073107 Supply Chain Killingsworth(MIT)

7/29/2019 073107 Supply Chain Killingsworth(MIT)

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Creating an Efficient & Responsive

Supply ChainPresented to the National Shipbuilding Research Program31 July 2007

Dr. Will iam R. Kil lingsworth

Executive Director, MIT Forum for Supply Chain Innovation

[email protected]


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MIT Forum for Supply Chain Innovation

Formed in 2002; European Section 2006

Led by the MIT School of Engineering & SloanSchool of Management

David Simchi-Levi, Charlie Fine,

Bill Killingsworth

Members Include Industry and Government

Hitachi Holding Co.
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Major Research Areas

Matching Products with Supply Chain

Inventory Positioning/Push-Pull

Manufacturing & Distribution Network Design Strategic Suppliers, PSM

Visibility, Identification, and SensorNetworks

RFID, Wireless Networks

Interoperability Sensors, GPS



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Major Research Areas

Product Development and Life-Cycle Design Integral vs. Modular Design

Product Clockspeed

Make vs. Buy

Portfolio Management

Supplier and Customer Relations

Contracts: Risk and Profit Sharing

Collaboration in Forecasting, Planning & Execution

Communication; Supplier Committees Purchasing and Supply Management



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Risk Management in Global Supply Chains

Supply Risks

Demand Risks

Development of Mitigation Strategies

Major Research AreasMIT Forum for Supply Chain Innovation


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Todays Supply Chain Pitfalls Long Lead Times

Minimized Inventories

Uncertain Demand and Supply

Complex Product Offerings Component Availability

Downsizing/Out-sourcing

Globalization/Off- and near-shoring Shrinking Supplier Base

Troubled Supplier Relations

Fragile Supply Chains


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Designing the Supply Chainfor the Specific Product

Many companies attempt to shoveeverything through one supply chainstructure and then wonder why someproblems continue;

Must recognize that products have different

characteristics and generally need to bemanaged in a different manner with analigned supply chain; and

Efficiency and Responsiveness are generallyin direct conflict.


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Functional Products Innovative Products

Efficient

Supply

Chain

ResponsiveSupply

Chain

Match

MatchMismatch

Mismatch

Marshall L. Fisher, Harvard Business Review, March-April 1997

Fishers Framework


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DEMAND CHARACTERISTICS & SUPPLY CHAIN DESIGN

PushFast & Efficient

Push PullDelayed Differentiation

Distribution Strategy

Push PullDistribution Strategy

PullResponsive & Adaptive

Low High

Low

High

Demand

Volume

Demand

Uncertainty


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A Key Design Element:Push-Pull Supply Chains

The Supply Chain Time Line

Low Uncertainty High Uncertainty

CustomersSuppliers

PUSH STRATEGY PULL STRATEGY

Push-Pull Boundary


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Examples of Push Supply Chains Automotive

Mercedes in Vance, Alabama 160,000 M and R Class vehicles per year

Two Shifts

New vehicle comes off line every 90 seconds

Honda in Lincoln, Alabama 300,000 Odyssey Minivans and Pilot SUVs per year

Two production lines; two shifts

New vehicle comes off each line every 90 seconds Baby Care: Over 300,000,000 packages of

Pampers sold annually

Key Focus: Efficiency, Just in Time, Velocity &Coordination


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Examples of Push-Pull Supply Chains Dell

Buys to Forecast; Makes to Order

Modular Product Design

Delayed Differentiation

Dynamic Pricing to Correct for Forecast Errors

Furniture Make to Order Pull

Hold and accumulate for regional shipment Push What About Ikea?

