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Supply Chain Managment Case

In: Business and Management

Submitted By zheng211
Words 1180
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1、 Why are the lead times so long? First of all, a lot of time was wasted getting the customers’ order to the shop floor by manual process, although the H.C. Starck had installed a new ERP system and Manger of Marketing and Sales name Mike Coscia use it. However, the Supervisor of Production Control named Jim McMahon don’t have faith in SAP, so the production planning and scheduling still be performed manually, which means that SAP was often ignored. Jim may stack the production order up on his desk, until it is time to release them to the floor, then a manual paper-based process was used to transmit the order from SO to PO, so there seems to be an ‘information black hole’——order go to the mill, but the demand data doesn’t seem to make it back upstream to the melt shop, which take about 2 weeks. Secondly, the long lag time was caused by the current production policy. HCST was a make-to-order job shop, yet few items are sold from stock, or even made in a single production step from stock. Moreover, HCST don’t maintain stocks of some of the standard intermediate size, so the material will likely flow through multiple process order before ending up as the final product like the Figure 3-23 shows. Therefore, manufacturing lead time will take longer than the Figure 3-26 shows. Thirdly, the technology of rolling and fabrication are not good enough. ‘Fishtailing’ and edge cracks make them to stop rolling and prevent these cracks from propagating. Besides, they use the same mill, but the rolling process is different named ‘breakdown’ and ‘finish’, and the changeover between them takes a full eight-hour shift. Fourthly, equipment failures, shortage of material and sharing bonus policy can make lead time such long. Equipment failures can bring schedule misses, and there are some competitor such as Chinese company to compete for raw-material, and reducing lead time doesn’t directly affect bonus, so the staff may not try them best. Finally, the extreme product diversity and unpredictable line-item demand seem to preclude any make-to-stock possibility, so these products would take longer lead time. 2、 What are the costs from reducing the lead times? What are the benefits from reducing the lead times? COST: 1. Increasing scrap purchased on the open market, because more raw-material can avoid the storage of material to get more market share and can reduce lead time. 2. Maintaining stocks of some of the standard intermediate size. Inventory will cost some money and space, but it can reduce manufacturing lead time. 3. Buying more mills and equipment. Now the rolling plant has three mills, and if there were more mills and equipment work together, the manufacturing lead time will be less.

4. Improving and debugging the SAP, which can reduce the slow manual process of transmitting order. BENEFITS: 1. Making more sales and improve ROA. 2. The ability to quickly fill customer orders and bring satisfaction, so HCST can get more market share and loyal customers in case of Chinese company enter the mill products markets. 3. Making use of inventories and cutting the number of inventories, which can save money and space. 4. Solving the ‘information black hole’ to offer better products. 5. Utilizing the SAP to get better forecasts. Staffs work more efficient. Information exchange will be more timely. 3、 How might Starck reduce the lead times? Using Alloy #1 products as an example, discuss the implementation details of your strategies for lead time reduction. State your assumptions. 1、 Improving and debugging the SAP, and make good use of it among all company to instead of manual process of transmitting order. 2、 Maintaining the ‘drumbeat’ meeting to focus on achieving on-time delivery, but they may should focus on the orders due to ship in the next month, but not the next week. 3、 Buying more mills and equipment to reduce manufacturing lead time. 4、 Improving the performance of mills and equipment and make staffs work efficiently. 5、 Not only maintain raw materials, but also storing stocks of some of the standard intermediate size to reduce the cycle of roll-clean-anneal. We can use the safety stock and risk coefficient of variation to analyze. Rearrange the data depend on gauge: Gauge Material Amount Average Std Cv Category 0.002 1011 8866 985.11 372.06 0.38 0.030’’sheet 0.005 1001 208+566 652.11 206.36 0.32 0.030’’sheet 1003 1=5869 0.010 1002 1766+13 215.00 164.19 0.76 0.030’’sheet 1023 1+38 1032 =1935 0.015 1004 5931+27 701.89 601.53 0.86 1/8’’plant 1018 9+105+2 1027 =6317 1035 0.020 1010 775+11+ 88.89 50.44 0.57 1/8’’plant 1019 14=800 1021 0.030 1009 2902 322.44 224.14 0.70 1/8’’plant

0.040 0.060 0.102 0.125

0.150 0.250 0.375 0.500

0.750 0.800 1.000 1.125

1008 1007 1024 1022 1012 1036 1037 1006 1013 1014 1030 1015 1034 1016 1020 1028 1029 1031 1017 1033 1005 1026 1025

2334 1636+54 =1690 60 1265+23 +33 =1321 101+113 5=1236 1714+92 =1806 375+57 =432 207+82+ 797+317 0+15 =4271 590 20 2+12=14 45

259.33 187.78 6.67 146.78

214.05 188.67 13.31 196.20

0.83 1.01 2.00 1.34

1/8’’plant 1/4’’plant 1/4’’plant 1/4’’plant

137.33 200.67 48.00 474.56

399.04 343.72 124.07 370.40

2.91 1.71 2.59 0.78

1/4’’plant 4’’bar 4’’bar 4’’bar

65.56 2.22 1.56 5.00

184.74 6.67 3.97 15

2.82 3.00 2.54 3.00

4’’bar 4’’bar 4’’bar 4’’bar

Hypothesis:Service level=97 percent Lead time=two weeks We can got average weekly demand and standard deviation of weekly demand by calculation. And the safety factor z=1.88, then we can get the average demand during lead time and safety stock. Category Demand(weekly) Std(weekly) Average Safety demand stock during lead time 0.030’’sheet 1852/4.3=430.70 248/2.1=118.10 861.4 313.95 1/8’’plant 1373/4.3=292.13 273/2.1=130.00 584.26 776.58 1/4’’plant 478/4.3=111.16 199/2.1=94.91 222.32 295.50 4’’bar 723/4.3=168.14 150/2.1=71.33 336.28 447.00 6、 Reducing the product diversity, so that they can forecast order more accurately and have effective intermediate inventory. For example, we can only manufacture top10 materials depend on the demand. They are 1002, 1003,1004,1007,1008,1009,1011,1012.1014,1029, then we analyze as the above means.

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