Chapter Ten

Process Analysis and Improvement

Application: Supply Chain Management

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc. All rights reserved.

Chapter Ten Learning Objectives

Learn how to view a product supply chain from process perspective

Develop a consumer product supply chain flow model using Visio

Develop and test various what-if business decision scenarios using Beer Game simulation models

Chapter Ten Worksheet Menu

Chapter 10 Exhibits

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Process Analysis and Improvement: Tools and Techniques Copyright ©2005 by The McGraw-Hill Companies, Inc.

Filename Sheet / Page Name Exhibit Number Application / Caption

Drawings.vsd Primis Custom Publishing 1 Primis Custom Publishing Textbook Supply Chain

Drawings.vsd Lead Time Syndrome 2 Lead Time/Safety Stock Syndrome

Drawings.vsd Inventory Reduction Syndrome 3 Inventory Reduction Syndrome

Drawings.vsd Supply Chain Network 4 Supply Chain Network

Drawings.vsd Manufacturing Supply Chain 5 Manufacturing Supply Chain Network

Worksheets.xls Textile Sector 6 Integrated Production Planning and Control Philosophy - Textile Sector

Drawings.vsd Marketing Strategies 7 Supply Chain Network: Marketing Strategies

Drawings.vsd Production Strategies 8 Supply Chain Network: Production Strategies

Drawings.vsd Coordinating Strategies 9 Supply Chain Network: Coordinating Strategies

Drawings.vsd Food Production Process 10 Supply Chain Network: Food Production Process

Drawings.vsd Steel Production Process 11 Supply Chain Network: Steel Production Process

Drawings.vsd Beer Game Process Model 12 Beer Game Production Process Model

Drawings.vsd Beer Game Flow Model 13 Beer Game Supply Chain Flow Model

Drawings.vsd Beer Game Node Model 14 Beer Game Node Model

Worksheets.xls Single Unit 15 Model Beer Game.doe Input Variables

Worksheets.xls Beer Game Output Files 31 Beer Game.doe Output Files

Worksheets.xls PAN_1 34 Model Beer Game.doe Results, PAN 1

Worksheets.xls PAN_2 35 Model Beer Game.doe Results, PAN 2

Worksheets.xls PAN_3 36 Model Beer Game.doe Results, PAN 3

Worksheets.xls PAN_4 37 Model Beer Game.doe Results, PAN 4

Worksheets.xls PAN_5 38 Model Beer Game.doe Results, PAN 5

Drawings.vsd Two Unit Beer Game 39 Two Unit Beer Game Flow Network

Worksheets.xls Two Units 40 Model Two Units.doe Variables

View Selected Worksheet or Drawing

Chapter Ten FilesCD File Description

Beer Game PAN 1.pan Four-level supply chain model Process Analyzer File 1

Beer Game PAN 2.pan Four-level supply chain model Process Analyzer File 2

Beer Game PAN 3.pan Four-level supply chain model Process Analyzer File 3

Beer Game PAN 4.pan Four-level supply chain model Process Analyzer File 4

Beer Game PAN 5.pan Four-level supply chain model Process Analyzer File 5

Beer Game PAN.doe Four-level supply chain model (No VBA)

Beer Game.doe Four-level supply chain model

Beer Game.pan Four-level supply chain model Process Analyzer File

Beer Game.xls Four-level supply chain model input data

Chapter 10 Drawings.vsd Chapter 10 Drawings

Chapter 10 Presentation.ppt Chapter 10 PowerPoint Presentation

Chapter 10 Worksheets.xls Chapter 10 Worksheets

Two Units.doe Four-level multiple-unit supply chain model

Two Units.xls Four-level multiple-unit supply chain model input data

Chapter Ten Outline

Learn how to view a product supply chain from process perspective

Develop a consumer product supply chain flow model using Visio

Develop and test various what-if business decision scenarios using Beer Game simulation models

