Supply Chain Defense Mba 550
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Supply Chain Defense
University of Phoenix
RESOURCE OPTIMIZATION
MBA550
Andrew Carpenter
Aug 09, 2007
Abstract
The following literature presents Kuiper Leda; an electronic manufacture company who implemented a set of methods and changes in order to accomplish competitive advantages. These methods helped the company deal with industrial challenges, such as excess manufacture capability, lack of inventory management, fluctuating demands, supplier consolidation and technology. Furthermore, provided metrics to help measure and align its business strategy.
Supply Chain Defense
Supply Chain Overview
Kuiper Leda Inc. is an electronic manufacture company located in the Republic of Novamia, which specializes in the production of electronic control units and sensors for the automobile industry. For the past 10 years Kuiper Leda has been very successful to the point of reaching 400 million dollars in revenue after an investment of just 100 million a decade ago. Kuiper Leda strong base technology in the ECUs, Microchips and RFID (Radio frequency identification) tags has open new door to the international market (University of Phoenix, 2006).Although Kuiper Leda is smaller than its competitor, it is recognized for their quality and delivery capabilities. Managers are aware of such reputation and understand that such industry demands scale of operation, capacity management and a proper delivery process. Therefore, managers are constantly looking at different of ways of improvement in order to achieve such demands. By looking at Kuiper Leda previous Challenges, solutions implemented and measuring techniques vendors will conclude that Kuiper Leda is prepare for scale of operations.
Supply Chain Challenges and Solution
Challenges
Sudden Increase in demand has cause Kuiper Leda to excess its Manufacture capacity in ECU and RFID.
Lack of Inventory Management Plan to deal with excess stock and production.
Fluctuating demand caused managers to overhaul distribution system.
Rationalize supplier base in order to comply with company strategy. (Technology integration, cost per unit, delivery and more)
Solutions
Sudden Increase in demand has cause Kuiper Leda to excess its Manufacture capacity in ECU and RFID.
Outsourcing is the act of moving some of a firms internal activities and decision responsibility to outside providers. The terms of the agreement are established in a contract (Chase, Jacobs, Aquilano, 2006, p. 413). In the electronics industry, for example, 11 percent of manufacturing is performed by such contract manufacturers, many of whom manage the full supply chain, even including distribution and repair. Kuiper Leda currently did not have the capacity to comply with Midland Motorss Specification. Therefore, it decided to outsource non core component of their production line (ECUs) via an e-business portal. With outsourcing, the company took in consideration the possible lead time for manufacturing ECUs, the time zone difference and shipping time which need to be included in the timeline of four weeks, which was within the specification. Furthermore, industry best practices from Hewlett-Packard and IBM. Hewlett-Packard turned over its inbound raw materials warehousing in Vancouver, Washington, to Roadway Logistics. Roadways 140 employees operate the warehouse 24 hours a day, seven days a week, coordinating the delivery of parts to the warehouse and managing storage. Hewlett-Packards 250 employees were transferred to other company activities. Hewlett- Packard reports savings of 10 percent in warehousing operating costs (Chase, Jacobs, Aquilano, 2006, p. 415). IBM consultant Andrew Tubb states “One strategy is the outsourcing of procurement operations–particularly for indirect spend. This frees up organizations to focus on strategic expenditure or other elements of their supply chain” (Bland, 2006). As immediate result Kuiper Leda gain an increase in flexibility to meet changing business conditions, demand for products and services.
Lack of Inventory Management Plan to deal with excess stock and production.
Kuiper Leda Inventory management structure did not facilitate the production of microchip to the level that added the most value to the company. Therefore, executives implemented a Material Requirement planning system. MRP systems have been installed almost universally in manufacturing firms, even those considered small. The reason is that MRP is a logical, easily understandable approach to the problem of determining the number of parts, components, and materials needed to produce each end item. MRP also provides the schedule specifying when each of these materials, parts, and components should be ordered or produced (Chase, Jacobs, Aquilano, 2006, p. 630). As an immediate gain MRP provided Kuiper Leda with visibility for future order.
3. Fluctuating demand caused managers to overhaul distribution system.
JIT is an integrated set of activities designed to achieve high-volume production using minimal inventories of parts that arrive at the workstation exactly when they are needed (Chase, Jacobs, Aquilano, 2006). Kuiper Leader is been affected by an increase in fluctuating demands, as a result Kuiper Leda decided to implement a JIT system help to keep their order streamline and easy accessible follow by a centralize demand center. JIT is suitable for Kuiper Leda because JIT focuses on large orders and fewer orders keeping inventory low and cost down. Companies like GE and Adidas serve as best practices for Kuiper Leda initiative. GE has a healthcare decision called GE Healthcare, and when fitting a new cardiac hospital in 2001 called Carle Heart Center they created a just-in-time system for the lab. We simply push a button to see what supplies are below our par levels, by vendor. Our inventory specialists can then print out replenishment orders and fax them out for next-day shipment. Adidas delivered more than 145,000 Greece team jerseys across markets in Europe .The success was due to the “centralized supply chain coordinated with its country-based sales subsidiaries” (Niezen,