1. MANGT 660 (A): Supply Chain Planning and Control Chapter 12 Manufacturing Focused Supply Chain Integration (1/2)

2. Supply Chain Integration (SCI) Opening in-class reading: “Sears faces massive supply chain integration challenge” (Frontline Solutions, 2005) The effective coordination of supply chain processes through the seamless flow of information between upstream and downstream supply chains. Mitigating the effects of supply chain disruptions (variability) 2

3. Example: Supply chain for a ketchup factory 3 Upstream Tier 3Tier 2Tier 1 Downstream Information flows Cash flows Tomato suppliers Tomato paste factories Tomato grading stations Retail sales Consumers Ketchup factory SCI (cont’d)

4. Supply chain environmental dynamism – Unpredictable changes in products, technologies, and demand for products in the market – Faster “clock speed” accelerates. The pace of the changes in the business environment (E.g., product clock speed, process clock speed, organization clock speed, etc.) 4 SCI (cont’d)

5. As supply chain dynamism increases: – Information-processing capacity must increase in order to achieve superior firm performance. Methods of increasing information- processing capability: – Information systems – Sharing information among supply chain members – Effective supply chain practices 5 SCI (cont’d)

6. Supply chain dynamics: Bullwhip effect – Upstream members must react to the demand. – Slightest change in customer demand can ripple through the entire chain. 6

7. SCI (cont’d) Example: Supply chain dynamics for facial tissue 7 Consumers’ daily demands Retailers’ daily orders to manufacturer Manufacturer’s weekly orders to package supplier Package supplier’s weekly orders to cardboard supplier 9,000 7,000 5,000 3,000 0 Order quantity Month of April Day 1Day 30Day 1Day 30Day 1Day 30Day 1Day 30

8. SCI (cont’d) Integrated supply chains – High degree of functional and organizational integration minimizes disruptions. – Integration must include linkages between the firm, its suppliers, and its customers. Further readings (Link is Available at Canvas) – Van der Laan (2010) “Supply Chain Integration for Excellent Organizations,” Retaileconomics. 8

9. SCI Example: Supply Chain Practices Associated with Delivery Performance 1.Supply chain planning 2.Delivery practice 3.JIT production 9

10. Used to process information from suppliers, customers, and internal operations with the objectives of: 1)Making a good forecast of future demand 2)Coordinating of various functions within a firm and its suppliers and customers Collaborative relationships – Win-win relationships – Usually formed with a firm’s strategic/ tier-one suppliers 10 1. Supply Chain Planning

11. 2. Delivery Practice Entering orders Consolidating orders Routing shipments Selecting carriers Transporting products etc… Entering orders Consolidating orders Routing shipments Selecting carriers Transporting products etc… Order inquiry processing START Customer invoicing Customer invoicing END 11 In-class reading: “US LBM implements an electronic delivery management system to improve customer service while cutting logistics costs” (2014, Forbes)

12. 3. JIT Production The 5 practices of JIT 1)Pull system 2)Cycle time reduction One of the most important attributes of a process (Also referred to as throughput time) 12

13. 3. JIT Production (cont’d) The 5 practices of JIT (cont’d) 3)Cellular manufacturing Traditional process-focused layout: Jumbled flows, long cycles, difficult to schedule 13

14. 3. JIT Production (cont’d) The 5 practices of JIT (cont’d) 3)Cellular manufacturing (cont’d) JIT cellular manufacturing: Product focused cells, flexible equipment, high visibility, easy to schedule, short cycles 14

15. 3. JIT Production (cont’d) The 5 practices of JIT (cont’d) 4)Agile manufacturing strategy 5)Bottleneck removal Exposes problems and bottlenecks caused by variability Achieves streamlined production 15