© 1999 Andersen Consulting
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Conflicting Objectives - Manufacturing
Little’s Law
WIP Cycle Time Variability
Cycle Time
Asset Utilization
Little’s Law Variability
Manufacturinstomer Service
Goal:
Lowest purchase price
Highest utilization
Lowest cost
100% customer satisfaction
Behavior: Long lead times Long run lengths
© 1999 Andersen Consulting
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Traditional functional alignments continue to impede Supply Chain Performance.
— Misaligned Functional Goals & Behaviors—
Purchasing
Variability
WIP INV
Due Date Performance
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Conflicting Objectives - Corporate
Market Share
Order Response Time
Cycle Time
Fil l Rates
Early Warnings
Asset Utilization Little’s Law
By Tom Davis
© 1999 Andersen Consulting
Early On-time Late
Manufacturing
• Responsiveness • Transportation • Location • Quality
4
Early On-time Late
Customer Deliveries
• Process Design • Product Design • Capacity • Quality
Under Forecast Over
Customer Demand
Raw Materials
Finished Goods
Early On-time Late
Supplier Performance
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Little or No Predictability and Poor Product Mix
Inventory Used to Cover Problems
Lead Times Limit Flexibility
Current Processes and Structures Inhibit Performance
WIP INV
© 1999 Andersen Consulting
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Conflicting Objectives - Customer
Early Warnings
© 1999 Andersen Consulting
Fill Rates
Order Response Time
Cycle Time
Asset Utilization Little’s Law
© 1999 Andersen Consulting
1
Resource Investment Asset Productivity Inventory Supplier & Capacity Contracts
What are the characteristics of Supply Chan Management, why is it so hard to manage?
Complexity
Variability
© 1999 Andersen Consulting
Conflicting Objectives
2
Complexity
Complications in the Electronics Industry
Chronic Capacity Shortages
January
High raw material Inflexible schedules inventory level High WIP inventory
Long order fill High inventories
times
Promise flexibility
Inflexible
schedules
Multiple forecasts and unreliable fulfillment today create the bullwhip effect.
Units Per Period
Channel Fill and Phantom Demand
Channel Orders True End Customer Demand
Real Shortage
Over-Supply
Target Launch
Supply
Actual Launch
Returns/ Cancellations
Time
End of Life
©Andersen Consulting 1998
5
Shortened product life cycle has increased the uncertainty.
Variability
Profit
WIP INV
Due Date Performance
Market Risk
© 1999 Andersen Consulting
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态度决定一切 细节影响成败 谢谢您的关注！
Ongoing
Ramp-up
End of Life
Role of Inventory Cost of Shortage Cost of Overage
Ramp-up High High Low
By Professor Hau L. Lee, Stanford University
© 1999 Andersen Consulting
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Ongoing Usual Usual Usual
End of Life Low Low High
Variability
Natural • Demand • Material supply • Production • Distribution Self-Introduced • Replenishment strategies • Planning processes • Inventory strategies
The Characteristics of Supply Chain Management
Complexity, Variability, Conflicting Objectives
The Business Challenges
Level of Service
Cost of Service
Order Response Time Product Availability Lead Time Order Changes Due Date Performance
© 1999 Andersen Consulting
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Complexity in Component / Semiconductor Manufacturing
• Mass customization • Personalization • Product mix effects on capacity • Multiple options • Contracted vs. owned capacity • Combined make-to-forecast and make-to-
order • Inverted BOM • Binning • Multi-stage global production
Uncertainty in the supply chain results in significant variability
• Past Performance • Market Research • Analytical Technique • Incentive Programs