Upload
allan-page
View
222
Download
3
Tags:
Embed Size (px)
Citation preview
Week 2
BUSN 6110 Spring 1, 2012
Supply Chain Management
Supply Chain Management • First appearance – Financial Times • Importance -
→ Inventory ~ 14% of GDP→ GDP ~ $12 trillion→ Warehousing/Trans ~ 9% of GDP→ Rule of Thumb - $12 increase in sales to = $1 savings in Supply Chain
• 1982 Peter Drucker – last frontier• Supply Chain problems can cause ≤ 11% drop in stock
price• Customer perception of company
SCOR
Reference: www.supply-chain.org
End-to-End Supply Chain
• Whether from Cow to Cone or from Rock to Ring SCOR is not limited by organizational boundaries
5Copyright © Supply Chain Council, 2008. All rights reserved 5
Supplier CustomerSuppliers’Supplier
Source
Internal or External Internal or External
Your Company
Return
Deliver MakeSource
Return
PlanDeliver
Return
Source
Return
MakeSource
Return
PlanDeliver
Return
DeliverMake
Plan
Return Return
Customers’Customer
SCOR reference model
End-to-End Supply Chain
6Copyright © Supply Chain Council, 2008. All rights reserved 6
Customer’s CustomerCustomerMP3 CompanySupplierSupplier’s Supplier
Sub assemblies Manufacturer Retailer ConsumerComponents
Source
SourceDeliverDeliverSourceSourceDelive
r
DeliverMakeMakeSourc
e
Source
Deliver
DeliverMakeMakeSourc
e
Source
Deliver
DeliverMakeMakeSourc
e
Source
Process, arrow indicates material flow direction
Supply Chain
“The global network used to deliver products and services from raw materials to end customers through an engineered flow of information, physical distribution, and cash.”
APICS Dictionary
Supply Chain Uncertainty
Forecasting, lead times, batch ordering, price fluctuations, and inflated orders contribute to variability
Inventory is a form of insuranceDistorted information is one of the
main causes of uncertainty Bullwhip effect
Information in the Supply Chain
Centralized coordination of information flows
Integration of transportation, distribution, ordering, and production
Direct access to domestic and global transportation and distribution channels
Locating and tracking the movement of every item in the supply chain - RFID
Bar Codes
Computer readable codes attached to items flowing through the supply chain
Generates point-of-sale data which is useful for determining sales trends, ordering, production scheduling, and deliver plans
1234 5678
IT Issues Increased benefits and sophistication come
with increased costs Efficient web sites do not necessarily mean
the rest of the supply chain will be as efficient Security problems are very real – camera
phones, cell phones, thumb drives Collaboration and trust are important
elements that may be new to business relationships
Suppliers
Purchased materials account for about half of manufacturing costs
Materials, parts, and service must be delivered on time, of high quality, and low cost
Suppliers should be integrated into their customers’ supply chains
Partnerships should be established On-demand delivery (JIT) is a frequent
requirement - what is JIT and does it work?
Sourcing Relationship between customers and suppliers
focuses on collaboration and cooperation Outsourcing has become a long-term strategic
decision Organizations focus on core competencies Single-sourcing is
increasingly a part of supplier relations
How doessingle sourcediffer from solesource?
