Title: Designing Effective Supply Chains
1Designing Effective Supply Chains
2First, what are some common SC Performance Metrics
- Cost
- Inventory Factors
- Turns
- Fill-rate
- Just-in-time
- Overstock/Stockouts
- Shipment size
- Transportation delay
- Manufacturing
- Utilization
- Setup Reduction
- Inventory Buffers
- Time factors
- Lead times
- Just-in-time
- Restocking time
- Product design time
- Cash cycle
- Quality factors
- Willingness of customers to accept
less-than-perfect products - Disruptions
3Designing an effective supply chain strategy
- Consider nature of demand or ones product
- Potential product lifecycle / industry clockspeed
- Demand stability
- Product Variety
- Market standards for times and service
- Availability of suppliers
- Your position in the supply chain
4Fishers hypotheses
- Supply chains can be divided into two categories
- Primarily functional
- Examples
- Primarily innovative
- Examples
5Functional Vs Innovative Products Differences in
Demand Characteristics
6What should be the dominate strategy for each
type of supply chain?
- For Functional products?
- For Innovative products?
- What type of suppliers should you have for each
SC type?
7Impact of Stockouts
- Contribution margin (price variable cost) /
price - For Innovative Products
- With a contribution margin of 50, and an average
stockout rate of 20, cost of stockouts .5.2
10 of sales - For Functional Products?
8Focus of supply chains for functional products.
- The Campbell Soup example.
- Traditional Operations Research Foci
- Efficiency
- Maximizing fill rates.
- Minimization of variety
- Co-ordination
- Long-range Forecasting
- The 3-Cs
- Command
- Coordination
- Control
9Focus of supply chains for innovative products
- Cannot control so manage
- Except uncertainty.
- Reduce uncertainty.
- Avoid uncertainty.
- Hedge against uncertainty.
- Needs
- Fast, accurate response.
- Close customer and supplier relationships
- Sense and respond management
- Ability to use mass customization
- Increase price
10Question
- Is Dell computer a functional or innovative
supply chain? - Does a hospital need a functional or innovative
supply chain?
11A strategic approach to SC design
12Changing Environments
13Cost Relationship between design content and
manufacturing process
14Rethinking Manufacturing
- From
- Separate but equal
- Multiple Sourcing
- Individual Decisions
- Excess Capacity
- Variable Production
- To
- Strategic Decisions
- Strategic Processes
- Unified Decisions
- Right Capacity
- Level Production
15Strategic Identification Process
16Strategic vs. Non-strategic
- Strategic Items
- Complex Items
- Unique Processes
- Single Supplier
- Schedule Drivers
- Prototypes
- Non-Strategic Items
- Simple Items
- Common Processes
- Many Suppliers
- Schedule Flexibility
- Typical Items
17Strategic Processes
18Strategy Procurement Planning Grouping of
strategic items by similarities
19Strategy Procurement Planning Grouping of
non-strategic items by similarities
system
20Strategy Procurement Planning Final results of
item process grouping
All items placed in a category
system
- Key
- Red Strategic Item Yellow Strategic process
- Blue Non-Strategic items/process White
Unique, but non-strategic item/process
21Strategy Procurement Planning Logistics
Considerations
System
22Strategy Procurement Planning Supplier
Considerations
system
23Integration of Process Strategy
24Factory Sizing Strategy
25Summary
- Look for parts commonalities at product design
- Divide products processes into strategic and
not-strategic - Group products processes if possible
- Investigate Logistics supplier considerations
- Look to minimize internal disruptions by using
suppliers