Mapping Supply Chains

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Mapping Supply Chains

• Paul Justensen
• BusM 361
• Brigham Young University

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Supply Chain Maps Training

• Overview
• In depth look at supply chain mapping
• Business Example
• Mapping activity
• Summary

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What is a Supply Chain Map?
?
How will mapping supply chains help your business?
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Supply Chain Maps History and Background

• Has become more important with increase in
  outsourcing
• Increased competition in supply chains

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Supply Chain Map Defined

• A visual representation of goods, information,
  processes, and money flows that occur throughout
  a supply chain, both upstream and downstream.

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Characteristics of Supply Chain Maps

• Can focus on
• particular use or user
• theme
• processes, flows, facilities, organizations,
  geographic relationships
• Easy to distribute
• Easy to Interpret
• Designed to support corporate strategy

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Brainstorming Exercise

• What suppliers supply your company?
• Which of these suppliers supply the most vital
  products?
• Pick one key supplier and think about the
  following list of questions
• How good is the quality of their products?
• How quickly do you receive products you order?

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Brainstorming Exercise (Cont)

• Are there any environmental factors
• that could affect your supplier such as
• Regulations
• Employee disputes
• Profitability issues
• Would that supplier be willing to team with your
  company in joint projects to improve operations?

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Brainstorming Exercise (Cont)

• Who supplies your supplier?
• Are there any internal or environmental
• factors that could affect them?

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Brainstorming Exercise Recap

• What did you learn from this activity?
• How might mapping supply chains help your company?

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Why do a supply chain map?

• Supply chains must now compete against other
  supply chains
• Supply chains are a points of strategic advantage
• Maps highlight inefficiencies
• Provide a methodology for analyzing processes

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Creating a Supply Chain Map

• 1. Organize the customer and supplier team
• Meet with management and supply chain directors
• Purpose is to discuss current situation and
  decide on what core competencies are desired in
  supply chain
• 2. Draw the current-state extended value stream
  map
• Identify activities required in transaction
• Use boxes to represent entities and transactional
  documents

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Creating a Supply Chain Map

• 2.Draw the current-state extended value stream
  map (contd)
• Use arrows to show flows of information and
  products.
• Label the time each step takes
• 3. Draw the future-state extended value stream
  map and implementation plan
• Identify areas where you can improve processes
• Prioritize improvement areas based potential
  benefits and by ease of implementation

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Creating a Supply Chain Map

• 4. Execute the implementation plan
• Implement plan by starting with the most
  value-added changes first
• Track changes in improvement and cost
• 5. Repeat process for continuous improvement

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Difficulties in collaboration

• Costs
• Savings
• Sensitive information
• Commitment
• Short-term focus

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Business Example

• Capital Equipment Incorporated and Mare
  Technologies
• CEIs customers unhappy with late deliveries
• CEI identified Mare, a key supplier, as a
  bottleneck
• Mare hadnt previously considered its impact on
  other businesses

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Business Example--Continued

• CEI persuades Mare to cooperate
• Cross-functional team organized
• Plan for achieving competencies developed

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Business Example--Continued

• Mapped out current value-stream map
• Identified inefficiencies through observation and
  interviews

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Business Example--Continued

• Mapped a future value stream map with
  improvements
• Improvements prioritized based on potential
  benefits and ease of integration

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Business Example--Continued

• Executed plan
• Focused on improvements with greatest ROI first
• Results
• Lead time reduce from 55 days to 42 days
• Reduced average days of WIP by 91
• 9 cost reduction
• Strengthened commitment to work together in future

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Activity Peanut Butter Case

• You are the owner of Ritz Peanut Butter Co.
  located in Sao Paulo, Brazil, and you have been
  wanting to improve operations at your
  manufacturing plant. One concern you have had is
  that your main supplier, Pedros Peanuts,
  requires long lead times when you order peanuts.
  Pedro, who is the owner of Pedros Peanuts, has
  agreed that he would work with you in improving
  operations. After looking closely at how the
  ordering process works, you come up with the
  following summary of operations

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Activity Peanut Butter Case

• Steps
• 1. Ritz faxes order of 1000 kilos of peanuts to
  Maria, the receptionist
• 2. Maria checks the fax for orders at 800am,
  1200pm, and 300pm
• 3. Because the production managers office is
  on the other side of the plant, new orders are
  sent over only 2 times per dayat 830am and at
  100pm

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Activity Peanut Butter Case

• 4. Production manager faxes a materials request
  to the purchasing director. Fax sits for 1 hour.
• 5. If there is enough stock on hand, purchasing
  notifies production manager of this. If not, it
  takes an average of 1 day to get stock from local
  farmers.
• 6. Peanuts then enter a batch process that takes
  6 hours
• 7. Upon finishing, workers notify production
  manager, and production managers requests an
  invoice from accounting to be prepared.

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Activity Peanut Butter Case

• 8. When accounting finishes invoice, they notify
  the production manager and send him a copy.
• 9. Production manager sends invoice to shipping
  and requests a shipment be made. Shipping gets
  request and loads truck (3 hours), and sends it
  to Ritz Peanut Butter Co. (1 day to deliver)

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Map of current process
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Possible Solution
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Summary--Continued

• To work with suppliers, companies must
• - build a business case benefiting both
  companies
• - plan how costs and savings will be shared
• - agree on competencies to pursue
• - work together in creating solutions

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Summary

• Supply chain mapping helps companies
• 1. Improve strategic supply chain relations
• 2. Identify inefficiencies
• 3. Visualize process for communication
• 4. Analyze development of core competencies

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References and Additional Readings

• Delmonico, David Horton, Peter. Charting a New
  Course Extended value stream mapping creates
  innovative supply chains. APICSThe Performance
  Advantage. October 2004. p 43.
• Gardner, John T. Cooper, Martha. Strategic
  Supply Chain Mapping Approaches. Journal of
  Business Logistics. Vol 24. No 2. 2003. pp 37-57.
• McInerney, Mike. Supply Chain Alliances Can Help
  Logistics Teams Provide Value. Pulp Paper.
  October 2003. pp 38-40.
• Anonymous, Good, Better, Best How to Assess
  Your Supply Chain Performance.
  http//www.tompkinsinc.com/publications/
• competitive_edge/articles/06-03-Good_Better_Best.
  asp. Nov 2005.

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References and Additional Readings

• Liker, Jeffrey K. Choi, Thomas Y. Building
  Deep Supplier Relationships. Harvard Business
  Review, Dec. 2004, Vol. 82. Issue 12.