Contents
Section I: Supply Chain Overview
1 Introduction to the Supply Chain.................................................. 3
1.1 Introduction
... [Show More] ....................................................................................................3
1.2 Defining Supply Chains................................................................................4
1.3 Defining Supply Chain Management .........................................................7
2 Supply Chain Management — The “Right” Way ......................... 9
2.1 Supply Chain Viewpoints.............................................................................9
2.1.1 Functional............................................................................................9
2.1.2 Procurement......................................................................................10
2.1.3 Logistics............................................................................................. 11
2.1.4 Information ....................................................................................... 11
2.1.5 Business Process Reengineering ....................................................12
2.1.6 Strategic .............................................................................................12
2.2 Evidence of the Impact................................................................................13
2.2.1 Personal Computers ........................................................................13
2.2.1.1 What Observers Say — The Buzz..................................13
2.2.1.2 The Supply Chain Spin ....................................................14
2.2.2 Entertainment ...................................................................................14
2.2.2.1 One Company’s Challenge............................................. 14
2.2.2.2 The Supply Chain Spin ....................................................15
2.2.3 Adding Value Through Brands......................................................15
2.2.3.1 The Buzz on Brands..........................................................15
2.2.3.2 The Supply Chain Spin ....................................................16
2.2.4 Healthcare .........................................................................................17
2.2.4.1 What Observers Say — The Buzz...................................17
2.2.4.2 The Supply Chain Spin ................................................... 18
2.3 SCM — Defensive and Offensive Weapon.............................................. 18
3 Supply Chain Potency.................................................................. 21
3.1 The Need for Help .......................................................................................21
3.2 Potent Supply Chains................................................................................. 23
4 Evolution of Supply Chain Models ............................................. 25
4.1 Manufacturing Strategy Stages..................................................................25
4.2 The Driving Force ........................................................................................29
4.3 Supply Chain Progression ..........................................................................32
4.4 What Does It Mean?.....................................................................................34
5 Model for Competing through SCM............................................ 35
5.1 Product Life Cycle Grid ..............................................................................35
5.2 Achieving Potency in Supply Chain Redesign........................................38
5.2.1 Strategic or Not Strategic? ..............................................................38
5.2.2 Level of Impact.................................................................................40
5.3 Why Bother? ................................................................................................ 41
6 Linking the Supply Chain with the Customer ........................... 43
6.1 Specifying Supply Chain Design ...............................................................43
6.2 Effective Supply Chains ............................................................................. 44
6.3 Quality Function Deployment ...................................................................49
Section II : The Supply Chain Challenge — Five Tasks for
Management
Task 1: Designing Supply Chains For Strategic
Advantage (Chapters 7–9) ............................................................. 55
Task 2. Implementing Collaborative Relationships
(Chapters 10–13)............................................................................. 55
TASK 3. Forging Supply Chain Partnerships
(Chapters 14–20)............................................................................. 56
TASK 4. Managing Supply Chain Information
(Chapters 21–23)............................................................................. 57
TASK 5. Removing Cost from the Supply Chain
(Chapters 24–29)............................................................................. 57
7 Supply Chains as Activity Systems ............................................. 59
7.1 Structuring the Supply Chain ....................................................................59
7.2 Case Study — Applying the Frameworks................................................60
7.2.1 Select Strategic Themes to Underpin Your Strategy ...................61
7.2.2 Define Unique Activities to Support These Streams...................63
7.2.3 Make Sure the Activities Fit Together ...........................................65
7.3 Conclusion ....................................................................................................66
8 QFD Case Study............................................................................ 69
8.1 Applying QFD at Acme...............................................................................69
8.1.1 Customer/Product Groups ............................................................71
8.1.2 Performance Factors ........................................................................71
8.1.3 Ideal Supplier ...................................................................................71
8.2 Acme’s Performance....................................................................................72
8.2.1 Competitor Comparison .................................................................72
8.2.2 Trends ................................................................................................72
8.2.3 Added Value .....................................................................................73
9 The Supply Chain and New Products ......................................... 75
10 Foundation for Supply Chain Change ....................................... 79
10.1 Promoting Change.......................................................................................80
10.1.1 Step 1: Plan........................................................................................80
10.1.2 Step 2: Do ..........................................................................................81
10.1.3 Step 3: Check.................................................................................... 81
10.1.4 Step 4: Act..........................................................................................81
10.2 Top Management Involvement..................................................................81
10.2.1 Who is Top Management? ..............................................................82
10.2.2 Keepers of the Strategy .................................................................. 83
10.2.3 Capability-Building/Strategy Shifts .............................................84
