Kuiper Leda Supply Chain Defense
An organization has to comprehend the functional processes of the different interaction that go on between manufacturers, distributors, suppliers and consumers in order to have a successful supply chain management system and at the same time be able to grow in efficiencies, get an advantage over competitors in its industry as well as remain competitive in the current business environment. A world-class company recognizes that its ability to compete in the marketplace depends on developing an operations strategy that is properly aligned with its mission of serving the customer (Chase, Jacobs, & Aquilano, 2005).
Generally, businesses have the goal of wanting to achieve the best ways to work within its own company and along with its partners effectively to meet intended costs in each phase of the product life cycle, thus Kuiper is currently is that situation of searching for the ultimate options that will result in the company’s growing of profits as well as maintain efficient choices of its sources. Among these options are either outsourcing or purchasing the key components and the product from a whole different manufacturer, manufacturing the product at the company itself, or buying products from a e-business that sells electronic items and components.
In dealing with the supply chain process, six major functions exist. These six functions are used by Kuiper Leda that aid in the managing of inventory in their supply chain. These functions consist of a production plan, where here the beginning of a supply chain exists providing a business plan with direction in which the company will go regarding how much space will be used, closing out inventory, and even sales revenues; a master planning and production schedule(MPS), where here the calculations of the needs of a customer is bumped up against the production plan to coincide with what is needed and when, this plan is the target input to the material requirement plan and paves the way in the organization and establishment of all the plans involved in the supply chain ; a materials requirement plan(MRP) is the third function where the deciding factor lies in what component will be used for a particular product and here the Bill of Materials is looked at; a capacity requirements plan(CRP) confirms in careful observation how much product can be produced making sure of all the actions within a shop can be performed and attainable under this plan dealing with factors such as work center machine load capabilities and work in process on the shop floor; the production activity control (PAC)is a factor and function that puts in order the cycles of production aiding in both the initial inputs and the eventual outputs; and lastly, the delivery function is the process of documenting the process of product package and shipping and how it is flowed to the customer with updates done as needed . (University of Phoenix, 2004)
The company Kuiper understands that it is able to make its supply chain management better from outsourcing ECU production and keeping RFID tag manufacturing production within the plant. The requirement laid out by the customer for delivery is attainable because there is a four week lead time in the outsourcing of the ECU. This entire process makes the conversion if done in an e-business manner, capable. Due to multiple counts of reschedules and increase in costs the keep coming up at later dates if the company decided to maintain the productivity of ECU’s in the plant, the very stresses of that activity is alleviated by simply outsources in this step in the process. The Inventory Management Plan used by Kuiper Leda in management of the recent request for microchips at Kuiper is to sustain N-weeks supply, Order Fill Rate, Lot for Lot, and Independent Ordering System. Inventory costs are some of the easiest to identify and reduce when attacking supply chain problems. Simple stochastic inventory models can identify the potential cost savings from, for example, sharing information with supply chain partners (Lee & Nahmias (1993). In the N-weeks supply system, an adequate amount of components and products are ordered in order to fulfill the need of any products at a certain time needed in the time to come. Such a growth in the amount of product in a system will possibly increase carrying costs, but then lowers ordering costs due to the fact that many of the production times the inventory is ordered at the same time together because of forecast in inventory needed. Thus an example of this would be that of an N-week of a supply of two is sufficient, but anything that exceeds that timeframe of being past two weeks can result in overhead or overstocking. This overhead is a sure result of an increase in carrying costs. A good choice of an order fill rate would be at 75% since the inputs reveal the order fill rate must not pass 80%. Reason being is that an abundant amount of safety stock would raise carrying costs quite significantly. Huge amounts of orders would raise the inventory currently being developed at the plant as well as increase the need for additional components.
In selecting the Lot for Lot system, this guarantees that the order placed is a guaranteed of success outcome. The amount of inventory ordered changes whenever the requirements change in these instances. Inventory is placed on order when and only when needed. This sets up the Just in Time setting because orders are known ahead of time and inventory is not used in this system and at the same time a reduction takes place in carrying costs. This system performs good together with the MRP since requirements in this system are establish early. The Independent Ordering System is a onward appearance type inventory composition. A certain order in detail decision is made ahead of time in this system. When the product or supply falls below the safety stock level the order in detail is sent off and a new order is made up and developed. These type systems attempt to maintain a small level of supply at every position. Of course, this depends on the lead time in production, demand rate per day, as well as the safety stock level.