DistributionThe actual movement of products
and materials between locationsHandling of materials and products at
receiving docks, storing products, packaging, and shipping
Often called logisticsDriving force today
is speed
Distribution Centers and Warehousing
DCs are some of the largest business facilities in the United States
Trend is for more frequent orders in smaller quantities
Flow-through facilities and automated material handling
Final assembly and product configuration (postponement) may be done at the DC
Vendor-Managed Inventory Not a new concept – same process used by
bread deliveries to stores for decades Reduces need for warehousing Increased speed, reduced errors, and
improved service Onus is on the supplier to keep the shelves
full or assembly lines running variation of JIT Proctor&Gamble - Wal-Mart Home Depot
Transportation
Railroads
95,000 - 150,000 miles in USLow cost, high-volume Improving flexibility
intermodal service double stacking
Complaints: slow, inflexible, large loadsAdvantages: large/bulky loads, intermodal
Trucking
Most used mode in US -75% of total freight (volume not total weight)
Flexible, small loadsConsolidation,
Internet load match sitesTruck load (TL) vs. Less Than Truck Load
(LTL)
Air
Lightweight, small itemsQuick, reliable, expensive (relatively
expensive depending on costs of not getting item there)
Major airlines and US Postal Service, UPS, FedEx
Package CarriersUPS, US Postal Service, FedEx GroundSignificant growth driven by
e-businesses and the move to smaller shipments and consumer desire to have it NOW
Use several modes of transportation Innovative use of technologies in some
casesOnline tracking – some better than others
Intermodal
Combination of several modes of transportation
Most common are truck/rail/truck and truck/water/rail/truck
Enabled by the use of containers – the development of the 20 and 40 foot containers significantly changed the face of shipping
Switching Milk Cans from a
Farmer’s Buggy to a Truck on a Rural Road in
North Carolina, 1929
Early form of intermodal transport and cross docking
WaterOne of oldest means of transportLow-cost, high-volume, slow (relative)Security - sheer volume - millions of
containers annuallyBulky, heavy and/or large itemsStandardized shipping containers
improve serviceThe most common form of international
shipping
Pipelines
Primarily for oil & refined oil productsSlurry lines carry coal or kaolinHigh initial capital investmentLow operating costsCan cross difficult terrain
Global Supply Chain
Free trade & global opportunitiesNations form trading groupsNo tariffs or dutiesFreely transport
goods across bordersSecurity!!
Quality Quality ManagementManagement
Quality is a measure of goodness that is inherent to a product or service.
Bottom line: perspective has to be from theCustomer – fitness for use
““The degree of excellence of a thing” The degree of excellence of a thing” (Webster’s Dictionary)(Webster’s Dictionary)
““The totality of features and The totality of features and characteristics that satisfy needs” (ASQ)characteristics that satisfy needs” (ASQ)
Fitness for useFitness for use Quality of designQuality of design
What Is Quality?
Quality
• Quality Management – not owned by any functional area – cross functional
• Measure of goodness that is inherent to a product or service
FedEx and Quality• Digitally Assisted Dispatch System – communicate
with 30K couriers • 1-10-100 rule
1 – if caught and fixed as soon as it occurs, it costs a certain amount of time and money to fix
10 – if caught later in different department or location = as much as 10X cost
100 – if mistake is caught by the customer = as much as 100X to fix
Product Quality Dimensions
• Product Based – found in the product attributes
• User Based – if customer satisfied• Manufacturing Based – conform to specs• Value Based – perceived as providing good
value for the price
Dimensions of Quality (Garvin)
1. Performance Basic operating characteristics
2. Features “Extra” items added to basic features
3. Reliability Probability product will operate over time
Dimensions of Quality (Garvin)
4. Conformance Meeting pre-established standards
5. Durability Life span before replacement
6. Serviceability Ease of getting repairs, speed & competence of repairs
Dimensions of Quality (Garvin)
7. Aesthetics Look, feel, sound, smell or taste
8. Safety Freedom from injury or harm
9. Other perceptions Subjective perceptions based on brand name, advertising, etc
1. Time & Timeliness Customer waiting time, completed on time
2. Completeness Customer gets all they asked for
3. Courtesy Treatment by employees
Service Quality
4. Consistency Same level of service for all customers
5. Accessibility & Convenience Ease of obtaining service
6. Accuracy Performed right every time
7. Responsiveness Reactions to unusual situations
Service Quality
Quality of Conformance
Ensuring product or service produced according to design
Depends on Design of production process Performance of machinery Materials Training
Quality Philosophers
Walter Shewhart – Statistical Process Control W. Edwards Deming Joseph Juran – strategic and planning based Armand Fiegenbaum – total quality control “entire
business must be involved in quality improvement”
Deming’s 14 Points
1. Create constancy of purpose2. Adopt philosophy of prevention3. Cease mass inspection4. Select a few suppliers based on quality5. Constantly improve system and
workers6. Institute worker training
Deming’s 14 Points
7. Instill leadership among supervisors8. Eliminate fear among employees9. Eliminate barriers between
departments10. Eliminate slogans11. Remove numerical quotas
Deming’s 14 Points
12. Enhance worker pride13. Institute vigorous training and
education programs14. Develop a commitment from top
management to implement these 13 points
The Deming Wheel(or PDCA Cycle)