Supply Chain Perspective

Exhibit 10-1 p. 280Page: Primis Custom Publishing

Integrated Supply Chain Management

A Historical Perspective on Supply Chain

Supply Chain Management Philosophy

Strategies for Solving Supply Chain Problems

Integrated Supply Chain Management

An arrangement of suppliers of products and services

A network for efficient management of demand and flow of products and services

A philosophy of conducting business A strategy to gain competitive advantage

through coordination and synchronization of actions of its members

Supply Chain Historical Perspective

1960 to 1975 corporations had vertical organization structures and optimization of activities was focused

on functions Relationships with vendors were win-lose interactions and were many times adversarial Manufacturing systems were focused on Materials Requirements Planning (MRP)

1975 to 1990 corporations were still vertically aligned, but several were involved in process mapping and

analysis to evaluate their operations There was realization by organizations of the benefit of integration of functions such as,

product design and manufacturing. Manufacturing systems were focused on MRP II.

1990 Onwards corporations all over the world have been experiencing increasing national and international

competition Strategic alliances among organizations have been growing Organization structures are starting to align with processes Manufacturing systems in organizations have been enhanced with information technology

tools such as, • Enterprise Resource Planning• Distribution Requirements Planning• Electronic Commerce• Product Data Management• Collaborative Engineering

Supply Chain - Channel Integration

Organizational structures and associated relationships

Supply chain coordination Inter and intra enterprise

communication Sourcing Manufacturing orientation Inventory and cost management

Supply Chain Management Issues

Flexible Organizations Organizational Relationships Total supply chain coordination Improved Communications Outsourcing non-core competencies Build to Order Manufacturing Strategy Inventory Management Cost Control

Solving Supply Chain Problems

The Acceleration Principle Lead Time/Safety Stock Inventory Reduction Syndromes

Implementing Effective Supply Chain Management Strategies

A Framework for Analysis

Acceleration Principle: Lead Time/Safety Stock

Exhibit 10-2 p. 285 Page: Lead Time Syndrome

Acceleration Principle: Inventory Reduction Syndromes

Exhibit 10-3 p. 286 Page: Inventory Reduction Syndrome

Implementing Effective Supply Chain Management Strategies

Manage inventory investment in the chain Establish supplier relationships Increase customer responsiveness Build a competitive advantage for the

channel Introduce supply chain management

solutions and enabling information technology

A Framework for Analysis

Exhibit 10-4 p. 288 Page: Supply Chain Network

A Framework for Analysis

Building blocks Production Operations Management

Systems (POMS) Integrated Production Planning and

Control (IPPC)

A Framework for Analysis

Exhibit 10-5 p. 289 Page: Manufacturing Supply Chain

Supply Chain Framework Elements

Goals Objectives

Increase throughput Reduce cycle time Reduce stage inventory

Modeling Principles Developing Coordinated strategies Implementation

Reducing the influence of

lead-time variability in the productive process

inventory variability at different supply chain stages and locations

batching effects variability in the productive process

variability due to supply chain bottleneck operations

Productive Process Lead-time Variability

Set-up time can be alleviated by ensuring constant demand in the system

Process time variations can be reduced / and or eliminated by standardizing methods and procedures

Queue time can be eliminated by coordinating schedules between servers so that elapsed time for service can be minimized and server efficiency improved, and

Idle time can be eliminated or alleviated by scheduling maintenance of productive resources

Supply Chain Inventory Variability

Exhibit 10-6 p. 292Sheet: Textile Sector

Batching Effects Variability

Batching EffectSaturation Effect

Developing Coordinated Strategies

Maintaining effective inventories while realizing production efficiencies

Achieving integration through synchronization and coordination of various system components

Potential of increase in supply chain payoffs

Developing Coordinated Strategies

Exhibit 10-7 p. 293Page: Marketing Strategies

Developing Coordinated Strategies

Exhibit 10-8 p. 293 Page: Production Strategies

Developing Coordinated Strategies

Exhibit 10-9 p. 294 Page: Coordinating Strategies

Implementation

Exhibit 10-10 p. 295 Page: Food Production Process

Implementation

Exhibit 10-11 p. 295 Page: Steel Production Process

Supply Chain Simulation: Beer Game

Beer Game Description Beer Game Arena Simulation Model Two Unit Beer Game Model

Beer Game Description

Exhibit 10-12 p. 297 Page: Beer Game Process Model

Beer Game Description

Exhibit 10-13 p. 297 Page: Beer Game Flow Model

Beer Game Description

Exhibit 10-14 p. 298 Page: Beer Game Node Model

Beer Game Simulation Model

Input VariablesNetwork Logic FlowDisplayCrystal ReportsOutput FilesOptimization Analysis

