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    Supply Chain Resource Slides

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    debasishrout
    This document discusses Six Sigma projects in supply chain management. It provides background on supply chains, quality management, and how Six Sigma can be used to improve quality and reduce costs in supply chains. The key points are: 1) Six Sigma uses data-driven methods like statistical process control (SPC) and design of experiments (DOE) to identify and remove quality problems in supply chains, lowering costs. 2) Implementing quality practices consistently across an entire supply chain through tools like QS 9000 certification can significantly improve productivity, reduce inventory levels, and increase customer satisfaction. 3) Case studies show how companies like Nissan and Chrysler worked with suppliers to lower defect rates and quality costs by implementing Six Sigma and

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    © All Rights Reserved
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    Supply Chain Resource Slides

    Uploaded by

    debasishrout
    40 views29 pages
    This document discusses Six Sigma projects in supply chain management. It provides background on supply chains, quality management, and how Six Sigma can be used to improve quality and reduce costs in supply chains. The key points are: 1) Six Sigma uses data-driven methods like statistical process control (SPC) and design of experiments (DOE) to identify and remove quality problems in supply chains, lowering costs. 2) Implementing quality practices consistently across an entire supply chain through tools like QS 9000 certification can significantly improve productivity, reduce inventory levels, and increase customer satisfaction. 3) Case studies show how companies like Nissan and Chrysler worked with suppliers to lower defect rates and quality costs by implementing Six Sigma and

    Original Description:

    A Supply Chain is a network of organizations.

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    This document discusses Six Sigma projects in supply chain management. It provides background on supply chains, quality management, and how Six Sigma can be used to improve quality and reduce costs in supply chains. The key points are: 1) Six Sigma uses data-driven methods like statistical process control (SPC) and design of experiments (DOE) to identify and remove quality problems in supply chains, lowering costs. 2) Implementing quality practices consistently across an entire supply chain through tools like QS 9000 certification can significantly improve productivity, reduce inventory levels, and increase customer satisfaction. 3) Case studies show how companies like Nissan and Chrysler worked with suppliers to lower defect rates and quality costs by implementing Six Sigma and

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    40 views29 pages

    Supply Chain Resource Slides

    Uploaded by

    debasishrout
    This document discusses Six Sigma projects in supply chain management. It provides background on supply chains, quality management, and how Six Sigma can be used to improve quality and reduce costs in supply chains. The key points are: 1) Six Sigma uses data-driven methods like statistical process control (SPC) and design of experiments (DOE) to identify and remove quality problems in supply chains, lowering costs. 2) Implementing quality practices consistently across an entire supply chain through tools like QS 9000 certification can significantly improve productivity, reduce inventory levels, and increase customer satisfaction. 3) Case studies show how companies like Nissan and Chrysler worked with suppliers to lower defect rates and quality costs by implementing Six Sigma and

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    Six Sigma Projects in

    Supply Chain Management

    Six Sigma Projects in Supply Chain Management


    Suppliers
    (International)
    Suppliers
    (International)
    Suppliers
    (International)

    Suppliers
    (International)

    13 Transshipment
    Points (TPs in Europe)

    Warehouse
    JIT PC Assembly
    Plant
    1.2 million PC/Yr
    Glasgow UK

    Port

    Country-wide
    Distribution Centers (DCs)

    Retailers

    What SCM is
    A Supply Chain is a network of organizations
    Goal: Produce value for the ultimate consumer
    Primary purpose:
    - Satisfy customer needs
    - Manage flows of goods and information
    - Generate profits for itself
    - Decide locations, which products to produce at what stage, how to produce and
    how to distribute

    The Supply Chain Process


    Integrated, coordinated network of value delivering business processes that procure raw
    materials, transform them into final products, services and delivers the product to the
    customers involving
    -

    Procurement
    Manufacturing/Assembly
    Inbound logistics
    Warehousing
    Distribution
    Outbound logistics

    The Inventory Cycle


    Profile of Inventory Level Over Time

    Q
    Usage rate

    Quantity
    on hand

    Reorder
    point

    Receive
    Order

    Place
    order

    Receive
    order

    Lead Time

    Place
    order

    Receive
    order

    Time

    Cost Minimization by EOQ


    The Total-Cost Curve is U-Shaped

    Annual Cost

    TC = H+ S

    Ordering Costs

    Q0 (optimal order quantity)

