Supply Chain Synthesis

Supply chain synthesis
Mathilde Miessen 2018-2019
Table des matières
1. Module 1 Introduction Understand Supply Chain Management ................................. 3

1.1. What is it ? ................................................................................................................... 3
1.2. What are the objectives................................................................................................ 4
1.3. Importance of SP decisions ........................................................................................... 4
1.3.1. Decision phases ............................................................................................................. 4
1.4. Process view ................................................................................................................ 6
1.4.1. Push/Pull view ............................................................................................................... 6
1.4.2. Cycle view ...................................................................................................................... 8
1.4.3. Macro processes ........................................................................................................... 8
2. Module 2: sourcing .................................................................................................... 9
1.1. Role of sourcing in a supply chain ................................................................................. 9
1.2. In-House or Outsource? ................................................................................................ 9
1.3. Factors Influencing Growth of Surplus by a Third Party ................................................ 10
1.4. Risks of using a Third Party ......................................................................................... 11
1.5. Total Cost of Ownership ............................................................................................. 11
1.6. Supplier Selection – Auctions and Negotiations ........................................................... 12
1.7. Sharing Risk and Reward in the Supply Chain .............................................................. 12
1.8. Tailored Sourcing ....................................................................................................... 13
1.9. Strategic sourcing: negociation ex ............................................................................... 14
3. Module 3: Make ...................................................................................................... 15
1.1. History of manufacturing ............................................................................................ 15
1.2. Lean ........................................................................................................................... 17
1.2.1. Philosophy ................................................................................................................... 17
1.2.2. 8 types of wastes ......................................................................................................... 17
8.1. Six Sigma.................................................................................................................... 19
8.1.1. Statistics ...................................................................................................................... 19
8.2. Lean Six Sigma green belt ........................................................................................... 20
8.2.1. In service companies ................................................................................................... 20
8.2.2. Introduction to DMAIC Mathodology ......................................................................... 21
8.2.3. Example : coffee shop ................................................................................................. 21
8.2.4. Exercice : prepare the SIPOC for your process ............................................................ 24
8.2.5. Exercice : prepare the process flow chart map of your process ................................. 26
Legend :
 : personnel notes
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1. Module 1: Introduction Understand Supply Chain

Management
1.1. What is Supply Chain?
Supply Chain = all stages involved directly (or indirectly) in fulfilling a customer request
• Customer is an integral part of the supply chain

• Each stage is connected though flows of: products, information & funds
• All stages may not be present in a supply chains
• Within each company, the supply chain includes all functions involved in fulfilling a
customer request
 Job: Make sure our customers are happy, that we maximize their value. When we draw a
supply chain we always start with customers.
Arrows= flows  those arrows represent money (flows of funds).
Amazon do not uses retailers (webplatform & efficient centers). This business model is more &
more present today.
 Most Supply Chains = Network = Several players / stage
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1.2. What are the objectives
1. Primary purpose of any Supply Chain = Satisfy the customer needs

2. Secondary purpose = Generate profit for itself
 Find a balance between the 2 objectives
Max (Supply Chain Surplus) = Customer value- Supply Chain cost
• Customer value = Value of the final product to the customer

 May vary from each customer = Max amount a customer is willing to pay
• SC cost = Cost the entire SC incurs in filling the customer’s request
1.3. Importance of SP decisions

There’s a close connection between:
• The management & design of Supply Chain flows:
Products, information, and funds
• The success of a company.
It is crucial to adapt the management its Supply Chain to a changing environment!!!
1.3.1. Decision phases

