Transcript Recruiting Results - Pennsylvania State University

IE 466 Concurrent Engineering
Sourcing
and
Supply Chain Management
Presented by:
Bill Lindquist and Felicia Lim
Ingersoll-Rand Company
Topics
• Evolution of Supply Chain Management
• Overview of Supply Chain Management (SCM)
• Market Forces and Emerging Trends in SCM
• What’s Hot in Supply Chain Management?
• Suppliers and Sourcing Functions in Product
Development
• How can engineers be valuable in these areas?
(Live Testimonials via Teleconference)
• Reference list of magazine sources and websites
Evolution of Supply Chain Management
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•
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Pre-1980: Clerical/Transaction Focus
1980-1990: Price/Quality Focus
1990-2000: Inventory/Productivity Focus
2001: Strategic Focus
using the firm’s supply function as a competitive tool
Evolution not yet complete
Overview
What is Purchasing?
– An organizational function that is
responsible for acquisition of required
materials, services, and equipment.
What is Procurement?
– An organizational function that includes
specifications development, value analysis,
supplier market research, negotiation,
buying activities, contract administration,
inventory control, traffic, receiving, and
stores.
Overview
What is Sourcing?
– The process of identifying sources that
could provide needed products or services
for the acquiring organization.
What is Strategic Sourcing?
– An on-going analysis to evaluate the right
mix of products and services, determine
the appropriate suppliers and terms and
conditions to balance cost, quality, and risk.
Overview of Supply Chain Management
What is Supply Chain Management?
“the identification, acquisition, access,
positioning, and management of resources the
organization needs or potentially needs in the
attainment of its strategic objectives”
Overview of Supply Chain Management
Strategic Contribution to the Firm
Low
Traditional Purchasing
• Process Orders
• Bidding/Negotiation
• Expediting/Tracking
High
Procurement/Sourcing
• System Efficiency
• Plan Volumes
• Cost Management
• Leverage Buying Power
1970’s
Supply Chain Management
• Shape and influence the supply
market and inbound chain
• Analyze and suggest supply
opportunities/options
• Provide the firm with access to
what it needs but cannot develop
• New revenues are as important as
cost savings
2001 and beyond
Timeline
The Supply Chain
Shared Information and Processes
Suppliers’
Suppliers
Assembler
Suppliers
Logistics
Providers
Issues:
• Inventory
• Visibility
• Communication
• Collaboration
• Overlap
• Conflicting Objectives
Distributors
Customer
Market Forces and Emerging Trends in SCM
• Greater emphasis on communication and collaboration
• Global competition and global sourcing
• Transportation improvements eliminating the need for regional
sourcing
• Integrated systems are being procured instead of parts and
services
• Transformation from piece-price to total-cost solutions
• Auctions and market exchanges on-line
• Drive towards making products “commodities” where possible
• More outsourcing allowing a focus on core competencies
• Outstanding quality is expected and not a discriminator
What’s Hot in SCM?
• Web-based procurement tools
• E-Procurement
• Third-party auctions
• Consortiums for buying leverage
• Buyer and seller exchanges
• Outsourcing
• Third-party logistics (3PL) providers
• Use of Integrators and Distributors
• Supplier Relationship Management
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•
•
•
Strategic Supplier alliances
Collaborative design
Supplier managed replenishment
On-site supplier representatives
Case Study
Cessna
Problem areas:
–
–
–
–
supplier on-time delivery
redundant inspection and rework
price and cost escalation
fragmented organization and strategies
• Improved on-time
delivery from 45% to 95%
• Reduced % of department
working on tactical issues
from 99% to 29%
• Inventory reduced from
30 days of supply to 10
Solution:
– Integrated Organization Structure/Process
• Sustaining Production; Strategic Sourcing; New Product Development
– Automate repetitive tactical activities
– Implement Six Sigma and VE/VA programs
– Supplier rationalization and development
– Include suppliers in design, manufacturing, e-business and product support
– Strategic Make vs. Buy process
Case Study
Harley-Davidson
Problem areas:
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–
–
–
Poor relationships with suppliers
Lack of coordination with Engineering
Sporadic quality problems
Weak product development
• Inventory reduced 25%
• Costs of Purchased Goods
reduced 10%
• Supplier quality levels
improved from average of
10,000 PPM to 48 PPM
Solution:
– Restructure Purchasing operations
• Dedicate half to product design and half to development
– Co-locate Engineers with Purchasing
– 80% of Purchases concentrated in 70 suppliers
– On-site Supplier Representatives
Importance in Product Development
• New Product Development Teams
– Suppliers participate in design reviews to ensure
feasibility of design based on capabilities.
– Sourcing function is responsible for supplier
identification, cost containment, and managing lead
time constraints.
• Value Engineering/Value Analysis (VE/VA)
– Sourcing function evaluates products, initiates
improvements with engineering and suppliers to
increase function while decreasing cost, and
manages implementation of improvements.
Product Development Tools Used in Sourcing
• Design For Manufacturing (DFM)
– Collaboration between engineering and
manufacturing functions prior to design release that
ensures that the product design meets manufacturing
capabilities and considers ease of manufacturability.
• Failure Mode Effects Analysis (FMEA)
– Risk assessment process during the design phase
that evaluates all potential failure modes, their effects
on the product’s performance or quality, and
develops control plans to reduce these risks of
failure.
Engineers in Sourcing and SCM
Brian Grev
“I learned that sourcing is more than just purchasing. It involves strategic
alignment of supply chains, supply chain management, negotiation tactics,
and more. Through my projects I have become more informed about
different manufacturing processes: forging, stamping, deep drawing, screw
machining, injection molding, fine blanking and more. I have also
developed relationships with suppliers that will continue to benefit my
projects.”
Jessica Rosenberger
“While at my current assignment I have been involved in many diverse
projects. I have participated on the supplier development council for a new
product that will change the way the golf car industry does business both
internally and externally. My primary responsibility is the design,
implementation, and documentation of an integrated supply program which
has resulted in cost reduction and inventory reduction, contributing not only
to our business until goals, but also to the goals of IR.”
Engineers in Sourcing and SCM
Mihyar Mohamed
“I see this as an opportunity to pursue a career that rewards you for your
technical background, while at the same time allowing you to use skills in
personal interaction, relationship management, and strategic thinking that
are all necessary to excel in this field.”
Craig Smith
“My assignments have gone beyond buying and purchasing ‘widgets’. I
have been involved with teams that find, select, and manage business
relationships that enable IR to strengthen its position in the marketplace.
The business unit I work for does very little manufacturing, so the
sustainable growth of the business depends heavily on new product
launches and service initiatives. Therefore the sourcing team works very
closely with the marketing team and takes on a much more important role
in the strategic plan of the business unit.”
References
Strategic Supply Chain Management
James P. Morgan and Robert Monczka
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