Supply Chain Defense

Supply Chain Defense

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Supply Chain Defense


The following literature presents Kuiper Leda; an electronic manufacture company who implemented a set of methods and changes in order to accomplish competitive advantages. These methods helped the company deal with industrial challenges, such as excess manufacture capability, lack of inventory management, fluctuating demands, supplier consolidation and technology. Furthermore, provided metrics to help measure and align its business strategy.
Supply Chain Defense

Supply Chain Overview

Kuiper Leda Inc. is an electronic manufacture company located in the Republic of Novamia, which specializes in the production of electronic control units and sensors for the automobile industry. For the past 10 years Kuiper Leda has been very successful to the point of reaching 400 million dollars in revenue after an investment of just 100 million a decade ago. Kuiper Leda strong base technology in the ECUs, Microchips and RFID (Radio frequency identification) tags has open new door to the international market (University of Phoenix, 2006).Although Kuiper Leda is smaller than its competitor, it is recognized for their quality and delivery capabilities. Managers are aware of such reputation and understand that such industry demands scale of operation, capacity management and a proper delivery process. Therefore, managers are constantly looking at different of ways of improvement in order to achieve such demands. By looking at Kuiper Leda previous Challenges, solutions implemented and measuring techniques vendors will conclude that Kuiper Leda is prepare for scale of operations.
Supply Chain Challenges and Solution
1. Sudden Increase in demand has cause Kuiper Leda to excess its Manufacture capacity in ECU and RFID.
2. Lack of Inventory Management Plan to deal with excess stock and production.
3. Fluctuating demand caused managers to overhaul distribution system.
4. Rationalize supplier base in order to comply with company strategy. (Technology integration, cost per unit, delivery and more)

1. Sudden Increase in demand has cause Kuiper Leda to excess its Manufacture capacity in ECU and RFID.
Outsourcing is the act of moving some of a firm's internal activities and decision responsibility to outside providers. The terms of the agreement are established in a contract (Chase, Jacobs, Aquilano, 2006, p. 413). In the electronics industry, for example, 11 percent of manufacturing is performed by such contract manufacturers, many of whom manage the full supply chain, even including distribution and repair. Kuiper Leda currently did not have the capacity to comply with Midland Motors's Specification. Therefore, it decided to outsource non core component of their production line (ECUs) via an e-business portal. With outsourcing, the company took in consideration the possible lead time for manufacturing ECUs, the time zone difference and shipping time which need to be included in the timeline of four weeks, which was within the specification.

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Furthermore, industry best practices from Hewlett-Packard and IBM. Hewlett-Packard turned over its inbound raw materials warehousing in Vancouver, Washington, to Roadway Logistics. Roadway's 140 employees operate the warehouse 24 hours a day, seven days a week, coordinating the delivery of parts to the warehouse and managing storage. Hewlett-Packard's 250 employees were transferred to other company activities. Hewlett- Packard reports savings of 10 percent in warehousing operating costs (Chase, Jacobs, Aquilano, 2006, p. 415). IBM consultant Andrew Tubb states "One strategy is the outsourcing of procurement operations—particularly for indirect spend. This frees up organizations to focus on strategic expenditure or other elements of their supply chain" (Bland, 2006). As immediate result Kuiper Leda gain an increase in flexibility to meet changing business conditions, demand for products and services.
2. Lack of Inventory Management Plan to deal with excess stock and production.
Kuiper Leda Inventory management structure did not facilitate the production of microchip to the level that added the most value to the company. Therefore, executives implemented a Material Requirement planning system. MRP systems have been installed almost universally in manufacturing firms, even those considered small. The reason is that MRP is a logical, easily understandable approach to the problem of determining the number of parts, components, and materials needed to produce each end item. MRP also provides the schedule specifying when each of these materials, parts, and components should be ordered or produced (Chase, Jacobs, Aquilano, 2006, p. 630). As an immediate gain MRP provided Kuiper Leda with visibility for future order.

