Mapping Supply ChainsPaul JustensenBusM 361Brigham Young University

Supply Chain Maps: Training Overview In depth look at supply chain mapping Business Example Mapping activity Summary

?What is a Supply Chain Map?

How will mapping supply chains help your business?

Supply Chain Maps: History and Background

Has become more important with increase in outsourcing

Increased competition in supply chains

Barn

Supply Chain Map: Defined

A visual representation of goods, information, processes, and money flows that occur throughout a supply chain, both upstream and downstream. Manufacturer

1st Tier Supplier

Retailer

Characteristics of Supply Chain Maps Can focus on:

*particular use or user*theme*processes, flows, facilities, organizations, geographic relationships

Easy to distribute Easy to Interpret Designed to support corporate strategy

Brainstorming Exercise:What suppliers supply your company?Which of these suppliers supply the most

vital products?Pick one key supplier and think about the

following list of questions How good is the quality of their products? How quickly do you receive products you

order?

Brainstorming Exercise: (Cont) Are there any environmental factors

that could affect your supplier such as: Regulations Employee disputes Profitability issues

Would that supplier be willing to team with your company in joint projects to improve operations?

Who supplies your supplier? Are there any internal or environmental

factors that could affect them?

Brainstorming Exercise: (Cont)

Brainstorming Exercise RecapWhat did you learn from this activity?How might mapping supply chains help your

company?

Why do a supply chain map? Supply chains must now compete against other

supply chains Supply chains are a points of strategic advantage Maps highlight inefficiencies Provide a methodology for analyzing processes

Creating a Supply Chain Map1. Organize the customer and supplier team

Meet with management and supply chain directors Purpose is to discuss current situation and decide on

what core competencies are desired in supply chain

2. Draw the current-state extended value stream map

Identify activities required in transaction Use boxes to represent entities and transactional

documents

Creating a Supply Chain Map2.Draw the current-state extended value stream map

(cont’d) Use arrows to show flows of information and products. Label the time each step takes

3. Draw the future-state extended value stream map and implementation plan

Identify areas where you can improve processes Prioritize improvement areas based potential

benefits and by ease of implementation

Creating a Supply Chain Map4. Execute the implementation plan

Implement plan by starting with the most value-added changes first

Track changes in improvement and cost

5. Repeat process for continuous improvement

Difficulties in collaboration Costs Savings Sensitive information Commitment Short-term focus

Business ExampleCapital Equipment Incorporated and Mare

Technologies CEI’s customers unhappy with late deliveries CEI identified Mare, a key supplier, as a bottleneck Mare hadn’t previously considered its impact on other

businesses

Business Example--Continued CEI persuades Mare to cooperate Cross-functional team organized Plan for achieving competencies developed

Business Example--Continued Mapped out current value-stream map

Identified inefficiencies through observation and interviews

Mare tech

Customer service Capital Equipment

Inc

Blanket order

Sales orderMRP

Production control

Blanket order

Sales order

Material suppliers

1 day

Weeklyscheduling

Receiving Quality control Kitting

Work station 1Work station

2&3

Work station 4 Work station 5

Work station 6 Assembly 1 Final assembly Shipping

9 days

4 days12 days 11 days5 days 6 days

14 days

10 days

10 minutes

4 days

Business Example--Continued Mapped a future value stream map with

improvements Improvements prioritized based on potential benefits

and ease of integrationMare tech

Customer service Capital Equipment

Inc

Blanket order

Sales orderMRP

Production control

Blanket order

Sales order

Material suppliers

6 Hours

ReceivingQuality control

Staging

Work cell 1

Work cell 2

Work cell 3 Final assembly Shipping1 dayFIFOFIFO FIFO

10 minutes

1 Hour

1 day1 day

Finish Goods Buffer Stock

Business Example--Continued Executed plan

Focused on improvements with greatest ROI first Results

Lead time reduce from 55 days to 42 days Reduced average days of WIP by 91% 9% cost reduction Strengthened commitment to work together in future

Activity: Peanut Butter CaseYou are the owner of Ritz Peanut Butter Co. located

in Sao Paulo, Brazil, and you have been wanting to improve operations at your manufacturing plant. One concern you have had is that your main supplier, Pedro’s Peanuts, requires long lead times when you order peanuts. Pedro, who is the owner of Pedro’s Peanuts, has agreed that he would work with you in improving operations. After looking closely at how the ordering process works, you come up with the following summary of operations:

Activity: Peanut Butter CaseSteps:

1. Ritz faxes order of 1000 kilos of peanuts to Maria, the receptionist2. Maria checks the fax for orders at 8:00am, 12:00pm, and 3:00pm3. Because the production manager’s office is on the other side of the plant, new orders are sent over only 2 times per day—at 8:30am and at 1:00pm

Activity: Peanut Butter Case4. Production manager faxes a materials request to

the purchasing director. Fax sits for 1 hour.5. If there is enough stock on hand, purchasing

notifies production manager of this. If not, it takes an average of 1 day to get stock from local farmers.

6. Peanuts then enter a batch process that takes 6 hours

7. Upon finishing, workers notify production manager, and production managers requests an invoice from accounting to be prepared.

Activity: Peanut Butter Case8. When accounting finishes invoice, they notify the

production manager and send him a copy.9. Production manager sends invoice to shipping

and requests a shipment be made. Shipping gets request and loads truck (3 hours), and sends it to Ritz Peanut Butter Co. (1 day to deliver)

Map of current process

Sam’s PeanutbutterReceptionist fax

1.25 hour wait

Production ManagerRaw Materials

PurchasingMaterialsrequest

12 hour average

wait

2 hour average

wait

LocalFarmer

LocalFarmer

De-shell peanuts

Wash InspectionAccounting

Shipping

6 hours

1 day

1 hour

1 hour

1 hour

1 hour

2 hours

1 day

Possible SolutionSam’s Peanutbutterfax

1.25 hour wait

Production ManagerRaw Materials

Purchasing

Weekly forecasted

need

2 hour average

wait

LocalFarmer

LocalFarmer

De-shell peanuts

Wash InspectionAccounting

Shipping

6 hours

Continuous

1 hour

1 hour

1 hour

1 hour

2 hours

1 day

Stock pileinventory

2 hours

Summary--ContinuedTo work with suppliers, companies must:

- build a business case benefiting both companies- plan how costs and savings will be shared- agree on competencies to pursue- work together in creating solutions

SummarySupply chain mapping helps companies:

1. Improve strategic supply chain relations2. Identify inefficiencies3. Visualize process for communication4. Analyze development of core competencies

References and Additional ReadingsDelmonico, David & Horton, Peter. “Charting a New Course: Extended

value stream mapping creates innovative supply chains.” APICS—The Performance Advantage. October 2004. p 43.

Gardner, John T. & Cooper, Martha. “Strategic Supply Chain Mapping Approaches.” Journal of Business Logistics. Vol 24. No 2. 2003. pp 37-57.

McInerney, Mike. “Supply Chain Alliances Can Help Logistics Teams Provide Value.” Pulp & Paper. October 2003. pp 38-40.

Anonymous, “Good, Better, Best: How to Assess Your Supply Chain Performance.” http://www.tompkinsinc.com/publications/competitive_edge/articles/06-03-Good_Better_Best.asp. Nov 2005.

Liker, Jeffrey K. & Choi, Thomas Y. “Building Deep Supplier Relationships.” Harvard Business Review, Dec. 2004, Vol. 82. Issue 12.

References and Additional Readings