1. PlanIdentify the problem and develop the plan for improvement.
2. DoImplement the plan on a test basis.
3. Study/CheckAssess the plan; is it working?
4. ActInstitutionalize improvement; continue the cycle.
Also known as the Shewart CycleAlso known as the Shewart Cycle
Six Sigma
• Quality management program that measures and improves the operational performance of a company by identifying and correcting defects in the company’s processes and products
Six SigmaStarted By Motorola
• Define• Measure• Analyze• Improve • Control
Made Famous by General Electric40% of GE executives’bonuses tied to 6 sigmaimplementation
Malcolm Baldrige National Quality Award
• Category 3 – determine requirements, expectations, preferences of customers and markets
• Category 4 – what is important to the customer and the company; how does company improve
Total Quality Management
1. Customer defined quality2. Top management leadership3. Quality as a strategic issue4. All employees responsible for quality5. Continuous improvement6. Shared problem solving7. Statistical quality control8. Training & education for all employees
Cost of QualityCost of achieving good quality
PreventionPlanning, Product design,
Process, Training, InformationAppraisal
Inspection and testing, Test equipment, Operator
Cost of QualityCost of poor quality
Internal failure costsScrap, Rework, Process failure,
Process downtime, Price-downgrading
External failure costsCustomer complaints,
Product return, Warranty, Product liability, Lost sales
Cause-and-Effect Diagram
QualityProblemQuality
Problem
Out of adjustmentOut of adjustment
Tooling problemsTooling problems
Old / wornOld / worn
MachinesMachinesFaultyFaulty testing equipmenttesting equipment
Incorrect specificationsIncorrect specifications
Improper methodsImproper methods
MeasurementMeasurement
Poor supervisionPoor supervision
Lack of concentrationLack of concentration
Inadequate trainingInadequate training
HumanHuman
DeficienciesDeficienciesin product designin product design
Ineffective qualityIneffective qualitymanagementmanagement
Poor process designPoor process design
ProcessProcess
InaccurateInaccuratetemperature temperature controlcontrol
Dust and DirtDust and Dirt
EnvironmentEnvironment
Defective from vendorDefective from vendor
Not to specificationsNot to specifications
Material-Material-handling problemshandling problems
MaterialsMaterials
Also known as Ishikawa Diagram or Fish BoneAlso known as Ishikawa Diagram or Fish Bone
Hot House Quality
Lots of Hoopla and no follow through
ISO 9000:2008
• Customer focus• Leadership• Involvement of the people• Process approach• Systems approach to management• Continual process improvement – GAO• Factual approach to decision making• Mutually beneficial supplier relationships
Implications Of ISO 9000Truly international in scopeCertification required by many foreign firmsU.S. firms export more than
$150 billion annually to EuropeAdopted by U.S. Navy,
DuPont, 3M, AT&T, and others
ISO Accreditation
European registration
3rd party registrar assesses quality program European Conformity (CE) mark authorized
United States 3rd party registrars
American National Standards Institute (ANSI) American Society for Quality (ASQ) Registrar Accreditation Board (RAB)
Product Development
IntroductionIntroduction
1. Analyze market to assess need2. Design product3. Design process for making product4. Develop plan to market product5. Develop plan for full-scale production6. Analyze financial feasibility
Product Development is a process which generates concepts, designs, and plans to create services and goods to meet customer needs.
Increasing Importance of
Product Development Increasing Importance of
Product Development 1. Customers demand greater product variety.
2. Customers are causing shorter product life cycles.
3. Improving technology is causing new products to be introduced
4. The impact of increasing product variety and shortening product life cycles is having a multiplicative effect on the need for product development.
