This report is about guiding companies to become successful in managing their supply chain by firstly to set for their company aims and business strategies.
Part A
Introduction
This report is about guiding companies to become successful in managing their supply chain by firstly to set for their company aims and business strategies. Then, focus on effective ways of streamlining the products or services flow through the supply chain pipelines. There are many issues to be concerned of to smooth the process flow along the supply chain pipelines. A particular industry has been chosen to identify the steps made by companies to improve the synchronisation processes and activities across the supply chain. Some barriers of change have been considered based on the suggested new design of supply chain. By referring to the automotive industry supply chain, late configuration of vehicle build for the 3 day car has been clearly specified. There will be changes that are likely to occur in the future. This report has identified the role that web-base technologies may play to make supply chain more efficient and effective.
Company Aims
Every company wants to become successful in business and be the best when compare with the competitors. Not surprisingly, many companies would have the similar aim which is to become a World Class Companies. There is no other ways that companies can straight achieving a success without a good plan. Hence, company strategies need to be well produced and achieve accordingly.
Business Strategies for The New Supply Chain
. Focus on the customers
2. Compete with the world class companies
3. Partnership with the World Class Companies
4. Collaboration with all parties along the supply chain
5. Trust between all parties
6. Synchronise the supply chain
7. Response to change
Major Problems in the supply chain
* Slow in order processing
* Early delivery of products to customer
* Lack of storage space of mass produced products can cause expensive inventory cost
* Customer dissatisfaction
* Late delivery of orders produce overhead cost
* Orders can delivered on time but quality deteriorates
* Customer change orders frequently and this affect the whole supply chain - lack of agility
* Difficult to manage the complex supplier network
* Difficult to achieve right orders at the right cost and on the right time.
Reduce Current Supply Chain Problems by Streamlining The Products/ Services Flow Through the Supply Chain Pipelines
Build to Order Strategy
To remain competitive in the car manufacturing industry for example, it is important that company should focus on its process flows within the supply chain. The automotive industry is required to flow the product along the supply chain from raw material to finished product and ultimately to customer. But, it is rather important to focus on how orders are to be taken and the orders are being processed to reduce error, increase accuracy of information and speed in processing the information. Normally, order processing stage would take about few weeks and remaining few days to produce the car. Today, customer can now place order over the Internet from the company web site and mass customise their orders by completing the web pages. The information obtained can be viewed by all parties connected to company's supply chain. By doing this, it saves time in order processing and reduces it to only one day for customer to take the order, the next day to produce the car and last day to deliver the finished car to the customer. This is known as the 3DayCar. On-line configuration could also speed the incorporation of innovative features and advanced technologies into new products, with automakers able to capture vast amounts of data on consumer preferences that could be fed directly into product development. These data could also trigger offerings of services customized to the needs of that individual. In effect, the customer becomes a co-designer of not only his/her current vehicles but of bundled services and future product offerings as well. A successful "build to order" system will be designed to shape consumer demand by control-ling what choices are offered. Rather than large numbers of individual features, consumers are likely to be presented with configurations of features to choose. The use of Internet can reduce the operational cost and improve process flow through supply chain pipeline.
Modularise Design Complexity
Due to the complexity of design of a car and the systemic characteristics such as NVH (Noise, Voice and Harshness), many designers require an integral approach for the product architecture. This can have standard modules designed to be usable in a wide array of products to compromise design quality with modules having to be designed to meet the highest requirements of the product range. There the integrality has been inbuilt to the functioning of a car. The idea is drawn from the safety system where computer makers are used to unite system functions and geography, e.g. to put all functions related to typing in the single physical unit of the keyboard. The supplier could optimize the design of all the remote components, with the production and installation of those components distributed according to their physical placement in the vehicle. The "system" strategy has the advantage of making the safety system work smoothly, but requires the careful integration of particular parts by the automaker during final assembly. The "modular" strategy could potentially compromise functionality, but allows the car to be divided into large 'chunks' that can be designed and assembled independently and then easily combined in response to customized consumer demand. In favour of modules are the prospects of design efficiencies from the combination of parts and functions that might lead to cost savings. According to Howard Mickey from the executive briefing that current emphasis on vehicle design is on module integration to make more specific models that increase sharing of parts and models standardization. He added that painted door modules, interior modules and roof modules will reduce production lead time. Other cost savings could come with the high volumes associated with modules that were sufficiently standardized to be usable across a wide array of vehicles.