Key Focus for Push-Pull are Responsiveness to

Market of One , then efficiency


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Raw Material

Supplier

Material

Manufacturers

/ Assemblers

Material

RetailerEnd-Users

Material

Shipbuilders

Boeing

Dell

HP

Pampers

Push

Buy to Order

(manufacturing

postponement high)

Ship to Stock

(manufacturingpostponement low)

Pull

Push Pull

Push Pull

Push Pull

Push Pull

Make to Order

Assemble to Order

Make to Stock

Denotes a Stockhold ing

Decoupling Point

PUSH PULL SUPPLY CHAINS

Source: Towill (2005) Decoupling for Supply Chain Competitiveness

Driven

byF

orecast

Driven

by

Deman

d


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Source: James Womack and Daniel T. Jones, Lean Thinking (New York: Simon & Schuster, 1996).

Five Lean Fundamentals

Specify value: Value is defined by customer in terms ofspecific products and services

Identify the value stream: Map out all end-to-end linkedactions, processes and functions necessary fortransforming inputs to outputs to identify and eliminatewaste

Make value flow continuously: Having eliminated waste,make remaining value-creating steps flow

Let customers pull value: Customers pull cascades allthe way back to the lowest level supplier, enabling just-in-time production

Pursue perfection: Pursue continuous process ofimprovement striving for perfection


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Command

Prime

First Tier

Suppliers

Depot

Second Tier

Suppliers

Raw Material

Suppliers

Orders

The Typical Sequentially Cascading Supply Chain

Sequentially Cascading

Supply Chains Are GenerallyNeither Efficient,

Nor Responsive


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The Sequential

Enterprise

The Goal: Transform the Enterprise

Command

Prime

First Tier

Suppliers

Depots

Second Tier

Suppliers

Raw Material

Suppliers

Orders

Customer

Distribution

Points

Command

PrimeManufacturers

1st , 2nd

And 3rd

TierSuppliers

Raw MaterialSuppliers

Integrated

CollaborativeSupply

Network

Depots

Transform


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Steps in the Transformation

Define and Map the Nature of the

Supplier Network

Identify Strategic Partners

Enable Visibility, Collaborative

Forecasting, Planning and Execution Maintain Positive Supplier Relations


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Systems Supplier

Systems Supplier

Structure Supplier

Structure Supplier

Supplier

Supplier

Supplier

Supplier

Supplier

Supplier

Final Assembly

Manufacturer Contract

Product Flow

Traditional Supply Chain Structure

Rotor Head Suppliers


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Company HRev Limiter 197 Days

Company E

Bushing 080 Days

Company F

Bushing

Company I

ID Plate 120 Days

ID Plate 110 Days

Company DD

Droop Stop 250 DaysArm 250 Days

Plate-Class 250 Days

Liner 197 Days

Block 275 Days

Stop 250 Days

Washer 280 Days

Pin Assembly 173 Days

Pin Assembly 210 Days

Plug 176 DaysTank Assembly

Beam

Cap

Company Q

Pitch Housing

Company L

Washer 167 Days

Company M

Support 119 Days

Company P

Hub 300 Days

Hub-Class 320 Days

Pin-Class 290 Days

Pin 250 Days

Company R

Cover 180 Days

Retainer 180 Days

Company W

Weight 126 Days

Weight 100 Days

Company G

Seal 120 Days

Seal 120 Days

Sleeve 120 Days

Seal 120 Day

Seal 189 Days

Company B

Shaft 176 Days

Company N

Weight

Company BB

Washer 110 Days

Company CRev Spring 155 Days

Company T

Adapter 100 Days

Weight 113 Days

Liner 210 Days

Spacer 176 Days

Lower Liner 197 Days

Tank 281 Days

Bolt 260 Days

Company D

Bolt 210 Days

Company K

Shim 075 Days

Shim

Company X

Collar

Cover Assembly

Company Y

S him 150 Days

Company Z

Ring 150 Days

Company AA

Shaft

Sleeve

Company CC

Washer 100 Days

Retainer 100 Days

Company EE

Washer 120 Days

Company FF

TankCompany U

Base

ShieldCompany GG

Cover 080 Days

Company HH

Tank Assembly

Company V

Boot 260 Days

Rotor Head SuppliersCompany A

Bolt 134 Days

Prime/LCMC

Company J

Stop 210 Days

Nut Plain 239 Days

Nut 170 DaysBracket Assembly

Company O

Sleeve Bushing 231 Days

Sleeve 120 Days

Washer 168 Days

Nut 155 Days

Key

Company S

Bearing 180 Days

Bearing 170 Days

Bearing 230 Days

Bearing 250 Days

Bushing Sleeve 275 Days

Hydroform

Cover 170 Days


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Shaft Assembly Supply Chain (1 of 2)

