Complex Supply Chain Networks And Supply Chain Drivers
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The analyst in the Distribution, Engineering, Maintenance, and Productions Management Group of the Central Engineering Department for Canbide Corporation is in charge of analyzing various operations at all of Canbide’s facilities. The purpose of our group is to analyze operations, report our findings, and make recommendations for continued improvements and implementations of Operations Management (OM) tools.
The remainder of this report summarizes our findings and recommendations on three of our electronics facilities located in Oregon. It is a result of a collaborated effort by the entire group, research, analysis, observations, communications with management, and interviews with the production and inventory planning staffs at these facilities. In order to focus the report on the main findings rather than all the individual problems and associated recommendations, we’ve included a detailed outline as an appendix to this report.
Our initial visit to the facilities allowed us to gather general information such as locations and relation to each other, facilities and production layouts, and business/operations information. It was discovered that facilities T and P were located in the same building but run as separate businesses and that S facility was about seventy miles from them. They share common customers and are dependant on each other. The S facility produces parts and sub-assemblies for facilities T and P and the “accessory” parts for the S facility are purchased by and shipped from the P and T facilities.
This creates a complex intra-company and external supply chain consisting of all business processes and information used to provide our product to the customers; this includes everything from procurement of raw materials, through production, and to distribution. Because of the relationship of these facilities they are suppliers and distributers to one another, making the need for supply chain management even more critical.
Through the aforementioned methods, we were able to uncover many issues with the supply chain and management of it. These are outlined in the appendix. The main areas that need concentrated on are communication, material and inventory handling and procedures, order entry processes, supervision at the facilities, and problems in production flow.
There is an apparent lack of communication from all levels within each facility, among the three facilities, with this division and the parent company, and along all aspects of the supply chain. The majority of the problems with the supply chain are directly or indirectly related to this lack of communication.
These problems are affecting efficiency, quality, customer relations, and profits.
This seems a bit odd for a corporation as successful as Canbide who is a multi-national, publicly traded company with annual sales nearing $10 billion. Therefore, we believe all our recommendations listed in the appendix for communication are most likely being properly done at the parent company. Corporate level management needs to coordinate with the management group at these facilities to help them implement our recommendations and guide them since they are a relatively new company.
Our analysis of material and inventory, order entry, and general production flow procedures uncovered numerous problems. The problems ranged from lost, misplaced, and defective parts to problems with JIT implementation, shipping, equipment and quality control issues, inadequate flow of materials, scheduling problems, lack of proper operations, and so on. Basically, the procedures for material, inventory, ordering, and production flow are not controlled properly and has a major impact on efficiency and profits. Problems in these areas disrupted the entire supply chain as well.
To properly address these problems it is vital that communication is improved and that we hire knowledge individuals in the fields of logistics, quality control, manufacturing and production, project management, technical support, operations integration, and any other roles defined by human resources. Knowledgeable individuals in the right fields should be capable of implementing all our recommendations and be specialist in those areas. Once the proper team is put in place they will be responsible for implementing OM tools, lean production, supply chain management systems, an integrated enterprise resource management systems, identify the needs of additional tools, equipment, technology, and training of employees that will eliminate these problems.
Colorado Technical University Online. (2008). Retrieved January 26, 2008, from https://campus.ctuonline.edu/MainFrame.aspx?ContentFrame=/Default.aspx
Broyles, D., Beims, J., Franko, J., & Bergman, M. (2005, April). Academic Mind. Retrieved January 19, 2008, from http://www.academicmind.com/unpublishedpapers/business/operationsmanagement/2005-04-000aaf-just-in-time-inventory-management.html
Environmental Protection Agency (2008, January 28). Just-in-Time / Kanban. Retrieved January 28, 2008, from www.epa.gov/lean/thinking/kanban.htm
Schroeder, R. G. (2007). Operations Management : Contemporary Concepts and Cases (3rd ed.). New York, NY: McGraw-Hill Companies Inc.
Supply-Chain Council. (2008). Retrieved January 19, 2008, from http://www.supply-chain.org/cs/root/scor_tools_resources/scor_model/scor_model
Wise Geek (2008, January 28). What is a Bill of Lading? Retrieved January 28, 2008, from www.wisegeek.com/what-is-a-bill-of-lading.htm
1. Lack of communication from all levels within the facilities, among all three facilities, with corporate management, and along all aspects of the supply chain
NOTE: The majority of the problems are directly or indirectly related to a lack of communication and therefore, most of them are listed below.