Modular Production and Mass Customisation Approach
In modular production, suppliers build up modules and deliver them in sequence to the OEM to simplify the final assembly process. The process sequence can potentially be organized so that customization steps are postponed until as late in production as possible, thus allowing for mass production economies at earlier stages. To build customized products will reduce finished goods inventories dramatically. This strategy may require suppliers hold higher levels of parts and work-in-process inventory. OEM access to data on consumer preferences, expressed during order configuration, can potentially improve demand forecasting accuracy, thus ...
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Modular Production and Mass Customisation Approach
In modular production, suppliers build up modules and deliver them in sequence to the OEM to simplify the final assembly process. The process sequence can potentially be organized so that customization steps are postponed until as late in production as possible, thus allowing for mass production economies at earlier stages. To build customized products will reduce finished goods inventories dramatically. This strategy may require suppliers hold higher levels of parts and work-in-process inventory. OEM access to data on consumer preferences, expressed during order configuration, can potentially improve demand forecasting accuracy, thus mitigating the need for inventory buffers. Running a true "build-to-order" production system also differs greatly from either mass production or lean production. Lean production operates with very low levels of inventory and with quick setups to handle rapid product changeover that are predictable. Predictability is necessary because lean production emphasizes the extreme leveling of production to avoid the waste of idle capacity or of overproduction. A production system based on 100% build-to-order might have too much volatility to allow for this degree of production leveling. Thus lean production could accommodate "build-to-order" only with production scheduling that combines "pull" and "push" derived demand. It is also important to combine with customers by steering customer at the customer front-end to support scheduling system that can be readily built, given production and parts supply constraints at any given point in time.
E-procurement under "Build-to-Order"
Electronic, Internet-mediated procurement can achieve "build-to-order" by facilitating the rapid and low-cost dissemination of order information, production scheduling, engineering changes, and other crucial information. There is a variety of alternate methods of communication between OEMs and suppliers, such as proprietary electronic data interchange (EDI). Today, Internet can accomplish the task and offers the low cost, high speed, and universal connectivity necessary to make build-to-order economically feasible. An integrated build to order system without infrastructure that can distribute large amounts of information simultaneously, at low cost to all upstream links in the value chain will not achieve a good supply chain. With e-procurement under build to order, it can also improve supplier relationships. It is manage supplier relationships by seeing them in 2 modes: "exit" and "voice". For exit model, automakers solve problems with suppliers through price negotiation, quality enforcement and allocate responsibilities in the agreement by replacing them with another supplier. For the 'voice' model, an automaker works with the original supplier to resolve problems. The Japanese industry has been characterized more by 'voice.'
The advantage of the voice model has been a rich flow of information that can lead to improvements such as the elimination of unnecessary or expensive process steps. The disadvantage is that suppliers are still lack of trust for information exchange. Conversely, the advantage of 'exit' for the automaker is that it is not locked in to any supplier. Due to the barriers to entry, suppliers in 'exit' mode tend to have less bargaining power than do those in 'voice' relationships. Under pressure from Japanese competition, the US industry has moved toward voice in the last 15 years. A key source of superior Japanese quality was held to be the proximity of design to production, so that defects could be ironed out quickly. This view has led many suppliers to invest heavily in design capabilities in order to take over design tasks from OEMs. Suppliers have hoped to persuade automakers of sourcing full modules (such as complete interiors) from one firm. Electronic procurement could end up reinforcing either the exit or the voice model depending on the nature of the product architecture's moves towards modularity. The idea of build-to-order may require modularization of the car into a few easy-to-assemble chunks.
