Making World-Class Supply Chains.


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Making World-Class Supply Chains Matthias Holweg Ph.D. Judge Business College of Cambridge Email: m.holweg@jbs.cam.ac.uk World Bank - Learning Economy Gathering VI Cambridge, April 17 2007 Blueprint Store network mangement Why is it vital?
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Making World-Class Supply Chains Matthias Holweg Ph.D. Judge Business School University of Cambridge Email: m.holweg@jbs.cam.ac.uk World Bank - Knowledge Economy Forum VI Cambridge, April 17 2007

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Outline Supply chain mangement Why is it essential? Elements of high-performing supply chains The part of innovation The car business Global patterns The instance of Slovakia Conclusions Policy proposals

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Outline Supply chain mangement Why is it critical? Elements of high-performing supply chains The part of innovation The car business Global patterns The instance of Slovakia Conclusions Policy suggestions

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Why do we discuss it? Customary considering: rivalry is driven by the 4P’s Today: inventory network capacities focus intensity! Wal-Mart versus K-Mart Compaq/HP versus Dell A last item is not the sole accomplishment of the OEM Customer experience is controlled by production network: quality, cost, conveyance Significant extent of worth sourced from suppliers! Supply chains are associated frameworks: Competitiveness of one level is a supply\'s element and conveyance capacities, i.e. encompassing levels. “Value Chains contend, not individual companies!” (Christopher 1992)

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“Islands of Excellence” or Optimal Supply Chain? 100 Max Average Assembly Plant 6% Raw Materials and segments 21% Distribution 73% Min 50 Days of Inventory 0 Customer Dispatch Distribution on location Parts Raw Material Assembly WIP Assembly WIP Finished Parts In-house Parts Bought-in Parts Inbound Transit Outbound Transit Pre-Assembly WIP Source: Holweg and Pil, “The Second Century”, MIT Press 2004

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Features of High-performing Supply Chains Long-term shared connections Trust and responsibility, appreciation of the privilege of common presence Single or double sourcing Component volume is balanced by Constant positive weight by double sourcing Improvement Collaboration with suppliers on operational change; illustration: Toyota’s Supplier Support Center (TSSC) in Kentucky Annual expense decreases are acknowledged in coordinated effort, not seclusion Operations and logistics Level creation timetables to keep away from spikes in the store network Milk-round conveyance frameworks that can deal with blended burden, little parcel conveyances Disciplined arrangement of JIT conveyance windows at the plant; suppliers convey just what is required, regardless of the fact that this bargains load productivity in transport

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The Role of Technology The ‘Holy Grail’ in curing inventory network ills? Illustration: ‘Bullwhip problem’ Demand perceivability is key: RFID/AutoID, EDI, EDIFACT, EPOS, CPFR …yet they just work if the arranging frameworks utilize this data! Sample: exchange costs in car COVISINT (est. 2000) and the B2B/e-business transformation Predicted investment funds of $1,000 per vehicle in exchange costs! The Role of Technology alone is not an adequate, it can help critical thinking If the hidden procedures are not able, innovation will fall flat It is an unfortunate obligation, not an end in itself!

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Outline Supply chain mangement Why is it essential? Components of high-performing supply chains The part of innovation The car business Global patterns The instance of Slovakia Conclusions Policy proposals

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Production by Region 1975-2005

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Auto Industry: Major Trends Overall worldwide development by 1.85% CAGR since 1975 Substitution of generation with nearby minimal effort districts Major development of creation in China (2000-05: x5.2 ), and India (2000-05: x1.7 ), - 4% in Western Europe Auto industry is regionalising , not globalizing ! What does this mean for the flow of rivalry? Contending in a worldwide, appropriated industry: Future rivalry on expense is a useless fight.. Depend on quality? Brand? Plan? Closeness to client?

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Market Demand New Entrant Continuous Window of Opportunity Established Player Product Features Time Any work expense point of interest is transitory! Source: adjusted from Christensen (1997)

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The Auto Industry in Emerging Countries Automotive industry exceptionally appealing Job multiplier of 5-7 for each get together employment Technology exchange Many endowments, however inquiries of long haul feasibility! The instance of Slovakia’s automobile industry VW Bratislava, PSA Trnava, Kia Zilina, developing group CZ, PL, HU 5m occupants, c.900k creation, local offers of <80k units Challenges Logistics: lead-time to client, unwavering quality of supply Labor lack, relocation and rising remuneration Migration promote east is inescapable Domestic interest in Russia, developing work cost differential

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Outline Supply chain mangement Why is it essential? Elements of high-performing supply chains The part of innovation The car business Global patterns The instance of Slovakia Conclusions Policy proposals

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Conclusion: Supply Chain ‘Enemies’ Common rationale behind all SCM activities! Stock & postponements Time compounds ‘swing’ of intensification Decision deferrals oblige stock Safety stock choices send false flags Unreliability or vulnerability Any sort of instability should be secured with stock Unreliable procedures cause questionable conveyance Hand-offs or choice focuses Every hand-off or level in the framework bears threat of bending! ‘Inventory is a substitute for information’

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Policy Recommendations Infrastructure is a dependably a worry.. …but instability is a certain enemy of any area choice! Traditions leeway Currency Regulation (work, activity, assessment) Crime & influences Supply chains are associated frameworks: Labor cost differential is just a fleeting favorable position Strong need to pull in suppliers, not simply producers! Need to fabricate neighborhood skills, instead of “screw-driver factories” Domestic interest is not fundamental if logistics frameworks work

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Center for Competitiveness and Innovation, Judge Business School, Univ. of Cambridge http://www-innovation.jbs.cam.ac.uk International Motor Vehicle Program Massachusetts Institute of Technology http://i

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