A Thesis Entitled

1

• A Thesis Entitled
• Product Driven Approach to Manufacturing Supply
  Chain Design
• by
• Mohit Uppal
• Advisor Dr. Samuel Huang
• Committee Members
• Dr. Mark Vonderembse
• Dr. John P. Dismukes

2
Acknowledgements

• Dr. Samuel Huang
• Dr. Mark Vonderembse and Dr. John P. Dismukes
• ICAMS Research Group Members

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Presentation Outline

• Research Objectives
• Thesis Structure
• Introduction
• Types of Supply Chains
• Literature Review
• Method
• Product types
• Difference between Lean, Hybrid and Agile Supply
  Chains

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Presentation Outline (Continued)

• Classic Product Life Cycle Model
• Supply Chain Design for Product Cycle Curves
  (model 1)
• Supply Chain Design for Product Types (models 2a
  and 2b)
• Product Categorization (Interactive Tool)
• Conclusion
• Summary
• Contributions
• Future Research

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Research Objectives

• To correctly define the current supply chains in
  practice lean and agile. It combines these two
  paradigms to introduce a third type hybrid
  supply chain.
• To clearly differentiate between the three types
  of supply chains.
• To develop model(s), which an organization would
  be able to adopt, depending on its products, in
  order to gain a competitive edge.

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Research Objectives (Continued)

• To develop a visual tool to aid in product
  categorization.

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Introduction

• History of Manufacturing
• Mass Production
• Mass producing standardized products quickly and
  efficiently
• Limited variety
• The TQM Paradigm
• High quality expected along with reduced lead
  time and price
• Was taken as a market qualifier
• Supply Chain Management (SCM)
• Reducing costs over the entire chain (suppliers,
  manufacturers, distributors and customers
• Respond quickly to customer needs

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Introduction (Continued)

• SCM - the management of materials and
  information both in and between facilities, such
  as vendors, manufacturing and assembly plants and
  distribution centers (Thomas, 1999)
• SCM - Drawbacks
• Flow of information across the chain was not
  instantaneous (bullwhip effect)
• Strategic alliances were not formed with
  suppliers
• Importance of distribution was not recognized
• Led to the formation of the Lean supply chain

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Types of Supply Chains

• Lean supply chain (LSC)
• Agile supply chain (ASC)
• Hybrid supply chain (HSC)
• Lean - A lean supply chain employs continuous
  improvement to focus on the elimination of waste
  or non-value added stops across the chain. It is
  supported by the reduction of set up times to
  allow for the economic production of small
  quantities, thereby achieving cost reduction,
  flexibility and internal responsiveness
• LSC employs lean production and time compression
  in parallel

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Types of Supply Chains (Continued)

• Is economical, flexible and internally responsive
• May participate in traditional alliances such as
  partnerships and joint ventures.
• Drawbacks
• Mass customization/Responsiveness squeeze
• Evolution of multiple niche competition (Booth,
  1996)
• LSC - Not adaptable to future market requirements
• Led to the formation of a Agile supply chain

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Types of Supply Chains (Continued)

• Agile - relates to the interface between a
  company and the market. It profits by responding
  to rapidly changing, continually fragmenting
  global markets by being dynamic,
  context-specific, aggressively changing and
  growth oriented, driven by customer designed
  products and services
• Advocates agile manufacturing, which is a further
  development of lean manufacturing
• Responds to unpredictable market changes and
  capitalizes on them
• Exploits a dynamic type of alliance known as a
  virtual organization

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Types of Supply Chains (Continued)

• Hybrid - A hybrid supply chain generally
  involves assemble to order products whose
  demand can be quite accurately forecasted. The
  chain helps to achieve mass customization by
  postponing product differentiation until final
  assembly. The lean supply chain is utilized for
  component production. The agile part of the chain
  establishes a company-market interface to
  understand and satisfy requirements by being
  responsive and innovative
• Employs lean manufacturing techniques
• May utilize agile manufacturing for producing
  innovative component(s), which, at times, form a
  part of the product

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Types of Supply Chains (Continued)

