Contentsnv/79IITM31012013-N.pdf · Outbound Logistics Eastern Europe Global Sup N.Viswanadham...
Transcript of Contentsnv/79IITM31012013-N.pdf · Outbound Logistics Eastern Europe Global Sup N.Viswanadham...
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Globally Dispersed Manufacturing Networks
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Evolution & Governance
N. ViswanadhamINAE Distinguished Professor
Computer Science and AutomationIndian Institute of Science
INTE
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SG
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Indian Institute of ScienceBangalore- 560012
[email protected] Madras Jan 31, 2013
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ContentsContents
History of manufacturing– Mass & Lean production
Automation Sensor Networks & Software: Integrated
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xcel – Automation, Sensor Networks & Software: Integrated
Manufacturing Networks– Modularity, Outsourcing :Global Supply Chain Networks
The Global Trade CollapseThe Ecosystem ModelG S l ti C di ti & E ti
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Governance: Selection, Coordination & ExecutionThe Orchestration ModelConclusions
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History of ManufacturingHistory of Manufacturing
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Phase I: Mass & Lean ProductionPhase I: Mass & Lean Production
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The Assembly Line The Assembly Line Henry Ford & Alfred Sloan Henry Ford & Alfred Sloan
Model T introduced in 1908. (Ford’s 20th design)Di i i d S i li i f W kf
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xcel Division and Specialization of Workforce.
– Each worker had only one task to perform. – Indirect- workers (repair men , quality inspectors) resident in factory.
Vertical Integration provided cost advantage & better control – Owned steel mills, a glass factory, a rubber plantation (in Brazil), iron
mines (in Minnesota), a fleet of ships and a rail road.Alfred Sloan developed the Centralized Mass Production
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pSystem by applying division of labour to management– Created decentralized divisions for Each car model : Chevrolet,
Pontiac, Buick, Oldsmobile & Cadillac
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Lean Manufacturing Lean Manufacturing ----Toyota (1950s)Toyota (1950s)
Japanese customers demand variety (Luxury & small cars, large & small trucks): Mass production did not work Lean is a process innovation to serve disparate customer
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xcel Lean is a process innovation to serve disparate customer
demands at low cost– Quick change-over of dies from 24hrs to 3 minutes thus reducing
the cost of producing small batches. – Process control not Product control– Fault Diagnosis Methodologies.– Kanban and Just-in-Time inventory management strategies.– Team-based work and management culture
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Team-based work and management culture. These innovations resulted in the Lean Manufacturing & make-to-order manufacturing
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Phase II: Automation: Machines, Phase II: Automation: Machines, Systems and NetworksSystems and Networks
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Automated Machines and Systems
NC Machine Controller Factory Floor Control System
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xcel
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eDistributed Manufacturing System
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xcel
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ERPFinance HR MRP Global
TMS
Customer Orders
Customer Orders
Pick
POD POD
Duty
Integrated Information Systems
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xcel Finance HR MRP
SUPPLIERS
Global Logistics
Manufacturing
WMSDemand
Sales History
Manufacturing Schedule
Completed Inter-site Transfers
Production Picks
Purchase Orders
Orders for
Routing
Customer Orders
EDI
Vehicle Routes
Exceptions
Detail
Receipt Detail
Carrier Discrepancy
POD
POD
Customers
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Manufacturing Scheduling
Demand Planning Production Planning
Demand Forecasting YMS
CarriersInter-Site Transfers
ASNs Inventory Summary
ASNs
Bidding
ASNs
ASNs
Load & Dock Detail
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Integrated Manufacturing-Service Networks
Manufacturer
Information Network
Enterprise System or Web-site
Supply Network Demand Network
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Supplier Distributor
Supplier Retailer
Logistics Network
Logistics Hub
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Service Provider
Financial Network
Banks
Service Network
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Phase III: Modularity, Connecting Technologies, Outsourcing & Globalization
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eProduct & Process Modularity and Outsourcing
Modular Products and Standardized Production Processes, lead to Outsourcing
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xcel lead to Outsourcing .
Standardized component manufacturers have become IP monopolies and wield global market power (Intel chips, Windows OS, Auto components)Products have become commodities.The strategic competitive advantage for assemblers ( Dell,
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GM, Nokia) moves from factory to managing the global manufacturing.
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Product Modularity in AutomobilesProduct Modularity in Automobiles
Different Modules in
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Source:
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DashboardModule
Shimokawa, K., Jurgens, U., and Fujimoto, T. (Eds), 1997, Transforming Automobile Assembly, Springer, New York.
