ElecComp case Quản lý chuỗi cung ứng

PUSH – PULL STRATEGIES Team: Instructor: Instructor: Dr Dr Huynh Huynh Nhat Nhat To To Dinh Thi Trang Pham Quoc Bao Nguyen Ngo Huong Binh ElecComp Case o Large contract manufacturer of circuit boards and other high tech parts; o About 27,000 high value products with short life cycles; o Fierce competition => Low customer promise times < Manufacturing Lead Times; o High inventory of SKUs based on long-term forecasts => Classic PUSH STRATEGY o o High shortages o Huge risk PULL STRATEGY not feasible because of long lead times New Supply Chain Strategy OBJECTIVES: o o Reduce inventory and financial risks; Provide customers with competitive response times New Supply Chain Strategy ACHIEVE THE FOLLOWING: o o o o o Determining the optimal location of inventory across the various stages; Calculating the optimal quantity of safety stock for each component at each stage; Hybrid strategy of Push and Pull; Push Stages produce to stock where the company keeps safety stock; Pull stages keep no stock at all New Supply Chain Strategy Challenge: o Identify the location where the strategy switched from Push-based to Pull-based; o Identify the Push-Pull boundary Benefits: o For same lead times, safety stock reduced by 40% to 60%; o Company could cut lead times to customers by 50% and still reduce safety stocks by 30% Notations Used Trade - Offs o o o o o o o o o o If Montgomery facility reduces committed lead time to 13 days, assembly facility does not need any inventory of finished goods Any customer order will trigger an order for parts and Part will be available immediately, since it is held in inventory Part will be available in 15 days 13 days committed response time by the manufacturing facility days transportation lead time Another 15 days to process the order at the assembly facility Order is delivered within the committed service time Assembly facility produces to order, i.e., a Pull based strategy Montgomery facility keeps inventory and hence is managed with a Push or Make-to-Stock strategy Current Safety Stock Location Optimized Safety Stock Location Current Safety Stock with Lesser Lead Time Supply Chain with More Complex Product Structure Optimized Supply Chain with More Complex Product Structure Key Points o Identifying the Push – Pull boundary; o Talking advantage of the risk pooling concept; o o Demand for components used by a number of finished products has smaller variability and uncertainty than that of the finished goods Replacing traditional supply chain strategies that are typically referred to as sequential, or local, optimization by a globally optimized supply chain strategy Local vs Global 0ptimization Global Optimization o For the same lead time, cost is reduced significantly; o For the same cost lead time is reduced significantly; o Trade – off curve has jumps in various places oRepresents situations in which the location of the Push – Pull boundary changes oSignificant cost savings are achieved Problems with Local Optimization Prevalent strategy for many companies o Try to keep as much inventory close to the customers; o Hold some inventory at every location; o Hold as much raw material as possible Problems with Local Optimization This typical yields leads to: o Low inventory turns; o Inconsistent service levels across locations and product; o The need to expedite shipments, with resulting increased transportation costs .. .ElecComp Case o Large contract manufacturer of circuit boards and other high tech parts; o About 27,000