Critical Thinking in (Logistic Management)

Slide 7.1

Harrison and van Hoek, Logistics Management and Strategy: Competing T hrough the Supply Chain , 4th Edition, © Pearson Education Limited 2011

Chapter 7:

Just-in-time and the agile supply chain

Slide 7.2

Harrison and van Hoek, Logistics Management and Strategy: Competing T hrough the Supply Chain , 4th Edition, © Pearson Education Limited 2011

Slide 7.3

Harrison and van Hoek, Logistics Management and Strategy: Competing T hrough the Supply Chain , 4th Edition, © Pearson Education Limited 2011

Just In Time

• Just In Time - JIT' An inventory strategy

companies employ to increase efficiency

and decrease waste by receiving goods

only as they are needed in the production

process, thereby reducing inventory costs.

• Used by Japanese automotive

manufacturers

Slide 7.4

Harrison and van Hoek, Logistics Management and Strategy: Competing T hrough the Supply Chain , 4th Edition, © Pearson Education Limited 2011

Lean Thinking

• Is a way to recognize and eliminate

wasteful activities from the supply chain in

order to increase product flow and speed.

• Organizations that incorporate lean

thinking into their supply chain can benefit

from improved customer service, reduced

environmental impact by reducing waste

and even overall corporate citizenship.

Slide 7.5

Harrison and van Hoek, Logistics Management and Strategy: Competing T hrough the Supply Chain , 4th Edition, © Pearson Education Limited 2011

Lean thinking invites to analyze

business processes systematically to

establish the base line of value adding

process and identify the incidence of

these seven wastes

Slide 7.6

Harrison and van Hoek, Logistics Management and Strategy: Competing T hrough the Supply Chain , 4th Edition, © Pearson Education Limited 2011

Figure 7.3 Basic tasks in a car assembly plant

Slide 7.7

Harrison and van Hoek, Logistics Management and Strategy: Competing T hrough the Supply Chain , 4th Edition, © Pearson Education Limited 2011

Types of waste

1. Waste of overproduction

2. Waste of waiting

3. Waste of transporting

4. Waste of Inappropriate processing

5. Waste of unnecessary inventory

6. Waste of unnecessary motions

7. Waste of defects

Slide 7.8

Harrison and van Hoek, Logistics Management and Strategy: Competing T hrough the Supply Chain , 4th Edition, © Pearson Education Limited 2011

Figure 7.4 Lean thinking principles (Source: After Womack and Jones, 2003)

Slide 7.9

Harrison and van Hoek, Logistics Management and Strategy: Competing T hrough the Supply Chain , 4th Edition, © Pearson Education Limited 2011

Principles of lean thinking

Lean thinking is a cyclical route to seeking perfection by

eliminating waste and thereby enriching value from

customer perspective. The customer should not pay for the

cost, time and quality penalties of the wasteful process in

the supply chain

 Specify value- Value from customer

perspective

 Identify the value stream- Identify the whole

sequence of process along the supply

network

Slide 7.10

Harrison and van Hoek, Logistics Management and Strategy: Competing T hrough the Supply Chain , 4th Edition, © Pearson Education Limited 2011

Principles of lean thinking

 Make value flow- means eliminating the

seven wastes and can be implemented by

applying the key factors such as minimizing

delays, inventories, defects

 Pull scheduling-Implies that demand

information is made available across the

supply chain.

 Seek perfection-Is achieved by getting better

gradually and squeezing waste out at every

step.

Slide 7.11

Harrison and van Hoek, Logistics Management and Strategy: Competing T hrough the Supply Chain , 4th Edition, © Pearson Education Limited 2011

Agility in Supply chain

• Is a practical approach to organizing logistics

capabilities around changing end- customer

demands

• where development, sourcing, logistics and

sales are designed to adapt quickly to

changes in demand or customer preference

• Agile strategy is concerned with assigning

capacity so that products can be made

rapidly to meet demand

Slide 7.12

Harrison and van Hoek, Logistics Management and Strategy: Competing T hrough the Supply Chain , 4th Edition, © Pearson Education Limited 2011