Standardisation
Smaller assemblers wanted to keep parts standard, because it meant they had to design and produce fewer parts themselves. Early projects focused on standardizing large parts such as carburetors. Ford and GM had the scale to make carburetors in-house, and wanted to be able to compete on the basis of a superior design of these parts. So they narrowed the Society of Automotive Engineers (SAE)'s focus on standardization to parts like nuts and bolts, and grades of steel. The result was that the barriers to entry in the auto assembly business went up dramatically, as independent suppliers of carburetors, bodies, and engines were bought up by firms that became the Big Three. The variance of profits in the supplier industry is likely to increase dramatically. Thus, it is possible that the industry would come to consist of a handful of multibillion-dollar global mega suppliers making returns similar to the automakers, meanwhile other smaller firms earning normal returns or small returns with low overhead. In summary, the Internet by itself is not likely to alter make or buy decisions. As we have seen, it reduces the cost of sharing information, but does not by itself increase the trust and relational knowledge that will continue to be important in the design and production of complex components and modules.
Electronics Streamline Processes
According to Howard Mickey that by integrating software and assembling electronic components before the '3 day clock' commences, the problems of complexity can be overcome. Multiplex (MUX) is a key enabler to 3 Day Car where a single optional fibre with Controller Area Network technology (CAN) eliminates hundreds of variations of traditional wiring harnesses. He added that MUX allows electronic options to be added during production or at any stage of vehicle lifecycle. The use of X-by-Wire technology for braking and steering can reduce internal complexity through electronic control. The benefit is that less mechanical parts are required, such as hydraulic cylinders, brake lines and fluid.
Design for Recyclability
Regarding to Howard Mickey that DFR can reduce parts counts and drive simpler designs for example by commissioning materials used for bumpers or cockpits. Composites and in-mould coverings can make vehicle assembly easier and should be made with compatible materials for recycling purposes.
Part B: Synchronising The Supply Chain
Transforming to B2B and Reinforcing Supplier Relationships
Both Ford and General Motors announced plans to put virtually all of their global purchasing activity into huge, separate web-mediated exchanges. Less than four months later, these e-arch-rivals announced that they would merge their separate exchanges into one and would invite Daimler-Chrysler and potentially most of the rest of the world's automakers to join as well. Four developments associated with B2B appear to have the most potential for affecting (either changing or reinforcing) past norms of automotive procurement:
) Open architecture and information transparency
2) Automation of steps in the purchasing process
3) New pricing models that commoditize purchases, such as auctions
4) New tools to facilitate collaborative product design of complex components or modules.
Open Architecture and Transparency
The now-widespread diffusion of XML (eXtensive Markup Language) provides data tags and data field labels that can be read by any operating system or application with minimal translation effort. This will make it possible to put all parties in a supply chain for either large or small companies which might be located anywhere in the world. All parties will be using the same information system with access to real-time data. This will reduce the barriers to smaller suppliers, who have been disadvantaged by the high costs of proprietary IT systems in the recent past. A key determinant of supplier access to new customers is whether the XML tags will be standardized or specialized to one exchange. For example, Covisint and e-Steel have different ways of describing a purchase orders, this will make it very difficult for a firm to link its production system to orders coming from both. Open architecture IT should also allow a reduction of in-process inventories held as buffers against uncertainties created by inaccurate or out-of-date information.
Automating Purchasing Steps
The Web's open architecture comes from the ability to automate much of the purchasing process. Expert systems can be created for lower-tier suppliers that can greatly simplify processes such as need identification, vendor selection, receiving, and accounts payable. Some examples come from procurement for MRO (maintenance, repair, and general plant operations). MRO is an area plagued by ad hoc fixes, and suppliers that are infrequently used. So an expert system that would explain how to complete a repair job for a broken piece of equipment in the plant, and an online auction for suppliers to do the work might well save a lot of money.
