Push & pull v1.0-c
- 1. As fo 2009.09. Lean SCL Approach Differentiation is our pride! Enterprise now demands New Approaches for Business Innovaion that are dynamically appealing and practically executing. It is an important part of doing business. Lean Enterprise Consulting can differentiate your company form the competition. 린 공급망 물류 접근방법
- 2. Page 2 Postponement & Delayed Differentiation Storage media manufacturer found that being able to offer CD/DVD media in many formats, speed, and packaging options was a competitive advantage. With a low-cost supplier in Taiwan they have implemented “Postponement Centers” in the U.S. that give them the ability to fulfill demand in a package to order scenario. • Significant service improvements • 27-point increase in Better service, current business Without model postponement, service levels OTIF goals would • $Millions in service require very large penalties eliminated Diskette Inventory • Product line turned Value inventories. profitable • 5% increase in Current revenue Diskette • 20% reduction in Optimized Postponement total inventory investment Service Level • Significant reduction Line Item Fill Rate: 71% 98% in total supply chain On-time In-full Rate: 49%* 91% cost
- 3. What Should Your Supply Chain Be? Differentiation is our pride! • Customer interface – lead time vs frequency of demand • Efficiency – demand volatility vs margin • New products – market life vs design time • Economies of scale – market size per plant vs transport % of price • Power position – importance of supplier to customer vs customer to supplier • Decoupling point – market lead time vs production lead time Focus and Essence! 3
- 4. The “dilemma of operations planning” Differentiation is our pride! Focus and Essence! 4
- 5. The “dilemma of logistics management” Differentiation is our pride! Level Service Quality Service Quality Inventory Inventory Focus and Essence! 5
- 6. Elements of the SCM Concept Differentiation is our pride! Elements of Upstream SCM Elements of Downstream SCM • Sourcing strategies • Inventory & warehouse management • Multivs. Single sourcing • Synchronized production • Strategic partnerships • Demand Management • Supplier development • Third party logistics • Vendor Managed Inventories • Direct distribution (VMI) • Efficient Consumer Response • JIT deliveries and supplies • Postponement • Open Calculations • Continuous Replenishment • Joint product development • Cross Docking • Technology Management • POS Focus and Essence! 6
- 7. The Demand-Supply Chain Differentiation is our pride! Order Penetration Point (OPP) •Determines supplier response, i.e., how and when is the product allocated to the customer •Determines the economics of the supplier Value Offering Point (VOP) •Defines customer decision making, i.e., how and when is customer demand allocated to the supplier •Defines the economics of the customer Focus and Essence! 7
- 8. Order Penetration Point (OPP) Differentiation is our pride! The OPP is the point in the SC at which customer demand is allocated to the product. Focus and Essence! 8
- 9. Value Offering Point (VOP) Differentiation is our pride! The VOP define show and why the customer makes the purchase decision. Focus and Essence! 9
- 10. Integrating Demand and Supply Differentiation is our pride! Focus and Essence! 10
- 11. Standard vs Special Differentiation is our pride! Focus and Essence! 11
- 12. Standard vs Special Differentiation is our pride! The Products are Different •Low variability •High variability •High volume for •Low volume for each each variant variant •Low price •High price •Small size •Bigger size (typical) •Impulsive purchase/ •Investment supplement Focus and Essence! 12
- 13. Standard vs Special Differentiation is our pride! Example: BeoDirect • Value from “Instant Acquisition” • Impluse purchase/gifts • Plug and Play • Volume Flexibility • Flow/Kanban • Quality and Speed • Automatic Scheduling • Capacity Leveling Focus and Essence! 13
- 14. Standard vs Special Differentiation is our pride! Example: B1 Configured • Value from Modification (mood) and “Instant Acquisition” • Volume Flexibility • Postponement • Quality and Punctuality • Forecast Driven • Capacity Leveling Focus and Essence! 14
- 15. Standard vs Special Differentiation is our pride! Example: Custom • Value through customization • Home installation • Individualization • Variant Flexibility • Postponement • Quality and Punctuality • Surpluses Capacity (quick assembly) Focus and Essence! 15
- 16. Standard vs Special Differentiation is our pride! VOP and OPP – 5 Basic Steps 1. Identify the customer´s demand chains. (Note that a customer can have a number of different demand chains) 2. Define the potential linkage points for the supplier to the customer demand chains. What are the potential VOP´s? 3. Identify your extended supply chains 4. Define the potential linkage points for the customer to the supply chains. What are the potential OPPs? 5. Try out the possible configurations and evaluate the cost and benefit for your self and the customer. Are there win-win solutions? Focus and Essence! 16