Prime

Comp A

Retainer

90 (M)

50 (M)Anodize (10)

Paint (10)

20 (M)

Comp A

Retainer

Comp D

(material)

OutsideProcessing

(35)

35 (M)

10 (M)

Comp A

AdapterOutside Processing1 (10)

Outside Processing2 (10)

20 (M)

Comp E

(material) 125 (M)100 (M)

Comp A

40 (M)

Comp F (Forge) 30 (M)130 (M)

Adapter


Outside Processing4(10)


Comp B

Spacer

118 (M)

In-house Mfg

Subassembly A (30)

Subassembly B (30)

Adapter (300)

Comp C

(material)10 (M)

158

150

200

250

168

50 (PA)

50 (PA)

50 (PA)

50 (PA)

50 (PA)

150 (M)Company G

(material)

100/mo

100/mo

100/mo

100/mo

6/moN/A

Notes: (A) Supplier Admin Lead Times

(M) Supplier Mfg Lead Times

(PA) Prime Administrative Lead TimesRed denotes Prime Lead TimesPurple denotes monthly capacity without

impact to normal through put

Now 350 Mfg Days!


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Shaft Assembly Supply Chain (2 of 2)

Prime

Comp HBolt

30 (M)

40 (M)Comp I

(material)10 (M)

Comp H

Comp J

(casting)

Finishing, coating

and paint (15)

15 (M)80 (M)

Comp L

Bearing

Outside

processing 40 (M)20 (M)

Comp Q55(M)48 (M)

Washer

Comp S

Plate Assembly

110 (M)

Support Assembly

Comp K

(material)

120 (M)

Comp LSubcontract

Machining20 (M) 60 (M)Comp G

(material)135 (M)

10 (M) w/LTA

Comp M

(material)

Tube

50 60 (M)

Comp NOutside

processing

Comp P

(material)10 (M) 22 (M)

15 (A)100 (M)

Mount

10 (A)

N/A

200

265

260

197

150

160

50 (PA)

50 (PA)

50 (PA)

50 (PA)

50 (PA)

50 (PA)

50 (PA) N/A

N/A

500/mo

100-150/mo

150/mo

50/mo

100/mo

Comp R

(material)

Now 350 Mfg Days!

Notes: (A) Supplier Admin Lead Times

(M) Supplier Mfg Lead Times

(PA) Prime Administrative Lead Times

Red denotes Prime Lead TimesPurple denotes monthly capacity without

impact to normal through put


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Product Flow

Systems

Partner

Structure

Partner

Partner/Supplier

Contract

Large ScaleLarge Scale

Systems IntegratorSystems Integrator

Final Assembly

Supplier

Supplier

Supplier

Supplier

Supplier

Supplier

Supplier

Supplier

Supplier

Supplier

Pre-Integration

Integrator owned product in several levels of the supply chain

Drives the requirement for multi-tier visibility

A

B

C

Strategic Partner Structure

D


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Typical Benefits of Procurement & Supply Management

(PSM) More Effective Buying Techniques

Spend Analysis Who buys what from whom with

what funds Market Intelligence What is happening in the market,

raw material trends

Logistical Efficiencies Enhancing PLT, ALT, AssetManagement

Savings Opportunities Opportunities to save money

Process Efficiencies Streamline current supply

chain processes & integrate

Improvements ViaPSM Analysis & Strategic Sourcing

Maturity Model for Collaboration and Process Interoperability


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* Source: AMR Research, Inter-Enterprise Supply Chain Coordination Needs a Platform,, 2003