    Order Quantity (Q)

    A Key Challenge in SCM


    Goal is to design and manage a supply chain network that delivers high-quality products
    to the right customers at the right time at minimum cost.
    Good supply chain management aims at reducing inventory and freeing up working
    capital without affecting service levels.
    A great deal of inventory piles up along the supply chain due to:
    - Poor quality of supplies production may stop if there are no materials and parts in
    the buffer stock
    - Poor management of logistics and no monitoring of lead times
    - Machines break down resulting from poor quality culture, causing production
    interruption again buffers are needed
    - Quality of finished goods may not be high enough to support JIT mode of operation in
    your customers operations

    Examples of Supply Chains operating in India All have buffers


    (just in case)
    Automotive Telco, ALL, Mahindra, Maruti
    Aerospace ADA, HAL
    Chemicals Asian Paints, Apollo tyres, Reliance
    Apparel Madura Coats, Reliance
    Food Cadbury, Parle, Amul Products, HLL
    Consumer durables HLL, P & G
    Forest Products Papermills
    Construction L & T
    Pharmaceutical Ranbaxy, Glaxo
    Electrochemical Kirloskar, L & T
    Tooling, HMT, Widia, Mico
    PC and Computer IBM, WIPRO, HCL, Intel

    Why bring TQM into SCM?


    Each entity in a supply chain is both a supplier and a customer
    Thus, important to have a customer focused corporate vision while implementing
    TQM and SCM practices both upstream and downstream
    Customer-driven vision can produce a number of competitive advantages for the
    supply chain by
    - Helping improve productivity
    - Reducing inventory and cycle time
    - Boosting customer satisfaction, market share and profits

    The Quality Chain


    External Customer
    Outside
    Organisation

    Supplier
    Customer

    Supplier
    Customer
    Supplier
    Customer
    Supplier
    Customer
    Supplier
    Customer
    Supplier
    Customer
    Supplier
    Customer

    Outside
    Organisation

    External Supplier

    Supplier
    Customer

    SPC Xbar Chart Helps Control Accuracy


    UCL

    86

    Xbar

    84

    +
    82

    + + +

    80

    + +

    78

    LCL

    76
    1

    11

    13

    15

    17

    Average Xbar = 82.5kg


    Standard Deviation of X bar = xbar = 1.6kg
    Control Limits = Average Xbar +/- 3 xbar
    = 82.5 +/- 3 1.6 = [77.7 87.3]
    Here the process is in control (i.e. the mean is stable)

    19 Sample

    SPC Range (R) Chart Helps Control Precision

    Range

    20

    UCL
    +

    15

    +
    10

    +
    +

    +
    +

    +
    +

    +
    +

    LCL

    0
    1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Sample

    Average Range R= 10.1kg


    Standard Deviation of RAnge= 3.5kg
    Control Limits : 10.1 +/- 3.5 = [20.6, 0]
    Process is in control (i.e. precisionis stable)

    SCM and TQM


    Supply Chain Management (SCM) and Total Quality Management (TQM) are two
    key tools used by manufacturers and service providers to make their business
    competitive.
    Quality: Value addition during production and delivery.
    Sustaining quality throughout the chain has significant implications for reducing
    costs and raising customer satisfaction, hence sales.

    SCM and TQM contd.


    Many end-products producers now recognize the potential benefits of partnering
    with their suppliers in managing quality in their supply chains.
    A key example is Chrysler:
    - In 1935 Chryslers suppliers showed a quality level of 300 to 400 defective parts
    per million (ppm)
    - To achieve < 100 ppm for its suppliers, Chrysler forced its 2nd and 3rd tier
    suppliers to implement the same quality standards as its 1st tier suppliers
    - Same procedures through the entire supply chain improved quality
    performance of all suppliers
    - Chrysler also used quality as a deciding factor to reduce the number of its
    suppliers

    Consequences of Poor Quality


    Huge Buffers
    Raw, WIP and Finished Goods Inventories
    Capacity Buffers (e.g. understated capacity)
    Lead time Buffers (e.g. Overstated lead time)

    Detailed Network Analysis and Management by


    SCM helps minimize the Total Cost
    But! Many $ buffers are added due to poor quality man, machine,
    materials & methods used

    $
    Tier 1
    Supplier

    Tier 2
    Supplier

    Tier 2
    Supplier

    $
    MFg
    Plants

    Tier 1
    Supplier

    Distribution

    MFg
    Plants

    $
    Customers

    Customers

    Distribution

    Customers

    $
    Distribution

    Customers

    Uncovering Production Problems due to Quality


    We must lower the water level!