The success of the management of a Supply Chain requires many decisions related to the flows
(products, information, and funds)
Each decision should be made to improve the Supply Chain surplus, and depend on:
 The frequency of each decision
 The time frame during which the decisions made apply
Supply Chain decisions fall under 3 categories:
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 Time frame
during which the decisions made apply: Next years
 Take uncertainty
into account Anticipate market conditions over the
following few years.
Objectives :
 What the chains configuration will be
 Ex : In-house vs outsource
 Ex : Location of production & warehousing facilities
 What process each stage perfom
 Modes of transportations
 Type of information systems to be used
 Time frame
during which the decisions made apply: Quarter ->
Year
 Incorporate
the flexibility build into the strategy phase, and
exploit it to optimize performance
 Include
uncertainties in: demand, exchange rate,
competition over the time horizon
Objectives :
 Max (SC surplus that can be generated over the planning horizon), given the constraints
established during the design phase)
 Ex : Which markets will be supplied by which locations
 Ex : Subcontracting of manufacturing
 Ex : Inventory policies to be followed
 Ex : Target production quantity, timing & size of marketing/prices promotions
 Time frame
during which the decisions made apply: Weekly ->
Daily
 Exploit the
reduction of uncertainty & optimize performance
Objectives :
 Handle the customer orders in the best possible manner.
o Supply chain configuration = fixed
o Planning policies= fixed
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 Ex: Allocation of inventory or production to individual orders

o Allocate a shipping mode to the order
o Set a date by which an order is to be filled
 Generate pick list at warehouses
 Set delivery schedules of trucks
 Place replenishment orders
1.4. Process view

Supply Chain =
 Sequence of processes & flows
 Take place within & in between stages
Processes performed in a Supply Chain can be viewed in different ways:

A. Push/Pull view = the processes in SC = divided in 2 categories, depending on whether
they’re executed in:
 Response to a customer order = Pull
 Anticipation of customer order = Push
B. Cycle view = the processes in SC = divided into series of cycles
 Performed at the interface between 2 successive stages in SC
C. Supply Chain Macro process in a firm
1.4.1. Push/Pull view

Push / Pull view of Supply chain processes
All SC processes depend on the timing of their execution relative to a customer order.
 Push process: initiated in anticipation of customer order based on forecast =

speculative process
 Boundaries: Uncertain environment (customer demand is not yet known)
 Pull process: initiated in response to the customer order
 Boundaries: Constrained by inventories & capacity decisions
This view is useful when considering strategic decisions
Make-to-stock: Forecasts demand to determine how much stock should be produced. If

demand for the product can be accurately forecasted, the MTS strategy can be an efficient
choice.
Assemble-to-order: Customer orders are produced quickly and are customizable to a certain
extent.
• Requires that the basic parts for the product are already manufactured, but not yet
assembled.
• Once an order is received, the parts are assembled quickly and sent to the customer.
Make-to-order: Only manufactures the end-product once the customer places the order.
• This creates additional wait time for the consumer to receive the product
• But, allows for more flexible customization
Engineer-to-order: Designs and manufacturers a product based on very specific customer
requirements. Because the end-product tends to be complex
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Customer order decoupling point (CODP)
Never fully a push or a pull company.
Ex : What’s type of view process is :

 Confetis’company: Make-to-stock process (not obsolete & demand is
not specific & peak of demand in december, carnaval,…)
 Macdo: assembe to stock & make to stock because semi-product &
burgers produced there. You produce some stock of the standard
burgers. After, some products are a little bit less consumed.
 Subway (sandwiches): assemble-to-stock, It’s not finished yet.
 Audi: assemble-to-stock. You already have some pieces.
 A house : engineer-to-stock.
 President’s car : engineer-to-stock.
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1.4.2. Cycle view

5 stages / 4 process cycles (always begin with customer side)
 Scale of orders: # of orders increase & order size decrease

 Demand uncertainty: Sharing information & operating policies becomes more & more
important as we move further from the end customer
Cycle view of SP process:
A cycle view of the Supply Chain clearly defines:

 T
he processes involved
 The owners of each process
This view is useful when considering operational decisions
Equivalent to the SCOR model (Supply Chain Operations

Reference)
o Source
o Make
o Deliver Processes
o Return
1.4.3. Macro processes

All Supply Chain processes within a firm can also be classified under Suppliers Firm Customer
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2. Module 2: Sourcing decisions in a Supply Chain

2.1. Role of sourcing in a supply chain
Procurement (= Purchasing): is the process by which companies acquire
raw materials, components, products, services, or other resources from
suppliers to execute their operations
Sourcing: entire set of business processes required to purchase goods and
services
Outsourcing: supply chain function being performed by a third party
Benefits of Effective Sourcing Decisions:

• Higher quality and lower cost lower inventories, improved matching of
• Better economies of scale supply and demand
• Reduced the overall cost of purchasing • Appropriate sharing of risk and
• Design collaboration resulting in easier benefits can result in higher profits for
manufacturing and distribution, lower both the supplier and the buyer
overall costs • Lower purchase price through the use of
• Facilitate coordination with the supplier auctions
and improve forecasting and planning,
 Procurement: More linked to the process, all steps we have to undertake making sure
products arrive, … (People buying the product & trying to make the process correctly)
Sourcing: Little broather, link to the suppliers, link to negociations, also can be more strategical
decisions.
 Difference between both is remote.
Outsourcing: Making a part of our business by someone else. Typically in production, when we
don’t have enough production capacity we call a third party to make it for us. In logisitic,
there’re more & different possibilities.
2.2. In-House or Outsource?

Outsourcing questions: Outsourcing questions: is it worth or not
1. Will the third party increase the supply chain surplus relative to performing the
activity in-house?
2. To what extent do risks grow upon outsourcing?
3. Are there strategic reasons to outsource?
Decisions based on supply chain surplus and risk incurred
Third parties increase surplus through:

1. Capacity aggregation 5. Warehousing aggregation
2. Inventory aggregation 6. Procurement aggregation
3. Transportation aggregation by 7. Information aggregation
transportation intermediaries 8. Receivables aggregation
4. Transportation aggregation by 9. Relationship aggregation
storage intermediaries 10. Lower costs and higher quality
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 Is it worth to outsource the business? (Answer the 3 questions)

Supply chain surplus: Difference between the value we bring to customers - cost l to bringing
the products to the cust
Never a good idea to outsource if everything is not working internally.
 Capacity aggregation: Producing product in small quantity  less competitive than
producing in larger qty
A third party may be able to provide a sustainable growth of the surplus by aggregating to a
higher level than the firm itself.
The growth in surplus:
• Comes from aggregating capacity, inventory, in-bound or out-bound transportation,
warehousing, procurement, information, receivables, or relationships to a level that the
firm cannot achieve on its own.
• May also occur if the third party has lower costs or higher quality because of
specialization or learning
2.3. Factors Influencing Growth of Surplus by a

Third Party
Scale: Large scale it is unlikely that a third party can achieve further scale economies and
increase the surplus
Uncertainty: If requirements are highly variable over time, third party can increase the surplus
through aggregation
Specificity of assets: If assets required are specific to a firm, a third party is unlikely to
increase the surplus
A firm gains the most by outsourcing to a 3rd party if its needs are small, highly uncertain,
and shared by other firms sourcing from the same 3rd party.
 These are the best situations to outsource based on 3 aspects: Scale (if qty is too small, it’s
better to ask a third party because too expensive to buy machines etc.. For such qty);
Uncertainty (if demand is certain, do not outsource. In the other side if demand is uncertain
better to outsource because if doing so internally not very efficient and the outsourcing
company can do it better by offsetting the production to another customer if we have to much
for the client’s demand comparing last year  ex: Zara: If Zara sells a lot & H&M sales less
products, but if they use the same logistic provider  less uncertainty they can manage the
stock by splitting between both) & specificity of assets (it’s too complicate for the supplier to
do so & most of the time, when is too specific is at the core of what the company is doing, If
you need specific knowledge, it is better to outsource).
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2.4. Risks of using a Third Party

1. Inability to meet demand on time
2. Underestimation of the cost of coordination
3. Loss of internal capability and growth in third-party power
4. Loss of supply chain visibility
5. The process is broken
6. Reduced customer/supplier contact
7. Leakage of sensitive data and information
8. Ineffective contracts
9. Negative reputational impact
2.5. Total Cost of Ownership (TCO)

Supplier performance should be compared based on the impact on total cost of ownership.
In addition to acquisition costs, ownership and post-ownership costs should also be
considered.
In many instances, a higher acquisition cost is more than compensated for by lower ownership
and post-ownership costs.
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2.6. Supplier Selection – Auctions and Negotiations