10.2.4 Portfolio Management.....................................................................84
11 Functional Roles in Supply Chain Change................................. 87
11.1 Introduction ..................................................................................................87
11.2 Designing Supply Chains For Strategic Advantage................................89
11.3 Implementing Collaborative Relationships (This Task) .........................90
11.4 Forging Supply Chain Partnerships..........................................................90
11.5 Managing Supply Chain Information.......................................................90
11.6 Making Money from the Supply Chain....................................................91
12 Supply Chain Design — A Team Framework ............................. 93
12.1 Initiatives and Projects ................................................................................93
12.1.1 Sponsorship ......................................................................................95
12.1.2 Project Phasing .................................................................................97
12.1.3 Teams at Three Levels .....................................................................97
12.2 A Methodology for Conceptual Design....................................................98
12.2.1 Task 1: Describe the As-Is Situation...............................................98
12.2.2 Task 2: Assess As-Is Strengths and Weaknesses ........................100
12.2.3 Task 3: Develop a Greenfield Vision............................................100
12.2.4 Task 4: Develop the To-Be Process...............................................101
12.2.5 Task 5: Prepare Conceptual Design and Action Plans ..............102
13 Institutionalizing Supply Chain Changes ................................ 103
13.1 The Supply Chain Function in the Organization ..................................103
13.1.1 Should There be a Supply Chain Function?...............................104
13.1.2 Basic Alternatives...........................................................................105
13.1.3 Timing Organization Change.......................................................107
13.2 Staying on Track — Performance Measures/Structure........................108
13.2.1 Measurement ..................................................................................108
13.2.2 Platform Teams at DaimlerChrysler............................................ 110
14 Motivations for Partnerships ..................................................... 113
14.1 Types of Partnerships ................................................................................ 115
14.1.1 The Vertical Partnership................................................................ 115
14.1.2 The Horizontal Partnership.......................................................... 116
14.2 Motivations for Supply Chain Partnerships .......................................... 117
14.2.1 Core Competency and the Supply Chain................................... 117
14.2.2 Traditional Model........................................................................... 119
15 Emerging Partnership Model ..................................................... 123
15.1 Introduction ................................................................................................123
15.2 New Roles For Procurement ....................................................................125
15.3 Fundamental Barriers................................................................................126
16 Planning for Partnerships........................................................... 129
16.1 A Partnership Vocabulary.........................................................................129
16.1.1 Purpose............................................................................................129
16.1.2 Direction ..........................................................................................131
16.1.3 Choice .............................................................................................131
16.2 Using the Vocabulary ................................................................................132
17 Core Competence and Partnerships........................................... 135
18 Organizing Improvement Efforts............................................... 139
18.1 Using Spheres to Segment the Supply Chain ........................................140
18.2 Defining “Spheres” ....................................................................................140
18.3 Spheres and Activity Systems ..................................................................145
19 Stage 3 Supply Chain Structure ................................................. 147
19.1 Step 1: List the Issues.................................................................................148
19.2 Step 2: Define Requirements ....................................................................149
19.3 Step 3: Structure the Effort........................................................................151
20 The Extended Enterprise
TM
at DaimlerChrysler....................... 153
20.1 Description of the Extended Enterprise..................................................153
20.2 Presourced Components Through a Supplier Strategy........................155
20.3 Documented Processes..............................................................................156
20.4 Risk Assessment.........................................................................................157
20.5 Product Sign-Off (PSO) .............................................................................157
21 SCM and Information Technology ............................................ 161
21.1 The Landscape............................................................................................162
21.2 Supply Chain Applications.......................................................................163
22 Topography of Supply Chain Applications .............................. 167
22.1 MRP and ERP .............................................................................................168
22.2 Specialized Applications for SCM ...........................................................172
22.2.1 SCM and APS ..................................................................172
22.2.2 MES...................................................................................173
22.2.3 Warehouse Management Systems (WMS)...................174
22.2.4 Customer Relationship Management (CRM) .............174
22.2.5 Product Data Management (PDM)...............................175
22.3 Meeting Improvement Objectives for Systems..........................176
22.3.1 Strategic Plan ...................................................................177
22.3.2 Documentation Shortcomings.......................................177
22.3.3 Modularizing the Job......................................................178
22.3.4 The “Simpler Way” .........................................................178
23 Supply-Chain Council ................................................................ 179
23.1 SCOR Model ...............................................................................................179
23.2 SCOR Application Cases...........................................................................181
23.2.1 AT&T Wireless Services .................................................182
23.2.1.1 SCOR Level 1: Basis of Competition ..........183
23.2.1.2 SCOR Level 2: Operations Analysis
and Mode .......................................................184
23.2.1.3 SCOR Level 3: Performance Levels,
Practices, and Systems Selection.................185
23.2.1.4 SCOR Level 4: Implementation ..................186
23.2.2 Mead Johnson Nutritionals (MJN) ...............................186
