Who is Bill Gaw?
And why should we listen to him?
Manufacturing Management Training
Supply Chain Barriers
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Lean
Manufacturing |
Manufacturing
Simulation
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PART I.
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The confluence of key technologies—including EDI, the electronic communications infrastructure and networking technologies—with advanced thinking about how companies can work together has made possible a new macro organization, the supply chain. Supply chains are a new way of looking at the collaborative structures that arise when traditional companies cooperate to share technologies and resources so that value is added in each step of the design, manufacturing and delivery process. Supply chains describe the enterprises that will be needed to integrate the global economy and to maximize its efficiency. This paper will describe the supply chain concept, discuss the need for these new macro organizations and identify ways to eliminate barriers to their creation. What Is a Supply Chain? Think of an intuitive example. An oil company pumps oil from a well in Texas. The oil is transmitted from the oil field to a refinery where, among other components, the hydrocarbons needed for plastics manufacture are recovered. These are then purchased by a plastics manufacturer which converts the hydrocarbons into plastic bottles. The plastic bottles are sold to a consumer products company which fills the bottles with dish washing soap, labels the containers and sells them to a warehousing and distribution operation. The soap is distributed to discount stores where it is purchased by the end consumer. Companies Linked by a Common Purpose A supply chain, in its simplest definition, is composed of the companies linked together by the common purpose of moving particular raw materials through the process that converts them into some usable end product and into the final consumers' hands. In the past these companies have viewed each other as customers and suppliers, and have focused on their own internal processes. 1 The supply chain model suggests a view that is more macro, more global. From the supply chain vantage point, the companies which seemed at first to be discrete entities are now seen for the macro organizations that they are. Each company plays a role in the larger organization which is the supply chain.World Class Manufacturing Menu lean
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sigma presentations principles A New Macro Organization The "discovery" of supply chains might be likened to the discovery by astronomers that galaxies are organized into galaxy clusters.2 The fact that stars and solar systems are organized into galaxies has been known for many years; the identification of clusters of galaxies is a more recent discovery. Likewise we have studied and managed departments within companies since the turn of the century. The identification of the macro structures into which companies are organized is a relatively recent discovery. In my view, supply chains represent a potential for more than simply linking companies joined by a common interest in getting products to consumers. To me, supply chains are the next step up in a hierarchy of business structure that starts with the individual worker, moves through work groups and teams, up to departments, and finally to corporations. Supply chains are the new pinnacle of this "hierarchy of inter dependence," the new macro structure of business. As we see more and more flattening (or down-sizing or right-sizing or your current euphemism of choice) of organizations, supply chains come more and more into view. Down-sizing has a way of exposing organizational effectiveness issues in much the same way that lowering inventory as part of a just in time (JIT) process exposes issues around materials control and delivery. Down-sizing individual companies has flattened the business infrastructure, exposing issues around how effective the global economy can or should be. Supply chains, therefore, become a way of getting at how to make global enterprises as effective as possible. Why Are Supply Chains Needed? My graduate economics text defines economics as being "concerned with the efficient utilization or management of limited productive resources for the purpose of attaining the maximum satisfaction of human material wants."3 My grandfather used to say, "There is enough for everyone's need, but not enough for everyone's greed."4 Both statements are concerned with the effectiveness of business: to increase the common wealth, we must attend to allocating resources as efficiently as possible and to eliminating waste. Supply chain concepts can help us do just that. To be Continued STAY CONNECTED To stay current on manufacturing competitive knowledge, please subscribe to our weekly bulletin, "Manufacturing. Basics and Best Practices (MBBP)." Simply fill in the below form and click on the " subscribe button." We'll also send you our Special Report, "6-Change Initiatives for Personal and Company Success." All at no cost of course. Your personal information will never be disclosed to any third party. privacy policy Here's what one of our subscribers said about the MBBP Bulletin: "Great articles. Thanks for the insights. I often share portions of your articles with my staff and they too enjoy them and fine aspects where they can integrate points into their individual areas of responsibilities. Thanks again." Kerry B. Stephenson. President. KALCO Lighting, LLC Manufacturing
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