Table 7.1 Comparison of lean supply with agile supply: the distinguishing attributes

Slide 7.13

Harrison and van Hoek, Logistics Management and Strategy: Competing T hrough the Supply Chain , 4th Edition, © Pearson Education Limited 2011

Table 7.2 Further characteristics of lean and agile supply

Slide 7.14

Harrison and van Hoek, Logistics Management and Strategy: Competing T hrough the Supply Chain , 4th Edition, © Pearson Education Limited 2011

Application of Lean thinking

 Order to replenishment

 Order to production

 Product development

Slide 7.15

Harrison and van Hoek, Logistics Management and Strategy: Competing T hrough the Supply Chain , 4th Edition, © Pearson Education Limited 2011

Model of Agile Capabilities

• Market sensitive

– Supply chain is capable of reading and responding to real demand

• Virtual

– Information-based supply chain, rather than inventory-based.

Agile supply chain

Slide 7.16

Harrison and van Hoek, Logistics Management and Strategy: Competing T hrough the Supply Chain , 4th Edition, © Pearson Education Limited 2011

Model of Agile Capabilities

• Network based

– EDI and internet enable

partners in the supply

chain to act upon the real

demand

• Process integration

– Collaborative working

between buyers and

suppliers, joint product

development, common

systems and shared

information Agile supply chain

Slide 7.17

Harrison and van Hoek, Logistics Management and Strategy: Competing T hrough the Supply Chain , 4th Edition, © Pearson Education Limited 2011

Sales and Operations Planning

for Agility

Factors for Successful S&OP 1. Ongoing routine S&OP meeting

2. Structural meeting agenda

3. Pre work to support meeting inputs

4. Cross functional participation

5. Participants empowered to make decisions

6. Responsible organization to run process

7. Unbiased base line forecast to start process

Slide 7.18

Harrison and van Hoek, Logistics Management and Strategy: Competing T hrough the Supply Chain , 4th Edition, © Pearson Education Limited 2011

Sales and Operations Planning

for Agility

8. Joint supply and demand planning

9. Measurement of the process

10. Integrated demand –supply planning

technology

11. External inputs to the process

Slide 7.19

Harrison and van Hoek, Logistics Management and Strategy: Competing T hrough the Supply Chain , 4th Edition, © Pearson Education Limited 2011

Product Design for agility

Design for manufacture and assembly

Concurrent engineering

Design for supply chain

Slide 7.20

Harrison and van Hoek, Logistics Management and Strategy: Competing T hrough the Supply Chain , 4th Edition, © Pearson Education Limited 2011

Manufacturing for agility

 Agility-responding to changes-requires

responsive and flexible manufacturing

 Can be adapted quickly to new products

 Can accommodate changes in mix range

of variants

 Involvement of minimum cost or time

penalties

Slide 7.21

Harrison and van Hoek, Logistics Management and Strategy: Competing T hrough the Supply Chain , 4th Edition, © Pearson Education Limited 2011

Supply chain partnerships for

agility

• Relationship could be described as

success factor of many agile supply chains

• Dependent on a network of supply chain

partners that collaborate to meet the end

customer needs by availing resources

Slide 7.22

Harrison and van Hoek, Logistics Management and Strategy: Competing T hrough the Supply Chain , 4th Edition, © Pearson Education Limited 2011

Combining Lean and Agile Three main approaches to combining lean

and Agile

Hybrid Strategies Appropriate market condition

Pareto Analysis across a product range-80:20 Use lean methods for the volume lines and agile methods for the slow movers

High levels of variety Demand is heavy skewed toward a small proportion of the product range

De-coupling Point The aim is to lean up to the decoupling point and agile beyond it, as in form postponement

Product design allows for this so the product remain generic in the early stage of manufacturing

Separate volatile and base demand for a given SKU Meet the forecastable element of demand using lean principles and use agile principles for the less predictable demand

When base level of demand can be confidently predicted from past experience

Slide 7.23

Harrison and van Hoek, Logistics Management and Strategy: Competing T hrough the Supply Chain , 4th Edition, © Pearson Education Limited 2011

• Application of leagility: the de-coupling point approach