mapping supply chains
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Mapping Supply ChainsPaul JustensenBusM 361Brigham Young University
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Supply Chain Maps: Training Overview In depth look at supply chain mapping Business Example Mapping activity Summary
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?What is a Supply Chain Map?
How will mapping supply chains help your business?
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Supply Chain Maps: History and Background
Has become more important with increase in outsourcing
Increased competition in supply chains
Barn
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Supply Chain Map: Defined
A visual representation of goods, information, processes, and money flows that occur throughout a supply chain, both upstream and downstream. Manufacturer
1st Tier Supplier
Retailer
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Characteristics of Supply Chain Maps Can focus on:
*particular use or user*theme*processes, flows, facilities, organizations, geographic relationships
Easy to distribute Easy to Interpret Designed to support corporate strategy
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Brainstorming Exercise:What suppliers supply your company?Which of these suppliers supply the most
vital products?Pick one key supplier and think about the
following list of questions How good is the quality of their products? How quickly do you receive products you
order?
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Brainstorming Exercise: (Cont) Are there any environmental factors
that could affect your supplier such as: Regulations Employee disputes Profitability issues
Would that supplier be willing to team with your company in joint projects to improve operations?
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Who supplies your supplier? Are there any internal or environmental
factors that could affect them?
Brainstorming Exercise: (Cont)
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Brainstorming Exercise RecapWhat did you learn from this activity?How might mapping supply chains help your
company?
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Why do a supply chain map? Supply chains must now compete against other
supply chains Supply chains are a points of strategic advantage Maps highlight inefficiencies Provide a methodology for analyzing processes
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Creating a Supply Chain Map1. Organize the customer and supplier team
Meet with management and supply chain directors Purpose is to discuss current situation and decide on
what core competencies are desired in supply chain
2. Draw the current-state extended value stream map
Identify activities required in transaction Use boxes to represent entities and transactional
documents
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Creating a Supply Chain Map2.Draw the current-state extended value stream map
(cont’d) Use arrows to show flows of information and products. Label the time each step takes
3. Draw the future-state extended value stream map and implementation plan
Identify areas where you can improve processes Prioritize improvement areas based potential
benefits and by ease of implementation
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Creating a Supply Chain Map4. Execute the implementation plan
Implement plan by starting with the most value-added changes first
Track changes in improvement and cost
5. Repeat process for continuous improvement
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Difficulties in collaboration Costs Savings Sensitive information Commitment Short-term focus
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Business ExampleCapital Equipment Incorporated and Mare
Technologies CEI’s customers unhappy with late deliveries CEI identified Mare, a key supplier, as a bottleneck Mare hadn’t previously considered its impact on other
businesses
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Business Example--Continued CEI persuades Mare to cooperate Cross-functional team organized Plan for achieving competencies developed
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Business Example--Continued Mapped out current value-stream map
Identified inefficiencies through observation and interviews
Mare tech
Customer service Capital Equipment
Inc
Blanket order
Sales orderMRP
Production control
Blanket order
Sales order
Material suppliers
1 day
Weeklyscheduling
Receiving Quality control Kitting
Work station 1Work station
2&3
Work station 4 Work station 5
Work station 6 Assembly 1 Final assembly Shipping
9 days
4 days12 days 11 days5 days 6 days
14 days
10 days
10 minutes
4 days
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Business Example--Continued Mapped a future value stream map with
improvements Improvements prioritized based on potential benefits
and ease of integrationMare tech
Customer service Capital Equipment
Inc
Blanket order
Sales orderMRP
Production control
Blanket order
Sales order
Material suppliers
6 Hours
ReceivingQuality control
Staging
Work cell 1
Work cell 2
Work cell 3 Final assembly Shipping1 dayFIFOFIFO FIFO
10 minutes
1 Hour
1 day1 day
Finish Goods Buffer Stock
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Business Example--Continued Executed plan
Focused on improvements with greatest ROI first Results
Lead time reduce from 55 days to 42 days Reduced average days of WIP by 91% 9% cost reduction Strengthened commitment to work together in future
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Activity: Peanut Butter CaseYou are the owner of Ritz Peanut Butter Co. located
in Sao Paulo, Brazil, and you have been wanting to improve operations at your manufacturing plant. One concern you have had is that your main supplier, Pedro’s Peanuts, requires long lead times when you order peanuts. Pedro, who is the owner of Pedro’s Peanuts, has agreed that he would work with you in improving operations. After looking closely at how the ordering process works, you come up with the following summary of operations:
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Activity: Peanut Butter CaseSteps:
1. Ritz faxes order of 1000 kilos of peanuts to Maria, the receptionist2. Maria checks the fax for orders at 8:00am, 12:00pm, and 3:00pm3. Because the production manager’s office is on the other side of the plant, new orders are sent over only 2 times per day—at 8:30am and at 1:00pm
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Activity: Peanut Butter Case4. Production manager faxes a materials request to
the purchasing director. Fax sits for 1 hour.5. If there is enough stock on hand, purchasing
notifies production manager of this. If not, it takes an average of 1 day to get stock from local farmers.
6. Peanuts then enter a batch process that takes 6 hours
7. Upon finishing, workers notify production manager, and production managers requests an invoice from accounting to be prepared.
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Activity: Peanut Butter Case8. When accounting finishes invoice, they notify the
production manager and send him a copy.9. Production manager sends invoice to shipping
and requests a shipment be made. Shipping gets request and loads truck (3 hours), and sends it to Ritz Peanut Butter Co. (1 day to deliver)
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Map of current process
Sam’s PeanutbutterReceptionist fax
1.25 hour wait
Production ManagerRaw Materials
PurchasingMaterialsrequest
12 hour average
wait
2 hour average
wait
LocalFarmer
LocalFarmer
De-shell peanuts
Wash InspectionAccounting
Shipping
6 hours
1 day
1 hour
1 hour
1 hour
1 hour
2 hours
1 day
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Possible SolutionSam’s Peanutbutterfax
1.25 hour wait
Production ManagerRaw Materials
Purchasing
Weekly forecasted
need
2 hour average
wait
LocalFarmer
LocalFarmer
De-shell peanuts
Wash InspectionAccounting
Shipping
6 hours
Continuous
1 hour
1 hour
1 hour
1 hour
2 hours
1 day
Stock pileinventory
2 hours
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Summary--ContinuedTo work with suppliers, companies must:
- build a business case benefiting both companies- plan how costs and savings will be shared- agree on competencies to pursue- work together in creating solutions
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SummarySupply chain mapping helps companies:
1. Improve strategic supply chain relations2. Identify inefficiencies3. Visualize process for communication4. Analyze development of core competencies
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References and Additional ReadingsDelmonico, David & Horton, Peter. “Charting a New Course: Extended
value stream mapping creates innovative supply chains.” APICS—The Performance Advantage. October 2004. p 43.
Gardner, John T. & Cooper, Martha. “Strategic Supply Chain Mapping Approaches.” Journal of Business Logistics. Vol 24. No 2. 2003. pp 37-57.
McInerney, Mike. “Supply Chain Alliances Can Help Logistics Teams Provide Value.” Pulp & Paper. October 2003. pp 38-40.
Anonymous, “Good, Better, Best: How to Assess Your Supply Chain Performance.” http://www.tompkinsinc.com/publications/competitive_edge/articles/06-03-Good_Better_Best.asp. Nov 2005.
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Liker, Jeffrey K. & Choi, Thomas Y. “Building Deep Supplier Relationships.” Harvard Business Review, Dec. 2004, Vol. 82. Issue 12.
References and Additional Readings