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Process Modularity
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Shimokawa, K., Jurgens, U., and Fujimoto, T. (Eds), 1997, Transforming Automobile Assembly, Springer, New York.
China assembles all iPods, but it only gets about $4 per unit – or just over 1% of the US retail price of $300
451 parts that go into the iPodHard Drive by Toshiba Japanese company, most of its hard drives made in the Philippines and China; it costs about $73 - $54 in parts and labor -- so the value that Toshiba added to the hard drive was $19 plus its own direct labor costs
Video/multimedia processor chip by Broadcom American company with manufactures facilities in Taiwan This component costs $8
The retail value of the 30‐gigabyte
video iPod that the authors
examined was $299 in
June, 2007
with manufactures facilities in Taiwan. This component costs $8.
Controller chip by Portal Player American company with manufactures .This component costs $5 .
-Final assembly done in China, costs only about $4 a unit
The unaccounted-for parts and labor costs involved in making the iPod came to about $110
The bulk of the iPod’s value is in the conception and design of the iPod. That is why Apple gets $80 for each of these video iPods it sells, which is by far the largest piece of value added in the entire supply chain. Apple figured out how to combine 451 mostly generic parts into a valuable product.
The largest share of the value added in the iPod goes to enterprises in the United States $163 of the iPod’s $299 retail value in the United States was captured by American companies and workers, breaking it down to $75 for distribution and retail costs, $80 to Apple, and $8 to various domestic component makers.
Source: Varian, Hal R. The New York Times, June 28, 2007. An iPod Has Global Value. Ask the (Many) Countries That Make It.
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Global Global Manufacturing NetworkManufacturing Network
Inventory hub
ChinaManufacturing
hub
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xcel
USA
USA
Europe
Demand
India
InBoundLogistics
China
Korea
OutboundLogistics
EasternEurope
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Distribution
Europe
Retail
Suppliers
Assembly
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The Global Trade CollapseThe Global Trade Collapse
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eLast Two Decades Companies were Last Two Decades Companies were
Proud of Their Supply ChainsProud of Their Supply Chains
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xcel Lean , JIT, TQM, Outsourcing, Collaboration,
VisibilitySupply-Demand matchingSoftware Providers, Consultants & Implementation Experts flourished
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Global trade grown exponentiallyThe Asian Century Began
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The great Trade CollapseThe great Trade CollapseGLOBAL
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• Globalization & Highly Connected Supply Chains amplified &
L
TRADE
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g y pp y ptransmitted market collapse across the globe.
• Governments turned protectionist . Resources became expensive.• High concentration Clusters became vulnerable. • Shortage of Talent to deal with new realties.
The Great Trade Collapse: Causes, Consequences and Prospects A VoxEU.org Publication Edited by Richard Baldwin page 3
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eShift in Resource LandscapeShift in Resource Landscape
During last century, the prices of natural resources: energy, food, water, and materials (steel) all fell
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xcel The past ten years have wiped out all of the price declines
that occurred over a centuryToday demand is soaring. New sources are scarce, extraction is expensive.Shortages of one resource is rapidly impacting others.– The energy intensity of water is rising due to the lowering of the
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The world could be entering an era of high and volatile resource prices. No solution in sight for now.