Collaborative Mechanisms
Auctions clearly would not be used for all components in a vehicle. Indeed, the information intensity of interactions between suppliers and their OEM customers has increased tremendously in recent years, as design responsibilities are outsourced to suppliers and as the product architecture becomes more modular. E-procurement of complex modules would not proceed by auction. These parts are rarely sourced entirely on the basis of price. In fact, bids for such parts are unlikely to be sought very often since relationship-specific knowledge must be extensive for suppliers to fulfil customer requirements. For example, the value of Covisint will be as a source of timely and accurate information that aids coordination and collaboration. Covisint could facilitate collaboration in a variety of ways. Automakers can post production schedules on the web. This step increases productivity, since no one has to call or fax each supplier affected by a change in the schedule. The asynchronous nature of web communication could facilitate communication with a global supply base. One could imagine an automaker sending a video of a quality problem whose cause was unknown to suppliers of adjoining parts. While this is not as good as having all parties come to the actual site of the problem. Therefore, it is better than trying to describe it over the telephone, or sending a fax. Designs could also be posted on the web. This step, which should be technically feasible soon would have a number of benefits. It would eliminate the expense of proprietary design soft-ware. Firms that supply more than one automaker have had to operate multiple CAD systems. The software need to be used is quite expensive that would cost approximately $100,000 and requires at least one engineer dedicated to stay fresh on each package. Beside, it facilitates discussion of quality or design problems that involve several suppliers.
E-commerce Synchronise the Supply Chain
E-commerce can be used to promote collaboration, in ways that mostly increase supplier bargaining power. Posting production data slightly lowers barriers to entry by new suppliers, since they do not need to buy and implement costly software for Electronic Data Interchange (EDI). Besides that, experienced suppliers are able to take advantage of this improved information to produce better scheduling and logistics and perform quick changeovers from one product to another. A prerequisite for sharing design data electronically may well be some commitment by automakers not to use these data to undercut existing suppliers, but also to increase suppliers' bargaining power. Modularization with outsourced modules would also increase supplier bargaining power. The modules are likely to be large and complex, meaning that only a few suppliers will be able to make them. An instructive example here is the case of seats. A seat set for a mid-size car costs about $800, the most expensive part after the engine. Today, suppliers have taken over the design and engineering of the entire seat. This trend toward increased bargaining power would be reinforced if suppliers could design products that consumers would ask for by name. Johnson Controls is attempting to do just that in its partnership with Lego to produce the seat. Almost all parts of the car today are specially designed for a particular model that includes the seats. This is going for a change, where suppliers are now more powerful when the open-architecture computers become more common. For example, TRW recently introduced a rain sensor that automatically sets windshield wipers to the correct speed. The biggest challenge was designing a sensor that can be used with any type of glass used in windshields.
Barriers of Change
Lose of Brand Image
According to Howard Mickey from the 3Day Car executive briefing that the disadvantage of sharing and standardization is the danger of losing the distinctive look and feel of individual models. This can affect brand image and the ability to price differentiate.
Web Security Vagueness
Technical barriers are not the largest obstacles to posting design data. Suppliers would not want their competitors to see their designs without some assurance that they would not lose business to a firm that could cheaply imitate it. Protection of proprietary information with firewalls and secure customer-specific sections of the site will be required. But no technological security mechanism will fully substitute for the presence of trust between supplier and customer, already crucial for the "voice" mode of supplier relations to function effectively. Collaborative mechanisms will need reinforcement from other aspects of the customer-supplier relationship.
Lack of Trust
All parties in the supply chain are still lack of trust towards information exchange. They are used to keep information to themselves and they are afraid of other suppliers that would win all advantages. They are protective towards themselves and somehow they hardly give accurate information. The information distributed will cause a positive or negative impact to their companies.
