Lecture 3 - Designing Supply Chains Flashcards
(27 cards)
What is functional demand?
When demand is relatively predictable
When fundamental variety is relatively low
When there are relatively few new products
When lead time is relatively unimportant
What is innovative demand?
When demand is relatively unpredictable
When fundamental variety is relatively high
When there are relatively frequent new products
When lead time is relatively important
What is the responsiveness for functional demand to be like?
Fast
Fast throughput time
Flexibility
Customisation
What is the efficiency of innovative demand?
Low cost
High utilisation
Dependability
Standardisation
What characteristics do functional products have?
Product life cycle: over 2 years Product variety: low Average stock out rate: 1-2% End of season reduction: 0% Lead time: 6 months - 1 year
What characteristics do innovative products have?
Product life cycle: 3 months - 1 year Product variety: high Average stock out rate: 10% End of season reduction: 10-25% Lead time: 1 day - 2 weeks
What is lean production? (Physically efficient process)
Supply objective: Efficiency and low cost
Inventory strategy: High turn over with minimal inventory
Lead time: Reduce if costs do not increase
Suppliers: selected to by cost and quality
Product design: to minimise cost
What is agile production? (Market responsive process)
Supply objective: quick response
Inventory strategy: sufficient buffer stocks and postponement strategies
Lead times: aggressively reduced
Supplier selection: based on speed, flexibility and quality
Product design: modularisation
What supply chain does Toyota use and what are its characteristics?
LEAN
- JIT
- Basic contracts
- Sourcing based on cost not price
- Local sourcing
- Supply base reduction and short chains
What is push production?
Material is moved on to the next stage as soon as it has been processed
- Build up an inventory
What is pull production?
Material is moved only when the next stage want it
- More efficient for cost reduction
What are the challenges for lean production systems?
JIT requires frequent deliviers
Green issues
Need for level scheduling - is more responsiveness required?
More open to disruption
Large finished good inventory
Define agile supply chains
“Respond quickly to sudden changes in supply or demand. They handle external disruptions smoothly and cost efficiently” - Lee 2007
SPEED = Lead time FLEXIBILITY = Range and response
What 4 areas constitute an agile supply chain?
VIRTUAL
- Sharing information on real demand, collaborative planning and end to end visibility
PROCESS ALIGNMENT
Co-managed inventory, collaborative product design and synchronous supply
NETWORK BASED
Leverage partners capabilities, focus on core competencies and act as a network orchestrator
MARKET SENSITIVE
Daily POS feedback, capture emerging trends and listen to customers.
What are the supply side factors to creating agile supply chains? (SOURCE)
Spatial integration Leverage partners' capabilities Inventory buffers Dependable logistics system or partners Contingency planning Information flows
What are the operational factors to creating agile supply chains? (MAKE)
Reduce non value adding time Manufacturing flexibility Inventory Product architecture Postponement strategies
What are the demand side factors to creating agile supply chains? (DELIVER)
Demand anticipation Information integration ICT enablers Market sensitivity Capture emerging trends
What products require a lean supply chain and which require an agile supply chain?
FUNCTIONAL - Lean supply chain
INNOVATIVE - Agile supply chain
What is the legile supply chain?
Combination of both lean and agile supply chains
The focus is:
- Product quality
- Minimizing lead time
- Meeting demand.
What is the pareto curve approach for lean products?
Makes a forecast to see:
- What inventory to manage centrally
- Seek economies of scale
- See low priority products in the production schedule.
Do you want to use 20% of products to meet 80% of demand? - Low variety, focus on popular goods.
What is the pareto curve approach for agile products?
Make products to order (other 80% of the graph).
They have a high priority in production schedule so you should utilise
- Quick response
- Continuous replenishment concepts.
What is the decoupling point approach?
Using strategic inventory and holding generic inventory stock to meet lean ojectives. You complete final assembly when the customer requirement is known fulfilled agile objectives.
Example: Dell computers
How is the decoupling point approach used in lean systems?
Where we know definitive components, we forecast at a generic level and maximise efficiencies through economic batch quantities.
Example: For Dell we know we will need hard drives and screens.
How is the decoupling point approach used for agile systems?
Once we know the customised order, we then order in the relevant parts for that order.
- Demand driven
- Localised configuration to maximise effectiveness.
Example: For Dell we would implement particular CPU and memory into the ordered laptop.
