Problem and Solution
Kuiper Leda Inc. (KLI) is an electronics components manufacturer for the automotive industry who specializes in electronic component units (ECUs) and sensors. Recently, the company added radio frequency identification devices (RFIDs) to the product line. Through this technology, KLI has a strong international base, and one of KLI’s customers include Midland motors who has placed a 250,000 order for ECUs, and 35,000 for RFID’s. KLI will determine whether to accept this project, decide how to meet these demands, and to figure out if such components should be produced partially in-house or outsourced (University of Phoenix, 2008).
Content
Problem Solution: Kuiper Leda head: PROBLEM SOLUTION: KUIPER LEDA
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Problem Solution: Kuiper Leda Albee Horne University of Phoenix MBA/550 Resource Optimization October 22, 2009
Problem Solution: Kuiper Leda Problem Solution: Kuiper Leda Kuiper Leda Inc. (KLI) is an electronics components manufacturer for the automotive industry who specializes in electronic component units (ECUs) and sensors. Recently, the company added radio frequency identification devices (RFIDs) to the product line. Through this technology, KLI has a strong international base, and one of KLI’s customers include Midland motors who has placed a 250,000 order for ECUs, and 35,000 for RFID’s. KLI will determine whether to accept this project, decide how to meet these demands, and to figure out if such components should be produced partially in-house or outsourced (University of Phoenix, 2008). Within this paper I will identify key issues and opportunities that can help KLI complete their tasks which include developing a plan that optimizes the supply chain, and developing metrics to assess the performance of the supply chain process. In completing these tasks, inadvertently I will explain the principles of inventory management and the effects on cash conversion cycles and cost of goods, Identify domestic and global best practices in supply chain management, as well as explain the roles of stakeholders in the supply chain, the relationship between forecasting, and Just in Time (JIT) inventory. After the tasks are completed, and key principles are adopted, KLI will be better able to consider all stakeholders, and dilemmas, that bridges the gap, and aides them in reaching their end goals.
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Problem Solution: Kuiper Leda Situation Analysis
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Issue and Opportunity Identification Issue KLI may be dealing with cross industry supply networks (University of Phoenix, 2008). According to the simulation from University of Phoenix, any other provider lower in the BOM (bill of material) may be servicing demands from other manufacturers or service providers in different industry segments. This would interfere with the time and demand component of the facets of a supply chain (University of Phoenix, 2008). Another issue is the ability to meet demand. In the simulation there was an example of car manufacturing, that when 5,000 cars are scheduled for production on a set schedule, any corresponding parts would be produced simultaneously and any changes in schedule leads to problems in supply timing and quantity, also affecting other scheduling for corresponding part manufacturers. KLI is experiencing an issue in meeting demand since 35% of that month’s shipments were not yet made. Additionally, distortion in the supply chain allows for larger work in progress for inventories in the supply pipeline, this limits the manufacturer’s ability to accommodate orders in a short time (University of Phoenix, 2008). KLI has backlog and quality assurance issues with product production and scheduling, determining to outsource or produce in house becomes a vital aspect during this time, especially when dealing with backlogs (University of Phoenix, 2008). In the Simulation University of Phoenix (2008), one of the issues plaguing KLI was trying to find a way to properly handle production which would affect inventory levels. Not only
Problem Solution: Kuiper Leda is inventory affected but communication and schedule correlation with everyone involved in the production aspect was also an issue. In conjunction, KLI’s inventory system may be antiquated; it appears KLI does not have an accurate forecasting system in place. Regardless of which future system they may use like,
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grassroots, market research, time series, panel consensus, history analogy, or Delphi method, the risk of obsolescence is present. A technology upgrade maybe necessary, KLI may run the risk of having to redefine their whole process do the fact that this software (even though industry standard) may not flow with their organizational structure (Chase, Jacobs & Aquilano 2005, p. 499).
Opportunity KLI could use a few techniques that Toyota has used in the past to build a successful supply chain design. The Toyota system’s whole design is based on elimination of wastes, which according to Chase, Jacobs & Aquilano (2005) Toyota’s president, Fujio Cho quote “anything other than the minimum amount of equipment, materials, parts, and workers (working time) which are absolutely essential to production.” (p. 472). The elimination of waste occurs through seven key steps: Focused Factory networks- small specialized plants Group technology- grouping of parts into families Quality at the source- do it right the first time, and halt the process when something goes wrong JIT (just in time) production- producing what is needed when needed
Problem Solution: Kuiper Leda Uniformed plant loading- making adjustments to eliminate problems by creating a frozen output rate or producing the same mix of products on a daily basis in small quantities that will be available to respond to any variations. Kanaban production control systems- it controls the amount of material that can be in process at a time—the number of containers of each item Minimized set up times- setup time reduction, setups are divided into internal and external activities Internal setups must be done while a machine is stopped. External setups can be done while the machine is running (Chase, Jacobs & Aquilano 2005, pgs. 472-479). KCL can benefit from utilization of capacity, level scheduling
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A level schedule is one that requires material to be pulled into final assembly in a pattern uniform enough to allow the various elements of production to respond to pull signals (Chase, Jacobs & Aquilano 2005, p. 484).” and, freeze windows (fixed schedule permitting no changes) otherwise known as a stable scheduling. In conjunction KLI incorporate into their inventory system safety stocks, and early deliveries, to ward against production problems such as bottlenecks (Chase, Jacobs & Aquilano 2005, p. 484). Working with suppliers and sharing usage requirements with vendors helps to see the big picture on the demands placed on their production and distribution systems (Chase, Jacobs & Aquilano, 2005). With KLI’s decision to outsource, the predicted turn around rate of delivery from these suppliers must correspond to the schedules of logistic, and other correlating parts manufacturing (University of Phoenix, 2008). This is why KLI must pursue this correlation by making this schedule available to all parties ahead of time to prevent issues. When working with
Problem Solution: Kuiper Leda suppliers correlation of efforts to keep customers and every individual who has a hand in the
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supply system must occur. This enables a level production system, with less buffering and, more confidence in vendor commitments (Chase, Jacobs & Aquilano 2005, p. 484). KLI can benefit from Focusing on factory networks, group technology, quality at the source, JIT (just in time) production, uniformed plant loading, Kanaban production control systems, and minimized set up times. Focusing on these concepts leads to Lean implementation and is obtained through; design flow, Total Quality Control (TQC), stabilized schedule, Kanban pull, working with vendors, reduced inventory, and improved product design (Chase, Jacobs & Aquilano 2005, pgs. 472-480). KLI can seize the opportunity of choosing the best inventory system. The Single period inventory system is less precise for KLI’s purposes. Inventory management for their line of business has to be an exact science that cannot be estimated. The Multi period inventory system fixed order quantity models to be set. With quantity models the optimal order quantity and the reorder point can be defined through the use of a formula.
