1. INTRODUCTION TO SUPPLY CHAIN MANAGEMENT
Inbound Logistics…..raw materials to the shop floor
BILL MOTLEY, CEM, CQMgr, PMP
10/14/2018

2. E-MFG SCM LEAN Supply Chain Management
SCM can be described as part of 3-D concurrent engineering:
Product-Process-Supply Chain
LEAN
zero waste, max flexibility, max value stream
E-MFG
the use of the Internet and all other electronic means to manage the entire manufacturing enterprise
SCM
all activities associated with the flow and
transformation of materials and its related information from source to end user
10/14/2018

3. Supply Chain Management
Definitions
Supply Chain – the flow of materials, information, funds and
services from raw material suppliers through factories and
warehouses to the end customers.
A supply chain also includes the organizations and processes
that create and deliver these products, information, and services
to the end customers.
Supply Chain Management – a total systems approach
to managing the entire supply chain. The function of Supply Chain
Management (SCM) is to plan, organize and coordinate all the supply
chain’s activities.
10/14/2018

4. Upstream Internal Downstream
Cereal Supply Chain
Customers
Upstream
Internal
Downstream
Grain Producer
Processing Facility
Packaging
Distributors
Stores
Lumber Company
CorrugatedPaper Co.
Boxes
Paperboard
Customers
Grain
Cereal
Customers
Customers
Packaged
Cereal
Label Manufacturing
Labels
10/14/2018

5. The Modern Supply Chain Environment
Background:
Global competition
More complex products
More diverse product lines
Shortened product lifecycles
Heightened customer expectations
Problems along the Supply Chain:
Uncertainties:
demand forecast – influenced by competition, prices, weather, tech development, etc.
delivery times – machine failures, road conditions, traffic jams, etc.
quality problems – internal or external
production delays – material availability, machine failures, etc.
Cost:
High inventory financing and carrying costs, obsolescent material –
worst in class vs. best in class is 3X-4X dollars more
10/14/2018

6. Supply Chain Problem: Materiel is now THE major cost in production: it costs a lot to hold but we also never want to run out! How do we balance?
Traditional Supply Chain Solutions:
Vertical integration – purchasing Upstream supply chain tier suppliers in
order to control “uncertainty” (i.e. Ford’s purchase of rubber for car tires).
Building inventories as “insurance” against supply chain uncertainties
very difficult to correctly determine inventory levels for each product
and part
if set too high (inventory) = large cost of maintaining a high inventory
if set too low (inventory) = no insurance against high demand or
slow delivery (lead) times
10/14/2018

7. SCM Design Product Design; modular or integral Make or Buy
Distribution Network
Inventory Control
Contractual relationship w/suppliers
Supplier coordination and KPIs
Info Technology and Decision Support Systems
10/14/2018

8. Supplier Selection Criteria
Past performance & previous experience
Ability to meet capacity & delivery rqmts
Financial stability
Ability to provide technical support
Adequacy of the quality mgt system
Estimated total cost of dealing with the supplier
10/14/2018

9. Supplier KPIs Quality Delivery Product cost Responsiveness
Cost due to customer failures, shop floor disruptions and failure at incoming inspection
Technological leadership
10/14/2018

10. INFORMATION DISTORTION ALONG THE SUPPLY CHAIN
SELF-OPTIMIZATION & MISTRUST
LACK OF INFORMATION/WRONG INFO
DELAY AND DELAY PROPAGATION
The “Bullwhip” Effect
10/14/2018

11. SCM Value Shifts Corporations Communities Physical Assets
Intellectual Assets
Closed
Collaboration
The move from vertical to virtual integration is the product of the shift in 20th century business, economic and technology models.
Information technology is both a cause and an accelerator of the transformation, which includes:
Corporation to corporation competition is being replaced by communities of corporations competing;
Physical assets traded for intellectual assets; and,
Closed business systems giving way to collaborative relationships.
These are the characteristics of the shift from vertical to virtual integration.
Vertical Integration
Virtual Integration
10/14/2018

12. The New Manufacturing
Design and integration only – perhaps some assembly
Contract Manufacturers – build-to-print
Third-party logistics providers
10/14/2018

13. THE RISE OF DISPERSED MFG “Low-Cost Country” Sourcing
More modern factories in low-cost areas
Reduction of trade barriers
Some factories are emerging as global leaders in certain technologies
10/14/2018

14. SCM TRENDS EXPECT OUTSOURCING TO INCREASE FOR ALL PRODUCTS
PRIMES INCREASINGLY FOCUSED ON DESIGN AND INTEGRATION
90% - 100% OUTSOURCED WILL NOT BE UNUSUAL IN THE FUTURE
10/14/2018