Auctions: Are best used when the quantifiable acquisition cost is the primary component of total
cost
 Are not appropriate if ownership or post-ownership costs are significant
Elements of auctions:
 When unit price is important, buyer must specify performance expectations
 Qualify potential suppliers
 Suppliers bid on requirements
 Setting up auctions when not all attributes can be quantified is difficult
 When there are many important non-price attributes, use direct negotiations
Bargaining surplus: the difference between the values of the buyer and seller
The goal of each negotiating party is to capture as much of the bargaining surplus as possible
 Have a clear idea of your own value and as good an estimate of the
third party’s value as possible
 Look for a fair outcome based on equally or equitably dividing the
bargaining surplus
 A win-win outcome
2.7. Sharing Risk and Reward in the Supply Chain

Independent actions by two parties often result in lower profits than could be achieved
Risk sharing
Stronger firms tend to push risk on to supply chain partners
Reward sharing
A buyer may want performance improvement from a supplier ho otherwise would have little
incentive to do so
A shared-savings contract provides the supplier with a fraction of the savings that result from
performance improvement
Effective in aligning supplier and buyer incentives when the supplier is required to improve
performance and most of the benefits of improvement accrue to the buyer
 Suppliers with the biggest bargaining power is the most powerful. Colruyt, as biggest
retailer in Belgium, when negociation with supp, he will push cost to him. He’s very powerful
As supp when neg with big client, « Oh let’s find a win-win sol, let’s imagine cost of a big
inventory pushed to me.I’ll take care of your inventory, manage it,… ». The big retailer doesn’t
have to manage inventory anymore  time saving. When we order lots of truck  discount on
prices
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2.8. Designing a sourcing portfolio: Tailored

Sourcing
Options with regard to whom and where to source from
 Produce in-house or outsource to a third party
 Will the source be cost efficient or responsive?
 Onshoring, near-shoring, and offshoring (delocalization)
Tailor supplier portfolio based on a variety of product and market characteristics.
 Onshoring is the exact opposite of Offshoring, it refers to the relocation of business

processes to a lower-cost location inside the national borders. Functions and processes are
often located near the customers, this is often the case with big clients, as close proximity may
a condition of the working agreement. A typical example could be suppliers of the automotive
industry. Working in close proximity (often directly next to the factory premises of their
customers) allows a business to provide the quickest possible service, one that is tailored to
suit their market needs and therefore supply customers based on the just-in-time principle.
Nearshoring is the outsourcing of business processes, especially information technology
processes, to companies in a nearby country, often sharing a border with the target country.
With Offshoring the operating activities are relocated to another country and the
geographical location is irrelevant. Offshoring can be divided into two subdivisions, namely
Nearshoring (closer countries like Eastern European countries) and Farshoring (distant countries
like e.g. countries in Eastern Asia).
Offshoring is often employed to reduce the personnel costs of a company.
Firms must consider a

tailored sourcing strategy
that couples responsive
onshore or near-shore
sources with low-cost
offshore sources.
The responsive onshore
sources should focus on
high-value products with
high demand volatility,
Whereas the low-cost,
offshore sources should
focus on lower-value, high-
volume products with high
labor content.
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2.9. Strategic sourcing: negotiation exercise

(check slide 18 for questions & others ppt for roles + response ppt 3)
Part 1: Pre-negotiation (15 min):
• Read information carefully
• Complete part 1: plan your strategy
Part 2: Negotiation (15 min):

• Negotiate: do not exchange sheets, straight cash deals only
• Complete part 2: complete your own evaluation of the negotiation
• Submit agreement or last offer range made
Part 3: Debriefing (20 min)
Part 1: pre-negotiation :
Name: _______
Your role: Reddington/seller or Pinkman/buyer
Please fill in the settlement amount which would result in the following levels of satisfaction for
you (note: marginally satisfactory must equal the bottom line you’ve been given in your
Confidential Instructions):
MARGINALLY SATISFACTORY $15.000
SATISFACTORY $17.000
VERY SATISFACTORY $18.000
OPTIMAL $20.000
Is there any amount which, though seemingly even better for you than the OPTIMAL figure you
just listed, you would reject as being unfair to the other side?
Choose one: YES NO
Now that you have completed the inventory, you may begin to negotiate. Don’t show this sheet
to your counterpart
Part 2: negotiation
Did you reach an agreement? (circle one): YES NO

