predictive metrics for supply chains · no maintenance supply chain no product development...
TRANSCRIPT
PREDICTIVE METRICSFOR SUPPLY CHAINS
By: Linda HaydamousAdvisor: Dr. Larry Lapide
May 21, 2009
Massachusetts Institute of Technology
Outline
1. What are Predictive Metrics?
2. Research Question and Scope
3. Motivation
4. Approach
5. Results – A Framework for Predictive Metrics
6. Conclusion
7. Future Research2
This is what “reactive” metrics show …
This is what predictive metrics aim to show.
1. What are Predictive Metrics?
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MetricsQuantitative or qualitative verifiable measures.Defined with respect to a reference point.
“Reactive” metricsBackward-looking – they measure past performance.Can be used, at best, for damage control.
Predictive metricsForward-looking – they assess future performance.Aim to prevent problems rather than correct them.
2. Research Question and Scope
What are the most effective metrics to predict supply chain future performance in the areas of:
CostScheduleQualityTechnical
Focused on Aerospace & Defense production programsNo maintenance supply chainNo Product DevelopmentEngineer-to-Order Type ProductNo Demand PlanningNo Inventory Policies
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3. Motivation
A&D companies develop large-scale systems Require numerous suppliersHave highly intertwined supply chains
Current performance management systems typically:Have a blizzard of metricsMeasure past performance to determine corrective actionLead to the wrong kind of behavior
Continuous performance “surprises”
Corrective action very costly6
4. Approach
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Predictive Metrics
Framework
Data Analysis
System Dynamics Models
Case Studies
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Sub-tier Supplier Performance
Root Cause Analysis of Supplier Position
Intrinsic Changes within Supplier
How to Predict Supply Chain Performance? (1/2)
Problem
Purchase Orders, Specifications
Parts, Technical Problems
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Data Trending
Statistical Process Control
Quality of Supplier Orders
How to Predict Supply Chain Performance? (2/2)
Critical Supply Chain Performance Factors
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Cost Schedule Quality Technical1 Skilled Labor x x x x2 Critical Skills Per Project x x x3 Employee Retention (or Attrition) x x4 Management Change x x x5 Employee Morale x x6 Labor Cost x
7 First‐Time Quality (or Rework) x x x8 Backlog x x x9 Expediting x x
10 Inspection x11 Process Improvement x12 Training x x
13 Plant Uptime x x
14 Research and Development x
15 Financial Stability x x x x
16 Growth x x
Factor
Peop
leProcess
Prod
uct
Busine
ss
Determined from System Dynamics ModelsRepetitive feedback loops across the 4 areas of performance :
CostScheduleQualityTechnical
Separated in 4 types:PeopleProcessProductBusiness
Comparing Predictive Metrics to “Reactive” Metrics
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Developing Predictive Metrics Framework
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Supplier SegmentationPower MatrixAdapted from Cox (2003)
Program SegmentationOperational Performance TriangleAdapted from Lapide (2006)
Customer Response
Efficiency Asset Utilization
Concept of Operation
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Root Cause Factors
Corrective Action
Predictive MetricsSupply Chain
OperationSystem Dynamics
ModelPredictive
Metrics
Program Focus(Objectives) Supplier Type
5. Results – A Predictive MetricsFramework
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• Attrition • Backlog• Critical Skills Per Project • Expediting • Financial Stability• Plant Uptime • Use of Substitute Material
Sample Predictive Metrics
6. Conclusion
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Predictive metrics:Provide early warnings of problems and early indications of successful completion.Do not eliminate the need of historical reporting, they provide smarter ways to look at them.
Business strategy, supply chain and predictive metrics should be aligned.
There is no “one-size-fits-all” – different metrics per program type and supplier type.
7. Future Research
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Predictive metrics for maintenance supply chains.
Predictive metrics for developmental programs.
Introduction of software
Backup Slides
Cost Causal Loop Diagram
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TotalCost
Profit
FinancialStability
CompanyRating
CustomerOrders
ProductionCapability
PlantCapacity
ProductionKnowledge and
Efficiency
Cost of Raw Material orSubassembly Components
Available Budgetfor Personnel
SkilledLabor
TraineesTraining
RateHiringRate
Skilled LaborLayoff/Quit Rate
-
+
+
+
-
+
+
+
+
+
BacklogOrder Rate Order Fulfillment
Rate
+
Defect RateDefect
IntroductionRate
DefectElimination
Rate
Rework
Pressure toCut Cost
Tendency toUse Substitute
Material
-
+
+
+
SchedulePressures
Ability to MakeOn-TimeDeliveries
Expediting+
+
-
R
Skilled Labor
Employee Wagesand Benefits
+
-
B
Labor Cost R
First-TimeQuality
-
Revenue+
Access toCapital
Tendency toExpand
+
+
+
TraineesLayoff/Quit
LaborCost+
+
B
Expediting
R
Growth
RejectionRate
+
+
Quality-
-
Executives
Executive HiringRate
ExecutiveFiring/Quit Rate
++
Tendency toIntroduceChange
EmployeeStress Level
+
+
+
+
R
ManagementChange