STRATEGIC ISSUES IN SC

LEAN MANUFACTURING
An overall methodology that seeks to minimize the resources required for production by eliminating waste (non-value added activities) that inflate costs, lead times and inventory requirements, and emphasizing the use of preventive maintenance , quality improvement programs. Lean manufacturing concepts are proven strategies to help manufacturers obtain attributes such as: focusing on waste reduction, improved lead time, maximised flexibility and upgraded quality.

 LEAN CHART

 The term lean was used because Japanese business methods used less human effort, capital invst, floor space, materials and time in all the aspects of operations. Lean manufacturing can be defined as a systematic approach to identifying and eliminating waste through continuous improvement by flowing the product at the pull of the customer in pursuit of perfection.

Value: In lean prodn the value of a prod is defined solely by the customer. The prod must meet the customers needs at both a specific time and price. Identifying the value in lean prodn means to understand all the activities required to produce a specific product, and then to optimise the whole process from the view of the customer.

Continuous improvement: The term continuous improvement means incremental improvement of prods, processes, or services overtime, with the goal of reducing waste to improve workplace functionality, customer service or product performance. Continuous improvement principles results in astonishing improvements in performance that competitors find nearly impossible to achieve.

Customer focus: A lean manufacturing enterprise thinks more abt its customers than it does abt running machines fast to absorb labour and overhead. Ensuring customer feedback assures quality and customer satisfaction. Perfection: The concept of perfection in lean management means that there are endless opportunities for improving the utilisation of all types of assets. The elimination of waste reduces the costs of operating and fulfills a desire for max value at the lowest price. Perfection helps in maintaining constant observation against wasteful practices.

Focus on waste: The aim of lean manufacturing is the elimination of waste in every area of production including customer relations, product design, supplier networks, and factory mngt. Its goal is to incorporate less human efforts, less inventory, less time to develop prods, and less space to become highly responsive to customer demand while producing top quality prods in the most efficient and economical manner possible. Essentially a waste is anything that is customer is not willing to pay for. Typically the type of wastes considered in a lean manufacturing system includes:

 1. 2. 1. 2. 1. 2. 3. 4. 5.

Overproduction: to produce more than demand or to produce it before it is needed. This happens due to: Long process setup Unbalanced workload Waiting for a machine to process. This happens due to: Unbalanced workload Unplanned maintenance Inventory or WIP: material between operation due to large lot production or process with long cycle time. This happens due to: Prod complexity Poor mkt forecast Unbalanced workload Unreliable shipments by suppliers Misunderstood communications

 Processing waste: all unnecessary processing steps should be eliminated. Causes for processing waste include: 1. Prod changes without process change 2. True customer requirements undefined 3. Lack of communications 4. Excessive info Transportation: does not add any value to the prod. Instead of improving the transportation, it should be minimised or eliminated. Causes of transportation waste include: 1. Poor plant layout Motion: motion of the workers, machine and transport is waste. Causes are: 1. Machine effectiveness 2. Inconsistent work methods 3. Unfavourable facility

 Making defective products: prevent the occurrence of defects instead of finding and repairing defects. Causes are: 1. Weak process control 2. Poor quality 3. Unbalanced inventory level 4. Product design 5. Customer needs not understood Underutilising ppl: not taking advantage of ppls ability. Causes are: 1. Poor hiring practices 2. Low or no invst in training 3. Low pay, high turnover strategy

KEYS TO LEAN SUCCESS: The following are some considerations to successful lean implementation: 1. Prepare and motivate ppl: Widespread orientation to Continuous Improvement, quality, training and recruiting workers with appropriate skills. Create common understanding of need to change. 2. Employee involvement: Push decision making and system development down to the lowest levels Trained and truly empowered ppl.

3. Share info and manage expectations 4. Identify and empower champions, particularly operations managers. 5. Atmosphere of experimentation tolerating mistakes, patience etc. Willingness to take risks 6. Installing enlightened and realistic performance measures, evaluation and reward systems Do away with rigid perf goals during implementation. Measure results and not the no. of activities/events.