[15.3]
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(Chase, Jacobs & Aquilano 2005, p. 598) With this same formula you can determine safety stocks, where the re order point would equal
(Chase, Jacobs & Aquilano 2005, p. 601) Determining the financial performance of the company involves much analysis and use of formulas. One metric used to determine the financial performance of a company is the Inventory turn formula, represented as such;
This represents the relationship between yearly demand and costs which also help us determine the use of safety stock, and proper forecasting (Chase, Jacobs & Aquilano 2005, p. 606). Time series forecasting is the main type of forecasting that takes past data, to determine
Problem Solution: Kuiper Leda demand, in order to make predictions for the future. Some of the trends used in this type of forecast are seasonal and cyclical. In a few months info will be available to KLI to make further predictions using the weighed moving average. Regression models are one metric used to measure differentiation or errors in forecasts (Chase, Jacobs & Aquilano 2005, p. 513).
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A closer look at the Logistic and Manufacturing aspect may be of benefit. Logistics is an important part of the supply chain and is broken down as such; materials management, plant maintenance, quality management, project management and production planning and control. Within this system you will find, JIT, ISO 9001 standards, and the need to communicate with other departments. Technology is bridging the gap by improving the supply chain’s design and strategy. Not only is it affecting the design but it also aides in the development of products that maybe outsourced globally. According to an article by Zeng. A.Z. (2003), quote Improved technologies have enabled companies to expand their markets worldwide and intensified competition has compelled organizations to outsource some of their non-core activities to other firms possessing the expertise. Under the waves of globalization and outsourcing, it is evidenced that large manufacturing companies often develop their products in Europe and the USA, manufacture in Asia and Latin America, and sell worldwide. This strategy, in its more advanced form, is known as global sourcing and is defined by Monczka and Trent (1991) as the integration and coordination of procurement requirements across worldwide business units, looking at common items, processes, technologies, and suppliers (p. 1) The article also states that the successful companies are the one who span globally, and this expansion is considered an important procurement strategy. In a survey that
Problem Solution: Kuiper Leda was conducted 80% of those who responded stated that foreign purchasing has increased for the
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company while 64% expect increases in the subsequent years. The paper also states that logistics, supply chain processes, and inter-organization information systems are important to global sourcing (Zeng. A.Z. 2003). Technology can aide in dealing with cross industry supply networks, with data warehousing databases. Applications like ERP (Enterprise Resource Planning) integrates info between departments like, manufacturing, sales, purchasing, and accounting, which all have impacts on the supply chain (Chase, Jacobs & Aquilano 2005, p. 499). Technology can also help by providing simulations for different approaches that can be taken to forecast and determine the best course of action (Chase, Jacobs & Aquilano 2005, p. 513). According to Richard B. Chase, F. Robert Jacobs, Nicholas J. Aquilano (2006) one company is facing a slowdown in the supply chain because of the September 11 attacks. Because of this change the inventory system was altered meaning that purchases were decreased on cheaper overseas items and more inventory items are being stocked and held due to shipping uncertainties (Richard B. Chase, F. Robert Jacobs, Nicholas J. Aquilano 2006, p1). Instead of stock piling inventory as Richard B. Chase, F. Robert Jacobs, Nicholas J. Aquilano (2006) states, and running away from global sourcing partners in the supply chain should share information with each individual group or persons who are directly affected by the supply chain. Included within the communication should be shared info regarding location, arrival and distribution. Contingency plans should also be in place and in sync with everyone involved as a way to ward against disruptions in business, such as shipping delays, which will cause distribution delays (Richard B. Chase, F. Robert Jacobs, Nicholas J. Aquilano 2006, p1).
Problem Solution: Kuiper Leda More people are listening and becoming in tune with the idea of total
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collaboration. In fact, I.T. is the tool that is used to create an ideal lean inventory model. This has become popular since managing inventory based on the older way of stock piling is considered too risky for some. By adapting and allowing technology to pave the way for a leaner inventory system, this company has the tools to better balance the supply vs. demand for inventory items in the future. Table 1 Issue and Opportunity Identification Issue Opportunity Reference to Specific Course Concept
(Include citation)
Concept
The production schedules for ECUs and RFIDs for KLI show back logs for both even after revisions (University of Phoenix, 2008).
KLI can use a conventional inventory system which allows them to determine the optimal order quantity (Chase, Jacobs & Aquilano 2005, p. 597).
Quote These assumptions are unrealistic, but they represent a starting point and allow us to use a simple example. • Demand for the product is constant and uniform throughout the period. • Lead time (time from ordering to receipt) is constant. • Price per unit of product is constant. • Inventory holding
Principles of inventory management Fixed order quantity
Problem Solution: Kuiper Leda cost is based on average inventory. • Ordering or setup costs are constant. • All demands for the product will be satisfied. (No backorders are allowed.) (Chase, Jacobs & Aquilano 2005, p. 597). In the beginning of the simulation the night crew ran the wrong size product and 35% of the month’s shipments still had to be Produced (University of Phoenix, 2008). By definition KLI has the potential to build quality into the Improved product design eliminates Improving supply chain
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imperfections when operating products are pulled and tested for TQC efficiency
product instead defects. The less of by inspection (Chase, Jacobs & Aquilano 2005, p. 487). defects, then the more it is assumed that all products share similar quality (Chase, Jacobs & Aquilano In the simulation RFID production was dependent on ECU production This is a 2005, p. 484). When dealing with
Effects of inventory
straightforward Independent
Problem Solution: Kuiper Leda and vice versa (University of Phoenix, 2008). problem that would need to demand, the demand for certain management on cash
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be commutated items are un related conversion and produced at specific intervals to offset delays and backlogs where as in a dependent relationship items co depend on each other (Chase, Jacobs & Aquilano 2005, p. 591) Independent vs. dependent demand cycle and cost of goods
In the simulation, the outsourcing alternatives may seem favorable for ECUs in some cases but not all. The alternatives for the RFIDs may not seem so favorable when produced out of house or outsourced (University of Phoenix, 2008).