How would you now describe the outcome?
MARGINALLY SATISFACTORY
SATISFACTORY
VERY SATISFACTORY
OPTIMAL
Did your standards for satisfaction ….. ?
Go up
Go down
Stay the same
If YES, for what amount $3.000
 Reading the different texts and check the debriefing
1. Assess your goals

 Winners curse: Keep in mind they are not absolute, but relative
2. Know your BATNA: Best Alternative To a Negotiated Agreement
 Don’t miss a good deal for ego reasons
3. Estimate the other side’s BATNA (alternatives)
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 Evaluate your negotiation power before the deal

 Be modest about how much you know
 Try to obtain more information during the negotiation
4. ZOPA strategy: Zone Of Possible Agreement
 Identify the range
 Shape perceptions
 Commit creditability
3. Module 3: Make
3.1. History of manufacturing
1. Hundreds of years ago, most goods were

made by individual craftspeople or artisans
2. Early concepts like “lobar specialization”
(Adam Smith), in which an individual was responsible for a
single, repeatable activity
3. Standardized parts (Eli Whitney) helped
to improve efficiency and quality.
4. In the early 20th century, the era of
“Scientific Management” came about. In which concepts such
as: time and motion studies (Frederick Taylor) and Gantt
charts (Henry Gantt) allowed management to measure,
analyze, and manage activities much more precisely.
5. The really big advancement came in the
early 1900s with the area of mass production (push process).
The subsequent concepts where applied
 The moving assembly line (e.g.
Ford motor Company)
 Economies of scale (produce large
quantities of the same item to spread fixed costs)
 Statistical sampling
6. In the 1980s, organized by the Japanese
after the second world war when resources where scarce, we
started hearing about the new concept of Just in Time (pull
process)
 Method of keeping the
minimal inventory of material (and information) – Not to
much, nor to little
7. Finally, additional (statistical) concepts and tools emerged
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3.2. Lean
3.2.1. Philosophy
Lean is a team based effort of continuous improvement in identifying and eliminating
“waste”. Centred on making obvious what adds value (to the customer) by reducing
everything else.
It’s management philosophy derived mostly from the Toyota Production System (TPS). Renowned for its
focus on reduction of the original Toyota seven wastes to improve overall customer value.
As waste (muda) is eliminated quality improves while production time and cost are reduced.
Sometimes, a warehouse is not value added.

Movement motion can also be a waste.
3.2.2. 8 types of wastes

1. Inventory waste
Inventory = buffer between (zone de tampon entre): suppliers, manufacturers, and customers. It
is needed to compensate for:
 Lead times (temps de fabrication) (e.g. transportation, manufacturing, etc.)
 Variability in the system (e.g. forecast error, late deliveries, setup time, scrap (or
error), quality problems, and downtime
There are 4 types of inventory, that cost money to maintain (holding or carrying costs)
 Raw materials: purchased materials & components
 Work-in-process (WIP): where transformation process has started, but not yet
completed
 Finished goods: Saleable products
 Materials, repairs, and operation (MRO): equipment spare parts (pièces de rechange)
and supplies
Businesses need some inventory, and have to make tradeoff between:
 Cost of carrying inventory (range from 15 to 30% of product value – Cost of capital,
taxes, storage, insurance, handle ling, labor, obsolescence, damage)
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 Customer service, that determines how much

2. Transportation (or movement) waste
(in between transportation center and clients)
Material may be moved from one place to another on the shop floor:
• Put on storage rack
• Temporary location (filling stocking)
Excess of those movements = waste
Concept of “Layout and visual workplace” are very important.
• It can be sometimes very obvious that you just learned to live with it (e.g. copier being
to far from your desk)
3. Motion waste
Motion and transportion are mostly the same but Motion is linked to the workers
(production environment. People have to make their place ergonomic, they don’t have to move
a lot when they are working, don’t have to waste time)
Having things you use close to you (and at waist level), and things you use less often further
away (and higher up).
- Ergonomic
Concept of “point-of-use storage”: having just enough material & information nearby, which
can be replenished (réapprovisionné) when needed from further away.
4. Waiting waste
Time spend waiting on: supplies, materials, information, and people that are needed to finish a
task.
In most of the processes, a great amount of production or service lead time is spend waiting
between the different steps.
• Most of the time, caused by the next step of the process.
• It results in a larger amount of Work-in-process (WIP) inventory.
5. Overproduction (and over-procurement) waste