5. Today, in order to be competitive, the firm may have to produce many different products with a life cycle of only five years or less. End of Life issues
Product Design
Specifies materialsDetermines dimensions &
tolerancesDefines appearanceSets performance standards
Service DesignSpecifies what the customer is to
experience Physical items Sensual benefits Psychological benefits
An Effective Design Process
Matches product/service characteristics with customer needs
Meets customer requirements in simplest, most cost-effective manner
Reduces time to market - haste vs. speed to market
Minimizes revisions - quality designed into the product
Stages in the Design Process Idea Generation — Product Concept - can you
create your own market? What role does the voice of the customer play in idea generation?
Feasibility Study — Performance Specifications Preliminary Design — Prototype - testing and
redesign Final Design — Final Design Specifications Process Planning — Manufacturing
Specifications - make to order/stock – assembly line?
Idea Generation
Suppliers, distributors, salespersons Trade journals and other published material Warranty claims, customer complaints,
failures Customer surveys, focus groups, interviews Field testing, trial users Research and development
More Idea Generators Perceptual Maps
Visual comparison of customer perceptions
BenchmarkingComparing product/service
against best-in-class Reverse engineering
Dismantling competitor’s product to improve your own product
Perceptual Map of Breakfast Cereals
HIGH HIGH NUTRITIONNUTRITION
LOW LOW NUTRITIONNUTRITION
GOOD GOOD TASTETASTE
BAD BAD TASTETASTE
Perceptual Map of Breakfast Cereals
© Russell and Taylor, Prentice Hall, 2004
HIGH HIGH NUTRITIONNUTRITION
LOW LOW NUTRITIONNUTRITION
GOOD GOOD TASTETASTE
Cocoa PuffsCocoa Puffs
BAD BAD TASTETASTE
Rice Rice KrispiesKrispies
WheatiesWheaties
CheeriosCheerios
Shredded Shredded WheatWheat
Perceptual Map of Breakfast Cereals
© Russell and Taylor, Prentice Hall, 2004
HIGH HIGH NUTRITIONNUTRITION
LOW LOW NUTRITIONNUTRITION
GOOD GOOD TASTETASTE
Cocoa PuffsCocoa Puffs
BAD BAD TASTETASTE
Rice Rice KrispiesKrispies
WheatiesWheaties
CheeriosCheerios
Shredded Shredded WheatWheat
How do I get here?
Feasibility Study
Market Analysis - Market Segmentation
Economic Analysis Technical / Strategic Analysis Performance Specifications Risk Analysis
Economic Analysis
• Can we produce it at a volume to make a profit?
• If not, why produce?• How many do we have to make to break
even?
Break Even AnalysisTotal Costs = Total Revenues
(Volume x Price) = (Fixed Costs + Variable Costs)
Profit = (Total Revenue – Total Costs)
Fixed Costs
Sales Price – Variable CostsB/E Point =
Example
Fixed Costs = $2000
Variable Costs = $5/item
Sales Price = $10/item
Fixed Costs ($2000)
Sales Price ($10) – Variable Costs ($5)
B/E PT =
B/E point = ($2000/$5) 400 items
Risk Analysis
1. Identify the Hazards2.Assess hazards to determine risks.3.Develop controls and make risk decisions.4.Implement controls.5.Supervise and evaluate.
Preliminary Design
Create form & functional designBuild prototypeTest prototypeRevise prototypeRetest
How will it look?
Functional Design(How the Product Performs)
Reliability Probability product performs intended function
for specified length of time
Maintainability Ease and/or cost or maintaining/repairing
product
System Availability
System Availability, SA = MTBF
MTBF + MTTR
PROVIDERPROVIDER MTBF (HR)MTBF (HR) MTTR (HR)MTTR (HR)
AA 6060 4.04.0BB 3636 2.02.0CC 2424 1.01.0
System AvailabilityPROVIDER MTBF (HR) MTTR (HR)
A 60 4.0B 36 2.0C 24 1.0
SASAAA = 60 / (60 + 4) = .9375 or 93.75% = 60 / (60 + 4) = .9375 or 93.75%
SASABB = 36 / (36 + 2) = .9473 or 94.73% = 36 / (36 + 2) = .9473 or 94.73%
SASACC = 24 / (24 + 1) = .96 or 96% = 24 / (24 + 1) = .96 or 96%
Production Design
Part of the preliminary design phase
Simplification Standardization Modularity
Final Design & Process Plans
Produce detailed drawings & specificationsCreate workable instructions for
manufactureSelect tooling & equipmentPrepare job descriptionsDetermine operation & assembly orderProgram automated machines
Improving the Design Process Design teams Concurrent design Design for manufacture & assembly Design to prevent failures and ensure value Design for environment Measure design quality Utilize quality function deployment Design for robustness Engage in collaborative design
Design Teams
Marketing, manufacturing, engineeringSuppliers, dealers, customersLawyers, accountants, insurance
companies
Preferred solution = cross functional teams
Concurrent Design
Improves quality of early design decisionsDecentralized - suppliers complete
detailed design Incorporates production processScheduling and management can be
complex as tasks are done in parallel include the customer in the process!!