BENEFITS OF LEAN: Reduce: manufacturing lead time, floor space requirements. Increase: throughput, productivity. Reduced scrap and waste Reduced inventory costs Reduced cycle time High quality and reliability Longer machine life Improved customer communication Higher labour efficiency and quality

TRADITIONAL VS LEAN MANUFACTURING:

A key difference in Lean manufacturing is that it is based on the concept that production can and should be driven by real customer demand. Instead of producing what you hope to sell, Lean manufacturing can produce what your customer wants with shorter lead times. Instead of pushing the products to the mkt, they are pulled through a system thats set up to quickly respond to customer demands. Lean manufacturing are capable of producing high quality products economically in lower volumes and bringing them to mkt faster that mass producers. Lean management is abt operating the most efficient and effective organisation possible, with the least cost and zero waste.

STRATEGIC ALLIANCES
These are typically versatile, goal oriented, long term partnerships between 2 companies in which both risks and rewards are shared. Strategic alliances typically lead to long term strategic benefits for both partners. A FRAMEWORK FOR STRATEGIC ALLIANCES: Jordan Lewis introduces an effective general framework for analysing strategic alliances, which is very helpful for considering the kinds of supply chain related strategic alliances.

 Adding value to prods: a partnership with the appropriate firm can help add value to existing prods. Eg., partnership that improve time to market, distribution times, or repair times help to increase the percieved value of a particular firm. Similarly, partnerships between companies with complementary prod lines can add value to the companies prods. Improving mkt access: partnership that lead to better advertising or increased access to new market channels can be beneficial. Eg., complementary consumer prod manufacturers can cooperate to address the needs of major retailers, increasing sales for everyone.

 Strengthening operations: alliance between appropriate firms can help to improve operations by lowering system costs and cycle times. Facilities and resources can be used more efficiently and effectively. Eg., companies with complementary seasonal prods can effectively use warehouse and trucks the year around. Adding technological strength: partnerships in which technology is shared can help add to the skills of both partners. Also the difficult transitions between old and new technologies can be facilitated by the expertise of one of the partners. Eg., a supplier may need a particular enhanced info system to work with a certain customer. Partnering with a firm that already has expertise in this system makes it easier to address difficult technological issues.

 Enhancing strategic growth: many new opportunities have high entry barriers. Partnership might enable firms to pool expertise and resources to overcome these barriers and explore new opportunities. Enhancing organisational skills: alliances provide a tremendous opportunity for organisational learning. In addition to learning from one another, partners are forced to learn more abt themselves and to become more flexible so that these alliances work. Building financial strengths: income can be increased, and administrative costs can be shared between partners or even reduced owing to the expertise of one or both of the partners.

ROLE OF STORES MANAGEMENT IN SCM (UNIT 3)

A professionally managed store has a process and a space within to receive the incoming materials (receiving bay), keep them for as long as they are not required for use (custody)and then to move them out of the stores for use (issue). In a manufacturing firm, this process forms a cycle to maintain and run the activities of the stores. The basic responsibilities of the stores are to act as custodian and controlling agent for parts, suppliers, and materials and to provide service to users of those goods.

 A stores has the following activities that are managed through the use of various resources and are thus called Stores Management: 1. Receiving of incoming consignments (goods) 2. Safe keeping of goods (custody) 3. Disposal of undesirable goods 4. Inventory management 5. House keeping and record maintenance.

 It all starts with a suitable layout design of stores. Depending on the nature of items used for processing by the org. the layout and type of stores are selected. Eg., for storing costly material, a closed and restricted kind of stores shall be needed. Irrespective of the type of layout, ant store would have, as its starting activity, receiving and accounting of the incoming goods. This part of stores is known as the RECEIVING BAY.

Once the material is been received and cleared through inspection and accepted for use, it needs safe custody till it is actually used. It calls for a separate physical storage space, open or closed, as per the need. It maintains all the documents that are able to trace an item, shows all its details nad preserves it upto its shelf life in the manner prescribed or till it is issued for use. This part of stores is called CUSTODY. Thus the role of custody is to receive and preserve the material and then to issue it to the user, as and when needed.