Manufacturing, ordering or processing something before it is actually needed.
The typical results are:
- Excess of inventory (Raw material, WIP, finished goods, and MRO)
- Longer lead times
- Greater amount of defects Because batch sizes are larger than needed
- High storage costs
Instead of Just In Time (JIT), it ends up being just in case!
6. Over-processing waste
Happens when: too much time (or effort) is put into processing material (or information) that is
not viewed as adding value to the customer.
Can include: using equipment that may be too expensive, complicated, or precise to perform
the operation.
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Occurs when the company:

• Receives unclear customer specifications
• Include lengthy approval process
7. Defect (or error) waste
In manufacturing the waste (or defects) primarily refers to: repairing, reworking, or scrapping
(mise en féraille) materials.
The are many causes of defects, such as:

• Poor processes • Not properly calibrated tools &
• Too much variations equipment
• Supply issues • Bad layouts
• Insufficient or improper training • Excessive handling
• High levels of inventory
8. Behavioral waste (or underutilized employees)

Some add this 8th waste of behavior. This is critical to consider, as you need employee
creativity & participation to eliminate the other 7 wastes.
50% of the companies (at least in the US) tend to fail their lean effort, because requires both:
 Top-down management commitment
 Bottom-up groundswell of participation & ideas (Vague de fond ascendante de
participation et d'idées)
o Have to encourage team based continuous improvement mentality
3.3. Six Sigma

Sigma is the Greek letter that is a statistical unit of measurement used to define the standard
deviation of a population. It measures the variability or spread of the data.
3.3.1. Statistics
6 Sigma is also a measure of variability. It is a name
given to indicate how much of the data falls within
the customers’s requirements.
Six Sigma: helps companies to reduce errors
Manufacturing process can be described by a sigma

rating indicating its percentage of defect-free
products (yield) it creates.
A six sigma process is one in which 99.99966% of all opportunities to produce some feature
of a part are statistically expected to be free of defects (3.4 defective features / million
opportunities)
The higher the process sigma, the more of the process outputs, products and services, meet
customer’s requirements – or, the fewer the defects.
Sigma DPMO Yield
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2 308.537 69,1%
3 66.807 93,3%
4 6.210 99,37%
5 233 99,976%
6 3,4 99,9996%
Situation 99% good (3,8 σ) 99,99966% good (6 σ)

Restaurant bills 83 incorrect checks/ lifetime <1 incorrect check/lifetime
Airline system 2 short/long landings/day 1 short/long landing/5 years
Postal system 20.000 lost articles of mail/hour 7 lost articles/hour
The concept of Six Sigma was originated by Motorola in the early 1980th and now is used in
many industries.
• Motorola set a goal of "six sigma" for all of its manufacturing operations, and this goal
became a by-word (symbol) for the management and engineering practices used to
achieve it.
3.4. Lean Six Sigma green belt

3.4.1. In service companies
Lean + Six Sigma = Faster process with lower cost and higher quality
Around the year 2000, lean manufacturing began to move from the shop to the office. As it
came apparent that waste was everywhere, and the offices shared the same characteristics of
manufacturing,
As much as 60 to 80% of a product (or service) lead time can be found in the office
environment (customer service, order management, …)
Benefits of lean offices include:

 Simplified process
 Improved utilisation of personnel
 More flexibility & responsiveness
 Reduce: lead time, errors, extra processing, and transactions
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3.4.2. Introduction to DMAIC Methodology
6 Sigma methodology :
3.4.3. Example : coffee shop

