UNIT IV SUPPLY CHAIN MANAGEMENT

TOPICS
Strategic Issues in Supply Chain
Bench marking Lean Manufacturing

STRATEGIC PARTNERSHIP AND ALLIANCES

Partnership:
Vertical relationship between supplier and customer/buyer are known as partnerships.

Alliances:
Horizontal relationships between two suppliers are called alliances.

HORIZONTAL RELATIONSHIP - Alliances

M

S
C LS

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Supplier 1 2

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VERTICAL RELATIONSHIP Partnership

Supplier
M

customer

S C
LS

+ + + +

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Examples of Horizontal relationships - alliances

Alcatel , C-Dot join hands- global R&D-

wireless product- Chennai Allahabad bank + with PNB- 40:60banking operations in Kazakhstan, branch in Hong Kong British airways and Air Sahara

Examples for vertical relationship - partnership

IOCL retails outlets in Srilanka
Tata steel invest in coal mines

carborough downs coal project in Queensland, Australia.-

STRATEGIC PARTNERSHIP/ALLIANCES
Interdependence of partners
Achieve strategic objectives Reduce overall risk increasing ROI

Maximizing utilization of scarce resources

Share difficulties-differentiated intermediate or long- term current and future benefits

Joint competitive advantage joint strategies

Strategic relationships inlogistics,

Handling systems, Equipment Warehousing, PPP environment

SC restructuring-issues, problems and benefits

TYPES OF STRATEGIC RELATIONSHIPS

Partnership sourcing
Supplier--- Customer Objective: stability/quality

Third party
Supplier- third party -- customer Objective: focus/cost

BENCHMARKING
Benchmarking is the process of

comparing one's business processes and performance metrics to industry bests and/or best practices from other industries. The term benchmarking was first used by cobblers to measure people's feet for shoes. They would place someone's foot on a "bench" and mark it out to make the pattern for the shoes.

Definition
"Benchmarking is the process of

measuring an organization's internal processes then identifying, understanding, and adapting outstanding practices from other organizations considered to be bestin-class.

WHY BENCHMARKING
Identify opportunities to improve

performance Learn from others experiences Set realistic but ambitious targets Uncover strengths in ones own organization Better prioritize and allocate resources

Issues and Problems in Benchmarking

TYPES OF BENCHMARKING
Process benchmarking
Financial benchmarking Performance benchmarking Product benchmarking Strategic benchmarking Functional benchmarking

Methods of Benchmarking
Four types of benchmarking methods are 1. Internal: Benchmark within a corporation for e.g.: between business units 2. Competitive: Benchmark performance or processes with the competitors 3. Functional: Benchmark similar processes within an industry. 4. Generic: Comparing operations between unrelated industries.

Process of Benchmarking
Planning
Improving Practices Analysis

Collecting Data

Planning
Determine the purpose and scope of the

project Select the process to be benchmarked Choose the team Define the scope Develop a flow chart for the process Establish process measures Identify benchmarking partners

Collecting Data
Conduct background research to gain

thorough understanding on the process and partnering organizations Use questionnaires to gather information necessary for benchmarking Conduct site visits if additional information is needed Conduct interviews if more detail information is needed

Analysis
Analyze quantitative data of partnering

organizations and your organization Analyze qualitative data of partnering organizations and your organization Determine the performance gap

Improving practices
Report findings and brief management
Develop an improvement

implementation plan Implement process improvements Monitor performance measurements and track progress Recalibrate the process as needed

LEAN MANUFACTURING
Introduction: An overall methodology

that seeks to minimize the resources required for production by eliminating waste (non-value added activities) that inflate costs, lead times and inventory requirements, and emphasizing the use of preventive maintenance , quality improvement programs.

Lean manufacturing concepts are proven

strategies to help manufacturers obtain attributes such as: focusing on waste reduction improved lead time maximised flexibility and upgraded quality. The term lean was used because Japanese business methods used less human effort, capital invest, floor space, materials and time in all the aspects of operations.

Definition
In general, lean production refers to manufacturing processes that improve upon mass production techniques to reduce cost, reduce time to produce, improve quality, and better respond to market demands.

