1. Basics of Supply Chain Management

3 Basic Choices of Processes and Layouts Process Choices:

1. Intermittent (Lot or Batch) 2. Flow - Repetitive, Line - Continuous 3. Project (Fixed Position)

Determinants of Manufacturing Environments? (4) Choice of manufacturing environments is influenced by:

1. LEAD TIME Expectations - Customers have expectations with respect to delivery lead time 2. Product Design INPUT FROM CUSTOMERS - Degree of product design required after receipt of order will have effect on lead time 3. Product VOLUME and VARIETY - Volume and variety will play a significant role in choice of manufacturing environments and process choices 4. Product LIFE CYCLE - The appropriate manufacturing environment for a product may change as the product evolves through life cycle

Manufacturing Planning and Control (MPC) 5 Objectives of Manufacturing Why plan? What is the challenge of manufacturing companies?

1. Produce right PRODUCTS 2. Of the right QUALITY 3. In the right QUANTITY 4. At the right TIME 5. At the right COST Challenge: high levels of customer satisfaction Why plan: Satisfy customer demand and ensure availability of resources --> balance MATERIALS needed for production and CAPACITY required --> Produce what customer wants, when and where --> Data governance and security is key!

Overall impact of new systems and philosophies? (6)

1. Reduced LEAD TIMES 2. Reduced INVENTORY LEVELS 3. Improved Worker PRODUCTIVITY 4. Improved Product QUALITY 5. COST Reductions 6. Increased PROFITABILITY

MRP Definition Materials Requirements Planning -- business process

Based on the due dates for end items in the master schedule, MRP establishes PRIORITY PLAN for the due dates and order quantities for the COMPONENTS (resources) for end items! --> serve needs of production and purchasing depts

External View of Supply Chain * Basic Elements (5a) * Manufacturer shoulds and should nots Which way down the line do these go? Flow of goods/ services: suppliers? Returns and reverse logisitics? Dominant flow of demand, design info, and cash?

Basic Elements: 1. Suppliers 2. Manufacturers/ Producers 3. Distributors 4. Retailers 5. Consumers 5a-- flow of information, cash, goods and services Flow of goods/ services: suppliers --> consumer Returns and reverse logisitics Dominant flow of demand, design info, and cash: consumer ---> supplier * Manuf should -- not just be a horizontal link, should be horizontally integrated * Manuf should --- coordinate ops with up and downstream distributors and retailers who add value to final price of product!

Product Volume and Variety Relationships -- Manufacturing Environments Is the product volume/ variety high/ low for each manufacturing strategy?

ETO - Volume: Low -Variety: High - No two products are alike; many variations of the project MTO - Volume: Low/Med -Variety: MedHigh - MTO products are not high enough in volume or low enough in variety to justify making components in advance like ATO ATO - Volume: Med High Variety: Med Low - ATO products are high enough in volume and low in enough in variety that 1) making components in advance and 2) assembling htem when order is received is justified to reduce lead time MTS - Volume: High Variety: Low - MTS are high enough in sales volume and low enough in variety to justify assembling them before they are ordered! Mass Customization - High Volume High Variety - High in volume at product fam level and high in variety at end item level - Mass customization some product design might be required to fulfill order. Also worker skill and flexibility requirements are greater and lead times can be higher (online shopping, colors for clothes)

UN Global Compact 10 Key Principles (within the 4 key areas) UN Global Compact Management Model

Human Rights: 1. Support and protect INTERNATIONALLY proclaimed human rights 2. Ensure non-complicity in human rights ABUSES Labor Practices 3. Uphold freedom of association and right to COLLECTIVE BARGAINING (negotiation of wages/ terms of employment by employees) 4. Eliminate FORCED & compulsory labor 5. Abolish CHILD labor 6. Eliminate DISCRIMINATION in employment and occupation Environment 7. Support a cautionary approach to enviro CHALLENGES (global warming) 8. Promote greater environmental RESPONSIBILITY (operate to protect enviro) 9. Encourage development and diffusion of environmentally friendly TECHNOLOGIES (green tech) Anti Corruption 10. Work against corruption in all of its forms including EXTORTION (blackmail) and BRIBERY UN Global Compact Management Model: provides detailed guidelines for incorporations the 10 principles in business strategies and operations

