1. Global Cases in Supply Logistics Class two – NPI & Metrics
MIM 544
Global Cases in Supply Logistics
Class two – NPI & Metrics

2. Agenda Case learning objectives Current Events – China Labor
Overview New Product Teams
Cisco discussion
Team Analysis
Overview Quality Metrics
Manfield discussion

3. Global Cases Case Learning Objectives Apply past knowledge
Provide a conceptual Framework
Analyze in depth – metrics & numbers
Don’t necessarily accept the strategy
Underlying objective – EBITA & Cash!

4. Case format for the evening
One team will lead the discussion
What do we know about the company?
What is the problem statement?
Questions assigned
Other questions?

5. China Labor Market – Relate to the NPI case?
Facts:
FDI-$500B; Directly Employ 16M people
112M factory workers
200 largest exporters, 153 were from FDI
Is unrest growing? 280K labor disputes 2009
Wages increased 9%/yr since 2002
Surplus labor or shortage?
Half the number of <16-29yrs by 2020

6. Global Cases - NPI New Product Introduction (NPI) – Why care?
Risks & Concerns without it?
SCM Strategy – Single / multi-sourced
Design for “X”
AVL
Packaging
Postponement
Service strategies

7. NPI Summary – All Affect Cost
Purchasing (RFQ / SOW)
Engineering (ERP / AVL)
Logistics (Packaging)
Quality (Yield / Touches)
Marketing (PRD)
Warranty / Service
Most Important – “The Crossover”

8. Drivers of the crossover
Demand side
Environmental – Macroeconomic
Competition
Pricing
Timing
Market response
Product capability
Supply side
External execution – SCM
Internal execution – supply in volume

9. Cisco Case
What do we know?
Viking Product has transitioned to a faster model, surpassing the competition (Juniper & Alcatel).
Now want to go from US-based NPI & China transition to Foxconn out of the gate in Shenzen.
Foxconn had never made this complex a box, especially from the start, but now level – 3.
45% of employees and sales from outside US.
Proud of their “adaptive supply chain,” cut its number of outsourced partners from 13 to 4 (is this good & why?)
2001 Cisco went from 1,500 suppliers to 600, of which 200 had 80% of the spend.
Cisco Lean was the mantra, pull system & predictable lead-times and on-time shipments.

10. Cisco NPI – 6 Questions What are the risks in NPI overall?
Why Foxconn or any new supplier?
What are the challenges and risks with China directly.
What are the benefits of going to China directly.
Why Foxconn?
How do you mitigate the risks of going direct to China?

11. Metrics – Right ones? Quality Systems TQM / Lean / ISO
Above the Shop Floor – Value stream mapping can be applied everywhere
“What is measured improves”
Overemphasis on a few can be risky
Too many? (Attention span?)

12. Lean
Sorting (Seiri)
Straightening or Setting in Order (Seiton) – Simplifying
Sweeping or Shining or Cleanliness / Systematic Cleaning (Seiso)
Standardizing (Seiketsu)
Sustaining the discipline (Shitsuke)
Safety

13. Some Performance Measurements
Quality – PPM, FPY, IC, FMEA
Cost to Target – OPEX & Procurement
On Time Delivery
Flexibility – cycle time improvement
Productivity Improvement – output / hour
Supplier’s Management Program
Progress Toward Certification ISO 14,000
Technology roadmap (products & IT infrastructure)

14. Measuring Performance – Cont.
Forecast Accuracy
Formal Sharing of Information – Markets & customers
Minimize expediting and Schedule Changes
Focus on Total Cost - Not Price
On Time A/P & A/R
Program to Manage Supplier Relationships
– NPI -> Obsolescence
Contractual Protection and Liabilities
Period Expenses - Variances

15. Technology The hp way: TQRDCEB:
Quality Responsiveness Delivery Cost Environment Business
Kropf, W. C. & Russell, P. L. (N.D.). Hewlett-Packard's Packaging Supplier Evaluation Process and Criteria. Retrieved May 24, 2009 from:

16. 7 Deadly Sins of Performance Measurements
Vanity – cognitive dissonance (IBM PC)
Provincialism – only measure within an org group
Narcissism – measure from your point of view, not the customer
Laziness – We know best
Pettiness – only a small component of what matters
Inanity – Measure what you want to change
Frivolity – Not taking metrics seriously

17. Manfield Coatings What do we know? Short lead-times
Strong niche player
Uses quality as comparative advantage
- Cost containment and speed for customers
- Satisfy customers, not surpass expectations

18. Manfield Coatings – 5 Questions
How does quality help Manfield?
What made the Q-S successful?
What metrics would have made Manfield more successful?
Are they moving in the right direction?
Seven deadly sins & aligning incentives; how does this relate?