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The Current StatusThe Current Status
• The three major revolutions have transformed the vertically integrated hierarchical enterprise into a
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market driven globally dispersed network• Organizations extraneous to Supply Chain:
Governments, Traders, Energy, .. Social, Political factors influence the performanceGovernance is Missing
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The Ecosystem FrameworkThe Ecosystem Framework
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The Ecosystem Model
A framework to visualize all
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Management & Execution Issues
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N. Viswanadham and S. Kameshwaran, Ecosystem Aware Global Supply Chain Management, World Scientific Publishing, 2013
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De
Institutions
The Basic EcosystemThe Basic Ecosystempl
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Resources
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Supply Chain Network
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Investment ClimateCo-Evolution, Conflict, Risk Propagation
Legal & Regulatory Systems
Industry Associations & Labor Unions
Institutions
Govt. Investments in Innovation, SEZS, Trade laws, Tax systems
Quality Control & Environmental laws
Se
Logistics Transportation , & Trade Facilitation Infrastructure
Equipment Manufacturers
Supply ChainEcosystem
ervice Delivery Technolog
& M
echanisms
Freight corridors, Logistics Parks, Trade facilitation
Cloud :Data records and Execution
Delivery Planning & IT service providers
Distribution Networks with GPS and Sensor Networks
Resources
Water & Power Resources
Supplier ClustersCollaboration
Skill Training ,Labor Productivity
Roads, Ports, Airports
Banks, Micro Finance
gies Supply Chain Dash Board
Supply Chain
Suppliers ConsumerDistributionAssembly &
ManufacturingRetailers
Education Institutions R&D Labs , Innovation
MRO for Factories, Vehicle Fleet, etc
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Transaction CostsTransaction Costs
Delivery Shipping, Inventory,
Hard & Soft Infrastructure
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Institutions Taxes, Tariffs, SEZs, FTAs,
Social groups
Transaction Cost
Resource Clusters, Human, Financial, Power
Water
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Supply ChainProduction,
Quality, Transport
Coordination Costs Broker fees
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Multilayer Governance:Partner selection, Coordination & Execution
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eGovernance: Partner Selection,
Coordination & Control
A h i i f d f h d
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xcel A separate chain is formed for each order
Partner selection based on– Structural features (asset specificity, capabilities)– Relational ties (with govt., social organizations, cluster mangmts, etc.)
Coordination : Determining who does what and when and communicating to everyone
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Execution: Monitor order status so that processes work as per plan & control exceptional events
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Network Governance: Network Governance: Partner Selection Coordination and ExecutionPartner Selection Coordination and Execution
OtherAgencies
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Partner Selection
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eThree Types of Network Governance Three Types of Network Governance
The Network Governance model – Highly Centralized External Broker (Li & Fung, Olam Intl.)
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xcel Highly Centralized External Broker (Li & Fung, Olam Intl.)
– Participant Shared Governance by Elected Board (Healthcare , Dairies, Cooperatives)
– Participant Shared Governance with a Lead PlayerProducer-driven (Cisco, Nike)Buyer-driven (Wal-Mart, Carrefour, Levi)
All th f i ti & N
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proved superior.
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The Orchestration ModelThe Orchestration Model
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Managing the Global Network- Own Nothing
Li & Fung orchestrates a
Li & Fung has developed deep knowledge & internal systems to identify quality suppliers in emerging markets, help them design & manufacture for Western customers and make on time delivery despite poor infrastructure
Li & Fung has set up a global video conference
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xcel Li & Fung orchestrates a
highly-customized delivery path through the supply chain
global video conference network. Clients can monitor details of every stage of an order such as color of a material or the stitching on a garment.
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Suppliers DistributionManufacturers
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OrchestratorOrchestrator Business ModelBusiness Model
End Customer
Planning, Coordination and Overall Responsibility
OrdersOrchestrator
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Material FlowOperationalStatus
Plans
Payment
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Supplier Contract Mfg 3PL
Execution
Supplier Contract Mfg 3PL
3PL
3PL
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Manufacturing has undergone structural changes from human intensive to fully automated; vertically integrated to globally dispersed; fully owned to orchestrating owning none; Strong ties with Trusted suppliers to Order
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xcel Configured SCNs; Managing Immediate Suppliers to Managing the
Entire Network and Reactive Expediting to Proactive Multi-tier Risk Management .Identifying and managing relations with government, trade, social groups, labour, resources and B2B and B2C delivery mechanisms are required capabilities.The principles can be applied in agriculture and services such as health
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Theory development needs Integration of Social networks, Inter-organizational theory, Machine learning, Optimization, Game theory with SCNs.
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What Business Can Learn from Organized Crime
When 10 men attacked the Taj Mahal Palace hotel in Mumbai, in November 2008, they executed one of the best-orchestrated, most technologically advanced terrorist strikes in history.
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xcel – Before the assault they had used Google Earth to explore 3-D models of the target
and determine optimal entry and exit routes, defensive positions, and security posts.
– During the melee they used Blackberry's, satellite phones, and GSM handsets to coordinate with their command center, which monitored broadcast news and the internet to provide real-time information and tactical direction.
– When a bystander tweeted a photo of commandos rappelling from a helicopter onto the roof of one of the buildings, the center alerted the attackers, who set up a trap in a stairwell.
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It took three days for authorities to kill nine of the terrorists and arrest the tenth; which had resulted in 163 deaths and hundreds of injuries.There were resources that could have addressed the problem, but they weren't in the right place, not under the right authority. Governance is missing
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