Operations Operations Management Management Supply-Chain Supply-Chain Management Management 供供供供供 供供供供供 Chapter 11 Chapter 11
Oct 29, 2014
Operations ManagementOperations Management
Supply-Chain ManagementSupply-Chain Management 供應鏈管理供應鏈管理
Chapter 11Chapter 11
OutlineOutline GLOBAL COMPANY PROFILE (全球性公司的槪述 ): VOLKSWAGEN THE STRATEGIC IMPORTANCE OF THE
SUPPLY-CHAIN( 供應鏈供應鏈的策略性重點的策略性重點 )) Global Supply-Chain Issues
SUPPLY-CHAIN CONOMICS( 供應鏈的經濟供應鏈的經濟性性 )) Make-or-Buy Decisions(自製與外購決策 ) Ref: Outsourcing (外包 )
Outline - ContinuedOutline - Continued SUPPLY-CHAIN STRATEGIES (供應鏈供應鏈的策略的策略 ))
Many Suppliers Few Suppliers Vertical Integration Keiretsu Networks Virtual Companies
Managing the Supply Chain(管理供應鏈供應鏈 )) Issues In an Integrated Supply Chain Opportunities in an Integrated Supply Chain
Outline - ContinuedOutline - Continued
INTERNET PURCHASING(綱路採購 )
VENDOR SELECTION(供應供應商的選擇商的選擇 ) ) Ref:Ref: Vendor Evaluation Vendor Development Negotiations
MATERIALS MANAGEMENT(配送選擇的成本 ) BENCHMARKING SUPPLY-CHAIN MANAGEMENT
(供應鏈供應鏈管理的標竿管理的標竿 ))
When you complete this chapter, you should be able to :
Identify or Define: Supply-chain management Purchasing Outsourcing E-procurement Materials management Keiretsu Virtual companies
Learning ObjectivesLearning Objectives
When you complete this chapter, you should be able to :
Describe or Explain: Supply-Chain Strategies Purchasing strategies Approaches to negotiations
Learning ObjectivesLearning Objectives
VolkswagenVolkswagen
Brazilian plant employs 1000 workers 200 work for VW 800 work for other contractors: Rockwell International, Cummins Engines, Deluge Automotiva,
MWM, Remon and VDO, etc. VW responsible for overall quality, marketing, research
and design VW looks to innovative supply-chain to improve quality
and drive down costs
VolkswagenVolkswagen
Unusual elements: VW is buying not only materials, but also the labor and
related services Suppliers are integrated tightly into VW’s own network,
right down to assembly work in the plant
Planning, organizing, directing, & controlling flows of materials Begins with raw materials Continues through internal operations Ends with distribution of finished goods
Involves everyone in supply-chain Example: Your supplier’s supplier
Objective: Maximize value & lower waste
Supply-Chain ManagementSupply-Chain Management
Consumer
Retailer
Manufacturing
Material Flow
VISA®
Credit Flow
Supplier
Supplier Wholesaler
Retailer
CashFlow
OrderFlowSchedules
The Supply-ChainThe Supply-Chain
The Supply ChainThe Supply Chain
Supplier
Supplier
Supplier
Inventory
Inventory
Distributor
Inventory Inventory
Manufacturer
Customer
Customer
Customer
Market research dataScheduling informationEngineering and design
dataOrder flow and cash flow
Ideas and design to satisfy end customer
Material flowCredit flow
11%
31%
58%
Material
Dir Wages
Other
71%
16%13% COGS
Payroll
Other
83%
9%8%COGS
Payroll
Other
ManufacturingManufacturing
WholesaleWholesale
RetailRetail
Material Costs in Supply-ChainMaterial Costs in Supply-Chain
Supply-Chain Support for Overall Supply-Chain Support for Overall StrategyStrategy
Supplier’sgoal
Primary Selection Criteria
Supply demand at lowest possible cost
Select primarily for cost
Low CostRespond quickly to changing requirements and demand to minimize stockouts
Select primarily for capacity, speed, and flexibility
ResponseShare market research; jointly develop products and options
Select primarily for product development skills
Differentiation
Supply-Chain Support for Overall Supply-Chain Support for Overall Strategy - continuedStrategy - continued
Process Characteristics
Maintain high average utilization
Low CostInvest in excess capacity and flexible processes
ResponseModular processes that lend themselves to mass customization
Inventory Characteristics
Minimize inventory throughout the chain to hold down costs
Develop responsive system, with buffer stocks positioned to ensure supply
Minimize inventory in the chain to avoid obsolescence
Differentiation
Supply-Chain Support for Overall Supply-Chain Support for Overall Strategy - continuedStrategy - continued
Lead-timeCharacteristics
Shorten lead-time as long as it does not increase costs
Low CostInvest aggressively to reduce production lead-time
ResponseInvest aggressively to reduce development lead-time
Differentiation
Product-design Characteristics
Maximize performance and minimize cost
Use product designs that lead to low set-up time and rapid production ramp-up