- 17. Standard vs Special Differentiation is our pride! Case: Dell´s Direct Model Focus and Essence! 17
- 18. Standard vs Special Differentiation is our pride! Case: Baxter´s ValueLink Focus and Essence! 18
- 19. Standard vs Special Differentiation is our pride! Before: Transactional business Transactional business: supplier offers spare parts and maintenance services as requested by customer Demand chain Maintenance Inventory mgmt Purchasing planning / maintenance Local service Regional Manufacturing center supply center Supply chain • Customer’s VOP located at purchasing, 3 demand types • Supplier’s performance measured in lead-time, on-time delivery etc. • Supplier’s OPP typically located at local service center to meet strict lead-time requirements, large inventories at local level Focus and Essence! 19
- 20. Standard vs Special Differentiation is our pride! Current: Maintenance service agreement Increased supplier responsibility: customer’s maintenance planning and operations outsourced to supplier Demand chain Maintenance Inventory mgmt Purchasing planning / maintenance Local service Regional supply center Manufacturing center Supply chain • Customer’s VOP located at maintenance planning: reduces work (less unplanned production shutdowns, smaller spare part consumption) and allows customer to take advantage of supplier’s expertise • Supplier’s changed role. => Supplier’s performance measured in process uptime • However, supplier’s OPP has not been moved Focus and Essence! 20
- 21. Standard vs Special Differentiation is our pride! Future: New opportunities to benefit operationally (1/3) Opportunity to increase supplier’s operational efficiency Demand chain Maintenance Inventory mgmt / maintenance Purchasing planning Local service Regional supply center Manufacturing center Supply chain • The reduced number of emergencies, earlier access to demand information and new performance measures provide the supplier with an opportunity to move the OPP upstream to the regional supply center or even to manufacturing • The operational efficiency comes from reduced inventories Focus and Essence! 21
- 22. Standard vs Special Differentiation is our pride! Future: New opportunities to benefit operationally (2/3) • Moving the OPP is not the only opportunity • Planning and organizing the customer’s maintenance operations offers an opportunity to affect demand – equipment and part standardization increases inventory efficiency and reduces risk of stocking the wrong product • Demand information being passed on by the supplier’s own experts improves quality of demand information – fewer errors mean reduced hassle for both customer and supplier • Moving of the VOP brings an opportunity to increase service and operational efficiency simultaneously • However, the supplier needs to develop its supply chain management skills to be able to realize the opportunity – supplier needs to actively change performance measures – supplier needs to learn how to utilize earlier, more accurate demand information – supplier needs to assess the time-criticality of its equipment and spare parts and organize warehousing accordingly – supplier needs to actively promote equipment standardization Focus and Essence! 22
- 23. Standard vs Special Differentiation is our pride! Future: New opportunities to benefit operationally (3/3) OPPORTUNITY REQUIRED MANAGEMENT ACTIONS BENEFIT Change performance measures Process Utilise increased optimisation planning possibilities Efficiency Capture earlier access to Easier to meet demand the targets Moving VOP information backwards Use demand information to Customer improve planning Capture better service accuracy quality of demand information Less errors Reduce SKU’s to be Use supplier’s controlled possibility to influence to demand Focus and Essence! 23
- 24. Differentiation is our pride! Focus and Essence! 24
- 25. Push/Pull View Differentiation is our pride! • Supply chain processes fall into one of two categories depending on the timing of their execution relative to customer demand – Pull: execution is initiated in response to a customer order(reactive) – Push: execution is initiated in anticipation of customer orders(speculative) – Push/pull boundary separates push processes from pull processes Focus and Essence! 25
- 26. Push/Pull View Differentiation is our pride! Focus and Essence! 26
