The Characteristics of
Supply Chain plexity, Variability, Conflicting Objectives
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© 1999 Andersen Consulting
Order Response Time
Product Availability
Lead Time
Order Changes
Due Date Performance
Resource Investment
Asset Productivity
Inventory
Supplier & Capacity Contracts
Level of
Service
Cost of
Service
The Business Challenges
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© 1999 Andersen Consulting
Complexity
Variability
Conflicting Objectives
What are the characteristics of Supply Chan Management, why is it so hard to manage?
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© 1999 Andersen Consulting
Complexity
Lead Times Limit Flexibility
Little or No Predictability and Poor Product Mix
?
Chronic Capacity
Shortages
Current Processes and Structures Inhibit Performance
Inventory Used to Cover Problems
Complications in the Electronics Industry
Complexity ponent / Semiconductor Manufacturing
Mass customization
Personalization
Product mix effects on capacity
Multiple options
Contracted vs. owned bined make-to-forecast and make-to-order
Inverted BOM
Binning
Multi-stage global production
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© 1999 Andersen Consulting
Uncertainty in the supply chain results in significant variability
Early
On-time
Late
Early
On-time
Late
Under
Forecast
Over
Early
On-time
Late
Customer Demand
Supplier Performance
Manufacturing
Customer
Deliveries
Raw
Materials
Finished
Goods
Past Performance
Market Research
Analytical Technique
Incentive Programs
Responsiveness
Transportation
Location
Quality
Process Design
Product Design
Capacity
Quality
By Tom Davis
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© 1999 Andersen Consulting
Supply
Channel Orders
Actual
Launch
Real Shortage
Returns/Cancellations
Over-Supply
Channel Fill and Phantom Demand
Target
Launch
End of Life
True End Customer Demand
Units Per Period
Time
Multiple forecasts and unreliable fulfillment today create the bullwhip effect.
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©Andersen Consulting 1998
Shortened product life cycle has increased the uncertainty.
Ramp-up
Ongoing
End of Life
Ramp-up Ongoing End of Life
Role of Inventory
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