KLI will have to find a balance between the alternatives such as out sourcing and in-house
This is one of the important tools for dealing with the uncertainty of the demand and supply system (Chase, Jacobs & Aquilano 2005, p. 413) Quote • ISO 9001 Model
Supply chain management practices
Outsourcing
KLI has an obligation to provide quality finished products. This
production Quality should be built into
Ethical issues
Problem Solution: Kuiper Leda obligation is not only recognized internally but externally as well. the manufacturing process in order to meet International quality standards. for quality assurance: design, development, production, installation and servicing • ISO 9002 Model for quality assurance: production, installation and servicing • ISO 9003 Model for quality assurance: final inspection and test • ISO 10012 Requirements for measuring equipment (Chase, Jacobs & Aquilano 2005, p. 334) Stakeholder Perspectives/Ethical Dilemmas ISO 9000 among supply chain stakeholders
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Problem Solution: Kuiper Leda
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The overall goal of KLI is to increase market share and to create beneficial results for all those involved. This would also mean that KLI would have an ethical obligation to provide quality products to its customers. According to the article In recovery: supply chain optimization brings benefits to all stakeholders (Sept 2006), one company called Premier Inc., which is an alliance of 200 or more hospitals and health care systems was able to do this by optimizing its supply chain quote Premier gained a number of opportunities to increase its contract purchase activity and to advance market share. Spend Manager reveals areas in which contracts are not fully utilized and can facilitate behaviors and process changes that maximize member savings, which lead to Premier administration fees. It also supports usage of existing contracts and increasing volume for a specific contract or product to reach a better price tier. The system identifies contracted product alternatives and opportunities to "standardize" on a contract or product, while pointing out automatically where there might be a need for additional contracts or products. "Premier has been able to grow its collection of administration fees because we have made it easier for our members to identify places where they can increase contract spending," says Palmer. Finally, the entire initiative has enhanced and strengthened Premier's competitive position in the marketplace. For any organization--provider, vendor, partnership or alliance--that is a major mission accomplished (p.1). In addition to vendors, customers and owners, financers are also included in that group of
Problem Solution: Kuiper Leda stakeholders. Table 2 Stakeholder Perspectives
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Stakeholder Perspectives Stakeholder Groups The Interests, Rights, and Values of Each Group Suppliers These individuals desire to maintain a working relationship with its buyer to incur profits, which Customers is vital to the sustainability of their company. These individuals presented a demand and would like their demands fulfilled so they can in turn Owners deliver their finished products to consumers. The company’s profitability relies on its profits. If the company cannot make a profit or live up to either of the before mentioned expectations then Financial institutions this company will suffer financially. The ones who may have a greater interest are those who have loaned money to the company in return for payment with interest. Problem Statement At the moment, KLI is suffering from non specialized factory networks which would better organize the structure of production and inventory management. Quality at the source is
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not in place at the production line, which is causing production errors for the overall production plans. Currently there aren’t any metrics imposed to monitor supply chain performance. A stable schedule is not in place, which allows for communication down the lines. In the simulation there is miss communication and non productive actions imposed by night crew management who are not in tuned with currents needs and schedules for the project. This has created waste, and with 35% of production behind schedule, recouping wasted time may be difficult or impossible to do. In looking at the big picture KLI has a lack of, global sourcing, an affective logistics design, outsourcing, and supply chain design strategy End-State Vision Through practicing principles introduced from the Toyota way KLI will accommodate high volume orders. With the right mix of outsourcing and in-house production, KLI can capitalize on the falling cost to purchase and manufacture this component. The potential is there to increase production with the system in place and an inventory plan based on independent vs. demand type needs as well as JIT, will benefit inventory needs for the future. Metrics such as regression models, inventory turn equations, and adherence to ISO 9000 standards adds value to the supply chain, and continued success of the company. Table 3 End State Goals End-State Goals KLI has positioned themselves to accommodate high volume orders of 250,000 ECU’s and 35,000 RFID or more in the future to increase profitability through assessing existing supply
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chain management practices. Increase margins KLI has increased production of both products by 25% without sacrificing quality KLI has managed to develop an inventory management plan KLI has managed to impose metrics for measuring supply chain performance for future analysis
Alternative Solutions The available solutions for manufacturing at KLI’s are; Manufacting- manufacturing the product in house Outsource- buying all or key parts from another manufacturer E-Portal- buying the product or components from portals, that sells electronic parts and components Contract manufacturing- outsourcing the whole production of the entire product or component to another manufacturer. To accommodate the high value of orders, increase margins and aide in the development of an inventory system ECU’s should be outsourced through an E-business portal. In doing so the lead time would remain the same as if it was manufactured in house, except that the purchasing cost would be less and the contribution margin higher (see appendices A & B) To accommodate the high value of orders, increase margins and aide in the development of an inventory system Microchips will be outsourced through an E- business portal as well. The lead times would be the same if they were manufactured in house but the purchasing cost would be lower, than if they were produced in house, and the contribution margin also higher (see appendices A & B)
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To accommodate the high value of orders, increase margins and aide in the development of an inventory system RFID’s would have to be manufactured in house due to the fact that the purchase manufacturing costs are lower, margins higher and lead times are lower
Table 3 Analysis of Alternative Solutions
Alternative Solution Evaluation Matrix
GOALS
Acco o aio o h h v lu e m d t n f ig o m o e rd rs
D v lo a in e t r e e p n v no y m n g m n sy e a a e e t st m
In e sem rg s cr a a in
ALTERNATIVE SOLUTIONS
Relative Importance (Weight)==>
1
4
4 5 5 5
Final Rating 5.00 5.00 5.00 -
Primary Alternative Solutions O t o r eEC 'sEb s e sP r a us uc U - u in s o t ls 5 5 O t o r em r c ip - u in s us uc ic o h sEb s e s P ra o t ls R ID Mn f cuein o s F 's a ua t r - h u e D ) E) Secondary Alternative Solutions O t o r eEC 'sC nr c us uc U - o ta t m n f c ue a ua t r r 5 1 M r c ip - a ua t r inh u e ic o h s M n f c ue o s 5 1 5 5 5 5
5 5
3.22 3.22 -
SCALE==>
5 = High 4 = Middle to High 3 = Middle 2 = Low to Middle 1 = Low
Problem Solution: Kuiper Leda Analysis of Alternative Solutions The outsourcing of ECU’s through an E-business portal aide in meeting all the goals,
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therefore a score of five (high ranking) was given for this alternative. Its secondary alternative of outsourcing to a contract manufacturer was more costly but would still aide in the accommodation of such high volume which ranks a five. The contribution margin would be lower which ranks a one. This choice would still aide in developing an inventory system, which yields a ranking of five. Manufacturing microchips in house would still helps to accommodate the volume which, rates highly at a five, but this would be more costly and would have a lower contribution margin which, ranks at one. It still is a viable alternative in developing an inventory system, which rates a five in conjunction with that concept (see appendices A & B).
Risk Assessment and Mitigation Techniques
Outsourcing ECU’s through E-business portals yield higher margins (45 is the margin for E-business portals, and 30 for contract manufacturing) and lower production costs (655 is the cost for E-business portals 670 for contract manufacturing), with favorable lead times (4 weeks as opposed to 5 in house, see appendices A and B). This would be the only mitigation technique that would help KLI meet their end goals. Outsourcing microchips would serve as a cost and lead efficient mitigation action and would correlate to the lead time for ECU production. This is important because for every ECU produced a corresponding microchip would also need to be produced (University of Phoenix 2008).
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Outsourcing RFID’s is too costly (see appendix B). Manufacturing costs are nine percent higher for E-business portal, and Contract manufacturing. The contribution margin for in house is 45, this is higher than both outsourcing alternatives (see appendix B).