Kuiper Leda Measures
“The efficient of the supply chain can be measured based on the size of the inventory investment in the supply chain. The inventory investment is measured relative to the total cost of the goods that are provided through the supply chain,” (Chase, Jacobs, Aquilano, 2005, p. 408).
Kuiper Leda needs to measure the supply chain performance of the company in order to determine its affect on the outcome of productivity by using two types of measuring techniques of inventory turnover and weeks of supply. The total value of all items held in inventory for the firmed valued at cost(Chase, Jacobs, and Aquileno, 2005, p.408) is what is measured through inventory turnover. The weeks of supply is a measurement of the amount of weeks worth of inventory in a system at a certain point in time. Using these particular types of techniques for measurement are important for future use of inventory in a company. It is vital that Kuiper incorporate these measurements in the performance in the company’s success because oftentimes, inventory plays a part in the costs and funds of the company that is used for it could in fact, be used towards other needs of the company. If mismanaged, the company could end up needing to get a loan to cover these costs. Currently, Kuiper measures the Supply Chain system quarterly. The information gathered from this is important in ordering or producing the components. Kuiper has the decision of producing either the single product or both in house or resorting to outsourcing, but because of the capacity limit, the company should produce at a certain rate each week to meet quota. The company needs to operate in boundaries of a system permitting the company to project the requests of the order needed at that certain time during time periods, thus there is a need for keeping stock of supplies to have a complete product and at the same time be able to operate in the case of limited or a shortage in inventory. With all this playing a factor, the company needs to maintain the incoming large capacity while remaining competitive in the market. “A firm considers inventory an investment because the intent is for it to be used in the future. Inventory ties up funds that could be used for other purposes and a firm may have to borrow money to finance the inventory investment. The objective is to have the proper amount of inventory and to have it in the correct locations in the supply chain” (Chase, Jacobs, & Aquilano, 2005).
Management, regional, divisional, and plant should be the four levels that the company uses or categorizes and reviews its inventory. Metrics in these areas can be created. Statistical analysis can aid in the decision making processes of these metrics. Since the company uses Just in time for operation, this concept can be continued in the process to decide when material should be used in certain order for each operation. This concept also increases effectiveness and at the same time is designed to decrease unnecessary waste in using products when and only when needed. This very concept lowers production of inventory costs in itself. All the data collected is beneficial to Kuiper’s suppliers as well. The concept will also allow the company to save a significant amount of money in overhead costs while setting the company up for upcoming projects in the future since forecast are able to be made in inventory needed in production.
Conclusion
According to the breakdown of supply chain management, one can see that the main functionality is very vital in the determination of a company in whether it will be successful or not. The company under review, Kuiper Leda, has a good chance in being able to put in place a strategy for the company that will continue the existing characteristics of the company in providing high quality, with fast delivery of product, while reducing costs with the use of supply chain management. The plan that the company has will need to be properly understood in the various areas including the relationships between the consumers and suppliers along with the manufacturers and distributers as well in order to be effective and successful. In following this plan, Kuiper Leda will be able to compete in the industry while optimizing the supply chain. Kuiper needs to use its operating system in a way that will key in on making sure that the capacity and delivery areas are managed properly. If the company decides to outsource parts of the product line, various inside operating costs can be reduced at the same time meeting the need of customer requirements for delivery. Since the company has a good reputation, this deems as a dependable supply chain management system that delivers a final product to customers on time all the time. This system is so strong that many options are available to the company in the manufacturing, e-business, and outsourcing arenas that it is adequate enough to keep up with the demands for manufacturing the RFID. Kuiper Leda should be able to handle the load at hand under its supply chain management system it currently has.
References
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Lee, H. L., & Nahmias, S. (1993). Single-Product, Single-Location Models. In S. Graves, A.
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Retrieved April 11, 2009 , from University of Phoenix, Simulation - Resource Optimization Web site.
Wikipedia, The Free Encyclopedia (2009), Supply Chain, Retrieved April 12, 2009 from www.
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