24 Cost and the Supply Chain......................................................... 189
24.1 The Allure of Cost Reduction...................................................................189
24.2 Are Cost Reductions Strategic?................................................................190
24.2.1 Conflicting Viewpoints..................................................................191
24.2.2 Strategic or Not Strategic? ............................................................192
24.3 Root Causes for Cost .................................................................................195
24.3.1 Lack of Clarity ................................................................................195
24.3.2 Variability ........................................................................................196
24.3.3 Product Design ...............................................................................197
24.3.4 Information Sharing ......................................................................197
24.3.5 Weak Links......................................................................................198
24.3.6 Unintended Consequences...........................................................199
25 Root Cause — Clarity ................................................................. 201
25.1 Introduction ................................................................................................201
25.2 Company Cost Structures .........................................................................203
25.2.1 The Starting Point (A)................................................................... 203
25.2.2 Department Costs (B) ....................................................................204
25.2.3 Improvement Categories (C)....................................................... 205
25.2.4 Allocated Costs — Roadblock to Clarity ....................................206
25.2.5 Direct Cost versus Absorption Accounting................................208
25.3 Activity-Based Cost ...................................................................................210
25.3.1 From Departments to Activities...................................................213
25.3.2 Capital Recovery (Level III)..........................................................215
25.3.2.1 Addressing Capital Recovery — The Need ............... 215
25.3.2.2 Capital Has a Cost...........................................................217
25.3.2.3 Recommended Approach ..............................................217
25.3.3 Product Costing with ABC (IV-D) .............................................. 219
25.3.3.1 Defining Activities ......................................................... 219
25.3.3.2 Cost Drivers .....................................................................221
25.3.3.3 Supply Chain Cost Map.................................................222
25.3.3.4 Paths to Supply Chain Product Costs ..........................223
25.4 Bottleneck Costs .........................................................................................224
25.5 Case Study: Cross-Company Accounting ..............................................225
25.5.1 The Cost Accounting Problem .................................................... 225
25.5.2 The SAMIS Approach ...................................................................226
26 Root Cause — Variability ........................................................... 229
26.1 Volume Variability .....................................................................................230
26.1.1 Self-Inflicted Variation...................................................................231
26.1.2 The Cost–Volume Relationship....................................................231
26.1.3 From Batch to Flow........................................................................234
26.1.3.1 The Batch World..............................................................234
26.1.3.2 The Flow World...............................................................237
26.2 Demand-Driven Supply Chain ................................................................238
26.2.1 Time Is Equal to Cost (Time Mapping).......................................239
26.2.2 Cells................................................................................................. 241
26.2.3 Agile Enterprises............................................................................244
26.2.4 Toyota Production System ............................................................245
26.2.5 Postponement................................................................................ 247
26.2.6 Demand Flow .................................................................................249
26.3 Process Variability......................................................................................250
26.3.1 Process Capability......................................................................... 250
26.3.2 Implications for SCM.....................................................................253
27 Root Cause — Design.................................................................. 257
27.1 The SCM Opportunity in Design.............................................................257
27.2 Discovery-Driven Planning......................................................................258
27.2.1 Step 1: Prepare a Reverse Income Statement .............................259
27.2.2 Step 2: Lay Out Pro Forma Functional Activity
Specifications ..................................................................................259
27.2.3 Step 3: Track Assumptions............................................................260
27.2.4 Step 4: Revise the Income Statement...........................................260
27.2.5 Step 5: Test Assumptions at Milestones......................................260
27.3 Stage Gate Process .....................................................................................261
28 Root Cause — Information ......................................................... 265
28.1 The Cost of Being “Unintegrated”.......................................................... 266
28.2 Defining Integration ..................................................................................266
28.3 New Architectures .....................................................................................268
28.3.1 The Promise (and Threat) of New Technology..........................269
28.3.2 Proactive Systems ..........................................................................269
29 Root Cause — Weak Links.......................................................... 273
29.1 The Role of Links .......................................................................................273
29.2 Theory of Constraints................................................................................274
29.3 Replenishment Rules.................................................................................275
29.4 The 3C Alternative .................................................................................... 277
29.5 Collaboration ..............................................................................................278
Section III: Supply Chain Methodologies
30 Supply Chain Prestudy ............................................................... 281
30.1 Organize End Users ...................................................................................281
30.1.1 Define Market Segments...............................................................282
30.1.2 Map Products to Segments ...........................................................282
30.1.3 Identify Supply Chains .................................................................283