Table 4 Risk Assessment and Mitigation Techniques
Risk Assessment and Mitigation Techniques
Alternative Solution ECU’s should be outsourced through an Contract manufacturer • • • Risks and Probability Higher production • costs Lower margins Longer lead times All three are probable and are a high risk Consequence and Severity If production costs get to high, KLI may not be able to handle high volumes in the future due to financial economics Mitigation Techniques • Outsource through E-business portals to reduce cost and increase margins
Microchips will be manufactured in house
• • •
Higher production costs Lower margins Longer lead times All three are probable and are a high risk
•
Co dependency on ECU manufacturing so a domino effect will occur here
•
Outsource through
E-business portals to reduce costs and to eliminate domino affects
RFID’s outsourced
•
Higher production
•
If KLI cannot
•
Manufacture in
Problem Solution: Kuiper Leda through E-business portals • costs Lower margins All three are probable and are a high risk keep up with production, this causes delays, and customers may look to other manufacturers house to reduce lead times • Reduce costs
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Optimal Solution
In comparing KLI to the bench markings, they too may benefit from adopting some of the principles presented by Ryder, Tompkins Associates, as well as those mentioned by Zeng. Specifically KLI, would need to use technology to help formulate the supply chain. The bench marking results also indicate that info sharing for all those affected should be an area of focus, along with design or re designing of the layouts relating to production, distribution, strategic planning, logistics, and outsourcing to optimize their supply chain. After benchmarking other inventory systems, independent vs. dependent demand has to be considered in conjunction with a fixed order quantity type inventory system. Other principles of lean manufacturing can be of benefit, such as the Toyota way which includes the seven principles of waste elimination focused factory networks ,group technology, quality at the source, JIT (just in time) production, uniformed plant loading, Kanaban production control systems, and minimized set up times.
Problem Solution: Kuiper Leda KLI will position them selves accommodate high volume orders of 250,000 ECU’s and 35,000 RFID or more in the future to increase profitability through accessing the proper manufacturing mix. ECU’s and microchips will be outsourced through E-business portals to reduce cost and increase margins, and RFID’s will be manufactured in house to reduce lead times and reduce costs. KLI will increase production of both products by 25% without sacrificing quality with the proper production mix, implementation of sound logistics system, and an online collaboration system.
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Implementation Plan
Metrics will be introduced to monitor the progress of each department in relation to meeting the company’s goals. Each department head will be accountable and will have to report and suggest contingencies to management when things steer of course, like with the production issue mentioned earlier where the wrong size components were produced. New software will be installed and tested by users within their delegated departments. Any issues in software will be reported and amended. In the mean time, inventory systems (safety stocks), production schedules, requirements and contingencies will be constructed to promote project “Optimization of supply chain”. Weekly status reports will be required to determine the progress of the project.
Table 5
Problem Solution: Kuiper Leda Optimal Solution Implementation Plan Deliverable Call first meeting of department heads. Flow chart outlining procedures and current technology systems that are in place will be delivered next meeting (flow charts come from the dept heads) Current procedures and flow charts of operation will be analyzed by CEO, who will in turn solicit the professional opinion of a consulting firm CEO will distribute a modification or revised flow diagram of operations (to each department head) for each department to follow up, with implementation of a new collaboration software Results discussed in relation to testing, out sourcing and manufacturing decisions and Full implementation of software due presently and requirement reports due the This is to be installed and tested for each department to try one week prior to next meeting Natalie Zamora Vice president of Finance Nicole Swanson Vice President of Operations Natalie Zamora Vice president of Finance Consulting company is to report back to Zach before the start of the next meeting Zach Muir Chief executive officer (CEO)
st
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Timeline 1 Monday of current month next meeting will be on the following Monday.
Who is Responsible Call of meeting Zach Muir Chief executive officer (CEO)
Problem Solution: Kuiper Leda requirements due next week with contingencies for production or delay mishaps, production schedules by all departments involved Inventory system plans, safety stocks, new production schedules (revised and collaborated down the lines of communication through new software) Contingencies, requirements and schedules due now, revised production schedule and detailed collaboration status due Monday the following week at the next weekly meeting Begin first week of project “Optimization of supply chain” with the new requirements and systems in place Status reports with full metrics determining progress of the new project Due presently the following week status updates will be due These status reports are due weekly by department heads and are reported to upper management Vice President of Operations responsible But Natalie Zamora Vice president of Finance will be present Nicole Swanson Vice President of Operations Zach Muir Chief executive officer (CEO) Natalie Zamora Vice president of Finance Nicole Swanson Vice President of following week…. Nicole Swanson Vice President of Operations
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Problem Solution: Kuiper Leda Operations
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Problem Solution: Kuiper Leda
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Evaluation of Results
Metrics in my opinion include a method of measuring progress or performance. The metrics assigned to each goal is the specific tool that is needed in order to meet the target. Scheduling, formulas, regression models and in some case benchmarking or research, are all affective metrics that a company may use to monitor their performance, check for inconsistencies, diagnose the problem and implement contingency plans to correct the issues.
Table 6 Evaluation of Results End-State Goals KLI has positioned themselves to accommodate high volume orders to increase profitability Metrics Schedule and verification of completion of tasks per week (all will not be produced at once a quota must be met regularly and monitored to insure the schedule is adhered KLI has increased production of both products to) Regression models relating outsourcing to actual performance goals KLI has managed to develop an inventory management (Weekly status reports) Inventory Turn formula (Weekly status reports) Safety stocks are incorporated in this system, along with 25% without sacrificing quality Target 250,000 ECU’s and 35,000 RFID or more in the future
Problem Solution: Kuiper Leda plan Independent and dependant demand
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Conclusion
Through careful analysis of identifying the issues, we were able to suggest applicable solutions to the problems facing KLI, identify the opportunities, define stakeholder needs, and identify the end goals in helping to meet the goals set for KLI.
If KLI capitalizes on the opportunities mentioned in this paper, then the company can pursue a more positive outcome, and meet all specified goals involving optimization of the supply chain.
References
In recovery: supply chain optimization brings benefits to all stakeholders. Sept 2006 v27 i9
Problem Solution: Kuiper Leda p40 (3) Health Management Technology, 27, 9. p.40 (3). Retrieved October 14, 2009, from RDS database.