• Option of participating in traditional as well as
  virtual alliances

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Literature Review

• One of the critical contributions has been made
  by Naylor, Naim and Berry, (1999)
• They proposed the use of the lean and agile
  concept with the aid of a decoupling point
• The model highlights how the decoupling point
  satisfies different manufacturing types
• Its importance is that it helps in the
  development of a new concept, the hybrid supply
  chain

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Literature Review (Continued)
Raw Material Supplier
Manufacturers/ Assemblers
Retailer
End - Users
Buy to order
Make to order
Assemble to order
Make to stock
Ship to stock
A Stock Decoupling Point
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Method

• Product types
• Standard
• Innovative
• Hybrid
• Standard Products
• Produced with the help of a LSC (examplestaples)
• Demand can be accurately forecasted
• Market share remains fairly constant
• Enjoy long life cycles (gt2 years)

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Method (Continued)

• Superficial design changes
• Utilization of lean production techniques
  consisting of reduced lead-time, efficiency,
  flexibility, cost cutting and a level schedule
  over the supply chain
• Employs a LSC over the entire product life cycle

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Method (Continued)

• Innovative Products
• Produced with the help of an ASC
  (examplepersonal computer)
• Unpredictable demand patterns
• Developed to capture a wider market share
• Significantly different from available product
  types
• Suited to customer requirements (mass
  customization)
• Short life cycles (3 months - 1 year)

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Method (Continued)

• Employs an ASC over the first 2 stages of life
  cycleintroduction and growth
• Employs a HSC over the last 2 stagesmaturity and
  decline
• Utilizes a strategic tool provided by ASCVirtual
  organization

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Method (Continued)

• Virtual organizations - A virtual organization
  is the integration of core competencies
  distributed among a number of carefully chosen
  but real organizations all with the similar
  supply chain focusing on quick to market, cost
  reduction and quality (Gunasekaran, 1999a)
  Example Dell and Apple computers
• They help to create or assemble new productive
  resources very quickly, frequently and
  concurrently as long as it is economically
  justifiable
• Provide access to a range of world class
  competencies

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Method (Continued)

• Hybrid products
• Consists of either
• Different combinations of standard components
• Mix of standard and innovative components
• LSC is utilized for component production
• ASC establishes a company-market interface
• ExampleAutomobile
• Components (A class) are manufactured by the
  OEM and suppliers (B and C class) by
  utilizing lean production techniques
• Agility is obtained by the OEM by constantly
  interacting with the market and adapting to its
  changes
• Employs a HSC over the entire product life cycle

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Difference between Lean, Hybrid and Agile Supply
Chains

• An in-depth analysis to clearly differentiate
  between the 3 chains is done on the basis of the
  following categories
• Definition
• Purpose
• Type of Manufacturing utilized
• Integration
• Dependency
• Type of Products and Life cycle

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Difference between Lean, Hybrid and Agile Supply
Chains (continued)

• Alliances
• Markets
• Organizational Structure
• Type of Firms
• Approach to choosing suppliers
• Demand patterns
• Inventory strategy
• Lead time focus
• Manufacturing focus

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Difference between Lean, Hybrid and Agile Supply
Chains (continued)

• Product Design Strategy
• Human Resources

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Method (Continued) - Classic Product Life Cycle
Model
Introduction
Growth
Maturity
Decline
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Method (Continued)

• Classic Product Life Cycle Model (page 25) -
  CPLCM
• Introduction
• Growth
• Maturation
• Decline
• Assumptions for proposed Model
• To aid organizations in developing and adopting
  the correct supply chain
• Developed for manufacturing industries
• Product driven

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Method (Continued)

• Related to Product Life Cycle stages
• High level model
• Resources for implementation available
• Hybrid products
• Standard components
• Mix of standard and innovative components
• Agility dependant on innovativeness
• Questionnaire based on previously published
  literature
• Model considers only a single product introduced
  by the organization

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Supply Chain types for Product Cycle Curves
(Innovative Products)
HYBRID SUPPLY CHAIN
AGILE SUPPLY CHAIN
Maturity
Decline
Introduction
Growth
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Supply Chain types for Product Cycle Curves
(Continued)

