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Improving Demand Reliability of Supply chain By focusing on Factory Responsiveness

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Improving Demand Reliability of Supply chain By focusing on Factory Responsiveness (ICI Paints) Final Project Report in Supply Chain Management Under the guidance of Prof. B.S. Sahay By Group 13 Apurva Sharma 03P011 Dinesh Kumar Gupta 03P087 Kaushik Bose 03P027 Anant Swamy 03P007 Lavish Talegaonkar 03P098 Management Development Institute Gurgaon 122 001 November 25th , 2004 EXECUTIVE SUMMARY ICI PAINTS is keen to establish a dominant position in the paint industry. It has decided to focus on demand reliability to improve its performance & customer satisfaction. One of the important factors to improve demand reliability is by focusing on factory operations & improving its responsiveness. The report discussing in detail a responsive production system, the various metrics & how it can be achieved. As markets become more volatile, lean supply chains are under pressure to become agile. Whilst lean and agile are often seen as opposites, much of the lean philosophy and practices are foundational for an effective agile company, and indeed as the research results show, most companies require a combination of the two approaches. The report suggests a Leagile production system to achieve a responsive factory. The mix of appropriate techniques to achieve this combination will differ depending on the products and processes within a given supply chain, and there is certainly no 'one size fits all' system. The final recommendations illustrate the various means to achieve agile paradigm. ACKNOWLEDGEMENT We would like to thank Mr.Amarpreet Singh (Manager- Supply chain) from ICI Paints for giving us an opportunity to work on this problem in the company. We also take this opportunity to thank other company officials for their valuable inputs. We would also like to thank Prof.B.S.Sahay for his continued help & guidance throughout the duration of the project. Further we would like to thank everyone who have helped us in the completion of this project TABLE OF CONTENTS COMPANY BACKGROUND 5 RATIONALE FOR TAKING PROJECT 6 OBJECTIVE OF THE STUDY 7 SCOPE OF THE PROJECT 7 METHODOLOGY 7 EXISTING SYSTEM ...read more.


This will also help us to fix suitable benchmarks. Also, ignoring the factory, will only lead to increased inventory, longer cycle times, and higher costs as product variety increases. There are a number of compelling reasons why the factory should be the starting point in the journey toward demand driven manufacturing. First, converting to lean manufacturing in the factories will help ensure that ERP software is not merely automating an otherwise bad process. Secondly, the factory is often the starting point for companies intending to make broader supply chain improvements. When a company sees significant results from the lean manufacturing transformation, they can often convince suppliers to do the same, providing help and experience. Once the factory is lean, upstream supply chain improvements help ensure that supply disruptions do not hamper the lean factory. Another critical aspect to be considered here is: "To Go for Global Optimisation across the Supply Chain rather than local optimization" To achieve suitable factory responsiveness we have to start evaluating right from the supplier end who delivers our raw material. We did a detailed secondary research to determine parameters to measure factory responsiveness. We also took the inputs of managers in demand planning & factory to arrive at a list of parameters The following parameters can be used to gauge the responsiveness of the factory. 1) Direct Labour Productivity This involves the measure of: * Standard Direct Labour Cost * Standard Direct Labour time per unit output * Earned standard Direct Labour dollars * Direct Labour efficiency * Direct Labour utilization Total Labour Rate = Direct Labour Rate X (1 + overhead rate) The principle problem of this allocation method is the high priority it puts on the reduction of Labour and the lack of emphasis on the reducing overhead. 2) Machine utilization Machine Utilization = Actual Time Producing (min/day) = Actual Output Rate Time Available (min/day) Standard Output Rate 3) ...read more.


The effectiveness of the processes reduces as we move away from the shop floor level towards the corporate/office level. The processes which can be directly affected while redesigning the shop floor are as follows: 1. Supplier Relations 2. Preventive maintenance 3. Inventory control 4. Production control 5. Integrated quality The processes which support and interact with the shop floor process but need a separate attention are as follows: 1. Marketing 2. Quality assurance 3. Production engineering 4. Finance/Accounting 5. Production planning 6. Product engineering Thus in order to take care of the aforesaid factors, in improving the factory or more precisely the shop floor responsiveness, the following order can be suggested to bring about agility on the shop floor. The suggested order is based on the study of the industry best practices as far as the improvement of the shop floor responsiveness is concerned: Agility Enabler Effect on the agility Cellular Layout Putting process steps close together on the shop floor minimizes material handling costs, eliminates the non-value added time, increases communication (information flow), and increases flexibility of workers to move between tasks Shop Floor ergonomics Building flexibility into the workplace allows workers to efficiently share tacks while protecting them from injury. This includes simple things like consideration of safe lifting techniques, provision of mechanical aids, avoiding repetitive motions to perform a given task. Setup reduction Setup reduction allows minimal batch sizes to reduce WIP between activities Integrated quality This minimizes waste due to production of defective parts by defect prevention (fool proofing) and defect prediction (quality control) Preventive maintenance It allows reduction of WIP inventory by eliminating need for buffer stock to cover for failed machinery Production control Pull production using simple control techniques such as Kanban minimizes WIP inventory, cycle time, and overheads Inventory Control This works in conjunction with pull production to provide parts to the shop floor only when needed and to minimize inventory Supplier relations This integrates suppliers into shop floor operations and features frequent delivery to the shop floor, standard order quantities, certification for quality, and single-source, long term contracts. ...read more.

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