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Richard B. Chase, F. Robert Jacobs, Nicholas J. Aquilano (2006) Chapter 15 Inventory control. The Mcgraw-Hills group.2009, from Business Dateline. Steve Konicki. (2001, December). He's fixed on keeping the supply chain strong. InformationWeek,(869), 41. Retrieved October 15, 2009, from ABI/INFORM Global. Tompkins Associates & Optiant Form Alliance to Bring Supply Chain Design and Inventory Optimization to manufacturers. (5 October). PR Newswire,1. Retrieved October 15, University of Phoenix (2008). Managing inventory in a supply chain. Retrieved October 12, 2 009from University of Phoenix website. Zeng. A.Z. (2003) “Global sourcing: process and design for efficient management”. Supply Chain Management: An International Journal v (8) 4
Appendix (A)
Problem Solution: Kuiper Leda Lead time evaluation of sourcing alternatives
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Problem Solution: Kuiper Leda
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Problem Solution: Kuiper Leda Appendix (B) Cost evaluation of sourcing alternatives
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Problem Solution: Kuiper Leda Albee Horne University of Phoenix MBA/550 Resource Optimization October 22, 2009
Problem Solution: Kuiper Leda Problem Solution: Kuiper Leda Kuiper Leda Inc. (KLI) is an electronics components manufacturer for the automotive industry who specializes in electronic component units (ECUs) and sensors. Recently, the company added radio frequency identification devices (RFIDs) to the product line. Through this technology, KLI has a strong international base, and one of KLI’s customers include Midland motors who has placed a 250,000 order for ECUs, and 35,000 for RFID’s. KLI will determine whether to accept this project, decide how to meet these demands, and to figure out if such components should be produced partially in-house or outsourced (University of Phoenix, 2008). Within this paper I will identify key issues and opportunities that can help KLI complete their tasks which include developing a plan that optimizes the supply chain, and developing metrics to assess the performance of the supply chain process. In completing these tasks, inadvertently I will explain the principles of inventory management and the effects on cash conversion cycles and cost of goods, Identify domestic and global best practices in supply chain management, as well as explain the roles of stakeholders in the supply chain, the relationship between forecasting, and Just in Time (JIT) inventory. After the tasks are completed, and key principles are adopted, KLI will be better able to consider all stakeholders, and dilemmas, that bridges the gap, and aides them in reaching their end goals.
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Problem Solution: Kuiper Leda Situation Analysis
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Issue and Opportunity Identification Issue KLI may be dealing with cross industry supply networks (University of Phoenix, 2008). According to the simulation from University of Phoenix, any other provider lower in the BOM (bill of material) may be servicing demands from other manufacturers or service providers in different industry segments. This would interfere with the time and demand component of the facets of a supply chain (University of Phoenix, 2008). Another issue is the ability to meet demand. In the simulation there was an example of car manufacturing, that when 5,000 cars are scheduled for production on a set schedule, any corresponding parts would be produced simultaneously and any changes in schedule leads to problems in supply timing and quantity, also affecting other scheduling for corresponding part manufacturers. KLI is experiencing an issue in meeting demand since 35% of that month’s shipments were not yet made. Additionally, distortion in the supply chain allows for larger work in progress for inventories in the supply pipeline, this limits the manufacturer’s ability to accommodate orders in a short time (University of Phoenix, 2008). KLI has backlog and quality assurance issues with product production and scheduling, determining to outsource or produce in house becomes a vital aspect during this time, especially when dealing with backlogs (University of Phoenix, 2008). In the Simulation University of Phoenix (2008), one of the issues plaguing KLI was trying to find a way to properly handle production which would affect inventory levels. Not only
Problem Solution: Kuiper Leda is inventory affected but communication and schedule correlation with everyone involved in the production aspect was also an issue. In conjunction, KLI’s inventory system may be antiquated; it appears KLI does not have an accurate forecasting system in place. Regardless of which future system they may use like,
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grassroots, market research, time series, panel consensus, history analogy, or Delphi method, the risk of obsolescence is present. A technology upgrade maybe necessary, KLI may run the risk of having to redefine their whole process do the fact that this software (even though industry standard) may not flow with their organizational structure (Chase, Jacobs & Aquilano 2005, p. 499).
Opportunity KLI could use a few techniques that Toyota has used in the past to build a successful supply chain design. The Toyota system’s whole design is based on elimination of wastes, which according to Chase, Jacobs & Aquilano (2005) Toyota’s president, Fujio Cho quote “anything other than the minimum amount of equipment, materials, parts, and workers (working time) which are absolutely essential to production.” (p. 472). The elimination of waste occurs through seven key steps: Focused Factory networks- small specialized plants Group technology- grouping of parts into families Quality at the source- do it right the first time, and halt the process when something goes wrong JIT (just in time) production- producing what is needed when needed
Problem Solution: Kuiper Leda Uniformed plant loading- making adjustments to eliminate problems by creating a frozen output rate or producing the same mix of products on a daily basis in small quantities that will be available to respond to any variations. Kanaban production control systems- it controls the amount of material that can be in process at a time—the number of containers of each item Minimized set up times- setup time reduction, setups are divided into internal and external activities Internal setups must be done while a machine is stopped. External setups can be done while the machine is running (Chase, Jacobs & Aquilano 2005, pgs. 472-479). KCL can benefit from utilization of capacity, level scheduling
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A level schedule is one that requires material to be pulled into final assembly in a pattern uniform enough to allow the various elements of production to respond to pull signals (Chase, Jacobs & Aquilano 2005, p. 484).” and, freeze windows (fixed schedule permitting no changes) otherwise known as a stable scheduling. In conjunction KLI incorporate into their inventory system safety stocks, and early deliveries, to ward against production problems such as bottlenecks (Chase, Jacobs & Aquilano 2005, p. 484). Working with suppliers and sharing usage requirements with vendors helps to see the big picture on the demands placed on their production and distribution systems (Chase, Jacobs & Aquilano, 2005). With KLI’s decision to outsource, the predicted turn around rate of delivery from these suppliers must correspond to the schedules of logistic, and other correlating parts manufacturing (University of Phoenix, 2008). This is why KLI must pursue this correlation by making this schedule available to all parties ahead of time to prevent issues. When working with
Problem Solution: Kuiper Leda suppliers correlation of efforts to keep customers and every individual who has a hand in the
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supply system must occur. This enables a level production system, with less buffering and, more confidence in vendor commitments (Chase, Jacobs & Aquilano 2005, p. 484). KLI can benefit from Focusing on factory networks, group technology, quality at the source, JIT (just in time) production, uniformed plant loading, Kanaban production control systems, and minimized set up times. Focusing on these concepts leads to Lean implementation and is obtained through; design flow, Total Quality Control (TQC), stabilized schedule, Kanban pull, working with vendors, reduced inventory, and improved product design (Chase, Jacobs & Aquilano 2005, pgs. 472-480). KLI can seize the opportunity of choosing the best inventory system. The Single period inventory system is less precise for KLI’s purposes. Inventory management for their line of business has to be an exact science that cannot be estimated. The Multi period inventory system fixed order quantity models to be set. With quantity models the optimal order quantity and the reorder point can be defined through the use of a formula.