Manufacturing Business Model

- DEFINE products, customers, market - DESIGN products and processes - Manage material flow - Provide customer service and support ** to support goal of making profit & effectively competing in marketplace

Providing Customer Service and Support (3 things customer service includes)

- Understanding and meeting customer needs - 2 Way communication with customers - Working with customers to solve design and production problems

Lean focuses on

- identifying and eliminating NON VALUE ADDED activities and resources, which are considered waste - creating CONTINOUS FLOW in manufacturing as a result of PULL by customer - empowering employees - continous improvement

Managing Material Flow (3)

1. Acquisition - Planning acquisition and use of production resources to meet demand 2. Manufacturing operations - Scheduling: schedule production ops as close to when customers need products as possible; reduces unnecessary inventory/ lost sales 3. Distribution - Manage flow of materials to and from customers - Reverse (repair, reycle, remanufacture) and green reverse logisitics (reuse/ dispose in eco friendly way) and remanufacturing (refurbished to like new position, eco friendly)

6 Steps in UN Global Compact Management Model

1. Commit - Leadership commitment to mainstream global compact principles 2. Asses: risks opportunites, and impacts 3. Define: goals strategies, and policies 4. Implement: strategies and policies across the company and supply chain 5. Measure: measure and monitor impacts and progress towards goals 6. Communicate: progress and strategies; engage stakeholders

Customer Expectations -- Characteristics that provide value to customer? (5)

1. Cost/ price 2. Quality 3. Speed: Lead time 4. Dependability (pre/post sales service) 5. Flexibility (product and volume)

Manufacturing Environments (Production Environment/ Manufacturing Strategy -- synonyms) - What are the 5 basic manufacturing environments? - When to use?

1. Engineer To Order - Products require a unique engineering design based on customer specifications 2. Make To Order - Manufacturing only starts when order received. Product usually made from standard raw material and maybe some custom designed components but doesn't require as much design lead time as ETO 3. Assemble To Order - Product made from standard components (subassemblies) held in inventory waiting for a customer order for final assembly ... assembled when customer orders 4. Make To Stock (MTS) - Manufacturer produces product and sells from finished goods inventory. Products are available before customer orders 5. Mass Customization - Product made in many different configurations mainly from stock components buy is quickly assembled in high volume

Business/ Operating Environment (External Factors that influence how a company develops their manufacturing environments and production process choices) Factors: (4)

1. Global Competition (markets) 2. Economic, Government, and Regulatory Influences (gov rules that influence global supply chain) 3. Customer Expectations 4. Corporate Social Responsibility and Sustainability

Corporate Social Responsibility areas and Sustainability

1. Human Rights 2. Labor Practices 3. Environment 4. Anti Corruption Sustainability: Responsible economic growth that benefits all segments of society in an equitable manner

Resolving Conflicts

1. Sales and Operations PLANNING -- balance inventory, customer service, and production efficiency in production planning process 2. Clear RESPONSIBILITY of MATERIALS MANAGEMENT function -- faciliates planning and manage day to day tradeoffs 3. APPLY PRODUCTIVITY SYSTEMS -- lean, quality, theory of constraints to speed up processes and reduce waste

6 Sigma -- approach that focuses on reducing defects by decreasing processes and product variation Important Elements: (3)

1. Variation cases defects 2. Goal to have no more than 3.4 DEFECTS PER MILLION opps, 6 sigma performance level 3. Continous improvement and problem solving to reduce variation and defects

TQM -- MANAGEMENT approach to long-term success through customer satisfaction, Key principles: (4)

1. customer focus 2. identifying costs of quality 3. taking action to solve problems 4. continous improvement

Model Step and Description 1. Commit

Commit: Leadership commits to supporting Global Compact and making the 10 principles part of strategy, culture, day to day operations, and oversight provided by transparent government structures -- signals commitment to stakeholders --> Assess: Assess RISKS and OPPORTUNITIES in financial, and IMPACT of operations and activities on issue areas, on an ongoing basis to develop and refine goals, strategies, and policies --> Define: Based on assessment, company develops and refines GOALS and METRICS specific to its operating context and creates roadmap to carry out program --> Implement: Uses ongoing adjustments in core processes, engages & educates employees, builds capacity & resources, and works with supply chain partners to address and implement strategy --> Measure: Capture, analyze, and monitor performance metrics established earlier; monitors performance against goals and makes adjustments to improve performance --> Communicate: Communicate progress and forward-looking strategies, engage with stakeholders to identify ways to continously improve performance

Intermittent Manufacturing -- PROCESS LAYOUT (Functional/ Job Shop Layout) Characteristics? Layout?

