Download - Lesson 5 upstream supply chain management
Upstream Supply Chain Upstream Supply Chain ManagementManagement
UpstreamUpstream
• Where should the order be produced?
• Do we have materials for the order?
• Do we have adequate capacity?
• Who should produce the order?
• What will be the delivery time?
• What will be the costprice?
• Where must the order be delivered?
Logistic management principlesLogistic management principles
Fordisme◦ Planning af prognoses and production for stock
Lean◦ Avoid waste by reducing all not value adding activities◦ Planning starts by the customers needs to avoid stocks
Agility◦ Is based upon extreme customer orientation.◦ Works with higher prices and higher profits margins
because it is more important to supply flexible and fast on differentiation rather than cheap
FordismeFordisme
Characterised by:
◦ Production to stock◦ Specialised machines◦ Focus on productivity◦ Focus on standardisation◦ High degree of work specialisation◦ High production volumens
LeanLean
The strategy in lean is to avoid waste by all non-value adding activities.
The planning of production starts by the customers actually need to avoid stocks.
It means better customer service and less costs.
LeanLean
7 types of waste:
1. Overproduction2. Waiting time3. Unnessary tranport4. Process waste5. Unnessasary stock6. Unnessasary operations7. Lack in quality
LeanLean
Lean is known by:
◦ Production to actual customer need◦ Focus on quality◦ Focus on flexsibility◦ Focus on standardisation◦ Involvement of employees◦ High production volumens
Push vs Pull driven supply chainsPush vs Pull driven supply chains
PushIf products are taken from stock it means that they have been produced or bought in advance based upon expected sales.
PullIf production or purchase are not made before the customer orders them the supply chain is pull driven
De-coupling pointDe-coupling point
Push-driven Pull-driven
De-coupling point
Raw materials End customer
De-coupling point separates push-driven activities in the supply chain from activities in the supply chain that are pull-driven
Manufacturing strategies
1. Engeneering to order (ETO)
2. Sourcing to order (STO)
3. Make to order (MTO)
4. Assemble to order (ATO)
5. Packaging to order (PTO)
6. Labeling to order (LTO)
7. Deliver to order (DTO)
Postponement
the point where the differentiation of the product take place
spreading the risk of inventories in the distribution channel
Driving forces for postponement: increased difficulties with forecasting demands increased demand after customized products increased manufacturing costs incresed competition increased distribution costs increased research and development costs
Managements toolsManagements tools
MRP (Manufacturing Ressource Planning) – Fordisme (push)
JIT (Just in Time production) – Lean (pull)
Push MRPPush MRP
MRP contains the following head components:
Overall planningDetailed planning of materialsDetailed planning of capacitySurvilance of deliveries
MRP is a concept based upon forecasts
Overall planningOverall planning
Consequences could be:
Contribution marginDelivery timeCostsBottle necksPurchase needsCash flow
Advantates and disadvantages by MRPAdvantates and disadvantages by MRP
Advantage:StockYou can see the needCalculations of
consequences is possible
Evaluate if a plan can run on existing machines
See the need of purchase of raw materials and goods
Disadvantages:Forecasts failsNot flexibleNeed of relilable
informations in the item lists
Complicated to runDemands IT to run
Management concept JITManagement concept JIT
Is a concept under LEAN which based upon the customer need deliver products:
in the right time in the right amount at the right place
Production starts first when the order is received in the sales department.
JITJIT
Multi function
al employe
es
Quality cirkels
Group layout
JIT - Kanban - systemJIT - Kanban - system
Purpose is to start the number in production which the customer or another department has ordered.
JIT - Multifunctional employeesJIT - Multifunctional employees
Employees can do more processes.
SMED (Single Minute of exchange Dies)
JIT – Quality circlesJIT – Quality circles
Small group of employees who on a running basis control the companys production quality
Kaizen = running improvements on existing products and processes.
Advantages and disadvantages by JITAdvantages and disadvantages by JIT
Advantages:Customization via
postponementNo stocksFast takt timeFocus on zero
defectMotivated
employees
Disadvantages:Delivery timeDelayed processes
might reduce use of capacity
Questions:Questions:
What is decoupling point?
Explain the concept of Fordisme
Explain the concept of LEAN
What is meant by postponement?