Mapping Supply Chains by dffhrtcv3


									Mapping Supply Chains
Paul Justensen
BusM 361
Brigham Young University
Supply Chain Maps: Training
   Overview
   In depth look at supply chain mapping
   Business Example
   Mapping activity
   Summary
What is a Supply Chain Map?

How will mapping supply chains
help your business?
             Supply Chain Maps:
           History and Background
   Has become more important with increase in
   Increased competition in supply chains

Supply Chain Map: Defined
A visual representation of goods,
                                         1st Tier Supplier

  information, processes, and money
  flows that occur throughout a supply
  chain, both upstream and
  downstream.                              Manufacturer

Characteristics of Supply Chain Maps
      Can focus on:
           *particular use or user
           *processes, flows, facilities, organizations,
           geographic relationships
      Easy to distribute
      Easy to Interpret
      Designed to support corporate strategy
Brainstorming Exercise:
What suppliers supply your company?
Which of these suppliers supply the most
   vital products?
Pick one key supplier and think about the
   following list of questions
 How good is the quality of their

 How quickly do you receive products you

Brainstorming Exercise: (Cont)
       Are there any environmental factors
        that could affect your supplier such as:
           Regulations
           Employee disputes
           Profitability issues
       Would that supplier be willing to team with your
        company in joint projects to improve operations?
Brainstorming Exercise: (Cont)
       Who supplies your supplier?
       Are there any internal or environmental
        factors that could affect them?
Brainstorming Exercise Recap
What did you learn from this activity?
How might mapping supply chains help your
Why do a supply chain map?
   Supply chains must now compete against other
    supply chains
   Supply chains are a points of strategic advantage
   Maps highlight inefficiencies
   Provide a methodology for analyzing processes
Creating a Supply Chain Map
1. Organize the customer and supplier team
      Meet with management and supply chain directors
      Purpose is to discuss current situation and decide on
       what core competencies are desired in supply chain
2. Draw the current-state extended value stream
      Identify activities required in transaction
      Use boxes to represent entities and transactional
Creating a Supply Chain Map
2.Draw the current-state extended value stream map
      Use arrows to show flows of information and products.
      Label the time each step takes
3. Draw the future-state extended value stream map
   and implementation plan
      Identify areas where you can improve processes
      Prioritize improvement areas based potential
       benefits and by ease of implementation
Creating a Supply Chain Map
4. Execute the implementation plan
      Implement plan by starting with the most value-added
       changes first
      Track changes in improvement and cost
5. Repeat process for continuous improvement
Difficulties in collaboration
   Costs
   Savings
   Sensitive information
   Commitment
   Short-term focus
Business Example
Capital Equipment Incorporated and Mare
      CEI’s customers unhappy with late deliveries
      CEI identified Mare, a key supplier, as a bottleneck
      Mare hadn’t previously considered its impact on other
Business Example--Continued
   CEI persuades Mare to cooperate
   Cross-functional team organized
   Plan for achieving competencies developed
 Business Example--Continued
           Mapped out current value-stream map
                         Identified inefficiencies through observation and
                                                    Blanket                                   Production                    Customer                             Blanket
                                                     order                                      control                      service                              order                   Capital Equipment
Material suppliers
                                                Sales                                                                                            Sales
                                                                                                MRP                         Mare tech
                                                order                                                        1 day                               order

                                                                                                                                                        4 days


                                                                                                14 days    Work station
                                                                       Work station 1

                                                                   10 days

                5 days                     6 days                                                                           12 days                   11 days                    4 days
  Receiving              Quality control                 Kitting                                           Work station 6                Assembly 1             Final assembly                Shipping

                                                                                                 9 days
                                                                             Work station 4                Work station 5
Business Example--Continued
      Mapped a future value stream map with
                    Improvements prioritized based on potential benefits
                     and ease of integration
                                         Blanket                  Production                 Customer                    Blanket
                                          order                     control                   service                     order              Capital Equipment
Material suppliers
                                         Sales                                                             Sales
                                                                    MRP                      Mare tech
                                         order                                 6 Hours                     order

                                                                                                                1 Hour

                                                    Work cell 1

                     Quality                 FIFO                    FIFO                        FIFO                              1 day
Receiving                      Staging                                         Work cell 3               Final assembly                           Shipping
                                                                     1 day
                                                                                                 1 day

