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A Thesis Entitled Product Driven Approach to Manufacturing ...


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A Thesis Entitled Product Driven Approach to Manufacturing ...

  1. 1. <ul><li>A Thesis Entitled </li></ul><ul><li>Product Driven Approach to Manufacturing Supply Chain Design </li></ul><ul><li>by </li></ul><ul><li>Mohit Uppal </li></ul><ul><li>Advisor: Dr. Samuel Huang </li></ul><ul><li>Committee Members: </li></ul><ul><li>Dr. Mark Vonderembse </li></ul><ul><li>Dr. John P. Dismukes </li></ul>
  2. 2. Acknowledgements <ul><li>Dr. Samuel Huang </li></ul><ul><li>Dr. Mark Vonderembse and Dr. John P. Dismukes </li></ul><ul><li>ICAMS Research Group Members </li></ul>
  3. 3. Presentation Outline <ul><li>Research Objectives </li></ul><ul><li>Thesis Structure </li></ul><ul><li>Introduction </li></ul><ul><li>Types of Supply Chains </li></ul><ul><li>Literature Review </li></ul><ul><li>Method </li></ul><ul><ul><li>Product types </li></ul></ul><ul><ul><li>Difference between Lean, Hybrid and Agile Supply Chains </li></ul></ul>
  4. 4. Presentation Outline (Continued) <ul><ul><li>Classic Product Life Cycle Model </li></ul></ul><ul><li>Supply Chain Design for Product Cycle Curves (model 1) </li></ul><ul><li>Supply Chain Design for Product Types (models 2a and 2b) </li></ul><ul><li>Product Categorization (Interactive Tool) </li></ul><ul><li>Conclusion </li></ul><ul><ul><li>Summary </li></ul></ul><ul><ul><li>Contributions </li></ul></ul><ul><ul><li>Future Research </li></ul></ul>
  5. 5. Research Objectives <ul><li>To correctly define the current supply chains in practice: lean and agile. It combines these two paradigms to introduce a third type: hybrid supply chain. </li></ul><ul><li>To clearly differentiate between the three types of supply chains. </li></ul><ul><li>To develop model(s), which an organization would be able to adopt, depending on its products, in order to gain a competitive edge. </li></ul>
  6. 6. Research Objectives (Continued) <ul><li>To develop a visual tool to aid in product categorization. </li></ul>
  7. 7. Introduction <ul><li>History of Manufacturing </li></ul><ul><ul><li>Mass Production </li></ul></ul><ul><ul><ul><li>Mass producing standardized products quickly and efficiently </li></ul></ul></ul><ul><ul><ul><li>Limited variety </li></ul></ul></ul><ul><ul><li>The TQM Paradigm </li></ul></ul><ul><ul><ul><li>High quality expected along with reduced lead time and price </li></ul></ul></ul><ul><ul><ul><li>Was taken as a market qualifier </li></ul></ul></ul><ul><ul><li>Supply Chain Management (SCM) </li></ul></ul><ul><ul><ul><li>Reducing costs over the entire chain (suppliers, manufacturers, distributors and customers </li></ul></ul></ul><ul><ul><ul><li>Respond quickly to customer needs </li></ul></ul></ul>
  8. 8. Introduction (Continued) <ul><li>SCM - “ the management of materials and information both in and between facilities, such as vendors, manufacturing and assembly plants and distribution centers” (Thomas, 1999) </li></ul><ul><li>SCM - Drawbacks </li></ul><ul><ul><li>Flow of information across the chain was not instantaneous (bullwhip effect) </li></ul></ul><ul><ul><li>Strategic alliances were not formed with suppliers </li></ul></ul><ul><ul><li>Importance of distribution was not recognized </li></ul></ul><ul><ul><li>Led to the formation of the Lean supply chain </li></ul></ul>
  9. 9. Types of Supply Chains <ul><li>Lean supply chain (LSC) </li></ul><ul><li>Agile supply chain (ASC) </li></ul><ul><li>Hybrid supply chain (HSC) </li></ul><ul><li>Lean - “ A lean supply chain employs continuous improvement to focus on the elimination of waste or non-value added stops across the chain. It is supported by the reduction of set up times to allow for the economic production of small quantities, thereby achieving cost reduction, flexibility and internal responsiveness” </li></ul><ul><li>LSC employs lean production and time compression in parallel </li></ul>
  10. 10. Types of Supply Chains (Continued) <ul><li>Is economical, flexible and internally responsive </li></ul><ul><li>May participate in traditional alliances such as partnerships and joint ventures. </li></ul><ul><li>Drawbacks </li></ul><ul><ul><li>Mass customization/Responsiveness squeeze </li></ul></ul><ul><ul><li>Evolution of ‘multiple niche competition’ (Booth, 1996) </li></ul></ul><ul><ul><li>LSC - Not adaptable to future market requirements </li></ul></ul><ul><ul><li>Led to the formation of a Agile supply chain </li></ul></ul>
