden of ensuring component quality is shifted to the vendor, local suppliers are preferred in order to reduce lead time !of small frequent deliveries", ideally the suppliers themselves will be operating under P+, the suppliers become a part of an e*tended integrated P+ system 3!r4ers 3!r4 ers as /ssets: /ssets: well-trained well-trained and motivated wor#ers are the heart of the lean system, they are given greater authority to ma#e decisions but more is e*pected of 7 wor#ers are them cr!ss-trained *!r4ers 7 wor#ers trained to perform several parts of a process and operate a variety of machines, facilitates fexibility, helps fexibility, helps in line balancing C!ntinu!us Impr!+ement: wor#ers in lean systems have greater responsibility for quality, and they are e*pected to be involved in problem solving and continuous improvement – lean wor#ers receive training in: statistical process control, quality improvement, problem solving. eams of wor#ers and managers who routinely wor# on problems, problem solving DcultureE: wor#ers are encouraged to report problems and potential problems ,ean Ser+ices: +n service the focus is often on the time needed to perform the service speed is often the order winner - 2rovide services when they are needed - /ean benets can be achieved in the following ways: 2liminate disrupti!ns !void having service providers also answer ei'le !rain phones" Ma4e system ei'le !rain wor#ers to handle more variety" %educe setup and lead times !stimate what parts and tools are frequently needed and have them on hand"
2liminate *aste !liminate *aste !liminate errors and 3I& !@rders duplicate wor#" Minimie 3I& !@rders waiting to be processed, calls waiting to be answered, pac#ages waiting for delivery, truc# waiting to be loaded5unloaded etc." Simpliy the pr!cess !Self-service pr!cess !Self-service systems such as in retail, )s, vending machines, service systems" Transiti!ning t! ,ean Systems: 9. )a#e sure top management is committed and that they #now what will be required &. (ecide which parts5processes will need the most e'ort to convert 8. @btain support and cooperation of wor#ers, reassure wor#ers that their Fobs are secure ;. %egin by trying to reduce setup times while maintaining the current system <. >radually convert operations, begin at the end and wor# bac#wards, at each stage, ma#e sure the conversation has been successful before moving on I. onvert suppliers to P+, narrow the list of vendors M. 2repare for obstacles $'stacles t! c!n+ersi!n: 1. Management may not be fully committed committed or or willing to devote the necessary resources to conversion &. $or#ers5management may not be cooperative be cooperative.. )anagement losses control as more responsibility is shifted to the wor#ers. $or#ers have increased responsibility. 8. +t can be dicult to change the organizational culture culture to to one consistent
with the lean philosophy ;. Suppliers may resist: 4ot enough assistance from buyer to perform transformation, 6neasy about long term commitment to buyer, Small frequent deliveries may be dicult, %urden of quality control, =requent engineering changes that may result from buyerJs lean improvements D!*nside ! a ,ean System: Substantial time and cost required for a successful conversion, Besources needed to achieve high level of quality and to function on a tight schedule, bility to respond quic#ly to problems as they arise, ommitment to continuous improvement. enets: reduced waste !inventory levels, scrap and rewor#, space requirements", high quality, 0e*ibility, reduced lead times, increased productivity and equipment %is4s: absence utilization %is4s: absence of bu'ers !personal, inventory" to fall bac# on if something goes wrong, possible loss o' sale and lost customers ,ean +s. traditi!nal phil!s!phies