[15.3]
Problem Solution: Kuiper Leda
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(Chase, Jacobs & Aquilano 2005, p. 598) With this same formula you can determine safety stocks, where the re order point would equal
(Chase, Jacobs & Aquilano 2005, p. 601) Determining the financial performance of the company involves much analysis and use of formulas. One metric used to determine the financial performance of a company is the Inventory turn formula, represented as such;
This represents the relationship between yearly demand and costs which also help us determine the use of safety stock, and proper forecasting (Chase, Jacobs & Aquilano 2005, p. 606). Time series forecasting is the main type of forecasting that takes past data, to determine
Problem Solution: Kuiper Leda demand, in order to make predictions for the future. Some of the trends used in this type of forecast are seasonal and cyclical. In a few months info will be available to KLI to make further predictions using the weighed moving average. Regression models are one metric used to measure differentiation or errors in forecasts (Chase, Jacobs & Aquilano 2005, p. 513).
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A closer look at the Logistic and Manufacturing aspect may be of benefit. Logistics is an important part of the supply chain and is broken down as such; materials management, plant maintenance, quality management, project management and production planning and control. Within this system you will find, JIT, ISO 9001 standards, and the need to communicate with other departments. Technology is bridging the gap by improving the supply chain’s design and strategy. Not only is it affecting the design but it also aides in the development of products that maybe outsourced globally. According to an article by Zeng. A.Z. (2003), quote Improved technologies have enabled companies to expand their markets worldwide and intensified competition has compelled organizations to outsource some of their non-core activities to other firms possessing the expertise. Under the waves of globalization and outsourcing, it is evidenced that large manufacturing companies often develop their products in Europe and the USA, manufacture in Asia and Latin America, and sell worldwide. This strategy, in its more advanced form, is known as global sourcing and is defined by Monczka and Trent (1991) as the integration and coordination of procurement requirements across worldwide business units, looking at common items, processes, technologies, and suppliers (p. 1) The article also states that the successful companies are the one who span globally, and this expansion is considered an important procurement strategy. In a survey that
Problem Solution: Kuiper Leda was conducted 80% of those who responded stated that foreign purchasing has increased for the
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company while 64% expect increases in the subsequent years. The paper also states that logistics, supply chain processes, and inter-organization information systems are important to global sourcing (Zeng. A.Z. 2003). Technology can aide in dealing with cross industry supply networks, with data warehousing databases. Applications like ERP (Enterprise Resource Planning) integrates info between departments like, manufacturing, sales, purchasing, and accounting, which all have impacts on the supply chain (Chase, Jacobs & Aquilano 2005, p. 499). Technology can also help by providing simulations for different approaches that can be taken to forecast and determine the best course of action (Chase, Jacobs & Aquilano 2005, p. 513). According to Richard B. Chase, F. Robert Jacobs, Nicholas J. Aquilano (2006) one company is facing a slowdown in the supply chain because of the September 11 attacks. Because of this change the inventory system was altered meaning that purchases were decreased on cheaper overseas items and more inventory items are being stocked and held due to shipping uncertainties (Richard B. Chase, F. Robert Jacobs, Nicholas J. Aquilano 2006, p1). Instead of stock piling inventory as Richard B. Chase, F. Robert Jacobs, Nicholas J. Aquilano (2006) states, and running away from global sourcing partners in the supply chain should share information with each individual group or persons who are directly affected by the supply chain. Included within the communication should be shared info regarding location, arrival and distribution. Contingency plans should also be in place and in sync with everyone involved as a way to ward against disruptions in business, such as shipping delays, which will cause distribution delays (Richard B. Chase, F. Robert Jacobs, Nicholas J. Aquilano 2006, p1).
Problem Solution: Kuiper Leda More people are listening and becoming in tune with the idea of total
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collaboration. In fact, I.T. is the tool that is used to create an ideal lean inventory model. This has become popular since managing inventory based on the older way of stock piling is considered too risky for some. By adapting and allowing technology to pave the way for a leaner inventory system, this company has the tools to better balance the supply vs. demand for inventory items in the future. Table 1 Issue and Opportunity Identification Issue Opportunity Reference to Specific Course Concept
(Include citation)
Concept
The production schedules for ECUs and RFIDs for KLI show back logs for both even after revisions (University of Phoenix, 2008).
KLI can use a conventional inventory system which allows them to determine the optimal order quantity (Chase, Jacobs & Aquilano 2005, p. 597).
Quote These assumptions are unrealistic, but they represent a starting point and allow us to use a simple example. • Demand for the product is constant and uniform throughout the period. • Lead time (time from ordering to receipt) is constant. • Price per unit of product is constant. • Inventory holding
Principles of inventory management Fixed order quantity
Problem Solution: Kuiper Leda cost is based on average inventory. • Ordering or setup costs are constant. • All demands for the product will be satisfied. (No backorders are allowed.) (Chase, Jacobs & Aquilano 2005, p. 597). In the beginning of the simulation the night crew ran the wrong size product and 35% of the month’s shipments still had to be Produced (University of Phoenix, 2008). By definition KLI has the potential to build quality into the Improved product design eliminates Improving supply chain
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imperfections when operating products are pulled and tested for TQC efficiency
product instead defects. The less of by inspection (Chase, Jacobs & Aquilano 2005, p. 487). defects, then the more it is assumed that all products share similar quality (Chase, Jacobs & Aquilano In the simulation RFID production was dependent on ECU production This is a 2005, p. 484). When dealing with
Effects of inventory
straightforward Independent
Problem Solution: Kuiper Leda and vice versa (University of Phoenix, 2008). problem that would need to demand, the demand for certain management on cash
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be commutated items are un related conversion and produced at specific intervals to offset delays and backlogs where as in a dependent relationship items co depend on each other (Chase, Jacobs & Aquilano 2005, p. 591) Independent vs. dependent demand cycle and cost of goods
In the simulation, the outsourcing alternatives may seem favorable for ECUs in some cases but not all. The alternatives for the RFIDs may not seem so favorable when produced out of house or outsourced (University of Phoenix, 2008).