  11. 11. Types of Supply Chains (Continued) <ul><li>Agile - “ relates to the interface between a company and the market. It profits by responding to rapidly changing, continually fragmenting global markets by being dynamic, context-specific, aggressively changing and growth oriented, driven by customer designed products and services” </li></ul><ul><li>Advocates agile manufacturing, which is a further development of lean manufacturing </li></ul><ul><li>Responds to unpredictable market changes and capitalizes on them </li></ul><ul><li>Exploits a dynamic type of alliance known as a “virtual organization” </li></ul>
  12. 12. Types of Supply Chains (Continued) <ul><li>Hybrid - “ A hybrid supply chain generally involves “assemble to order” products whose demand can be quite accurately forecasted. The chain helps to achieve mass customization by postponing product differentiation until final assembly. The lean supply chain is utilized for component production. The agile part of the chain establishes a company-market interface to understand and satisfy requirements by being responsive and innovative” </li></ul><ul><li>Employs lean manufacturing techniques </li></ul><ul><li>May utilize agile manufacturing for producing innovative component(s), which, at times, form a part of the product </li></ul>
  13. 13. Types of Supply Chains (Continued) <ul><li>Option of participating in traditional as well as virtual alliances </li></ul>
  14. 14. Literature Review <ul><li>One of the critical contributions has been made by Naylor, Naim and Berry, (1999) </li></ul><ul><li>They proposed the use of the lean and agile concept with the aid of a decoupling point </li></ul><ul><li>The model highlights how the decoupling point satisfies different manufacturing types </li></ul><ul><li>Its importance is that it helps in the development of a new concept, the hybrid supply chain </li></ul>
  15. 15. Literature Review (Continued) Raw Material Supplier Manufacturers/ Assemblers Retailer End - Users A Stock Decoupling Point Buy to order Make to order Assemble to order Make to stock Ship to stock
  16. 16. Method <ul><li>Product types </li></ul><ul><ul><li>Standard </li></ul></ul><ul><ul><li>Innovative </li></ul></ul><ul><ul><li>Hybrid </li></ul></ul><ul><li>Standard Products </li></ul><ul><ul><li>Produced with the help of a LSC (example:staples) </li></ul></ul><ul><ul><li>Demand can be accurately forecasted </li></ul></ul><ul><ul><li>Market share remains fairly constant </li></ul></ul><ul><ul><li>Enjoy long life cycles (>2 years) </li></ul></ul>
  17. 17. Method (Continued) <ul><ul><li>Superficial design changes </li></ul></ul><ul><ul><li>Utilization of lean production techniques consisting of reduced lead-time, efficiency, flexibility, cost cutting and a level schedule over the supply chain </li></ul></ul><ul><ul><li>Employs a LSC over the entire product life cycle </li></ul></ul>
  18. 18. Method (Continued) <ul><li>Innovative Products </li></ul><ul><ul><li>Produced with the help of an ASC (example:personal computer) </li></ul></ul><ul><ul><li>Unpredictable demand patterns </li></ul></ul><ul><ul><li>Developed to capture a wider market share </li></ul></ul><ul><ul><li>Significantly different from available product types </li></ul></ul><ul><ul><li>Suited to customer requirements (mass customization) </li></ul></ul><ul><ul><li>Short life cycles (3 months - 1 year) </li></ul></ul>
  19. 19. Method (Continued) <ul><ul><li>Employs an ASC over the first 2 stages of life cycle:introduction and growth </li></ul></ul><ul><ul><li>Employs a HSC over the last 2 stages:maturity and decline </li></ul></ul><ul><ul><li>Utilizes a strategic tool provided by ASC:Virtual organization </li></ul></ul>
  20. 20. Method (Continued) <ul><li>Virtual organizations - “ A virtual organization is the integration of core competencies distributed among a number of carefully chosen but real organizations all with the similar supply chain focusing on quick to market, cost reduction and quality” (Gunasekaran, 1999a) Example: Dell and Apple computers </li></ul><ul><li>They help to create or assemble new productive resources very quickly, frequently and concurrently as long as it is economically justifiable </li></ul><ul><li>Provide access to a range of world class competencies </li></ul>