Your’re working for a coffe shop, a regular one, just at the corner of the stree. Your speciality
is great coffee! You’re serving all kinds of cust so the process may looks different, however
usually it starts when the clients enters the coffee shop and stops whan the customer receives
the ordered coffee.
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Objective : reducing the time between the start and the end
Recently, the number of customers’

complaints raised, you’re loosing customers & your turnover is dropping. Luckily based on quick
research, you’re able to identify the problem, unfortunately you do not know what the source
of it is and how to solve it. Therefore, you decide to improve your process using Six Sigma.
Problem you face : Customers are waiting too long or the coffee
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3.4.4. Define SIPOC
Leads to insight concerning the process

High Level Process Mapping:
• Very effective communication tool
• Defines boundaries and provides uniform vision
Process classification:
CORE BUSINESS PROCESSES: Have a direct impact on the customers of the business.
E.g. production, marketing, order execution
SUPPORT BUSINESS PROCESSES: Enable the core processes to work effectively.

E.g. maintenance, IT, purchase
MANAGEMENT PROCESSES: Guide, direct and control the core and support processes.
E.g. planning, budgeting & controlling, strategy
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Exercise: prepare the SIPOC for your process (5 minutes)

 Suppliers
Sugar, milk, coffee, cacao, packaging, machines, caramel, cups, …
 Inputs
Analysing arrivals of the clients and being sure to have enough employees during the peaks
Machines defects, shut down, planning when you do the maintenance of the machines, supplier
constraints, people capacity, …
 Process
Already having hot milk ready and having things opened and prepared
What do I have to do to make my customers happy?
Having a menu on the wall, taking the order,…
 Customers
Clients pay when they order so that they can leave their tables when they have finished
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 Outputs
The major output is the coffee and satisfy the customer, delivering the product in time, to have
a hot coffee, a good quality coffee, a good milk. I also have to give an extra (name on the
cups). Maybe we can think at having special pricing for students, workers.
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3.4.5. Define Macro Process Map
Exercice : prepare the process flow chart map of your process (10
minutes)
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Line structure
 Manual
operations: dashed line ( ------------ )
 Automate
d operations: full line
IT support (optional)
 Assign
color codes to the 6 most important software
solutions
E.g.
 Use fill
colors to identify the IT support
Format
 Visio/Powerpoint/Excel : Flow
 Word : Process description
Win improvement opportunities
27
Define
The aim
is to have
the
maxim
um
custom
er
satisfa
ction.
28
29
Listening posts = feedbacks from the market. We have to use the complaints to integrate them
in the process and to improve
Sales Representatives (selling the products) has to come back with feedbacks of products.
Research : there is a lot of data so you have to select and maybe analyse how the competitors
are working, etc Be able to benchmark yourself with the external market is important.
6
igma
meth
odol
ogy
30
31
Analyze Toolbox
Analyze Analyze the current situation and make a diagnosis
Toolbox
Analyze if the process is capable in meeting the customer
Process Capability Analysis (PCA)
requirements
Process Activity Map Visually depicting waste activities in a process
Ishikawa diagram Shows the relation between causes and effects
5x Why For each cause, ask why, verify and ask why again (5 times)
Lead time waterfall Analysis of the lead time of each process step
Overall Equipment Effectiveness (OEE) Measurement of the efficiency of a production line
Roadmap
Measure Make the problem measurable and quantifiable
Toolbox
Investigate the problem by asking who?, what?, why?, where?,
5W2H when?, how much? and how often?
Shows the relation between an external CTQ and measurements

Correlation in the process
Shows the most important influence factors according to

Pareto analysis frequency
Breakdown of the external CTQ’s into internal CTQ’s and

CTQ flow down influence factors
Experiment to assess the random measurement error by means

Gage R&R of repeatability and reproducibility tests.
32
Ishikawa diagram = fishbone diagram
To compile a list of possible causes and segment the various causes the Cause and Effect analysis can be used. Relationships
between the causes become visible.
Below the cause & effect diagram, also called fishbone diagram, is used.
Machine Man Mother Nature
Weak transition bet-

Insufficient
ween machine produc- Restrictions
training
tion and packaging
Not occupied
Old machines Effect:
fully
Too much
variation
during the
Process is not delivery time
Delivery time
Different quality executed in the
not measured
resources same way each
accurately Root
time
causes
Material Method Measurement
A structured brainstorming session can further be used to identify the causes.
The Fishbone diagram may also be used in the Measure Phase (determine what to measure)
Improve: Toolbox
Improve Identify the relationship between Xs and CTQs
Toolbox
Mistake prevention, proofing and detection to systematically eliminate
Poka Yoke (mistake proofing)
errors and disturbances
Line balancing Balancing the throughput of a line by removing the bottle necks
Sort, Set in Oder (Hots >< cold object), Shine, Standardize, Sustain
5S
Methodology to organize the workplace
Single-Minute Exchange of Die.

