Total Cost Approach to Supply Chain...
Transcript of Total Cost Approach to Supply Chain...
218-Dec 09
v Challenges / Opportunities
v Understanding of supply chain
v Anatomy of cost in SCM
v Total Cost Approach to SCM
Agenda
318-Dec 09
Customer awareness
Borderless global trade / Logistics
Global meltdown
Fiscal / Regulatory requirements
Commodity prices
Technological Innovation & IPR
IT revolution & HR
Challenges / Opportunities
Shift in market dynamics / business strategy
418-Dec 09
Suppliers CustomersProcurement Manufacturing support
Physical Distribution
Supply Chain Management
Supply Chain Model
Upstream Downstream
“Supply Chain starts with customer and ends with customer”
Inventory Flow
Information Flow
Understanding of supply chain
518-Dec 09
Today’s Supply Chain Network
T2 T1 OEM
CustomersSuppliers
T3
Location of facilitiescloser to market
Expanding dealers &service network
Distribution
Understanding of supply chain
618-Dec 09
Anatomy of Cost in SCM
+
+
How visible are these costs ?
Labour Consumable
Power & Fuel
Depn R & M RejectionInterest OthersMaterial
Cost
Conversion
Packing Logistics ProfitTier 2
Labour Consumable
Power & Fuel
Depn R & M RejectionInterest OthersMaterial
Cost
Conversion
Packing Logistics ProfitTier 1
Total Cost
OEM Material Cost Manufacturing cost
Logistics Cost
Other variable cost
Fixed Cost Profit
+
718-Dec 09
Total Cost Approach to SCM
Trust and transparency
Ø Customer Insight
Ø Supplier / Dealer development
Ø Supplier collaboration
Ø Supplier consolidation
Ø Complexity reduction
Ø Lean manufacturing
Ø Strategic sourcing
Ø Cost of poor quality
Ø Benefit sharing
Ø Network expansion
Ø Postponement
Ø Value stream mapping
Ø TPM
Ø TQM
Ø JIT & Kanban
Ø 5S
Ø Activity based cost
Ø Design to target cost
Ø Value engineering
Ø Kaizen
Ø Six Sigma & QFD
Ø Supplier / Dealer clusters
Strategy Tools / Techniques
818-Dec 09
Customer insight
Attractive features
Vs
Customer preference
Total cost approach to SCM
" Value Vs Cost "
918-Dec 09
T2 T1
OEM
Customers
Suppliers
T3
Location of facilitiescloser to market
Distribution
Lean and agile supply chain
Value stream mapping
Lean
Total cost approach to SCM
1018-Dec 09
Supplier clusters
World Class Organisation
Methodology
Cluster approach
Ø Group learning
Ø Moving together
Ø Focussed plant visits & diagnosis
Ø Corrective actions
Ø Progress as a group
Ø Take off – company specific
Lean Manufacturing
Total Productive Maintenance
Flow manufacturing
Inventory management
5S Work Practice
Quality System
Total Employee Involvement
Total cost approach to SCM
1118-Dec 09
Postponement – Logistics ManagementBefore Improvement After Improvement
Loading capacity in a truck - 44 Loading capacity in a truck - 55
Action taken :-
• Redesigned a few parts• Postponed assembly to dealer end
Desc. UOM BEFORE AFTER Impro vement
Volume Nos 44 55 25%Transportation cost reduced by 20%
Benefits
Total cost approach to SCM
1218-Dec 09
Approach towards Target cost
Macro Level
v Platform Commonisationv Part Commonisation v Part count reductionv Design for supply chain / early supplier involvement v Target Cost deployment
Micro Levelv Material / Weight / Surface area / Process / Specification, etcv Process Design
Understand and Attack cost drivers
Total cost approach to SCM
1318-Dec 09
How Specification drives cost in Supply Chain?Notification on 24.07.2008 Implemented Effective 01.07.2009
“Specification should be the documentation of the results, not the recipe of the plan”
Total cost approach to SCM
1518-Dec 09
Cost + Profit = Price
Price – Profit = Cost
Price – Cost = Profit
Total Cost Approach to SCM