  21. 21. Method (Continued) <ul><li>Hybrid products </li></ul><ul><ul><li>Consists of either </li></ul></ul><ul><ul><ul><li>Different combinations of standard components </li></ul></ul></ul><ul><ul><ul><li>Mix of standard and innovative components </li></ul></ul></ul><ul><ul><li>LSC is utilized for component production </li></ul></ul><ul><ul><li>ASC establishes a company-market interface </li></ul></ul><ul><ul><li>Example:Automobile </li></ul></ul><ul><ul><ul><li>Components (‘A’ class) are manufactured by the OEM and suppliers (‘B’ and ‘C’ class) by utilizing lean production techniques </li></ul></ul></ul><ul><ul><ul><li>Agility is obtained by the OEM by constantly interacting with the market and adapting to its changes </li></ul></ul></ul><ul><ul><ul><li>Employs a HSC over the entire product life cycle </li></ul></ul></ul>
  22. 22. Difference between Lean, Hybrid and Agile Supply Chains <ul><li>An in-depth analysis to clearly differentiate between the 3 chains is done on the basis of the following categories </li></ul><ul><ul><li>Definition </li></ul></ul><ul><ul><li>Purpose </li></ul></ul><ul><ul><li>Type of Manufacturing utilized </li></ul></ul><ul><ul><li>Integration </li></ul></ul><ul><ul><li>Dependency </li></ul></ul><ul><ul><li>Type of Products and Life cycle </li></ul></ul>
  23. 23. Difference between Lean, Hybrid and Agile Supply Chains (continued) <ul><ul><li>Alliances </li></ul></ul><ul><ul><li>Markets </li></ul></ul><ul><ul><li>Organizational Structure </li></ul></ul><ul><ul><li>Type of Firms </li></ul></ul><ul><ul><li>Approach to choosing suppliers </li></ul></ul><ul><ul><li>Demand patterns </li></ul></ul><ul><ul><li>Inventory strategy </li></ul></ul><ul><ul><li>Lead time focus </li></ul></ul><ul><ul><li>Manufacturing focus </li></ul></ul>
  24. 24. Difference between Lean, Hybrid and Agile Supply Chains (continued) <ul><ul><li>Product Design Strategy </li></ul></ul><ul><ul><li>Human Resources </li></ul></ul>
  25. 25. Method (Continued) - Classic Product Life Cycle Model Introduction Growth Maturity Decline
  26. 26. Method (Continued) <ul><li>Classic Product Life Cycle Model (page 25) - CPLCM </li></ul><ul><ul><li>Introduction </li></ul></ul><ul><ul><li>Growth </li></ul></ul><ul><ul><li>Maturation </li></ul></ul><ul><ul><li>Decline </li></ul></ul><ul><li>Assumptions for proposed Model </li></ul><ul><ul><li>To aid organizations in developing and adopting the correct supply chain </li></ul></ul><ul><ul><li>Developed for manufacturing industries </li></ul></ul><ul><ul><li>Product driven </li></ul></ul>
  27. 27. Method (Continued) <ul><ul><li>Related to Product Life Cycle stages </li></ul></ul><ul><ul><li>High level model </li></ul></ul><ul><ul><li>Resources for implementation available </li></ul></ul><ul><ul><li>Hybrid products: </li></ul></ul><ul><ul><ul><li>Standard components </li></ul></ul></ul><ul><ul><ul><li>Mix of standard and innovative components </li></ul></ul></ul><ul><ul><li>Agility dependant on innovativeness </li></ul></ul><ul><ul><li>Questionnaire based on previously published literature </li></ul></ul><ul><ul><li>Model considers only a single product introduced by the organization </li></ul></ul>
  28. 28. Supply Chain types for Product Cycle Curves (Innovative Products) Introduction Growth Maturity Decline AGILE SUPPLY CHAIN HYBRID SUPPLY CHAIN
  29. 29. Supply Chain types for Product Cycle Curves (Continued) <ul><li>The model depicted previously (Supply chain types for product cycle curves - model 1) is for innovative products (page 32) </li></ul><ul><li>Standard products follow a Lean supply chain for their entire life cycle </li></ul><ul><li>Hybrid products follow a Hybrid Supply chain for their entire life cycle </li></ul>
  30. 30. Supply Chain Types for Product Cycle Curves (Continued) <ul><li>Supply Chain Design for Product Types (models 2a and 2b) helps in identifying the product manufactured by an organization and provides guidance in the adoption of the correct supply chain </li></ul><ul><li>Following is the representation of model 2a (Product introduction - pg. 34) and model 2b (Product categorization and adoption of correct supply chain - pg. 35) </li></ul>
  31. 31. Product Introduction (Model 2a)
  32. 32. Product Categorization and adoption of correct Supply Chain (Model 2b)