30.2 Describe the Supply Chain(s)...................................................................283
30.2.1 Document Physical Flow ..............................................................284
30.2.2 Document Information Flow........................................................284
30.2.3 Document Financial Flow.............................................................284
30.2.4 Document New Product Flow .....................................................285
30.3 Document Management Processes..........................................................285
30.4 Interview Executives .................................................................................285
30.4.1 Describe Customer Requirements by Segment .........................285
30.4.2 Assess Relative Strengths and Weaknesses by Segment ..........286
30.4.3 Understand Barriers ......................................................................286
30.5 Prepare Conclusions ..................................................................................286
31 Implementation Roadmap .......................................................... 287
31.1 More about Spheres ...................................................................................287
31.2 The Three Phases........................................................................................288
31.3 The Five Tasks.............................................................................................289
31.4 Crosscurrents ..............................................................................................290
31.5 Task 1 Strategy Deliverables.....................................................................291
31.5.1 Describe the As-Is Situation......................................................... 292
31.5.2 Assess As-Is Strengths and Weaknesses .....................................292
31.5.3 Develop Greenfield, or Ideal, Vision ...........................................293
31.5.4 Develop the To-Be Process............................................................294
31.5.5 Prepare Conceptual Design and Action Plans .......................... 294
31.6 Tasks 2 Through 5 Initiatives....................................................................295
31.6.1 Task 2 Collaborative Relationships Initiatives...........................295
31.6.2 Task 3 Partnership Initiatives .......................................................295
31.6.3 Task 4 Information Systems Initiatives .......................................296
31.6.4 Task 5 Cost Reduction Initiatives.................................................296
32 From Purchasing to Strategic Sourcing — A Road Map .......... 299
32.1 Why Pursue Strategic Sourcing?..............................................................299
32.2 Methodology...............................................................................................300
32.2.1 Step 1: Determine Your Spending................................................300
32.2.2 Step 2: Prioritize the Spend Categories.......................................300
32.2.3 Step 3: Form Category Teams.......................................................301
32.2.4 Step 4: Develop a Sourcing Strategy for
Your Categories ..............................................................................301
32.2.5 Step 5: Perform the RFP Process and Make
the Final Selection ..........................................................................301
32.2.6 Step 6: Manage the Supplier Relationship
Aggressively ...................................................................................302
32.2.7 Step 7: Provide Feedback to Both Suppliers
and Senior Management ...............................................................302
32.3 Strategic Sourcing Success Stories ...........................................................302
33 Selecting Supply Chain Software .............................................. 305
Section IV: Supply Chain Case Studies
34 Partnership Barriers in the Nuclear Industry .......................... 313
34.1 Introduction ................................................................................................313
34.2 Historical Look ...........................................................................................314
34.3 Challenges in Partnership Formation .....................................................315
34.3.1 Generating Unit Differences.........................................................315
34.3.2 Cost Savings....................................................................................316
34.3.3 Inadequate Executive Oversight..................................................316
34.3.4 Inadequate Analysis and Planning..............................................317
35 Wholesale Grocer: Supply Chain “Streamlining” ................... 319
35.1 Distribution Center Consolidation and Relocation...............................319
35.2 Planning Considerations...........................................................................320
35.3 Distribution Center Location Scenarios..................................................320
35.3.1 The Facility Location Problem .....................................................321
35.3.2 The “Total Logistics Cost” Approach..........................................322
35.3.3 Results of the Analysis ..................................................................323
36 Plumbing Supplies: Manufacturer/Distributor........................ 325
36.1 The Faulty “Intellectual Model” ..............................................................325
36.2 PlumbCo’s Faulty Model ..........................................................................326
36.3 Revising PlumbCo’s Model ......................................................................327
36.4 The Impact of PlumbCo’s New Model ...................................................328
36.5 Lessons Learned.........................................................................................330
37 Supply Chain Management in Maintenance, Repair, and
Overhaul Operations................................................................... 335
37.1 Demand Chain Issues................................................................................335
37.2 Service Imperatives....................................................................................336
37.3 Supply Chain Management......................................................................337
37.4 Stockholding ...............................................................................................338
37.5 Practical Solutions......................................................................................338
37.6 Primary Supply Line .................................................................................339
37.7 Replenishment............................................................................................339
37.8 Ordering from the Supply Chain.............................................................340
37.9 Results..........................................................................................................341
38 Retail Distribution: From Low Tech To Leading Edge
Distribution Center ..................................................................... 343
38.1 Background.................................................................................................343
38.1.1 Motivating Factors .........................................................................344
38.2 Distribution Center Existing Conditions ................................................344
38.2.1 Planning Criteria ............................................................................345
38.2.2 Operations Planning and Layout ................................................345