Use modular design to postpone product differentiation for as long as possible
Global Supply-Chain IssuesGlobal Supply-Chain Issues
Supply chains in a global environment must be: Flexible enough to react to sudden changes in parts
availability, distribution, or shipping channels, import duties, and currency rates
Able to use the latest computer and transmission technologies to schedule and manage the shipment of parts in and finished products out
Staffed with local specialists to handle duties, trade, freight, customs and political issues
Major cost center Affects quality of final product Aids strategy of low cost, response, and
differentiation
Importance of PurchasingImportance of Purchasing
Supply-Chain Costs as a Percent Supply-Chain Costs as a Percent of Salesof Sales
All industry Automobile Food Lumber Paper Petroleum Transportation
52% 67% 60% 61% 55% 79% 62%
Industry Percent of Sales
Dollars of Additional Sales Needed to Dollars of Additional Sales Needed to Equal 1$ Saved Through PurchasingEqual 1$ Saved Through Purchasing
Percent of Sales Spent in the Supply-Chain
30% 40% 50% 60% 70% 80% 90%
2 $2.78 $3.23 $3.85 $4.76 $6.25 $9.09 $16.67
4 $2.70 $3.13 $3.70 $4.55 $5.88 $8.33 $14.29
6 $2.63 $3.03 $3.57 $4.35 $5.56 $7.69 $12.50
8 $2.56 $2.94 $3.45 $4.17 $5.26 $7.14 $11.11
10 $2.50 $2.86 $3.33 $4.00 $5.00 $6.67 $10.00
Percent Net Profit of Firm
Objectives of the Purchasing Objectives of the Purchasing FunctionFunction
Help identify the products and services that can be best obtained externally; and
Develop, evaluate, and determine the best supplier, price, and delivery for those products and services
The Purchasing FocusThe Purchasing Focus
Materials Management-High transportation cost-High inventory costs
Supply Management-High costs-Scarcity: national or
international
Source Management-Unique items-Custom-made items-High technology items
PurchasingManagement-Commodity items-Standard products
ReceivingDock
PurchaseOrder
PackingList
OrderProcessing
Invoice
Receivables Report
Check Accounts Receivable
Accounts Payable
MailReconcile
Customer Supplier
Traditional Purchasing ProcessTraditional Purchasing Process
Purchasing TechniquesPurchasing Techniques
Drop shipping and special packaging Blanket orders Invoiceless purchasing Electronic ordering and funds transfer Electronic data interchange (EDI) Stockless purchasing Standardization Outsourcing
Make/Buy ConsiderationsMake/Buy Considerations
1. Maintain core competencies and protect personnel from layoff
2. Lower production cost3. Unsuitable suppliers4. Assure adequate supply5. Utilize surplus labor and
make a marginal contribution
1. Frees management to deal with its primary business
2. Lower acquisition cost3. Preserve supplier
commitment4. Obtain technical or
management ability5. Inadequate capacity
Reasons for Making Reasons for Buying
Make/Buy Considerations - Make/Buy Considerations - ContinuedContinued
6. Obtain desired quantity7. Remove supplier collusion8. Obtain a unique item that
would entail a prohibitive commitment from the supplier
9. Protect proprietary design or quality
10. Increase or maintain size of company
6. Reduce inventory costs7. Ensure flexibility and
alternate source of supply8. Inadequate managerial or
technical resources9. Reciprocity10. Item is protected by patent
or trade secret
Reasons for Making Reasons for Buying
Plans to help achieve company mission Affect long-term competitive position Strategic options
Many suppliers Few suppliers Keiretsu network Vertical integration Virtual company Plan
© 1995 Corel Corp.
Supply-Chain StrategiesSupply-Chain Strategies
Supply-Chain StrategiesSupply-Chain Strategies Negotiate with many suppliers; play one supplier against another Develop long-term “partnering” arrangements with a few suppliers
who will work with you to satisfy the end customer Vertically integrate; buy the actual supplier Keiretsu - have your suppliers become part of a company coalition Create a virtual company that uses suppliers on an as-needed
basis.
Many sources per item Adversarial relationship Short-term Little openness Negotiated, sporadic PO’s High prices Infrequent, large lots Delivery to receiving dock © 1995 Corel Corp.
Many Suppliers StrategyMany Suppliers Strategy
1 or few sources per item Partnership (JIT) Long-term, stable On-site audits & visits Exclusive contracts Low prices (large orders) Frequent, small lots Delivery to point of use
© 1995 Corel Corp.