  33. 33. Product Categorization <ul><li>Achieved with the help of a questionnaire </li></ul><ul><li>Three levels of questions involved: </li></ul><ul><ul><li>Level 1 - critical ( 5 questions) </li></ul></ul><ul><ul><li>Level 2 - significantly important ( 8 questions) </li></ul></ul><ul><ul><li>Level 3 - important ( 2 questions) </li></ul></ul><ul><li>Points for each product type </li></ul><ul><ul><li>Functional products: 1 - 3 </li></ul></ul><ul><ul><li>Hybrid products: 4 - 6 </li></ul></ul><ul><ul><li>Innovative products: 7 - 10 </li></ul></ul><ul><li>Interactive tool used: Visual Basic </li></ul>
  34. 34. Product Categorization (Continued) <ul><li>Computational method used - Weighted Average </li></ul><ul><li>Mathematical explanation </li></ul><ul><ul><li>Let </li></ul></ul><ul><ul><li>N,M and O are integers </li></ul></ul><ul><ul><li>N, M and O are number of questions - values lie between 1 - 10, for each level, entered by user </li></ul></ul>
  35. 35. Product Categorization (Continued) <ul><li>P,Q and R are preset weights where </li></ul><ul><ul><li>P = 3 (Level 1 questions) </li></ul></ul><ul><ul><li>Q = 2 (Level 2 questions) </li></ul></ul><ul><ul><li>R = 1 (Level 3 questions) </li></ul></ul><ul><li>W C = calculated score obtained from values entered by user </li></ul>
  36. 36. Product Categorization (Continued) <ul><li>W 1 , W 2 , W 3 = W C where </li></ul><ul><li>W1, W2 and W3 are pre-calculated limits </li></ul><ul><ul><li>W 1 = upper limit for functional product </li></ul></ul><ul><ul><li>W 2 = upper limit for hybrid product </li></ul></ul><ul><ul><li>W 3 = upper limit for innovative product </li></ul></ul><ul><li>For </li></ul><ul><ul><li>W 1 , X N = Y M = Z O = 3 </li></ul></ul><ul><ul><li>W2, X N = Y M = Z O = 7 </li></ul></ul><ul><ul><li>W3, X N = Y M = Z O = 10 </li></ul></ul>
  37. 37. Product Categorization (Continued) <ul><li>Compare W C with W 1 , W 2 and W 3 </li></ul><ul><li>This helps in product categorization and selection of the correct chain for each product type </li></ul>
  38. 38. Conclusion - Summary <ul><li>This model may prove to be the panacea organizations are looking for </li></ul><ul><li>It further develops the understanding of supply chain management </li></ul><ul><li>Also throws light on other issues, which have not been previously dealt with </li></ul><ul><ul><li>Companies following a LSC tend to form traditional alliances as opposed to dynamic alliances (VO) </li></ul></ul><ul><ul><ul><li>Example - Exxon Mobil merger </li></ul></ul></ul>
  39. 39. Conclusion (Continued) <ul><ul><li>Companies following HSC also form traditional alliances. They may form VO in areas other than their core competencies (for producing ‘B’ and ‘C’ class components) </li></ul></ul><ul><ul><ul><li>Example - Daimler Benz and Chrysler </li></ul></ul></ul><ul><ul><li>Companies utilizing ASC form VO. Constant need for innovation is the driving force </li></ul></ul><ul><ul><ul><li>Example - Projects involving IBM and Sun Microsystems (IBM1999a), AT&T and Microsoft </li></ul></ul></ul><ul><li>Hopefully these new points raised are worth pondering upon and lead to further research </li></ul>
  40. 40. Conclusion - Contributions <ul><li>It focuses on the current supply chain types, lean and agile. It combines the two paradigms to introduce a third type of supply chain: hybrid. It clearly defines and differentiates between the three types of supply chains. </li></ul><ul><li>It logically associates product types; standard, hybrid or innovative to the lean, hybrid and agile supply chains respectively . </li></ul>
  41. 41. Conclusion (Continued) <ul><li>By utilizing the classic product life cycle model, it explains the different requirements for each of the 4 life cycle stages of the product. </li></ul><ul><li>In order to provide guidelines to organizations for supply chain selection, it develops another model, which consists of product categorization on the basis of a questionnaire. </li></ul>
  42. 42. Conclusion (Continued) <ul><li>A software tool has been developed to aid in product categorization. On product categorization, the model provides guidelines on the adoption of the correct supply chain . </li></ul><ul><li>The thesis focuses on questions, which previously have not been raised. It opens up areas for future research in SCM. </li></ul>
  43. 43. Conclusion - Future Research <ul><li>The models introduced are high level models. </li></ul><ul><li>This thesis deals with a single product introduced by an organization. </li></ul><ul><li>The effect of an organization being a member of several, different supply chains needs to be researched. </li></ul>
  44. 44. Questions THANK YOU !