• The model depicted previously (Supply chain types
  for product cycle curves - model 1) is for
  innovative products (page 32)
• Standard products follow a Lean supply chain for
  their entire life cycle
• Hybrid products follow a Hybrid Supply chain for
  their entire life cycle

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Supply Chain Types for Product Cycle Curves
(Continued)

• Supply Chain Design for Product Types (models 2a
  and 2b) helps in identifying the product
  manufactured by an organization and provides
  guidance in the adoption of the correct supply
  chain
• Following is the representation of model 2a
  (Product introduction - pg. 34) and model 2b
  (Product categorization and adoption of correct
  supply chain - pg. 35)

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Product Introduction (Model 2a)

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Product Categorization and adoption of correct
Supply Chain (Model 2b)
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Product Categorization

• Achieved with the help of a questionnaire
• Three levels of questions involved
• Level 1 - critical ( 5 questions)
• Level 2 - significantly important ( 8 questions)
• Level 3 - important ( 2 questions)
• Points for each product type
• Functional products 1 - 3
• Hybrid products 4 - 6
• Innovative products 7 - 10
• Interactive tool used Visual Basic

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Product Categorization (Continued)

• Computational method used - Weighted Average
• Mathematical explanation
• Let
• N,M and O are integers
• N, M and O are number of questions - values lie
  between 1 - 10, for each level, entered by user

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Product Categorization (Continued)

• P,Q and R are preset weights where
• P 3 (Level 1 questions)
• Q 2 (Level 2 questions)
• R 1 (Level 3 questions)
• WC calculated score obtained from values
  entered by user

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Product Categorization (Continued)

• W1, W2, W3 WC where
• W1, W2 and W3 are pre-calculated limits
• W1 upper limit for functional product
• W2 upper limit for hybrid product
• W3 upper limit for innovative product
• For
• W1, XN YM ZO 3
• W2, XN YM ZO 7
• W3, XN YM ZO 10

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Product Categorization (Continued)

• Compare WC with W1, W2 and W3
• This helps in product categorization and
  selection of the correct chain for each product
  type

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Conclusion - Summary

• This model may prove to be the panacea
  organizations are looking for
• It further develops the understanding of supply
  chain management
• Also throws light on other issues, which have not
  been previously dealt with
• Companies following a LSC tend to form
  traditional alliances as opposed to dynamic
  alliances (VO)
• Example - Exxon Mobil merger

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Conclusion (Continued)

• Companies following HSC also form traditional
  alliances. They may form VO in areas other than
  their core competencies (for producing B and
  C class components)
• Example - Daimler Benz and Chrysler
• Companies utilizing ASC form VO. Constant need
  for innovation is the driving force
• Example - Projects involving IBM and Sun
  Microsystems (IBM1999a), ATT and Microsoft
• Hopefully these new points raised are worth
  pondering upon and lead to further research

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Conclusion - Contributions

• It focuses on the current supply chain types,
  lean and agile. It combines the two paradigms to
  introduce a third type of supply chain hybrid.
  It clearly defines and differentiates between the
  three types of supply chains.
• It logically associates product types standard,
  hybrid or innovative to the lean, hybrid and
  agile supply chains respectively.

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Conclusion (Continued)

• By utilizing the classic product life cycle
  model, it explains the different requirements for
  each of the 4 life cycle stages of the product.
• In order to provide guidelines to organizations
  for supply chain selection, it develops another
  model, which consists of product categorization
  on the basis of a questionnaire.

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Conclusion (Continued)

• A software tool has been developed to aid in
  product categorization. On product
  categorization, the model provides guidelines on
  the adoption of the correct supply chain.
• The thesis focuses on questions, which previously
  have not been raised. It opens up areas for
  future research in SCM.

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Conclusion - Future Research

• The models introduced are high level models.
• This thesis deals with a single product
  introduced by an organization.
• The effect of an organization being a member of
  several, different supply chains needs to be
  researched.

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Questions
THANK YOU !