KLI will have to find a balance between the alternatives such as out sourcing and in-house
This is one of the important tools for dealing with the uncertainty of the demand and supply system (Chase, Jacobs & Aquilano 2005, p. 413) Quote • ISO 9001 Model
Supply chain management practices
Outsourcing
KLI has an obligation to provide quality finished products. This
production Quality should be built into
Ethical issues
Problem Solution: Kuiper Leda obligation is not only recognized internally but externally as well. the manufacturing process in order to meet International quality standards. for quality assurance: design, development, production, installation and servicing • ISO 9002 Model for quality assurance: production, installation and servicing • ISO 9003 Model for quality assurance: final inspection and test • ISO 10012 Requirements for measuring equipment (Chase, Jacobs & Aquilano 2005, p. 334) Stakeholder Perspectives/Ethical Dilemmas ISO 9000 among supply chain stakeholders
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Problem Solution: Kuiper Leda
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The overall goal of KLI is to increase market share and to create beneficial results for all those involved. This would also mean that KLI would have an ethical obligation to provide quality products to its customers. According to the article In recovery: supply chain optimization brings benefits to all stakeholders (Sept 2006), one company called Premier Inc., which is an alliance of 200 or more hospitals and health care systems was able to do this by optimizing its supply chain quote Premier gained a number of opportunities to increase its contract purchase activity and to advance market share. Spend Manager reveals areas in which contracts are not fully utilized and can facilitate behaviors and process changes that maximize member savings, which lead to Premier administration fees. It also supports usage of existing contracts and increasing volume for a specific contract or product to reach a better price tier. The system identifies contracted product alternatives and opportunities to "standardize" on a contract or product, while pointing out automatically where there might be a need for additional contracts or products. "Premier has been able to grow its collection of administration fees because we have made it easier for our members to identify places where they can increase contract spending," says Palmer. Finally, the entire initiative has enhanced and strengthened Premier's competitive position in the marketplace. For any organization--provider, vendor, partnership or alliance--that is a major mission accomplished (p.1). In addition to vendors, customers and owners, financers are also included in that group of
Problem Solution: Kuiper Leda stakeholders. Table 2 Stakeholder Perspectives
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Stakeholder Perspectives Stakeholder Groups The Interests, Rights, and Values of Each Group Suppliers These individuals desire to maintain a working relationship with its buyer to incur profits, which Customers is vital to the sustainability of their company. These individuals presented a demand and would like their demands fulfilled so they can in turn Owners deliver their finished products to consumers. The company’s profitability relies on its profits. If the company cannot make a profit or live up to either of the before mentioned expectations then Financial institutions this company will suffer financially. The ones who may have a greater interest are those who have loaned money to the company in return for payment with interest. Problem Statement At the moment, KLI is suffering from non specialized factory networks which would better organize the structure of production and inventory management. Quality at the source is
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not in place at the production line, which is causing production errors for the overall production plans. Currently there aren’t any metrics imposed to monitor supply chain performance. A stable schedule is not in place, which allows for communication down the lines. In the simulation there is miss communication and non productive actions imposed by night crew management who are not in tuned with currents needs and schedules for the project. This has created waste, and with 35% of production behind schedule, recouping wasted time may be difficult or impossible to do. In looking at the big picture KLI has a lack of, global sourcing, an affective logistics design, outsourcing, and supply chain design strategy End-State Vision Through practicing principles introduced from the Toyota way KLI will accommodate high volume orders. With the right mix of outsourcing and in-house production, KLI can capitalize on the falling cost to purchase and manufacture this component. The potential is there to increase production with the system in place and an inventory plan based on independent vs. demand type needs as well as JIT, will benefit inventory needs for the future. Metrics such as regression models, inventory turn equations, and adherence to ISO 9000 standards adds value to the supply chain, and continued success of the company. Table 3 End State Goals End-State Goals KLI has positioned themselves to accommodate high volume orders of 250,000 ECU’s and 35,000 RFID or more in the future to increase profitability through assessing existing supply
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chain management practices. Increase margins KLI has increased production of both products by 25% without sacrificing quality KLI has managed to develop an inventory management plan KLI has managed to impose metrics for measuring supply chain performance for future analysis
Alternative Solutions The available solutions for manufacturing at KLI’s are; Manufacting- manufacturing the product in house Outsource- buying all or key parts from another manufacturer E-Portal- buying the product or components from portals, that sells electronic parts and components Contract manufacturing- outsourcing the whole production of the entire product or component to another manufacturer. To accommodate the high value of orders, increase margins and aide in the development of an inventory system ECU’s should be outsourced through an E-business portal. In doing so the lead time would remain the same as if it was manufactured in house, except that the purchasing cost would be less and the contribution margin higher (see appendices A & B) To accommodate the high value of orders, increase margins and aide in the development of an inventory system Microchips will be outsourced through an E- business portal as well. The lead times would be the same if they were manufactured in house but the purchasing cost would be lower, than if they were produced in house, and the contribution margin also higher (see appendices A & B)
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To accommodate the high value of orders, increase margins and aide in the development of an inventory system RFID’s would have to be manufactured in house due to the fact that the purchase manufacturing costs are lower, margins higher and lead times are lower
Table 3 Analysis of Alternative Solutions
Alternative Solution Evaluation Matrix
GOALS
Acco o aio o h h v lu e m d t n f ig o m o e rd rs
D v lo a in e t r e e p n v no y m n g m n sy e a a e e t st m
In e sem rg s cr a a in
ALTERNATIVE SOLUTIONS
Relative Importance (Weight)==>
1
4
4 5 5 5
Final Rating 5.00 5.00 5.00 -
Primary Alternative Solutions O t o r eEC 'sEb s e sP r a us uc U - u in s o t ls 5 5 O t o r em r c ip - u in s us uc ic o h sEb s e s P ra o t ls R ID Mn f cuein o s F 's a ua t r - h u e D ) E) Secondary Alternative Solutions O t o r eEC 'sC nr c us uc U - o ta t m n f c ue a ua t r r 5 1 M r c ip - a ua t r inh u e ic o h s M n f c ue o s 5 1 5 5 5 5
5 5
3.22 3.22 -
SCALE==>
5 = High 4 = Middle to High 3 = Middle 2 = Low to Middle 1 = Low
Problem Solution: Kuiper Leda Analysis of Alternative Solutions The outsourcing of ECU’s through an E-business portal aide in meeting all the goals,
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therefore a score of five (high ranking) was given for this alternative. Its secondary alternative of outsourcing to a contract manufacturer was more costly but would still aide in the accommodation of such high volume which ranks a five. The contribution margin would be lower which ranks a one. This choice would still aide in developing an inventory system, which yields a ranking of five. Manufacturing microchips in house would still helps to accommodate the volume which, rates highly at a five, but this would be more costly and would have a lower contribution margin which, ranks at one. It still is a viable alternative in developing an inventory system, which rates a five in conjunction with that concept (see appendices A & B).
Risk Assessment and Mitigation Techniques
Outsourcing ECU’s through E-business portals yield higher margins (45 is the margin for E-business portals, and 30 for contract manufacturing) and lower production costs (655 is the cost for E-business portals 670 for contract manufacturing), with favorable lead times (4 weeks as opposed to 5 in house, see appendices A and B). This would be the only mitigation technique that would help KLI meet their end goals. Outsourcing microchips would serve as a cost and lead efficient mitigation action and would correlate to the lead time for ECU production. This is important because for every ECU produced a corresponding microchip would also need to be produced (University of Phoenix 2008).
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Outsourcing RFID’s is too costly (see appendix B). Manufacturing costs are nine percent higher for E-business portal, and Contract manufacturing. The contribution margin for in house is 45, this is higher than both outsourcing alternatives (see appendix B).