Effect of Problem:
1. Lost Materials (Parts / WIP / Finished goods)
2. Improper Scheduling in Production and Shipping
3. Inventory left in trucks
4. JIT problems
5. Inadequate or Undefined operations and procedures
7. Wrong Parts being used
8. Untrained or Undertrained Employees
9. Lack of and insufficient Supervision
10. Facilities have inadequate Equipment
11. Quality is being compromised
12. The company is losing profits
13. Wasted Resources
14. The proper tools, resources, and technology aren’t being used
15. Production shut-downs
16. The different departments and facilities don’t seem to realize that they are a team
1. Traditional Communication (phone, email, meetings, company webpage, newsletters, face to face)
2. Using technology (teleconferencing, integrated system for information sharing, web based communications, use of intranet, internet, and computers) mobile communication devices)
3. Involve the Human Resource Department because they have more education in this field (performance evaluations, suggestion box, feedback, etc)
4. Benchmark companies that have superior communication in their business
5. Research for tips, tools, resources on business communication
6. Communications Training / Hire Educated Individuals
7. Find ways to communicate over distance
8. Communicate to all employees the importance of information sharing and working together
9. Define chain of command and communication procedures and expectations
10. Create and use forms as a way to relay information
Material & Inventory
1. “S” facility isn’t getting parts to “P” and “T” on time or in the correct amounts and vice-versa
2. WIP are being misplaced in the “S” facility’s stamping department
3. Inventory has been left in trucks
4. JIT wasn’t properly implemented
5. Manufacturing Defects have occurred (Quality – wasted resources & scrap)
6. Wrong resins were used on some molded parts
7. Machines are casing down time when they need converted between parts
8. There are availability issues with the molds
1. Company wide integrated system and database
2. Because regular shipments go out to the same supplier – automatic reorder / restock system can be implemented
3. Proper training of employees
4. Clearly defined procedures
5. JIT inventory can be effective but needs proper planning & implementation
6. Better quality control department / processes
7. Use of technology
8. Purchase adequate equipment & additional molds
9. Explore the possibility of outsourcing
10. Use of forms (Bill of Materials, Job Specs, Flow of Materials, etc)
11. Implement a parts coding system
12. Perform audit of Inventory, WIP, and other materials
13. Clearly designated areas to store inventory and WIP
14. Regular checking of machines for service issues
15. Application of lean manufacturing
1. There are record disputes – “S” facility disputes that they are not shipping on time
2. WIP parts are being lost – Date Entry to track these?
3. Orders aren’t being placed / tracked properly
4. Improper use or no use of Bill of Materials, Purchase Orders, Job Specs, Delivery Information, etc.
5. Confusion occurs with improper order entries
6. Order Entry errors are causing delays – lack of or surplus of parts
7. Use of outdated EOQ’s possible at this location as with the Charleston location
8. It was previously established that copier distributers aren’t communicating with us – this is delaying our order entry procedures
9. Inadequate order entry is causing problems in several departments – shipping, distribution, inventory, scheduling, etc.
1. Integrated Enterprise Resource Management System
2. Central Database
3. Training of Employees
4. Form Templates and Processes for use need to be created
5. Implement ways of finding and correcting errors
6. Evaluate and continually update ordering procedures, training, forms, and needs of customers for orders / orders between facilities
Supervision at the Plants
1. The quality control group at “S” facility is small and lacking equipment which results in quality issues and possibly violations
2. There is an apparent lack of communication and / or skill in Supervision
3. “S” facility’s stamping and molding departments only have one supervisor on nights and weekends
4. One VP for all three facilities so his time / capabilities are spread too thin
5. There is mismanagement / under-managed of supply chain operations
1. Work with HR and Corporate level on Strategic Planning, staffing need, and processes for hiring, retaining, & training of additional management
2. Evaluation of current supervisions skills and / or need for training / replacement
3. Assess the needs of supervision for scheduling purposes - Match demand with staffing needs
4. Initiation of “team work” attitude
5. Clearly define chain of command and have the supervisors evaluated by the next level of management on their performance – accountability needs to be established
6. Consider cross-training or relocation of employees and managers
General Production Flow
1. Machinery conversion time is causing down time, wasting resources, and causing shipment delays
2. Possible lack of specifications resulted in the wrong resins being applied to molded parts
3. The materials and parts are being misplaced, lost, and in the wrong quantities
4. Inventory from JIT and on the shelf is not being stocked or shipped properly
5. There seems to be no visibility and poor management of supply chain operations
6. There is a lack of quality controls
7. There isn’t enough equipment for the quality control and manufacturing departments
8. WIP isn’t being tracked properly
9. Procedures aren’t put in place to handle production flow
10. Scheduling of multiple operations and within multiple departments is inadequate
1. Increase communication and information sharing
2. Company wide integrated system, procedures, and database applications
3. Proper planning and forecasting
4. Improved quality control measure
5. Purchase of additional equipment
6. Evaluate the possibility of outsourcing
7. Collaboration among all employees, departments, facilities, levels in corporation, and external partners
8. Proper JIT implementation
9. Assessment of operations
10. Use technology and resources available to improve production flow
11. Implementation of lean operations