Definition
Lean manufacturing can be defined as a systematic approach to identifying and eliminating waste through continuous improvement by flowing the product at the pull of the customer in pursuit of perfection.

Lean Chart

5 Elements of LM
Value
Continuous Improvement

Customer Focus
Perfection

Focus on wastage

TRADITIONAL VS LEAN MANUFACTURING

A key difference in Lean manufacturing is

that it is based on the concept that production can and should be driven by real customer demand. Instead of producing what you hope to sell, Lean manufacturing can produce what your customer wants with shorter lead times.

Cont
Instead of pushing the products to the

market, they are pulled through a system thats set up to quickly respond to customer demands. Lean manufacturing are capable of producing high quality products economically in lower volumes and bringing them to market faster that mass producers.

Cont
Lean management is about operating the

most efficient and effective organisation possible, with the least cost and zero waste.

Elements of Lean Manufacturing

Elimination of Waste: Waste is defined as

anything that consumes material or labor and that does not add value to the final end customer. Equipment Reliability: Equipment that runs when production requires it to run Process Capability: Processes which always make good parts.

Continuous Flow:

Material flows one part at a time vs. mass production using big batches. Less inventory required throughout the production process, raw material, WIP, and finished goods. Reduces defects Reduces lead time. Speeds up order to delivery time.

Cont.
Error Proofing: Ways to prevent the

product from being built incorrectly. Stop the Line Quality System: The production line is stopped when bad quality is being produced. Kanban System: Kanban is a pull material system. The material is pulled through the production process by customer demand. Kanban uses cards to move material along the value stream.

Cont..
Standard Work: Standard Work is a

system of organizing work steps and documenting them. The team leader prepares the Standard Work.
Visual Management: When a plant

utilizes Visual Management fully, a new employee can understand how to do his job from the visual information in the plant.

Cont..
In Station Process Control: Each

workstation has the information and equipment for the worker to inspect and produce good quality parts.
Level Production: Production is leveled to

customer demand.

Cont.
Takt Time: Production is paced to

customer demand. Takt Time = Time available to produce a product divided by the number of parts that the customer wants to buy.
Quick Changeover: A system to change

over from one product to another quickly.

Agile Manufacturing
Introduction: Manufacturing industry is on the verge of a major paradigm shift. This shift will take us away from mass production, way beyond lean manufacturing, into a world of Agile Manufacturing.

Definition
Agile manufacturing is a method for manufacturing which combine our organization, people and technology into an integrated and coordinated whole.

Definition
Agile manufacturing is a term applied to an organization that has created the processes, tools, and training to enable it to respond quickly to customer needs and market changes while still controlling costs and quality.

Why do we need agile

Global Competition is intensifying.
Mass markets are fragmenting into

niche markets. Cooperation among companies is becoming necessary, including companies who are in direct competition with each other.

Cont
Customers are expecting:
Low volume products High quality products Custom products

Very short product life-cycles,

development time, and production lead times are required. Customers want to treated and individuals.

Goldman et al. suggest that Agility has four underlying components:

1. Delivering value to the customer;
2. Being ready for change; 3. Valuing human knowledge and skills; 4. Forming virtual partnerships.

Benefits of agile manufacturing

Specialization
Customization Flexibility Lower costs Higher quality

Lower inventory
Shorter lead times

Integration of lean manufacturing and SCM

STRATEGIC RELATIONSHIPS IN LOGISTICS

Dowling & Robinson(1990) & Bucklin and Schmalensee(1987) Cooperation among channel members Manufacturers necessity develop new & improved products Increasing need for segmentation Impact and importance of IT Increasing diversity of delivery systems Impact of increasing costs

THE VALUE CHAIN AND STRATEGIC RELATIONSHIP IN LOGISTICS

Incremental Increases in Value added
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OL M &S

distributor2
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IL

distributor1

Cust Value added

manufacturer

Productivity Cost

STEPS for strategic relationships

Vision formulation environmental scan- internal & external Issues formulation - critical Issues identification and defined Issue prioritization Articulating the issuesassumption,objectives,strategies, action plans, time frames, budgets,monitor plans and responsibilities.

THANK YOU