Design for Manufacture and Assembly
Design a product for easy& economical production
Incorporate production design early in the design phase
Improves quality and reduces costs Shortens time to design and manufacturealso known as Design for Six Sigma
Design for Six Sigma• Define – the goals of the design activity• Measure – customer input to determine what is
critical to quality from the customers’ perspective – what are customer delighters? What aspects are critical to quality?
• Analyze – innovative concepts for products and services to create value for the customer
• Design – new processes, products, and services to deliver customer value
• Verify – new systems perform as expected
DFM Guidelines
1. Minimize the number of parts, tools, fasteners, and assemblies
2. Use standard parts and repeatable processes
3. Modular design4. Design for ease of assembly, minimal
handling5. Allow for efficient testing and parts
replacement
Design for Assembly (DFA)Procedure for reducing number of partsEvaluate methods for assemblyDetermine assembly sequence
Design Review
Failure Mode and Effects Analysis (FMEA)A systematic approach for analyzing causes
& effects of failuresPrioritizes failuresAttempts to eliminate causes
Value Analysis (Value Engineering)
Ratio of value / cost Assessment of value :
1. Can we do without it?2. Does it do more than is required?3. Does it cost more than it is worth?4. Can something else do a better job5. Can it be made by less costly method, tools,
material?6. Can it be made cheaper, better or faster by
someone else? Should we contract it out?
Is there value added?
Design for EnvironmentDesign from recycled materialUse materials which can be recycledDesign for ease of repairMinimize packagingMinimize material & energy
used during manufacture, consumption & disposal
green laws in Europe -
Design for Robustness
Product can fail due to poor design quality Products subjected to many conditions Robust design studies
Controllable factors - under designer’s control
Uncontrollable factors - from user or environment
Designs products for consistent performance
A Well-Designed Service System is
Consistent with firm’s strategic focusCustomer friendlyEasy to sustainEffectively linked between front & back
officeCost effectiveVisible to customer
91
CHAPTER 8 CHAPTER 8
Process Selection affects the outcome – in production or sports:
What is Process Selection?
• Series of decisions that includes technical/engineering issues and volume/scale issues
• Technical/engineering: basic methods that produce a good or service
• Scale: how many or how much to produce; how many to serve at a time
• Trade off analysis between capacity and costs
92
Why process selection is critical
• Dell – from make/assemble to order in Texas to make/assemble to stock off shore
• Does this work?• Break even analysis may depend on process
costs• Which process gives the lowest costs –
assumption?
93
The Point of IndifferenceComparing Two Processes
• What is it? • Who cares? • How do you calculate it?
94
Comparing Two Processes
• Process A• Fixed = $2000• Variable = $5/item
• Process B• Fixed = $11000• Variable = $2/item
FixedA + (VarA)x = FixedB + (VarB)x
2000 + 5x = 11,000 + 2x
3x = 9000
X = 3000
So what?
Comparing the Processes
Trade off analysis
• Customer demanded quantity drives the trade off analysis and decision process
• Example:→ retail stocks at Christmas 2008 and 2009 season - goal save money by stocking less→ At what point do you lose sales due to lower stockage levels?
97
Process Design/Selection/Capacity
• Have to be simultaneous operations – some texts suggest sequential steps
• Decision process has to be customer based → what should it be? → how many should be produced/how many
are we capable of producing? → how should it be produced?
