1. Supply Chains
Dr. Ron Lembke

2. Vertically Integrated World
One company does all processing, from raw material through delivery
Most efficient

3. Vertically Integrated
Forests, iron mines, rubber plantation, coal mines
Ships, railroad lines, docks
blast furnaces, foundries, rolling mills, stamping plants
engine plant, glass manufacturing, tire plant,
its own power plant
Most efficient: DIY
Why? He was the master of Continuous Process Improvement

4. Supply Network View of the World
Integrated international networks of companies process, produce and distribute products.
Efficient, effective partners available

6. Airbus A380 853 passengers 1990 announced 1992 designs 2002 production
first delivery
(Air France)
Flickr user Axwel

7. Saturn Layout

8. Computer Example Wacker Siltronic makes silicon wafers: buy sand
grow into long crystals
slice into thin wafers

9. Chip Production Chip burned in a $2b “wafer fab”
Wafer cut into chips and “packaged”
2017 – Intel using circuit wiring 10 nanometers wide
Human hair = 75,000 nm wide

10. Moore’s Law
1965 – Gordon Moore – Computing Power would double every 18 months, for 10 years
Cost of computing speed cut in half
Companies spending billions on factories, wafer fabs, to keep up with the curve
1993

11. CD Drive Chip stuffed onto board by Flextronics, Celestica, etc.
CD drive assembled by separate contract manufacturer
Green Printed Circuit Board from different supplier
CD drive, with a brand name on it, sold to Gateway

12. Apple and Foxconn EMS elect mfg services Foxconn:
Shenzhen, mile square
1 million workers
Largest private employer in China
Over 700 million iPhones sold, March 2015
Global CE industry = $285b -PwC
Foxconn = 40% = $114b

13. First iPhone 2007, Steve Jobs using prototype
Dozens of scratches on plastic screen
“I want a glass screen. And I want it perfect in 6 weeks.”
Shenzhen – built a new factory, engineers in dorms 24/7
Glass arrived at midnight
8,000 workers woken up, given a biscuit and some tea
Within half hour, started 12 hour shift
In 96 hours, 10,000 iPhone a day
3 months later, sold 1 million iPhones
Apple exec: “The speed and flexibility is breathtaking. There’s no American plant that can compete with that.”

14. Ethics & Headline Risk 10 hour days, crowded dorms
Terry Gou: Clean, affordable
Good food
17 suicides in 10 yrs
¼ rate US college students
9 in March-May 2010
Below national average
HK ngo:12hr*13days iPad?
Counseling, outsource dorms
10,000 horses galloping

15. Dhaka, Bangladesh, 2013 Rana Plaza Building
8 stories
1,129 people died
2,515 injured
Walmart, Benetton
Joe Fresh
Children’s Place
April 23, 2013
TV crews find cracks
Evacuated
April 24, collapses
3 stories added without permits
Engineer who declared it unsafe had helped expand it

16. Supply Chain Design Demand Uncertainty Supply Uncert.
Efficient
Risk-Hedging
Responsive
Agile
Low
High
Low (stable)
High (evolving)
Supply
Uncert.
Efficient – economies of scale.
TP, toothpaste, landlines, routers
Responsive – Changing consumer needs, mass customization, build-to-order
Computers, fashion apparel
Risk-Hedging – pooled resources, multiple sources of supply, more inv., share inv., need good IT
Server parts, some ag products, power
Agile – responsive to changing needs, pooled resources: Foxconn/Apple

17. Other factors Risk – of injury to employees or customers
Finding root causes of defects
Transportation safety – Hours of Service of drivers
FAA rules and the Polar Vortex
Traceability –
Where did it come from?
Social media

18. Summary Supply chains complex Examples:
Specialized partners increase efficiency and effectiveness
Examples:
Semiconductors / PCs
Apple / Foxconn
Ethical sourcing: worker safety
Supply Chain Design