Human Attitude
Human are fear towards change because they are afraid of failure. Company can afford to change its business, but cannot afford to face the failures when change turns sour. Change is hardly achieved if the staff is lack of commitment. Without staff commitment, even there are powerful technologies, the whole process will be not work smoothly.
Lack of Knowledge
When the traditional manufacturing companies start to use computers to manage the functional processes, it is likely that the processes need to be managed by skilful staff, computer literates and know the work well. One of the barriers is that there is not enough experts in the manufacturing automation and IT field.
Current IT barriers
Current IT might not be able to fulfil all required process for a particular company. Therefore, it is important that companies need to keep technology up to date, so that new technology and IT systems could help them to create more opportunities or new life in managing efficient manufacturing process to minimize waste and errors in current supply chain. There, problems of the supply chain can be reduced from time to time and current IT systems capabilities will be improved to meet with total quality system of the ISO standard.
Part 3
Late Configuration In The 3DayCar
Peugeot is an example of 3DayCar that perform late configuration. When Peugeot received an order from the customer, they will first build the body shell, then, paint it. Lastly, fit all other bits and pieces such as the engine, wheels, lights, seats, sun roof and more until everything is complete. It is a highly complex process where every movement of the process is inbuilt into the systems and worked by the robots. All processes have been fully controlled over the computerised systems. Building the Peugeot 206 at Ryton falls into four distinct phases. Firstly, the body shell is assembled by welding hundreds of metal body panels together. Second, the bare-metal body shell is specially treated, then painted. Third, the painted body shell is trimmed, the engine and major mechanical components are fitted and seats and the electrics and soft trim added. Finally, the assembled car is tested thoroughly before delivery to the customer via the network of Peugeot dealers.
Hundreds of staff needed to organise the delivery of components so that they arrive at the right place, at the right time and in the right quantity with the right quality. The component deliveries and production process are co-ordinated in such a way that assembly can continue without unnecessary delays or stops. All component delivery, both to the factory and to the trackside from large bumper assemblies to tiny fasteners is governed by complex computer systems. The smaller parts are replenished and larger components for specific cars all arrive "just-in-time". The track side delivery trucks are computer linked and the new smart trucks will operate only as programmed.
Peugeot has invested substantially in new methods and machinery at Ryton to make sure the body structure of 206 is as accurate and rigid as possible. The whole new extension has built to house new robots and tooling jigs to weld accurately the body under structure, which incorporates the floor and engine bay. More than 90 robots are used to weld body sub-assemblies, combined groups to weld larger structures, weld the body sides, floor and roof assemblies or framed and held accurately in place while being multi-welded.
However, human is still important in the body assembly process. After framing by robots, the body shell moves on to a metal finish line, where operators fit doors, bonnet, boot lid, tailgate and wings. Human mind plays a major role to fit the finish products. The complete body shell will be moved to body treatment and paint process. Most of the paint plant is for protecting the body shell, but only the end of the process is the final coat of colour applied.
First the body is cleaned by removing all traces of grease. Then, it is zinc-phosphated to prevent flaking. Next, the body moves to under seal line for PVC anti-chip coating and hardened by an infra red heat curing process. A high level of manual dexterity is used to seal all internal and external joints on the body shell before priming and painting. The application of primer and final colour paints is fully automated and computer controlled. Then, the body is baked for 20 minutes at 160-165 Celsius. The final colour will be sprayed with special high speed sprayers which spin at around 30,000 rpm. Each body is electronically charged so that the paint spray is magnetically attracted. The body is baked for further 20 minutes at 140 -145 Celcius. A further coat of lacquer is given to bodies except those painted white.
The painted body shells move to final assembly line where all mechanical and trim components will be fitted. Each body has an identity, a computer print out the itemised specification and its country destination. There will be approximately 100 different specifications for mass customise the final car. The first operation is the installation of sunroof, electrical wiring harnesses and rear light fitted. Larger components like heaters, fascias, bumpers, etc are assembled on separate mini production lines before being fitted to the car.