- 27. Definitions from APICS Dictionary, 11th Edition Differentiation is our pride! • “decoupling points : The locations in the product structure or distribution network where inventory is placed to create independence between processes or entities. Selection of decoupling points is a strategic decision that determines customer lead times and inventory investment. See: control points.” • “control points : In the theory of constraints, strategic locations in the logical product structure … Detailed scheduling instructions are planned, implemented, and monitored at these locations…” • “order penetration point : The key variable in a logistics configuration; the point (in time) at which a product becomes earmarked for a particular customer. Downstream from this point, the system is driven by customer orders; upstream processes are driven by forecasts and plans. Syn: principle of postponement.” • “postponement : A product design strategy that shifts product differentiation closer to the consumer by postponing identity changes, such as assembly or packaging, to the last possible supply chain location.” Focus and Essence! 27
- 28. Types of Supply Chain Model(or Production Process) Differentiation is our pride! “i” Basic linear production Example? Focus and Essence! 28
- 29. Types of Supply Chain Model(or Production Process) Differentiation is our pride! “T” Many simple product or packaging variations or distribution points Low variety of products Example? Focus and Essence! 29
- 30. Types of Supply Chain Model(or Production Process) Differentiation is our pride! “V” Many end products Few raw materials Example? Focus and Essence! 30
- 31. Types of Supply Chain Model(or Production Process) Differentiation is our pride! “A” Few end products Many raw materials and sub-assemblies Example? Focus and Essence! 31
- 32. Types of Supply Chain Model(or Production Process) Differentiation is our pride! “X” Many end products Many raw materials and sub-assemblies Example? Focus and Essence! 32
- 33. Types of Supply Chain Model(or Production Process) Differentiation is our pride! Which One? Focus and Essence! 33
- 34. Generic Customer Order Decoupling Points Differentiation is our pride! Focus and Essence! 34
- 35. Generic Customer Order Decoupling Points Differentiation is our pride! Focus and Essence! 35
- 36. Tradeoffs Differentiation is our pride! Focus and Essence! 36
- 37. A familiar example – MTS vs ATO Differentiation is our pride! Example 1 Focus and Essence! 37
- 38. A familiar example – MTS vs ATO Differentiation is our pride! Example 2 Focus and Essence! 38
- 39. A familiar example – MTS vs ATO Differentiation is our pride! Example 3 Focus and Essence! 39
- 40. A familiar example – MTS vs ATO Differentiation is our pride! Example 4 Camco – Montreal (owned by GE Canada) Washers, Dryers, and Dishwashers 450 models, $500 million sales 1980’s : 1990’s : 120 day planning horizon, 60 days frozen Make-to-Order project Growing inventories Kanban project 75% fill rate 95% customer satisfaction Labor-intensive forecast process 30 families, less detailed forecast 120 day production cycle 3 day order turnaround 12 week supply of elec wires (external 3 day supply of elec wires (external supply) supply) 2004: still Canada’s #1 appliance maker, and #1 supplier of GE dryers; inventory turns were about 12 (vs sales), and the company credits their Six Sigma program for reduced quality costs and enabling other changes Focus and Essence! 40
- 41. Baseline CODP model Differentiation is our pride! Focus and Essence! 41
- 42. Types of CODP model Differentiation is our pride! Concurrent CODPs per product or product-market combination Focus and Essence! 42
- 43. Types of CODP model Differentiation is our pride! Multiple CODPs per product component Focus and Essence! 43
- 44. Types of CODP model Differentiation is our pride! Multiple CODPs per level of customer commitment Focus and Essence! 44
- 45. Types of CODP model Differentiation is our pride! Multiple CODPs per interface in the chain network Focus and Essence! 45
- 46. Types of CODP model Differentiation is our pride! Example of a chain network configuration with multiple CODPs in dairy Focus and Essence! 46
- 47. Types of CODP model Differentiation is our pride! Example of a chain network configuration in Parquet Industry Focus and Essence! 47
- 48. Types of CODP model Differentiation is our pride! Example of a chain network configuration in Parquet Industry Focus and Essence! 48
- 49. Types of CODP model Differentiation is our pride! Example of TFT-LCD manufacturing process Focus and Essence! 49
- 50. Types of CODP model Differentiation is our pride! Example of Details in a Control Model with CODP Focus and Essence! 50
- 51. Types of CODP model Differentiation is our pride! The challenge of mass customization for the wood furniture sector in Quebec (Lihra et al., 2005; Poulin et al., 2006) Popularizing Varietizing Accessorizing Configuring Tailoring Servicing Adjusting Monitoring Retailing Component Distribution Packaging Finishing Assembling Supply Engineering Design manuf. Sale-2O Ship-2O Pack-2O Finish-2O Assembly-2O Make-2O Supply-2O Engineer-2O Design-2O Focus and Essence! 51
- 52. CODP and customer order lead-time in MTS/ATO/MTO Differentiation is our pride! Focus and Essence! 52
- 53. Postponement Differentiation is our pride! Focus and Essence! 53
- 54. 4 Generic Postponement Strategies Differentiation is our pride! Focus and Essence! 54
- 55. 4 Generic Postponement Strategies Differentiation is our pride! Focus and Essence! 55