                                                    Work cell 2

                                                                                                                                           Finish Goods Buffer Stock
Business Example--Continued
   Executed plan
       Focused on improvements with greatest ROI first
   Results
       Lead time reduce from 55 days to 42 days
       Reduced average days of WIP by 91%
       9% cost reduction
       Strengthened commitment to work together in future
Activity: Peanut Butter Case
You are the owner of Ritz Peanut Butter Co. located
  in Sao Paulo, Brazil, and you have been wanting
  to improve operations at your manufacturing plant.
  One concern you have had is that your main
  supplier, Pedro’s Peanuts, requires long lead
  times when you order peanuts. Pedro, who is the
  owner of Pedro’s Peanuts, has agreed that he
  would work with you in improving operations. After
  looking closely at how the ordering process works,
  you come up with the following summary of
Activity: Peanut Butter Case
  1. Ritz faxes order of 1000 kilos of peanuts to
  Maria, the receptionist
  2. Maria checks the fax for orders at 8:00am,
  12:00pm, and 3:00pm
  3. Because the production manager’s office is on
  the other side of the plant, new orders are sent
  over only 2 times per day—at 8:30am and at
Activity: Peanut Butter Case
4. Production manager faxes a materials request to
     the purchasing director. Fax sits for 1 hour.
5. If there is enough stock on hand, purchasing
     notifies production manager of this. If not, it
     takes an average of 1 day to get stock from local
6. Peanuts then enter a batch process that takes 6
7. Upon finishing, workers notify production
     manager, and production managers requests an
     invoice from accounting to be prepared.
Activity: Peanut Butter Case
8. When accounting finishes invoice, they notify the
    production manager and send him a copy.
9. Production manager sends invoice to shipping
    and requests a shipment be made. Shipping
    gets request and loads truck (3 hours), and
    sends it to Ritz Peanut Butter Co. (1 day to
                 Map of current process
                                                                                            12 hour                               1.25 hour
                                                                                            average                                  wait
                 Raw Materials              Materials                                         wait
                                                               Production Manager                              Receptionist             fax   Sam’s Peanutbutter
                  Purchasing                request
                                               2 hour

 Local                                                                                                                                          1 day
Farmer                                      1 hour

                                                                                                      1 hour
                                                                      1 hour
                                                                                                                              2 hours

                                                                                        1 hour

         1 day
                                 De-shell                                                                       Accounting
                                                        Wash                   Inspection

                                                        6 hours
                          Possible Solution                                                                              1.25 hour

                          Raw Materials
                                                      forecasted          Production Manager                                fax                Sam’s Peanutbutter
 Local                                                   need
                                                        2 hour

 Local                                                                                                                                           1 day
Farmer                                               1 hour

                                                                                                            1 hour
                                                                                 1 hour
                                                                                                                                     2 hours

                                                                                                   1 hour

                  2 hours                                                                                                                           Shipping
Stock pile                                De-shell                                                                   Accounting
                                                                   Wash                   Inspection
inventory                                 peanuts

                                                                   6 hours
To work with suppliers, companies must:
  - build a business case benefiting both companies
  - plan how costs and savings will be shared
  - agree on competencies to pursue
  - work together in creating solutions
Supply chain mapping helps companies:
  1. Improve strategic supply chain relations
  2. Identify inefficiencies
  3. Visualize process for communication
  4. Analyze development of core competencies
References and Additional Readings
 Delmonico, David & Horton, Peter. “Charting a New Course: Extended
    value stream mapping creates innovative supply chains.” APICS—The
    Performance Advantage. October 2004. p 43.
 Gardner, John T. & Cooper, Martha. “Strategic Supply Chain Mapping
    Approaches.” Journal of Business Logistics. Vol 24. No 2. 2003. pp 37-
 McInerney, Mike. “Supply Chain Alliances Can Help Logistics Teams
    Provide Value.” Pulp & Paper. October 2003. pp 38-40.
 Anonymous, “Good, Better, Best: How to Assess Your Supply Chain
    competitive_edge/articles/06-03-Good_Better_Best.asp. Nov 2005.
References and Additional Readings
   Liker, Jeffrey K. & Choi, Thomas Y. “Building Deep Supplier
       Relationships.” Harvard Business Review, Dec. 2004, Vol. 82. Issue

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