global sourcing, or “what’s a ‘supply chain?’” dr. ron lembke operations management
TRANSCRIPT
Supply Network View of the World
• Integrated international networks of companies process, produce and distribute products.
Computer Example
Wacker Siltronic makes silicon wafers: buy sand
grow into long crystals
slice into thin wafers
CD DriveChip stuffed onto board by Flextronics, Celestica, etc.
CD drive assembled by separate contract manufacturer
Green Printed Circuit Board from different supplier
CD drive, with a brand name on it, sold to Gateway
Supply Chain Design
Efficient – economies of scale. TP, toothpaste, landlines, routers
Responsive – Changing consumer needs, mass customization, build-to-order
Computers, fashion apparelRisk-Hedging – pooled resources, multiple sources of supply, more inv., share inv., need good IT
Server parts, some ag products, powerAgile – responsive to changing needs, pooled resources: Foxconn/Apple
Efficient
Risk-Hedging
Responsive
Agile
Low High
Low (stable)
High (evolving)
SupplyUncert.
Demand Uncertainty
Mass Customization
Dell perfected: exactly what you want, how you want, cheaper than off the shelfHighly customized
Integrate design, processes, supply network
Supply components cheaply to production pointsFast, responsive production, quick deliveryHigher value, lower weight
Managing the Supply ChainPostponement -- withhold any modification until as long as possible. Keep product generic “vanilla”
HP BenettonHome Depot paint department
Channel Assembly -- have distributor assemble products from components
HP Inkjet Printers
Printers made in Vancouver, sent via ship through Panama Canal to EuropeEurope warehouse stocks inventory by country
physically different-- power supplymanuals different languagesSubstitution not allowed
Re-supply time very long
HP Inkjet Printers
Redesigned printers so that power supply added in Europe
Re-engineer product, power supplyAssembly done in a warehouse (Quality?)Manuals added in EuropeMany expensive changes
Store ‘vanilla’ boxesPostpone point of differentiation25% cost reduction
Benetton
Sweaters of undyed wool, dyed once demand is known
Dyeing LT much faster than production
How many undyed sweaters to make?
How many Red, Green, Blue, also, if this production process is cheaper, and you know you’ll sell some minimum amount?
Behr Paints
Small # of bases
Small # tints
Unlimited # combinations
Keep stock colors on hand?How many gallons?
Which ones?
Lower labor costs
Higher inventory costs
Modular Components Take advantage of modules: parts or products previously prepared
Restaurants: prepared ingredients, assembled to order
Suppliers can develop new, interesting products to use more quickly, cheaply
Variety is gained by different combinations of same components