Definition: Goods flow through series of WORK STATIONS rather than one by one on an assembly line! Layout: - equipment/ ops grouped together by functional - similar skills/ equip in each dept - volume not high enough to justify assembly line Characterisitics: - LOTS and BATCHES production - Work does to required stations - Many diff parts at work stations - General purpose machinery - Easy to CHANGE product/ Volume - Complex and expensive production and inventory control - High WIP, Long Lead Times

Project Manufacturing (Fixed Position) Definition? Used for? (Example) Advantage?

Definition: Product made at one site/ project in one location for assembly - Used for large, complex projects (ships, buildings, aircrafts) - Advantage: avoid cost of moving product (not feasible to move materials and assemblies from one work station to another)

Flow Manufacturing -- PRODUCT LAYOUT Characerisitics? Repetitive/ Line VS Continuous? Advantages of Flow Manufacturing? (3)

Definition: Work flows through each work station's dedicated equipment at a nearly constant rate. Volume high enough for this to be justified. - Work stations in SEQUENCE Flow Manuf Characterisitics: - Dedicated machinery - Fixed Routing - High volume - Constant Rate of Production - Capital Intensive Repetitive/ Line: Discrete items (phone/ automobile) --> assembly line Continous Flow: Transform raw materials into products (gas/ steel by mixing chemicals) Advantages: - Low WIP Inventory - Short Throughput and Lead Times - Low Unit Costs

Product life cycle relationship to manufacturing enviro

Intro - ETO, MTO (prototype) Growth - MTO, ATO, MTS, Mass Customization Maturity - MTO, ATO, MTS, Mass Customization Decline - MTO, ATO (adjustments in product) Phase Out - MTO

Product Life Cycle Products typically go through a cycle of introduction to phase out in 5 stages

Introduction: Products are designed and introduced w/ sales promo and advertising. Costs are high in this stage Growth: As the product becomes accepted, production increases and unit costs drops. Competition may arise here. Maturity (peak) : The product is well established in the marketplace. Competing products exist. Some products are in perpetual maturity (steel and milk) Decline: Sales volumes decline and profits reduced. Organizations may introduce new products or improve production methods to reduce costs Phase Out: (end of life stage) Product taken off market. Adv and promos stop, production ends, sales and support outsourced.

Role of Manufacturing What does it do? 2 outcomes

It creates value for producers & customers by..... Transforming raw materials & ideas into finished products and services that meet customer needs 1) Adding value creates wealth 2) Value to the customer

Manufacturing Planning and Control Hierarchy (MPC)

Layered Steps: 1. Strategic// Business Planning - Long term plan Priority Planning Capacity Planning 2. Sales and Operations Planning - Resource planning 3. Master Scheduling - Rough cut capacity planning 4. Material Requirements Planning - Capacity requirements planning 5. Production Activity and Control - Input/ output control, sequencing * MPC validates production plan using resource planning and priority plans developed at Master Scheduling and MRP levels against capacity available at levels * Closed Loop system --> Plans continually adjusted to account for events that occur before or during production (internal/ external events) * Requires Cross Functional Coordination of manufacturing, marketing and finance and support from IT

Lean six sigma? Theory of Constraints?