Every departmentEvery department

for itselffor itself

Every companyEvery company

for itselffor itself

SingleSingle--TierTier

PartneringPartnering

MultiMulti --tiertier

FederationFederation

Slow & sequential planningSlow & sequential planning

Internal optimizationInternal optimization

Data sharingData sharing

withwith

11stst Tier partnersTier partners

Process MaturityProcess Maturity Information MaturityInformation Maturity

ReactingReacting

AnticipatingAnticipating

CollaboratingCollaborating

OrchestratingOrchestrating

MultiMulti --tiertier

Visibility,Visibility,

CollaborationCollaboration

Supply Network

Yield Management

ImprovedMarketShare

Improved

Margins

Demand Network

Optimization

Maturity Model for Collaboration and Process Interoperability


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Exostar Solution: Multi-tier visibility

Exostar Conference: October 9, Washington DC


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Tier 1 SuppliersPrime or SI

Tier 2..n Suppliers

Forecast & Commit Cycle

Order Management Cycle

Consumption Replenishment

Logistics Management

COMPONENTS

WHERE USED

Gain Consolidated Visibility Across Tiers


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RFID Industry Transformations -- CapGemini

Textiles

Food

HighTec&White

Goods

LuxuryItems

Courier&Postal

InternationalLog

istics

DC / Warehouse Operations X X X X X X X X X

International Trade / Customs / Security X X X X X X

Pedigree / Track / Trace / Theft / Counterfeit X X X X X X X X X

Cold Chain Logistics X X X X X X X X

Inventory Management / Real-Time Optimization X X X X X X X X X XMobile (Returnable) Asset Management / Utilization X X X X X X X X X X X

Store Operations / Consumer Driven Replenishment X X X X

Asset Maintenance & Monitoring (MRO / SPL) X X X X X X

Mission Demand Planning X

Managed Service Provision X X X X X X X X X

Information Sharing (EDI, GDS, EPCIS) X X X X X X X X X XManufacturing (Work in Progress) X X X X X X X X

Reverse Logistics (Returns / Recalls / Waste) X X X X X X X X X X X

Government

FinancialDocuments&Securitie

s

Distribution

RFID Enabled Supply Chain Transformation

Opportunities

Aviation

Automotive

Energy/Utilities

Defense

Retail&CPG

Manufacturing

&Packaging

LifeSciences

/Pharma

Healthcare


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DC / Warehouse Operationsy Improved In-Bound / Receiving

y Improved Out-Bound / Loading

y

Improved Stagingy Improved Picking

y Improved Packaging

y Improved Miss-placed Items

y

Improved Cross Docking

Receiving Marshalling Cross sorting

PackingLoadingShipping


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GovernmentRelations

Public Relations

Community

RelationsCustomer Relations

Where is Supplier Relations?

What is Supplier Relations?

Investor Relations

Employee Relations


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Four Columns of Collaboration

The Toyota Model

OpenCommunication

Strong Supplier RelationsStrong Supplier Relations

SupplierAssociations

On-site Support

& Training

Reduce SupplierBurden


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Conclusions

Think Globally;

Act Globally; and

Do Not Stop With Local Islands of

Optimization


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Summary: Enabling Both Efficiency andResponsiveness in a Pull Supply Chain

Streamline supply chain through the use ofstrategic partners;

Involve strategic partners in design and

development process; Identify critical bottlenecks and lead time

drivers; develop corrective actions;

Enable visibility, collaborative planning andforecasting; and

Strengthen supplier relations.


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Coming Events You Are Invited

14-15 November 2007 Road Trip for Forum! To Be Held at GE Global Research Labs

Schenectady, New York

Real Time Global Tracking and Logistics

Wireless Sensors and Networks

29-30 November 2007 European Road trip! To Be Held at the Newly Opened DHL InnovationCenter near Bonn, Germany

Sponsored by the European Section of the MIT Forumfor Supply Chain Innovation, Hasso Plattner Institute