3. Fluctuating demand caused managers to overhaul distribution system.
JIT is an integrated set of activities designed to achieve high-volume production using minimal inventories of parts that arrive at the workstation exactly when they are needed (Chase, Jacobs, Aquilano, 2006). Kuiper Leader is been affected by an increase in fluctuating demands, as a result Kuiper Leda decided to implement a JIT system help to keep their order streamline and easy accessible follow by a centralize demand center. JIT is suitable for Kuiper Leda because JIT focuses on large orders and fewer orders keeping inventory low and cost down. Companies like GE and Adidas serve as best practices for Kuiper Leda initiative. GE has a healthcare decision called GE Healthcare, and when fitting a new cardiac hospital in 2001 called Carle Heart Center they created a just-in-time system for the lab. We simply push a button to see what supplies are below our par levels, by vendor. Our inventory specialists can then print out replenishment orders and fax them out for next-day shipment. Adidas delivered more than 145,000 Greece team jerseys across markets in Europe .The success was due to the "centralized supply chain coordinated with its country-based sales subsidiaries" (Niezen, 2006). With the centralized supply chain, Adidas created just-in-time product for the championship team and other national teams as they advanced through the series.
4. Rationalize supplier base in order to comply with company strategy (Technology integration, cost per unit, delivery and more).
As Kuiper Leda started their JIT initiatives it had to rationalize on their supplier base in order to obtain benefits of scale such as reduction in procurement cost and decrease lead time. Kuiper Leda objective is to implement something similar to staples, which is to shift spending to suppliers that are willing to collaborate to identify true cost of transaction. Staples works with many customers to reduce cost by applying spend management techniques to untapped areas of opportunities. Kuiper Leda will not just focus on cost per unit but cost per delivery as well (Supply and Demand Chain (2007). Kuiper Leda has not only considered cost but also their vendor technical integration capability. Technology is one of the major strategic and tactical areas where companies typically seek operations assistance (Chase, Jacobs, Aquilano, 2006, p. 378). Kuiper Leda was faced with product expansion, low visibility into customer's demands and supplier capability which lacked of proper technology that can insure interoperability among vendors systems. As result Kuiper Leda can took advantage of other companies' best practices. With product expansion, Kuiper Leda needs to manage its supply chain and implement an effective system to ensure products meet customer demand. One way for Kuiper Leda to do this was to implement a supply chain software system as Hitachi E2open. Such technologies helped measure supplier performance and support-integrate with a variety of IT structure. Through E2open Hitachi was able to have a records kick-off to launch in just four months, as a result of the efficiency gained with the software. Operating cost was cut by 35 percent. Hitachi's inter-company process management with supplier and customer improve cycle times and more rapid response (Supply and Demand Chain, 2007). Supply Chain should always be structure to meet the needs of different products and customer groups along with a set of metrics that help measure its performance.

Supply Chain Measures
Inventory is considered to be the center of supply chain. Therefore, Kuiper Leda has taken in consideration metrics that matters the most to insure performance. Because the inventory at each stage ties up money, it is important that the operations at each stage are synchronized to minimize the size of these buffer inventories. The efficiency of the supply chain can be measured based on the size of the inventory investment in the supply chain. The inventory investment is measured relative to the total cost of the goods that are provided through the supply chain (Chase, Jacobs, Aquilano, 2006, p. 408). Two common methods implemented by Kuiper Leda were Inventory Turn over and Weeks of supply. However, it doesn't stop there, by constant monitoring and following the Supply Chain Operations References-models Kuiper Leda has also adapted other metrics that helped obtain strategic advantage. The SCOR isolates key supply-chain management processes and matches their process elements against industry-specific best practices, benchmarking performance data, and appropriate software applications, providing users with a framework for understanding where they need to make improvements (The Performance Measure Group, 2007). These metrics are categorized as:
Delivery Performance
Scheduled Orders to Customer Request
Delivery Performance to Request Date
Delivery Performance to Commit Date
Perfect Order Fulfilment
Perfect Order Fulfilment ( as a % of Total Orders )
Fill Rate for Ship-From-Stock Products
Fill Rate by Order
Fill Rate by Line
Order Fulfillment Lead Time
Customer Signature/Authorization to Order Receipt
Order Receipt to Order Entry Complete
Order Entry Complete to Start Manufacture