38.3 Validation of the Plan ................................................................................346
38.4 Implementation ..........................................................................................348
38.5 Results Achieved........................................................................................348
38.6 Recent Steps ................................................................................................349
39 British Telecom — Capacity Planning in a
Deregulating Industry ................................................................ 351
39.1 Background.................................................................................................351
39.2 The Challenge.............................................................................................352
39.3 The Reconnaissance Study........................................................................353
39.4 The Improvement Program ......................................................................354
39.5 Conclusions.................................................................................................357
40 Semiconductor Equipment: Supply Chain Links..................... 359
40.1 Background.................................................................................................359
40.2 Goals ............................................................................................................360
40.3 Company Operations ................................................................................361
40.4 Designing a Solution..................................................................................362
40.5 Benefits ........................................................................................................363
41 Footwear Distribution................................................................. 365
41.1 Major Decision Required ..........................................................................365
41.2 Management Incentives ............................................................................366
41.3 Benefits of the Program.............................................................................366
42 Bicycle Manufacturer: Internet Strategy ................................... 369
43 Consolidation Centers in the Lean Supply Chain ................... 375
43.1 Introduction ................................................................................................375
43.2 Definition of a Consolidation Center? ....................................................376
43.3 Motivations for Using Consolidation Centers.......................................377
43.4 The Work of the Consolidation Center ...................................................377
43.4.1 Which Items? ..................................................................................377
43.4.2 Why Returnable Containers? .......................................................378
43.4.3 Physical Organization of the Work..............................................379
43.4.4 Location of the Consolidation Center .........................................380
43.4.5 What the Consolidation Center Shouldn’t Do...........................380
43.4.5.1 Kitting ...............................................................................380
43.4.5.2 Incoming Quality Assurance.........................................381
43.4.5.3 Sorting Empty Boxes and Dunnage .............................381
43.5 Business Structure......................................................................................381
43.6 Information Flows Around the Consolidation Center .........................382
43.6.1 Routine Operations........................................................................382
43.6.2 Planning...........................................................................................383
43.6.3 Alarm and Emergency Response.................................................383
43.6.4 Performance Monitoring...............................................................383
44 Demand-Driven Supply Chain in a Start Up............................ 385
44.1 The Business ...............................................................................................385
44.2 Markets........................................................................................................386
44.3 Needs for Improvement............................................................................387
44.4 Process Recommendations .......................................................................388
44.4.1 Order Entry and Tracking/Sales Management .........................388
44.4.2 Inventory Management.................................................................390
45 Automobile Industry: Incoming Material................................. 395
45.1 The Big Picture ...........................................................................................395
45.2 Outsourcing ................................................................................................396
45.3 The Golden Rule — Support the Vehicle Build Process .......................397
45.4 Eliminating Cardboard..............................................................................397
45.5 Reducing Rack Costs .................................................................................397
45.6 Facilities and Equipment ..........................................................................398
46 Water Utility: Logistics Services Partnerships ......................... 399
46.1 Development and Operation....................................................................399
46.1.1 Purchasing.......................................................................................400
46.1.2 Supply Chain Management..........................................................400
46.2 Benefits ........................................................................................................401
47 Auto Parts Retailer — Logistics Partnership ............................ 403
47.1 AutoZone Before the Partnership............................................................403
47.2 Goals for the Partnership ..........................................................................404
47.3 Benefits ........................................................................................................406
48 Improving Furniture Manufacturer EVA .................................. 409
48.1 The Need for Speed ...................................................................................409
48.2 The New Supply Chain.............................................................................410
48.3 Results Achieved........................................................................................413
49 Performance Improvement Through Metrics for Buyers ........ 415
49.1 Background.................................................................................................415
49.2 Philosophy and Use of Metrics ................................................................416
49.3 Back to Merisel ...........................................................................................418
49.4 “Sludge” Metrics ........................................................................................421
49.5 How the Metrics Were Used.....................................................................421
49.6 The Results..................................................................................................422
Glossary .............................................................................................. 425
Bibliography ...................................................................................... 443
Index ................................................................................................... 447 [Show Less]