SMED
Methodology to reduce the change-over time
Cellular production Lay-out to improve the work flow and minimize work-in progress
33
Control toolbox
Control Adjust the quality control system and close

project
Toolbox
Written document or instruction detailing all steps and activities
Standard Operating Procedure (SOP) of a process or procedure
Methodology to look for an assignable cause in case of a problem

Out of Control Action Plan (OCAP) (detected by control chart)
Matrix to define roles and responsibilities per task (Responsible,

RACI Accountable, Consulted, Informed)
Statistical Process Control (SPC) Control charts to track the KPI performance in time
Visual management Expectations and current status are clear and visible to everyone
34

Supply Chain Synthesis

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Supply Chain Synthesis

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Supply chain synthesis

Mathilde Miessen 2018-2019

Table des matières

1. Module 1 Introduction Understand Supply Chain Management ................................. 3

1. Module 1: Introduction Understand Supply Chain

• Customer is an integral part of the supply chain

 Most Supply Chains = Network = Several players / stage

1.2. What are the objectives

1. Primary purpose of any Supply Chain = Satisfy the customer needs

Max (Supply Chain Surplus) = Customer value- Supply Chain cost

• Customer value = Value of the final product to the customer

1.3. Importance of SP decisions

It is crucial to adapt the management its Supply Chain to a changing environment!!!

1.3.1. Decision phases

Supply Chain decisions fall under 3 categories:

 Ex: Allocation of inventory or production to individual orders

1.4. Process view

Processes performed in a Supply Chain can be viewed in different ways:

1.4.1. Push/Pull view

 Push process: initiated in anticipation of customer order based on forecast =

This view is useful when considering strategic decisions

Make-to-stock: Forecasts demand to determine how much stock should be produced. If

Customer order decoupling point (CODP)

Never fully a push or a pull company.

Ex : What’s type of view process is :

1.4.2. Cycle view

 Scale of orders: # of orders increase & order size decrease

Cycle view of SP process:

A cycle view of the Supply Chain clearly defines:

This view is useful when considering operational decisions

Equivalent to the SCOR model (Supply Chain Operations

1.4.3. Macro processes

2. Module 2: Sourcing decisions in a Supply Chain

Benefits of Effective Sourcing Decisions:

2.2. In-House or Outsource?

Decisions based on supply chain surplus and risk incurred

Third parties increase surplus through:

 Is it worth to outsource the business? (Answer the 3 questions)

2.3. Factors Influencing Growth of Surplus by a

2.4. Risks of using a Third Party

2.5. Total Cost of Ownership (TCO)

2.6. Supplier Selection – Auctions and Negotiations

2.7. Sharing Risk and Reward in the Supply Chain

2.8. Designing a sourcing portfolio: Tailored

Tailor supplier portfolio based on a variety of product and market characteristics.

 Onshoring is the exact opposite of Offshoring, it refers to the relocation of business

Firms must consider a

2.9. Strategic sourcing: negotiation exercise

Part 2: Negotiation (15 min):

Part 3: Debriefing (20 min)

Did you reach an agreement? (circle one): YES NO

 Reading the different texts and check the debriefing

1. Assess your goals

 Evaluate your negotiation power before the deal

1. Hundreds of years ago, most goods were

Sometimes, a warehouse is not value added.

3.2.2. 8 types of wastes

 Customer service, that determines how much

5. Overproduction (and over-procurement) waste

Occurs when the company:

The are many causes of defects, such as:

8. Behavioral waste (or underutilized employees)

3.3. Six Sigma