    Visible production
    problems are only
    some of the total

    Visible Productivity

    In-Process
    Inventory

    Workload
    Imbalances
    Worker
    Absenteeism

    Control Specs
    Problems

    Material
    Shortages

    Quality Problems

    Dimensions of Quality
    Quality Improvement
    Quality improvement is the reduction of variability in processes and products.
    Alternatively, quality improvement is also seen as waste reduction (muda).

    The Link Between Quality and Productivity

    Effective quality improvement can be instrumental in increasing productivity and


    reducing cost.
    The cost of achieving quality improvements and increased productivity is often
    negligible.

    But how does the company save $?


    It does so by targeting and attacking Cost of Poor Quality Elements

    Inspection and Test


    Rework/Repair
    Low process yield
    Scrap
    Warranty
    Besides, the company has large hidden costs

    Visible and Hidden Costs


    Scrap
    Rework
    Warranty costs

    Conversion efficiency of materials


    Inadequate resource utilization
    Excessive use of material
    Cost of redesign and re-inspection
    Cost of resolving customer problems
    Lost customers/Goodwill
    High inventory

    VISIBLE COSTS

    HIDDEN COSTS

    How a Company averted a Supply Chain Quality Failure


    Recognize the rising dependence on Supply Chain Quality Requirements, Time Cost

    Shift immediately to Supply Chain Collaboration


    Find Benchmarks Quickie Tools (http://ww.quickie.com)
    - Manufacturer of cleaning tools, relies exclusively on more than 100 suppliers, many
    overseas
    - Needed a system to monitor and manage their suppliers quality all the way down to
    the shop floor as the products were being manufactured implemented real-time SPC
    - Goal: Improve supplier quality. Was critical to identify problems caused by a breakdown
    in manufacturing process control up front rather than at the tail end of the process
    after producing hundreds of products and packaging and shipping them
    - Realized benefits within just a few weeks of SPC implementation
    - Drastically reduced the risk of receiving defective lots
    - Implemented incentive programs that share savings to reward the better suppliers and
    reduce the costs of working with poor performing suppliers

    Quality Tools that work in SCM


    TQM philosophy to guide all plans, operations and activities
    - Top managements direct involvement
    - Strong internal/external customer orientation
    - Systematic problem solving using statistics
    - Everyone participates suppliers, organization, customers
    7 tools to solve problems at the floor level: QS 9000 for culture
    SPC to monitor variability in all that can be measured: Sampling to provide
    evidence
    DMAIC projects to focus improvement efforts in meeting requirements, delivery
    times and cost/profit targets

    Defects Per Million Opportunities (DPMO)

    Is Six Sigma Realistic? Let your customers tell you


    100K
    10K
    Average
    Company

    1K

    100
    10
    Best in Class
    1
    2

    5
    SIGMA

    Six Sigma Implementation: DMAIC Framework

    1. Define (D)

    2. Measure (M)

    3. Analyze (A)

    Customers and their priorities


    Process and its performance

    Causes of defects

    4. Improve (I)

    Remove causes of defects

    5. Control (C)

    Maintain quality

    NISSAN Motor Company Supply Chain Problem: Logos wont stick!

    Factor

    Level
    High

    Low

    15

    20

    Type of glue

    Acryl

    Urethan

    Thickness of Foam
    Styrene

    Thick

    Thin

    Thickness of Logo

    Thick

    Thin

    Amount of pressure

    Small

    Big

    Pressure
    application time

    Short

    Long

    Yes

    No

    Adhesion Area
    (cm2)

    Primer applied

    NISSANs DOE Design Array


    A Adhesion Area (cm2)
    B Type of Glue
    C Thickness of Foam Styrene
    D Thickness of Logo

    No.

    Gluing
    Str

    9.8

    8.9

    9.2

    8.9

    12.3

    13

    13.9

    12.6

    Factor Effects Plot

    Gluing Strength

    6.5

    5.58

    5.65

    5.58

    5.43

    5.5

    4.6

    Adherence Area

    Type of Glue

    Thickness of
    Foam Styrene

    Thickness of logo

    QS 9000 Certification is a must for all


    suppliers of the Automotive Industry

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