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MIM 544 Global Cases in Supply Logistics Class two – NPI & Metrics

MIM 544 Global Cases in Supply Logistics Class two – NPI & Metrics. Agenda. Case learning objectives Current Events – China Labor Overview New Product Teams Cisco discussion Team Analysis Overview Quality Metrics Manfield discussion Team Analysis. Global Cases.

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MIM 544 Global Cases in Supply Logistics Class two – NPI & Metrics

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  1. MIM 544 Global Cases in Supply Logistics Class two – NPI & Metrics

  2. Agenda • Case learning objectives • Current Events – China Labor • Overview New Product Teams • Cisco discussion • Team Analysis • Overview Quality Metrics • Manfield discussion • Team Analysis

  3. Global Cases • Case Learning Objectives • Apply past knowledge • Provide a conceptual Framework • Analyze in depth – metrics & numbers • Don’t necessarily accept the strategy • Underlying objective – EBITA & Cash!

  4. Case format for the evening • One team will lead the discussion • What do we know about the company? • What is the problem statement? • Questions assigned • Other questions?

  5. China Labor Market – Relate to the NPI case? • Facts: • FDI-$500B; Directly Employ 16M people • 112M factory workers • 200 largest exporters, 153 were from FDI • Is unrest growing? 280K labor disputes 2009 • Wages increased 9%/yr since 2002 • Surplus labor or shortage? • Half the number of <16-29yrs by 2020

  6. Global Cases - NPI • New Product Introduction (NPI) – Why care? • Risks & Concerns without it? • SCM Strategy – Single / multi-sourced • Design for “X” • AVL • Packaging • Postponement • Service strategies

  7. NPI Summary – All Affect Cost • Purchasing (RFQ / SOW) • Engineering (ERP / AVL) • Logistics (Packaging) • Quality (Yield / Touches) • Marketing (PRD) • Warranty / Service • Most Important – “The Crossover”

  8. Drivers of the crossover • Demand side • Environmental – Macroeconomic • Competition • Pricing • Timing • Market response • Product capability • Supply side • External execution – SCM • Internal execution – supply in volume

  9. Cisco Case What do we know? Viking Product has transitioned to a faster model, surpassing the competition (Juniper & Alcatel). Now want to go from US-based NPI & China transition to Foxconn out of the gate in Shenzen. Foxconn had never made this complex a box, especially from the start, but now level – 3. 45% of employees and sales from outside US. Proud of their “adaptive supply chain,” cut its number of outsourced partners from 13 to 4 (is this good & why?) 2001 Cisco went from 1,500 suppliers to 600, of which 200 had 80% of the spend. Cisco Lean was the mantra, pull system & predictable lead-times and on-time shipments.

  10. Cisco NPI – 6 Questions • What are the risks in NPI overall? • Why Foxconn or any new supplier? • What are the challenges and risks with China directly. • What are the benefits of going to China directly. • Why Foxconn? • How do you mitigate the risks of going direct to China?

  11. Metrics – Right ones? • Quality Systems • TQM / Lean / ISO • Above the Shop Floor – Value stream mapping can be applied everywhere • “What is measured improves” • Overemphasis on a few can be risky • Too many? (Attention span?)

  12. Lean • Sorting (Seiri) • Straightening or Setting in Order (Seiton) – Simplifying • Sweeping or Shining or Cleanliness / Systematic Cleaning (Seiso) • Standardizing (Seiketsu) • Sustaining the discipline (Shitsuke) • Safety

  13. Some Performance Measurements • Quality – PPM, FPY, IC, FMEA • Cost to Target – OPEX & Procurement • On Time Delivery • Flexibility – cycle time improvement • Productivity Improvement – output / hour • Supplier’s Management Program • Progress Toward Certification ISO 14,000 • Technology roadmap (products & IT infrastructure)

  14. Measuring Performance – Cont. • Forecast Accuracy • Formal Sharing of Information – Markets & customers • Minimize expediting and Schedule Changes • Focus on Total Cost - Not Price • On Time A/P & A/R • Program to Manage Supplier Relationships • – NPI -> Obsolescence • Contractual Protection and Liabilities • Period Expenses - Variances

  15. The hp way: TQRDCEB: • Technology • Quality Responsiveness Delivery Cost Environment Business • Kropf, W. C. & Russell, P. L. (N.D.). Hewlett-Packard's Packaging Supplier Evaluation Process and Criteria. Retrieved May 24, 2009 from: http://www.hp.com/packaging/Procurement/paper.doc

  16. 7 Deadly Sins of Performance Measurements • Vanity – cognitive dissonance (IBM PC) • Provincialism – only measure within an org group • Narcissism – measure from your point of view, not the customer • Laziness – We know best • Pettiness – only a small component of what matters • Inanity – Measure what you want to change • Frivolity – Not taking metrics seriously

  17. Manfield Coatings • What do we know? • Short lead-times • Strong niche player • Uses quality as comparative advantage • - Cost containment and speed for customers • - Satisfy customers, not surpass expectations

  18. Manfield Coatings – 5 Questions • How does quality help Manfield? • What made the Q-S successful? • What metrics would have made Manfield more successful? • Are they moving in the right direction? • Seven deadly sins & aligning incentives; how does this relate?

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