Creating Supply Chain Flexibility


Presentation Description

Modern trends can sometimes degrade value chain performance, but these unintentional side-effects can often be countered by creating flexible supply chains. Integrated strategies, lean operations, visibility, collaboration and big data style analytics are presented by Chris Armbruster as key drivers for recovering lost performance and ultimately achieving an organization's full operating potential. The presentation concludes with a compelling case study of a semiconductor manufacturer's supply chain transformation. Whether you are a supply chain leader, strategist, demand planner, supply planner, inventory controller, lean practitioner, logistics professional, data scientist or provider of IT capability, this presentation brings together all of these disciplines to create breakthrough supply chain flexibility. This is a digital remastering of the talk I gave at the Supply Chain World Conference.


Presentation Transcript

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Driving Supply Chain Flexibility Creating Supply Chain Flexibility Chris Armbruster | CAArmbruster | 224.430.2046

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Modern supply chain trends can introduce inefficiencies:  Additional trading partners increase latency  Global supply chains increase complexity  Redundant judgments exacerbate demand uncertainty TRENDS REQUIRE SUPPLY CHAIN FLEXIBILITY

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WASTE Is Never Tolerated

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“The quest for certainty blocks the search for meaning. Uncertainty is the very condition to impel man to unfold his powers.” --Erich Fromm It’s the Driving Force Behind Flexibility UNCERTAINTY

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It is commonly known that signals degrade as demand propagates up the supply chain. DEMAND UNCERTAINTY It Can Be Measured and Mitigated Foundry Chip Maker EMS Ultimate Customer

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Amplification Interference Changes in demand can become exaggerated. Noise can superimpose onto the demand signal. Latency Demand can become out of phase or shift in time. + + Net Effect Uncertain Demand Chip Maker Foundry EMS Ultimate Customer

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Visibility and Collaboration Improve the Demand Signal FLEXIBILITY Must Do the Rest

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Notwithstanding its fickle nature uncertainty can be understood characterized bounded and modeled.  The data exists but must be mined for meaningful information.  Business intelligence is a key input to developing a relevant fulfillment strategy. BUSINESS INTELLIGENCE Potential Waiting To Be Tapped

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Time Certainty Window Execution Window Risk Risk  Speed of operations shrinks execution window  Speed of information stretches certainty window SPEED It Is All About Aligning Windows

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Strategy Strategy Customer Requirements Product Supply Chain Architecture Process System Blueprint Business Intelligence Speed Identify Key Flexibility Points Where to buffer inventory capacity how much Where to focus on speed how often to plan how to trigger execution What to insource what to outsource STRATEGY Start with the customer of course.

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CASE STUDY Semiconductor Manufacturer

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SUPPLY CHAIN Wafer Fabrication Package Assembly Test Circuit Assembly Weeks Hours Days

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+ Error Propagation Error As demand propagates up the supply chain the demand signal degrades. Market Error Forecasts are often based on uncertain markets. - Error Helps Manage Uncertainty BUSINESS INTELLIGENCE + Error

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Propagation Error As demand propagates up the supply chain the demand signal degrades. + Error Market Error Forecasts are often based on uncertain markets. - Error Works Hand-in-Hand with Visibility Collaboration FLEXIBILITY + Error

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Probability Demand Certainty Short Horizon Volatility • How certain demand is over a short horizon • Finished goods inventory policy Long Horizon Volatility • How certain demand is over a long horizon • Semi-finished inventory policy Downsides Upsides DEMAND PROFILING In this case customers are somewhat certain about their demand over a quarter but beyond the current week they are not sure when in the quarter it will materialize.

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Time Weeks Certainty Window Lean Manufacturing Shrink Execution Window for Package Assembly Test Operations to Fit Inside Certainty Window Speed Aligns Windows 0 50 100 150 200 250 300 350 1998 1999 2000 2001 2002 2003 2004 Hours Package Assembly Test Cycle Time Y4 Y3 Y2 Y1 Y0

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Strategy Customer Requirements Flexibility Responsiveness Security Supply Chain Architecture Insource Assembly Test Outsource Wafer Fabrication Process System Blueprint Daily Planning Custom Built APS Business Intelligence Demand Profiling Leading Indicators Speed Lean Manufacturing Logistics Key Flexibility Point is just before Package Assembly Test Statistically size and locate buffers Align Package Assembly Test execution time w/ Certainty Window FLEXIBILITY STRATEGY SUPPLY CHAIN

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Buffers for Flexibility Response and Security Buffers for Flexibility Response and Security Receipt of Customer Order Order Process and Planning Wafer Fab Buffers for Flexibility Response and Security Package Assembly and Test Pick and Pack Ship Product on Customer Dock Demand Collaboration Build to Forecast Automation and eBusiness Super Fast Cycle Times JIT 48 Hour 3PL Partnership Multiple Mfg Locations Daily Planning Supply Collaboration Statistically Profiled Lean Mfg Integrated Strategy Delivers MAXIMUM PERFORMANCE

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BENEFITS REALIZED Shipping Performance to Customer Request Date Inventory Velocity Turns 0 10 20 30 40 50 60 70 80 90 100 Shipping Performance 5 5.5 6 6.5 7 7.5 8 8.5 9 9.5 10 Inventory Turns Year 1 Year 4 Year 2 Year 3

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Share on Twitter “Organizations fall short of their potential by accident but they become world-class on purpose.” Share on LinkedIn Chris Armbruster | CAArmbruster | | 224.430.2046

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