Few Suppliers StrategyFew Suppliers Strategy
Daimler Chrysler’s Supplier Cost Daimler Chrysler’s Supplier Cost Reduction EffortReduction Effort
Supplier Suggestion Model SavingsRockwell Use passenger car door
locks on trucksDodgetrucks
$280,000
Rockwell Simplify design/substitutematerials on manualwindow system
Various $300,000
3M Change tooling for wood-grain panels to allow threefrom one die instead of two
Caravan,Voyager
$1,500,000
Trico Change wiper-bladeformulation
Various $140,000
Leslie MetalArts
Exterior lighting suggestions Various $1,500,000
Tactics for Close Supplier Tactics for Close Supplier RelationshipsRelationships
TacticTactic Reduce total number of suppliers
Certify suppliers
Ask for JIT delivery from key suppliers
Involve key suppliers in new product design
Develop software linkages to suppliers
ResultsResults Average 20% reduction in 5 years
Almost 40% of all companies surveyed were themselves currently certified
About 60% ask for this
About 54% do this
Almost 80% claim to do this About 50% claim this
Raw Material(Suppliers)
BackwardBackwardIntegrationIntegration
CurrentCurrentTransformationTransformation
ForwardForwardIntegrationIntegration
Finished GoodsFinished Goods(Customers)(Customers)
Ability to produce goods previously purchased Setup operations Buy supplier
Make-buy issue Major financial
commitment Hard to do all things well
Vertical Integration StrategyVertical Integration Strategy
Forms of Vertical IntegrationForms of Vertical Integration
Iron Ore
Steel
Automobiles
DistributionSystem
Dealers
Silicon
IntegratedCircuits
Circuit Boards
ComputersWatches
Calculators
Farming
Flour Milling
Raw Material(Suppliers)
BackwardIntegration
CurrentTransformation
ForwardIntegration
Finished Goods(Customers)
Baked Goods
Vertical Integration Can be Vertical Integration Can be Forward or BackwardForward or Backward
Vertical Integration Examples of Vertical Integration
Raw material (suppliers) Iron ore Silicon Farming
Backward Integration Steel
Current Transformation Automobiles Integrated Circuits Flour Milling
Forward Integration Distribution System
Circuit boards
Finished goods (customers) Dealers Computers, watches, calculators
Baked Goods
Japanese word for ‘affiliated chain’ System of mutual alliances and
cross-ownership Company stock is held by allied firms
Lowers need for short-term profits Links manufacturers, suppliers, distributors, &
lenders ‘Partnerships’ extend across entire supply chain
Keiretsu Network StrategyKeiretsu Network Strategy
Virtual CompaniesVirtual Companies
Companies that rely on a variety of supplier relationships to provide services on demand.
Also known as hollow corporations, or network corporations
© 1995 Corel Corp.
Virtual Company StrategyVirtual Company Strategy
Network of independent companies Linked by technology
PC’s, faxes, Internet etc. Each contributes core competencies Typically provide services
Payroll, editing, designing
May be long or short-term Usually, only until opportunity is met
Managing the Supply-ChainManaging the Supply-Chain Options:
Postponement Channel assembly Drop shipping Blanket orders Invoiceless purchasing Electronic ordering and funds transfer Stockless purchasing Standardization Internet purchasing (e-procurement)
Managing the Supply-Chain - Managing the Supply-Chain - Other OptionsOther Options
Establishing lines of credit for suppliers Reducing bank “float” Coordinating production and shipping schedules
with suppliers and distributors Sharing market research Making optimal use of warehouse space
Successful Supply-Chain Successful Supply-Chain Management Requires:Management Requires:
A mutual agreement on goals Trust Compatible organizational cultures
Issues in an Integrated Supply-Issues in an Integrated Supply-ChainChain
Local optimization Incentives Large lots
Opportunities in an Integrated Opportunities in an Integrated Supply-ChainSupply-Chain
Generation of accurate “pull” data Reduction of lot size Single stage control of replenishment
Vendor Managed Inventory (VMI)Vendor Managed Inventory (VMI)
Postponement – keeps product generic as long as possible Channel Assembly – sends to distributor individual components and
modules rather than finished goods Drop Shipping and Special Packaging – supplier will ship to end
consumer rather than to seller Blanket Orders – a long-term purchase commitment to a supplier for
items that are to be delivered against short-term releases to ship Standardization – reducing the number of variations in materials and
components Electronic Ordering and Funds Transfer – “paperless” ordering and
100% material acceptance, payment by “wire”
Vendor evaluation Identifying & selecting potential vendors
Vendor development Integrating buyer & supplier
Example: Electronic data exchange
Negotiations Results in contract Specifies period of agreement, price, delivery terms etc.
Vendor Selection StepsVendor Selection Steps
Company Financial stability Management Location
Product Quality Price
Service Delivery on time Condition on arrival Technical support Training
Supplier Selection CriteriaSupplier Selection Criteria
Vendor Selection Rating FormVendor Selection Rating Form
Negotiation StrategiesNegotiation Strategies
Three types: cost-based price model - supplier opens its books to
purchaser; price based upon fixed cost plus escalation clause for materials and labor
market-based price model - published price or index competitive bidding - potential suppliers bid for contract
Logistics ManagementLogistics Management
Integrates all materials functions Purchasing Inventory management Production control Inbound traffic Warehousing and stores Incoming quality control
Objective: Efficient, low cost operations
Goods Movement OptionsGoods Movement Options
Trucking Railways Airfreight Waterways Pipelines
Supply-Chain Performance Supply-Chain Performance ComparedCompared
Typical FirmsBenchmark
FirmsAdministrative costs as percent of purchases
3.3% 0.8%
Lead time (weeks) 15 8
Time spent in placing order 42 minutes 15 minutes
Percentage of late deliveries 33% 2%
Percentage of rejected material 1.5% .0001%
Number of shortages per year 400 4