 When the prod is needed for use, stores release the material from its custody to the user dept and the process is called ISSUE OF GOODS. It might also happen that after partial use, some materials having usable value in the future are returned to the stores and thus they also become a part of the custody again. In the long drawn process of preserving the materials till its use, some materials might get obselete and unservicable and may require removal from the stores, in order to clear space for other incoming goods. This activity is known as DISPOSAL OF GOODS.

 One of the basic functions of stores is to account for every material received in stores by maintaining proper records of all the incoming, stored and outgoing materials so that proper accounting is maintained. Hence, record keeping is a vital function of the stores. Material handling is another vital function of stores management. Within a manufacturing organisations, its stores is seen having FORKLIFTS, Cranes, Trolleys etc., inside the stores and Trucks outside the stores equipment to handle the materials.

STRATEGIC PARTNERSHIP
A strategic partnership is a formal alliance between 2 commercial enterprises, usually formalised by 1 or more business contracts but falls short of forming legal partnership or agency. Typically 2 companies form a strategic partnership when each possesses one or more business assets that wil help the other that it does not wish to develop internally. One common strategic partnership involves one company providing engineering, manufacturing or product development services, partnering with a smaller entrepreneurial firm or inventor to create a specialised new product.

 Typically the larger firm provides capital, and the necessary prod development, marketing, manufacturing, and distribution capabilities, while the smaller firm supplies specialised technical or creative expertise. Another common strategic partnership involves a supplier/manufacturer partnering with a distributor or wholesale consumer. Here the 2 companies form a closer relationship where they mutually participate in advertising, marketing, branding, prod development and other business functions. Eg., an automotive manufacturer may form strategic partnerships with its suppliers, or a music distributor with record labels

PARTNERSHIPS IN SC

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Increasing numbers of partnerships are formed by companies connected in a SC. SCM has a major effect on a companys ability to reach its primary objectives, including growth, profit, company value and customer orientation. Partnerships in SCM are viewed as: CRM Customer Service Management Demand Management Order Fulfillment Manufacturing Flow Management Supplier Relationship Management Product Development and Marketing Returns Management.

1. Customer relationship management: As a result of an efficient CRM, prods and service levels tailored to individual customer segments can be offered so called prod service agreements. One imp aspect of CRM is to identify key customers and customer groups that represent a high strategic value to the company. 2. Customer service mngt: CSM is the face to the customer. On 1 hand, customers receive real-time. Real time info such as prod-availability reports and data on shipment tracking. On the other hand, companies gain valuable info abt their customers. Individual customer segments are supported by customer service managers.

3. Demand management: Given the variety of customer orders, efficient replenishment planning and mngt are crucial in order to promptly fulfill customer requests. In this process, demand mngt brings customer requests in line with the capacities of the SC. It encompasses both efficient forecasting and synchronisation of supply and demand with production, procurement and distribution. It also increases the flexibility of production and reduces the variability of inventories as a result of the integrated flow of info.

4. Order fulfillment: its objective is to develop a seamless process from suppliers to various customer segments. This requires the integration of production, sales and distribution plans. 5. Manufacturing flow management: In contrast to conventional make-to-stock production, SCM frequently pursues the goal of the pull principal. Unlike the pust principal in which the production is based on past data and forecast. Pull principal is initiated only by a customer order. This requires flexible processes that permit quick reaction to mkt changes. In particular, manufacturing flow management involves all activities necessary to steer prods through a company and to facilitate, implement and manage flexible production in the SC.

6.Supplier relationship management: This can be viewed as a major image of customer relationship mngt. Strategic plans that support manufacturing flow management and product development are worked out with imp suppliers. 7. Product development and marketing: This process is designed to integrate customers and suppliers into the prod-development process at an early stage in order to reduce the time to mkt introduction. These activities must be coordinated with CRM, which identifies customers wishes and needs. At the same time the suppliers are integrated into the selection of materials early on. Finally, integration onto the process of manufacturing flow mngt helps identify suitable production technology.

8. Returns management: The objective of efficient returns mngt is not just efficient return of products. This approach also helps identify ways of reducing unwanted returns and monitoring the return of reusable assets such as containers. Effective returns mngt can create a sustainable competitive edge.

 In particular

CUSTOMER SERVICE IN SC
The International Customer Service Association (ICSA) defines customer service as those functions within a business