Start Manufacture to Order Complete Manufacture
Order Complete Manufacture to Customer Receipt of Order
Customer Receipt of Order to Installation Complete
Total Order Fulfilment Lead Time
Upside Production Flexibility Metrics
Upside Production Flexibility: Principal constraint
Key Components or Material Availability
Direct Labor Availability
Internal Manufacturing Capacity
Supply Chain Response Time
Forecast Cycle Time
Replan Cycle ( Sales & Operations Planning ) Time
Intra-Manufacturing Replan Cycle Time
Total Sourcing Lead Time
Release-to-Ship Time
Total Supply Chain Management Costs
Order Management Cost
Material Acquisition Cost
Inventory Carrying Cost
Supply-Chain-Related Finance and Planning Cost.
Supply-Chain-Related IT Cost
Total Supply-Chain Management Costs

Cash-to-Cash Cycle Time
Days Sales Outstanding
Average Payment Period for Production Materials
Total Inventory Days of Supply
Inventory Days of Supply (Raw, WIP, Finished Goods)
Inventory Turns
Cash-to-Cash Cycle Time
Forecast Accuracy
Unit Forecast Accuracy
Dollar Forecast Accuracy
Financial Metrics
COGS as a % of Revenue
Year over Year change in COGS
Profitability (EBIT) as a % of Revenue
Expenses (SG&A) as a % of Revenue
Sales Growth (1 Year)
Net Asset Turns
Value Added Productivity
Value Added Productivity per Employee
Value Added Productivity per Payroll

For the past 10 years Kuiper Leda has been very successful to the point of reaching 400 million dollars in revenue after an investment of just 100 million a decade ago. Despite that it is a small company it comparison to its competition it has continue to pursue constant improvement by making the necessary adjustment to overcome challenges, apply the right solution and selecting metrics that truly matters for the business. It is recommended that before you evaluate supply chain monitoring tools, you need to work with the business to identify the metrics that will contribute to business results and help you make sound decisions. Furthermore, who will be using these metrics and for what purposes (Hofman, 2006). Supply Chain management is not an easy task. It requires the collaborations of different groups within the organization. Follow; by management support in order react to Industry changes and continue the ongoing process of improvement. That is exactly what Kuiper Leda has accomplish by facing its challenges, taking action and constant monitoring.

Chase, R. B., Jacobs, F. R., & Aquilano, N. J. (2006). Operations Management for Competitive Advantage (11th ed.). New York: McGraw-Hill.
General Electric Healthcare. (2006). Carle Clinic and Just-in-Time Management. Retrieved July 29, 2007 from products/cardiolink
Hofman, D. (2006, october 1, 2006). Getting to World-Class Supply Chain Measurement. Retrieved August 8, 2007, from
Niezen, C., & Weller, W. (2006). Procurement as strategy. Harvard Business Review. Retrieved July 29, 2007 from EBSCOhost database
Schoeniger, E. (2007). Supply chain: Measuring what matters most. Retrieved August 6, 2007, from
Supply and Demand Chain (2007). E2open. Inside Hitachi Global Storage Technologies' Rapid Supply Chain Deployment. Retrieved July 26, 2007, from
Supply and Demand Chain (2007). Staples Inc. Partnering to Achieve "Lowest Total Delivered Cost. Retrieved July 26, 2007, from Http://
The Performance Measure Group (2007). Understanding the SCOR Model &PACE Framework. Retrieved August 8, 2007, from
University of Phoenix (2006). Managing Inventory in a Supply Chain. Retrieved July 20, 2007, from
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