Table 4 Risk Assessment and Mitigation Techniques
Risk Assessment and Mitigation Techniques
Alternative Solution ECU’s should be outsourced through an Contract manufacturer • • • Risks and Probability Higher production • costs Lower margins Longer lead times All three are probable and are a high risk Consequence and Severity If production costs get to high, KLI may not be able to handle high volumes in the future due to financial economics Mitigation Techniques • Outsource through E-business portals to reduce cost and increase margins
Microchips will be manufactured in house
• • •
Higher production costs Lower margins Longer lead times All three are probable and are a high risk
•
Co dependency on ECU manufacturing so a domino effect will occur here
•
Outsource through
E-business portals to reduce costs and to eliminate domino affects
RFID’s outsourced
•
Higher production
•
If KLI cannot
•
Manufacture in
Problem Solution: Kuiper Leda through E-business portals • costs Lower margins All three are probable and are a high risk keep up with production, this causes delays, and customers may look to other manufacturers house to reduce lead times • Reduce costs
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Optimal Solution
In comparing KLI to the bench markings, they too may benefit from adopting some of the principles presented by Ryder, Tompkins Associates, as well as those mentioned by Zeng. Specifically KLI, would need to use technology to help formulate the supply chain. The bench marking results also indicate that info sharing for all those affected should be an area of focus, along with design or re designing of the layouts relating to production, distribution, strategic planning, logistics, and outsourcing to optimize their supply chain. After benchmarking other inventory systems, independent vs. dependent demand has to be considered in conjunction with a fixed order quantity type inventory system. Other principles of lean manufacturing can be of benefit, such as the Toyota way which includes the seven principles of waste elimination focused factory networks ,group technology, quality at the source, JIT (just in time) production, uniformed plant loading, Kanaban production control systems, and minimized set up times.
Problem Solution: Kuiper Leda KLI will position them selves accommodate high volume orders of 250,000 ECU’s and 35,000 RFID or more in the future to increase profitability through accessing the proper manufacturing mix. ECU’s and microchips will be outsourced through E-business portals to reduce cost and increase margins, and RFID’s will be manufactured in house to reduce lead times and reduce costs. KLI will increase production of both products by 25% without sacrificing quality with the proper production mix, implementation of sound logistics system, and an online collaboration system.
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Implementation Plan
Metrics will be introduced to monitor the progress of each department in relation to meeting the company’s goals. Each department head will be accountable and will have to report and suggest contingencies to management when things steer of course, like with the production issue mentioned earlier where the wrong size components were produced. New software will be installed and tested by users within their delegated departments. Any issues in software will be reported and amended. In the mean time, inventory systems (safety stocks), production schedules, requirements and contingencies will be constructed to promote project “Optimization of supply chain”. Weekly status reports will be required to determine the progress of the project.
Table 5
Problem Solution: Kuiper Leda Optimal Solution Implementation Plan Deliverable Call first meeting of department heads. Flow chart outlining procedures and current technology systems that are in place will be delivered next meeting (flow charts come from the dept heads) Current procedures and flow charts of operation will be analyzed by CEO, who will in turn solicit the professional opinion of a consulting firm CEO will distribute a modification or revised flow diagram of operations (to each department head) for each department to follow up, with implementation of a new collaboration software Results discussed in relation to testing, out sourcing and manufacturing decisions and Full implementation of software due presently and requirement reports due the This is to be installed and tested for each department to try one week prior to next meeting Natalie Zamora Vice president of Finance Nicole Swanson Vice President of Operations Natalie Zamora Vice president of Finance Consulting company is to report back to Zach before the start of the next meeting Zach Muir Chief executive officer (CEO)
st
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Timeline 1 Monday of current month next meeting will be on the following Monday.
Who is Responsible Call of meeting Zach Muir Chief executive officer (CEO)
Problem Solution: Kuiper Leda requirements due next week with contingencies for production or delay mishaps, production schedules by all departments involved Inventory system plans, safety stocks, new production schedules (revised and collaborated down the lines of communication through new software) Contingencies, requirements and schedules due now, revised production schedule and detailed collaboration status due Monday the following week at the next weekly meeting Begin first week of project “Optimization of supply chain” with the new requirements and systems in place Status reports with full metrics determining progress of the new project Due presently the following week status updates will be due These status reports are due weekly by department heads and are reported to upper management Vice President of Operations responsible But Natalie Zamora Vice president of Finance will be present Nicole Swanson Vice President of Operations Zach Muir Chief executive officer (CEO) Natalie Zamora Vice president of Finance Nicole Swanson Vice President of following week…. Nicole Swanson Vice President of Operations
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Problem Solution: Kuiper Leda Operations
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Problem Solution: Kuiper Leda
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Evaluation of Results
Metrics in my opinion include a method of measuring progress or performance. The metrics assigned to each goal is the specific tool that is needed in order to meet the target. Scheduling, formulas, regression models and in some case benchmarking or research, are all affective metrics that a company may use to monitor their performance, check for inconsistencies, diagnose the problem and implement contingency plans to correct the issues.
Table 6 Evaluation of Results End-State Goals KLI has positioned themselves to accommodate high volume orders to increase profitability Metrics Schedule and verification of completion of tasks per week (all will not be produced at once a quota must be met regularly and monitored to insure the schedule is adhered KLI has increased production of both products to) Regression models relating outsourcing to actual performance goals KLI has managed to develop an inventory management (Weekly status reports) Inventory Turn formula (Weekly status reports) Safety stocks are incorporated in this system, along with 25% without sacrificing quality Target 250,000 ECU’s and 35,000 RFID or more in the future
Problem Solution: Kuiper Leda plan Independent and dependant demand
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Conclusion
Through careful analysis of identifying the issues, we were able to suggest applicable solutions to the problems facing KLI, identify the opportunities, define stakeholder needs, and identify the end goals in helping to meet the goals set for KLI.
If KLI capitalizes on the opportunities mentioned in this paper, then the company can pursue a more positive outcome, and meet all specified goals involving optimization of the supply chain.
References
In recovery: supply chain optimization brings benefits to all stakeholders. Sept 2006 v27 i9
Problem Solution: Kuiper Leda p40 (3) Health Management Technology, 27, 9. p.40 (3). Retrieved October 14, 2009, from RDS database.
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Richard B. Chase, F. Robert Jacobs, Nicholas J. Aquilano (2006) Chapter 15 Inventory control. The Mcgraw-Hills group.2009, from Business Dateline. Steve Konicki. (2001, December). He's fixed on keeping the supply chain strong. InformationWeek,(869), 41. Retrieved October 15, 2009, from ABI/INFORM Global. Tompkins Associates & Optiant Form Alliance to Bring Supply Chain Design and Inventory Optimization to manufacturers. (5 October). PR Newswire,1. Retrieved October 15, University of Phoenix (2008). Managing inventory in a supply chain. Retrieved October 12, 2 009from University of Phoenix website. Zeng. A.Z. (2003) “Global sourcing: process and design for efficient management”. Supply Chain Management: An International Journal v (8) 4
Appendix (A)
Problem Solution: Kuiper Leda Lead time evaluation of sourcing alternatives
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Problem Solution: Kuiper Leda
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Problem Solution: Kuiper Leda Appendix (B) Cost evaluation of sourcing alternatives
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