Lean Six Sigma: Combined approach for process improvement and problem solving (through lean and six sigma methods) Theory of Constraints: Holistic management philosophy --> systems have constraints limiting their ability to meet goals. Objective: achieve THROUGHPUT goals by identifying and managing a few leverage points

MRP --> ERP MRP Capabilities MRP Closed Loop MRP 2 ERP

MRP --> established priority plan for due dates and component order quantities MRP Closed Loop --> Links production planning, MS, and MRP to capacity planning **incorporates feedback (start dates, due dates, quantities to enable adjustments to priority plans and production schedules) MRP 2-->

MRP 2 ERP

MRP 2 - Coordination and collaboration between production, finance, and marketing in developing sales and operations plans, deal with DEMAND changes in MPS for due dates and order quantities - Adjustments to priority plan based on capacity shortages * best practice processes, common database, sales and operations planning ERP - TOTAL cross-functional software process integration - Cross-functional, seamlessly integrated software applications; best business practices - Company wide access to single database that serves lots of functions - Integration of MPC Functions with requirements and activities of upstream suppliers and downstream customers

Manufacturing ennivornment choices (4) Manufacturing process choice:

Manufacturing environment: Make To Order (MTO), Make To Stock (MTS), Assemble To Order (ATO) Engineer To Order (ETO) Manufacturing Process: Project Intermittent Repetitive Flow Continous Flow

CONFLICTS in Conventional Supply Chain Systems Marketing Objective: Increase revenue and satisfy customers Production Objective: Reduce Manuf Cost Finance: Increase profit and cash flow, reduce investment Effect on customer service? Production efficiency? Inventory investment

Marketing Customer Service: high Production efficiency: low (need to interrupt schedules, short runs) Inventory levels: high (products in stock) Production Customer Service: low// less flexible(bc need long production runs, few products, & few setups) Production efficiency: high Inventory levels: high (minimize interuptions) Finance Customer Service: high (maximize profit) Production Efficiency: high (minimize cost) Inventory Levels: low (minimize investment)

Defining Products (8)

POSITIONING of product (quality vs. price) Breadth of product LINE Price Quality Brand Name/ Generic Design Packaging Returns allowed? --> ends up in product design

Priority and Capacity Planning - relation to demand/supply? - Priority definition? - Capacity definition? * Priority and Capacity planning process?

Priority --> supply Capacity --> Demand Priority: What PRODUCT/ COMPONENT needed, How much, and when Capacity: how much PRODUCTION CAPACITY and other resources to meet priorities Priority and capacity planning is the process of balancing RESOURCES and DEMAND

Product vs. Process Layout Capital Cost Flexibility Annual Setup Cost Run Cost WIP Inventory Production and Inventory Control Costs Lead Time

Product Layout (Assembly Line) Capital Cost - High Flexibility - Low Annual Setup Cost - Low Run Cost - Low WIP Inventory - Low Production and Inventory Control Costs - Low Lead Time - Quick Process Layout (Work stations) Capital Cost - Low Flexibility - High Annual Setup Cost - High Run Cost - High WIP Inventory - High Production and Inventory Control Costs - High Lead Time - Long

Wealth Creation - Multiplier Effect - How is manufacturing important for the economy & what impact does it have?

Product sold > Cost to make it, creates profit: value added to product Society benefits from multiplier effect --> Company's supplier creates wealth in similar, as do their suppliers --> wages paid to employees creates wealth for them Economy: - Producing the right goods and services efficiently is a major value adding activity with positive impact on aggregate wealth & standard of living

3 Types of KPI's Balanced Scorecard - 4 key areas?

Strategic: LONG term goals of business; profitability, market share, growth, productivity Tactical: IMMEDIATE Term goals to support overall strategic plan; adhering to production plans and budget, % on time delivery, inventory turnover Operational: DAILY goals work center cycle times, utilization, efficiency Balanced Scorecard: measures KPI's vs. actual performance - CUSTOMER Perspective - BUSINESS PROCESS Perspective - FINANCIAL Perspective - INNOVATION and LEARNING perspective

The Manufacturing Supply Chain Definitions: Supply Chain: Supply Chain Management:

Supply Chain: The Global NETWORK used to deliver products/ services from raw materials to end customers through an ENGINEERED FLOW of INFO, Physical DISTRIBUTION, and CASH **network to get from r/m to end customer Supply Chain MANAGEMENT: The Design, Planning, Execution, Control, and MONITORING of the supply chain activities with OBJECTIVE of - creating new value - building competitive infrastructure - leveraging worldwide logisitics - sync supply and demand - measure performance globally

MPC Definition Manufacturing Planning and Control

System used by manufacturing to recognize DEMAND for products, plan the RESOURCE required to produce and execute/ control PRODUCTION - Framework for more detailed business processes and best practices

Defining Customer/ Market - Customer types?