Input VariablesExhibit 10-15 p. 299 Sheet: VariablesBeer Game.xls

Beer Game.doe

Exhibit 10-16 p. 300 Network Logic Flow

Beer Game.doe

Exhibit 10-18 p. 301 Route Order Module

Exhibit 10-17 p. 301 Generate Demand Costs Assign Module

Beer Game.doe

Exhibit 10-19 p. 301Order Inventory Update Assign Module

Exhibit 10-20 p. 302Retail Sale Assign Module

Beer Game.doe

Exhibit 10-22 p. 302Reorder Assign Module

Exhibit 10-21 p. 302Retailer Lost Sale Assign Module

Beer Game.doe

Exhibit 10-24 p. 303Update Inventory Assign Module

Exhibit 10-23 p. 303Factory Order Assign Module

Beer Game.doe

Exhibit 10-25 p. 303Fill BackOrders Assign Module

Exhibit 10-26 p. 303Ship Order Assign Module

Exhibit 10-27 p. 304Route Kegs Spreadsheet

Beer Game.doe

Exhibit 10-28 p. 304Plot Displays

Beer Game.doe Crystal Reports

Exhibit 10-29 p. 305Time Persistent Statistics

Beer Game.doe Crystal Reports

Exhibit 10-30 p. 305Output Statistics

Beer Game.doe Output Files

Exhibit 10-31 p. 306Sheet Beer Game Output Files

Output Description Output Filename

Inventory Kegs 1 Retailer InventoryRetailer.datInventory Kegs 2 Wholesaler InventoryWholesaler.datInventory Kegs 3 Distributor InventoryDistributor.datInventory Kegs 4 Factory InventoryFactory.datKegs Backordered 1 Retailer KegsBackOrderedRetailer.datKegs Backordered 2 Wholesaler KegsBackOrderedWholesaler.datKegs Backordered 3 Distributor KegsBackOrderedDistributor.datKegs Backordered 4 Factory KegsBackOrderedFactory.datKegs On Hand 1 Retailer KegsOnHandRetailer.datKegs On Hand 2 Wholesaler KegsOnHandWholesaler.datKegs On Hand 3 Distributor KegsOnHandDistributor.datKegs On Hand 4 Factory KegsOnHandFactory.datKegs On Order 1 Retailer KegsOnOrderRetailer.datKegs On Order 2 Wholesaler KegsOnOrderWholesaler.datKegs On Order 3 Distributor KegsOnOrderDistributor.datKegs On Order 4 Factory KegsOnOrderFactory.dat

Beer Game.doe Output Files

Exhibit 10-32 p. 306Beer Game Output Files

InventoryRetailer.datKegsOnOrderRetailer.dat

Optimization Analysis (PAN)

Exhibit 10-33 p. 307Beer Game PAN.doe Process ANalyzer (PAN) Display

Optimization Analysis (PAN)

Exhibit 10-34 p. 307Sheet PAN 1

Exhibit 10-38 p. 309Sheet PAN 5

Two Unit Beer Game Model

Exhibit 10-39 p. 309Page Two Unit Beer Game

Two Unit Beer Game ModelExhibit 10-40 p. 310Sheet Variables Two Units.xls

Two Unit Beer Game Model

Exhibit 10-41 p. 310Two Units.doe Display

Two Unit Beer Game Model

Exhibit 10-42 p. 311Two Units.doeOutput Statistics

Summary

Supply Chain Management Process Improvement, a Supply Chain

Perspective Integrated Supply Chain Management Supply Chain Simulation: Beer Game

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