A new monorail system is used to improve engine assembly in which the height of the engine can be varied to the best ergonomic advantage and a new floor conveyor system to improve the fitting of the engines, gearboxes and suspension systems into the car. Then, seats, wheels and tyres are delivered to the trackside ready assembled for fitting straight onto the car and maintaining a smooth flow of production. Rechecking works were performed by operators when the car moves along the assembly track. The car produced will be tested in a test track to highlight any defects of the car parts. Then, the car will be sent for a complete computerised test. A wax coating will be given to protect it on its way to the Peugeot dealer.
Every employee is responsible to check the car and act as a quality inspector. The use of SPC(statistical Process Controls) are set upper and lower tolerance limits on every activity and is also used to maintain for high quality cars.
Changes That Are Likely To Occur In The Future
. Rely on the automated systems such as robotic machines to achieve lean manufacturing.
2. Utilise Internet capabilities (e.g. e-market) to achieve agile supply chain that allow all parties along the supply chain to share information along supply chain network.
3. Use software applications to achieve speed, high accuracy and visibility of data that can be shared throughout the supply chain. All business partners and suppliers need to invest by using compatible systems to achieve collaborative supply chain.
4. Reduce the supplier base complexity by reducing hundred of suppliers to a few. This way, it is able to reduce variation of raw materials.
5. Create responsibilities for the selected suppliers to build and deliver orders in sub systems.
The Role That Web-Based Technologies May Play
According to Yucesan.E and Van Wassenhove.L.N (2002) that the Internet can be viewed as an open communication infrastructure, while web-based technologies provide standard interfaces among dissimilar computing hardware and software. The web-based technologies on supply chain coordination can mitigate information delay and distortion as well as whether they can reduce transaction costs leading to local optimization. As for supply chain design, product supply chain and process -supply chain interfaces, investigating the impact of web-based technologies on the make versus buy decisions.
Internet is a universal communication standard that reduces the up-front investment needed to connect all parties along the supply chain regardless the hardware they possess. Low entry and exit costs make the Internet and web-based applications affordable at any stage of a buyer-supplier relationship. Web-based technologies provide a full portfolio of functionality ranging from simple information transformation to telepresence. With increased connectivity, the web provides virtual free platform to enhance transparency, eliminate delays, reduce costs and mitigate bullwhip phenomena.
The catalog hubs, or meta-catalogs offer the possibility of bringing together a virtually unlimited offers from different suppliers all over the world. The web-based technologies have provided an infrastructure that enables better matching of supply and demand by offering manufacturers a larger choice of suppliers and suppliers increased access to manufacturers, both increase reach to each other. Web-based technologies do provide extended reach into a wide pool of potential suppliers. Beside that, web-based technologies can drastically reduce day-to-day purchasing costs.
The web-based technologies also allow for the customisation of orders for each specific customer. It also enabled transparency by facilitating connectivity for effective communication and collaboration.
Conclusion
In juxtaposition, web-based technologies are the key enabler to achieve collaborative and synchronised supply chain. Internet has been used to streamline the products or services flow through the supply chain pipeline. To streamline the supply chain pipeline, it is a must to adopt build to order strategy, modularise the design complexity, mass production and mass customisation, standardisation, adopt e-procurement, replacing with electronic machines and design for recyclability. All of these processes could simplify the supply chain. To synchronise the supply chain, it is a need to achieve greater transparency of data, collaboration between parties, exploitation in e-commerce and automating purchasing steps for quick receive of supplies. There are some barriers to such change. The last part of this report focus on late configuration of the 3Day Car. The report focuses on ways adopted by the 3 Day Car to fit all sub-systems and parts together in time. It also discussed about the changes that are likely to occur in the future, and the role of web-based technologies might play.