Type of customer (industrial, consumer, institutional, government) Market Segmentation Sales/ Distribution CHANNELs Market Share/ Profitability --> This leads into choice of manufacturing environment

United Nations Global Compact - What is it? - Membership entails? What are the 4 key areas?

UN Global Compact: Strategic policy iniative for businesses interested in *social justice* and *sustainable development* (balance current resource consumption without compromising well being of future generations) Membership is VOLUNTARY (8000 corporate companies participating) Membership has companies align their operations with 10 key principles in 4 areas according to the Global Compact - human rights - labor practices - environment - anti corruption

UN Global Compact Management Model Overview - Who is it used by? - What does it do? - How do companies benefit?

Used by manufacturing and service companies Provides guidance for developing a corporate sustainability strategy consistent with the 10 global compact principles in business strategies, operations, and culture Companies are able to better widen their view of risk and opportunity and increase long-term valuation

Value to Customer - Value defined as? - Productivity/ Quality Improvement systems? - How is value provided in manufacturing?

Value: worth of an item, good, or service, what customer is WTP Productivity Improvement Systems: lean to eliminate waste, unnecessary costs from production processes bc customers not willing to pay for it. ** eliminate things that are not of value Quality Improvement Systems: Manufacturers use methods to determine features and functions of product consumers find of value ** narrow down things that are of value Value in Manufacturing: Focus is on conversion of raw materials - such as minerals, metals, wood, or electronic components into products that meet customer needs such as automobiles, houses, and electronics

Internal View Cross-Functional Supply Chain View: 5 steps

View: Develop NEW PRODUCTS and services --> Manage procurement --> Produce products --> manage distribution --> Perform MARKETING and SALES! --> Manage customer orders and reverse logisitics -->Manage finance, IT, HR, and General Admin functions *Consists of processes that enable company to take product from conception to market *Conventional view is a SUBSET of cross functional view

Internal View Conventional (simplified) Internal Supply Chain View --> 3 steps? #1 Problem Approach to management? Conflicts in procurement, production, distribution? & Results?

View: Purchasing --> Production --> Distribution #1 problem: Tend to operate as functional silos rather than set of integrated processes (aimed to transform r/m to products customers are WTB) Approach to management: Compartmentalized operations in RESPONSE to conflicting or uncoordinated success factors/ performance measures Conflicts Procurement: Perceives no stockouts and low purchase costs as critical success factors --> LOWEST PURCHASE COST preferred even if materials must be purchased in larger volumes than needed Function --> Lowest purchase price, inventory buffers Production: maximize machine utilization --> results in buildup of WIP and F/G Inventory Function --> High utilization percent Long runs (minimal changeover) Low unit costs Safety Stock Distribution: prefer high service levels and attempt stock out production --> leads to high inventory levels Function --> Full truck load quantities Best shipping rate Safety Stocks

Materias Management 2 Major Areas materials management is involved in: MPC: (balances what) Physical supply and distribution:

Vital coordinating function b/w functions; balances DEMAND and RESOURCES 1. MPC: Integrated Planning system that serves as template for manufacturing RESOURCE PLANNING (MRP2) and ERP systems --> balances MATERIALS and CAPACITY 2. Physical Supply and Distribution: MM responsible for - managing purchase/ control of production materials, -controlling WIP - controlling storage, shipping, and distribution of finished product

Designing Products and Processes Design affects: Products and supporting processes should be designed to: (5)

downstream planning system parameters, manufacturing processes, ongoing support, and return on investment - Meet CUSTOMER NEEDS and provide value (quality, technical requirements of customer) **most important - Be COST EFFECTIVE: (fixed and variable costs) (manufacturing: 1. make vs buy product or 2. put cost reduction methods in place) - Provide QUALITY - EFFICIENCY - Accommodate PLANNING PARAMETERS (lead time, safety stock/ buffers, capacity, etc)