98
Process Strategy - Defines
• Capital intensity• Process flexibility• Vertical integration• Customer involvement
99
Goal of Process Design
• Reduce lead time for product to the customer• Is it best to be the first to market and establish
the market?• Or, be the follower and let someone else do
the R&D/design/risk?
100
Problems with Managing Large, Unfocused Operations
Problems with Managing Large, Unfocused Operations
• Growing facilities add more levels of management and make coordination and control difficult.
• New products are added to the facility as customers demand greater product variety.
• Hidden overhead costs increase as managers add staff to deal with increased complexity.
101
Process Planning
Make-or-buy decisions Process selection Specific equipment selection Process plans Process analysis
102
Make-or-Buy Decisions
1. Cost2. Capacity3. Quality4. Speed5. Reliability6. Expertise
103
What about
Proprietary Information?
Barrier to Make-or-Buy?
104
Rationale for Off Shore to Low Country Source
94.00%
37.00%
27.00%23.00% 22.00% 21.00% 20.00%
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
80.00%
90.00%
100.00%
$ Savings procuredgoods
Penetration to newmarket
inventory redux inc customer service access newtechnology
reduced cycle time log cost reductions
Source: Aberdeen Research, “Low-Cost Country Sourcing Success Strategies: Maximizing and Sustaining the Next Big Supply Savings Opportunity,” Jun 2005
Process Plans Blueprints Bill of material Flat or multiple layers -
part or assembly Assembly chart /
product structure diagram Operations process chart - list of
operations involved in assembly Routing sheet - sequence of events
105
Process Analysis
106
The systematic examination of all aspects The systematic examination of all aspects of a process to improve its operationof a process to improve its operation FasterFaster More efficientMore efficient Less costlyLess costly More responsiveMore responsive
Basic toolsBasic tools Process flowchartProcess flowchart Process diagramsProcess diagrams Process mapsProcess maps
Operations Process Chart
107
Part name Crevice Tool
Part No. 52074
Usage Hand-Vac
Assembly No. 520
Oper. No. Description Dept. Machine/Tools Time
10 Pour in plastic bits 041 Injection molding 2 min
20 Insert mold 041 #076 2 min
30 Check settings 041 113, 67, 650 20 min& start machine
40 Collect parts & lay flat 051 Plastics finishing 10 min
50 Remove & clean mold 042 Parts washer 15 min
60 Break off rough edges 051 Plastics finishing 10 min
Process Analysis – What processes feed other processes?
108
Process Flowchart
109
Ste
p
Op
erat
ion
Tra
nsp
ort
Insp
ect
Del
ay
Sto
rag
e
Dis
tan
ce(f
eet)
Tim
e(m
in)Description
ofprocess
1
2
3
4
5
6
7
8
9
10
11
Unload apples from truck
Move to inspection station
Weigh, inspect, sort
Move to storage
Wait until needed
Move to peeler
Apples peeled and cored
Soak in water until needed
Place in conveyor
Move to mixing area
Weigh, inspect, sort
TotalPage 1 0f 3 480
30
5
20
15
360
30
20
190 ft
20 ft
20 ft
50 ft
100 ft
Date: 9-30-02Analyst: TLR
Location: Graves MountainProcess: Apple Sauce
Principles for Redesigning Processes
• Walk the Process!• Remove waste, simplify, consolidate• Link processes to create value• Let the swiftest and most capable
execute• Capture information digitally, data mine,
and use information to improve operations
110
Principles for Redesigning Processes
• Provide visibility through information about process status
• Fit the process with sensors and feedback loops
• Add analytic capabilities• Connect, collect and create knowledge
around the process• Personalize the process
111
Techniques for Generating Innovative Ideas
Vary entry point to a problem Draw analogies Change your perspective Use attribute brainstorming
112
RFID
• Active Tags• Always on • Battery powered• Can be read from up to
300 ft• US Army • Savi Tags
• Passive Tags• Small• Must be activated• May be turned off• England• California• Rolex
113
115
Robotics Programmable manipulators Follow specified path Better than humans with respect to
Hostile environments Long hoursConsistency
Adoption has been slowed by ineffective integration and adaptation of systems
Welding at Harley Davidson Plant
116Questions?