Supply Chain Flashcards
Supply chain definition
“A network of organisations that link together to deliver goods and services to the consumer”
Supply chain tiers
Tier 1 (Direct supplier) - Tier 2 (Supplies the supplier) ect…
Now they form supply networks rather than chains.
MRP & MRP II
Materials Requirements Planning:
- Under forecast or planned demand in the Master Production Schedule
- Knowing a bill of materials for each product
- Knowing the point in the manufacturing process each input is needed.
- Place orders taking the producers lead times into account.
MRP II:
- MRP + resource scheduling
ERP
Enterprise Resource Planning:
- Integrates planning and real-time control of production processes, including updating schedules
- ERP Systems will do:
Production planning
Materials purchase
Manufacturing scheduling
Inventory management
Planning and monitoring delivery of finished goods
Managing payments
Finance
Throughput thinking
Aims to model production as a pipeline with unobstructed flow. Obstructions to the flow must be identified and removed.
Impact of the internet on supply chains
- Electronic ordering
- Shorter requisition and fulfilment cycles
- Centralised spending controls
- Online catalogues
- Tracking orders and deliveries
- Global sourcing
- Social responsibility
- Marketplaces and auction sites
Boeing 787 Dreamliner case
Boeing opted for an outsourcing strategy in order to reduce lead time from 6 to 4 years, and reduce development cost from $10bn to $6bn
They outsourced production of Lithium batteries, that weren’t perfectly integrated into the aircraft, leading them to overheat.
In order to cut costs Boeing opted not to have on site support for suppliers. Technical problems resulted in Boeing having to send out over 2000 engineers to first, second and third tier suppliers to solver various technical problems
70% outsourcing rate
Summary:
Boeing opted for a new outsourcing strategy that saw them share IP and develop a tiered supply chain where the manufacture would happen at different stages of a supply chain. They found that their lack of control over operations across the whole chain lead to defects and production delays.
Triple A supply chain
Agile - can respond quickly to issues are changes in demand / supply
Adaptable - Can adjust to structural changes in the market, products and technologies
Aligned - Clear sharing of knowledge and responsibilities
TPS Supply Chain
Reducing Inventory Constant Improvement - Cooperating in order to improve production of each component - Long term contracts and collaboration - Mutual Investments
Customer Pull
- Supplier sets up close to factory
- Integrated IT systems
- Customised goods unloaded in the on-track assembly sequence
- v short lead times
Risks & Benefits to a single source TPS supply chain
Benefits:
- Simpler to deal with
- Companies should build up mutual knowledge and respect
Drawbacks:
- The focal company is susceptible to suppliers production issues.
- Suppliers will have invested heavily, so may lose bargaining power over their buyer.
Keiretsu [Keiretsu at Toyota (ref)]
Complicated supply tree’s focused in one manufacturer, where the focal manufacturer has cross-holdings in supply chain firms
Relationships based on trust and mutual growth and development.
Suppliers are dependent on the firms in the tier above them.
[study of 3000 firms in Toyota’s supply network. 580 suppliers in first tier, 218 of which only supply Toyota. More of a network than a tiered system (Kito et al, 2011)]
Toyota Keiretsu analysis (ref)
Kito et al. (2011)
- A study of 3000 firms forming Toyota’s supply network
- 580 first tier suppliers (218 of which only supply Toyota)
- More of a barrel shaped network, than a chain.
‘Last mile’ innovations
3D printing:
- Rather than moving something through a supply chain, just deliver the data to a printer and print on site
Bullwhip effect (ref)
Jopczak & Johnson
- A small disturbance downstream in the supply chain can induce larger and larger production errors as it moves upstream.
supply chain relationships
arms length
relational