15. GOAL: A LEAN, MEAN SUPPLIER BASE
F-22 SUPPLIERS
Alliant TechSystems
Electrodynamics
HamiltonSundstrand
Honeywell
Rosemount
NWL
Global Tooling
Models & Tools
M. C. Aerospace
Interval
Hughes Treitler
Amphenol Bendix
Boeing
Kaman
MPC
Supplier Content as % of Contract Value
100 % 90 80 70 60 50 40 30 20 10
BFG/Simmonds
GD Armament
Dowty Decoto
Primex
Sanders
Schlosser
Timet Castings
Argo-Tech
Crane/Lear Romec
Fenwal Safety Syst
Litton Itek
Wyman Gordon
Aerojet
Aircraft Eng
Avica
Chem-Tronics
Circle Seal
Eaton
Hexcel
Honeywell
Kaiser
LM Aero - Palmdale
Litton
BAE Systems
Marvin Eng
OEA Aerospace
Pacific Scientific
Parker Bertea
Parker Hannifin
Raytheon
BF Goodrich (Rohr)
Sierracin/Sylmar
Sterer
Superform USA
Sweeney Eng
Symetrics
Telair Int’l
Teledyne
Vickers
TRW
Pratt & Whitney
70%
Boeing Defense
60%
61%
GKN Westland
Hamilton Sunstrand
Pratt
&
Whitney
Boeing
LM Aero
F-22 SPO
EDO
Lucas Aerospace
Curtiss Wright
Hexcel, AlliedSignal
Smiths Ind.
Northrop Grumman
Orbital Sciences
This chart represents the team members we have all across the country. Our main partners are represented by the dark green states and the suppliers are listed around the outside. Suppliers make up approximately 60 to 70% of the dollars spend on the F-22 as can be seen from the center chart.
Honeywell
Motorola
Brunswick, Walter KIDDE
Howmet, Alliant TechSystems
BAE Systems
Menasco
Raytheon Training
Raytheon TI
ICI Fiberite
Vickers
Harris
Intellitec
LMEM
Pall Aero
Trilectron
LM Aero
Ft. Worth
LM Aero
Marietta
BAE Systems
Avionics - UK
Helmet Integrated
Systems - UK
Normalair Garrett-UK
Kidde Graviner
Ltd - UK
GOAL: A LEAN, MEAN SUPPLIER BASE
10/14/2018

16. SCM TRENDS ASSEMBLY BECOMING A COMMODITY
SCM BECOMING A STRATEGIC FACTOR
SCs MUST FUNCTION LIKE A SINGLE ENTITY
ELECTRONICS LEADS ALL OTHER MFG SECTORS IN THE OUTSOURCING OF FAB AND ASSY
IS SCM THE ULTIMATE CORE COMPETENCY?
SC MANAGEMENT TO SUPPLIER MGT?
10/14/2018

17. BOEING 787 Modular design Design work in US, Japan, China, Russia
Fabrication all in Japan, France and Italy except for nose, cockpit and vertical stab.
Air transport vice sea
Contracting councils for each module
10/14/2018

18. IMPROVING SC PERFORMANCE
DESIGN FOR PRODUCIBILITY,MODULARITY, STANDARDIZATION, COMMONALITY, AND POSTPONEMENT
“SHORTEN THE CHAIN”: FEWER STRATEGIC PARTNERS W/ WORLD CLASS QUALITY AND DELIVERY
ADDING INTELLIGENCE and End-to-End VISIBILITY OF THE CHAIN:
TECHNOLOGY: WWW B2B, integrated ERP
BETTER DEMAND FORECASTS: ”all forecasts are wrong”
- hybrid inventory control: MRPII + JIT
- order long-lead materials/components based on demand forecasts and econometric models
10/14/2018

19. SCM ISSUES
A capable prime means little if its supply chain has quality and delivery issues
Are there risks in a global supply chain?
Is the government losing insight into its primes’ SCs? Does it matter?
Does your prime have management and technical processes to manage its supply chain?
These are issues we have not faced before on this scale
Use your DCMA resources
10/14/2018

20. The Effects of 9/11 Alternate sourcing arrangements formalized
Formalized transportation alternatives
More sophisticated logistics/ERP software to know where materials are at any time
Inventory levels being increased by 10% to 15%
Parts being ordered earlier, more lead times being built into production schedules
10/14/2018

21. Top Ten SC Managers per AMR Research 2004
Dell
Nokia
Proctor & Gamble
IBM
Wal-Mart
Toyota Motor
Johnson & Johnson
Johnson Controls
Tesco
PepsiCo
10/14/2018