Presentation Transcript

1. Off-Shoring, On-Shoring -SCM As A Core Competency

   APICS Terra Grande District Houston, TX March 1, 2012 Bob Forshay, VP Transformance Advisors Inc.
2. Learn Evaluate – Debate Apply Agenda Why We Do This? Group Exercise Impacts, + or – Examples What If? Call To Action Summary
3. Off Shore Impacts? Low Unit Cost?
4. Laptop Batteries - Fires Pet Food Contaminated - Deaths Lead Paint on Toys - Deaths Drywall Contaminated – Sickness Business Lost to Pirating - Revenue Embedded Security Risks – Security How do you proactively manage the risks? What is the real cost? Partial History
5. Business Impacts?
6. Social Impacts? Subpar Labor Practices Low compliance to work standards Fraudulent audits Child labor est. 4-5% 10-20% turnover/month 12-18 hour shifts Union worker complaints = reason to fire Suicides increased - higher than average Epidemic of chemical poisoning incidence US Worker Earning Potential – Standard of Living down
7. Environmental Impacts? Substandard air quality Water supplies cannot sustain natural life Climate change n –hexane exposure
8. Teams Compete RobotRick Enterprise Control PCBA Outsourced to China Foreign labor cost 50% of US labor $50 per ea. from China $59 per ea. from US 10,000 unit monthly volume Evaluate Supply Chain Alternatives
9. What Is The True Cost? What doesn’t flow to the Purchase Order Price but is still a cost we are paying?
10. Total Landed Cost Calculation Key to Supply Chain Optimization Still Immature Practice, 2010 3PL Study Finds Only 45% Report Extensive Use; 41% report Somewhat Use; Data Capture Challenges - Primary Obstacle Oct 2010 Supply Chain Digest News
11. Poll – 2010 15th Annual 3rd Party Logistics Study A. Data Not available B. Do Not Have Right Tools C. Insufficient Time for Analysis D. Not Sure how to calculate TLC
12. the total cost of a landed shipment including purchaseprice, freight, insurance, and other costsup to the port of destination. In some instances, it may also include the customs duties and other taxes levied on the shipment. BUT – Is there more to know? Least Total Cost
13. Total Landed Cost Example
14. Example – Circuit Cards
15. Circuit Cards Risk 10,000 units produced per quarter, 75% in transit – Boat 25% already arrived $110 each! $1M Immediate Engineering Change Implemented, Rework = 100%
16. Circuit Cards Risk Required assy’s to ship product Takes too long to return Non Standard Labor Reassigning allocated skills, stopped other important work Allocate limited supply of new parts, Rework in US and New Build in China, costly expediting
17. Example – Forged steel Parts
18. Forged steel Parts Volume Low -weekly demand Quality Requirement is very high Lead Time from US = 2-4 weeks Lead Time from China = 8-16 weeks Inventory at risk increased 4x
19. Forged steel Parts Over half of items outsourced ultimately cost MORE. Quality problems increased Significant incidents reduced OTD Some product returned, added freight Some reworked locally when possible, added labor
20. Example – Mechanical Steel Fab
21. Mechanical Steel Fab Power Supply designed by US team, manufactured by CM in China Assy at 2nd CM in China for Assy & Test Quality Management System ignored Defects set aside at Assy CM, piling up in informal “MRB” area. Assy Contractor ran out of usable PS’s as defect rate from Contract Mfg grew.
22. Mechanical Steel Fab “Escapes” found their way to customers. Production Stopped. Intransit inventories quarantined Triage sort & ship process set up in Bonded Warehouse. Return majority not usable Weeks to recover AFTER quality defect root cause identified.
23. Poll – Results A. Data Not available 49% B. Do Not Have Right Tools 48% C. Insufficient Time for Analysis 31% D. Not Sure how to calculate TLC 27%
24. Too busy working ON the business to work IN the business! Too busy driving to stop for gas!
25. What If? Lean: the systematic elimination of waste Lean: the systematic elimination of waste
26. Lean Supply Chains Supplier Relationship Management Lean Enterprise Customer Relationship Management Supply Chain Management is a core competency
27. On Shoring Instead - 2011 GE Water Heaters Local collaboration saves cost, US 6% less than China – 400 Jobs returned Hydraulic Die Cutting process Custom Order Warranty Cost reduced 90% Master Lock productivity increased 6x Returned mfg from overseas
28. China Labor Cost Rising Boston Consulting Group Press Release from May 5th, 2011; “We should expect net labor costs for manufacturing in China and the US to converge by around 2015.”
29. Minimize Risk, Minimize Variation! Manage the Leading Indicators FPY – First Pass Yield Inbound Materials Certified Daily “MRB” resolution, no laggards! Track / Improve Response Time Daily Quality Reporting by SN/item Common Data Base Timely CARs, Corrective Action Reports Daily Supplier Dashboard
30. Promote Education Current Position Lean Supply Chain Over production Motion Supplier Relationship Management Lean Enterprise Customer Relationship Management seven types of waste Defects Movement Seek Perfection Leverage Pull Supply Chain Management is a core competency Waiting Create Flow Inventory Identify Value Streams Specify Value Poor processing
31. Benefits?
32. The World Class Imperative 75% Higher Profits* Business Strategy Supply Chain Capabilities Market Leadership Profit Advantage *Supply Chain Management Review, Survey of 110 companies in five sectors
33. Your Status?
34. List Three Things To Do Next Week What are you measuring? TLC as The Metric? Who Collaborates on data? Balanced Scorecard & Daily Dashboard Call To Action
35. Questions? Ideas?
36. Summary - Key Takeaways Elements of lean supply chains must include Total Cost view. Apply 5 principles of lean Systematic lean leadership = Participation and Education
37. End of Presentation
38. How to Reach Us Bob Forshay, CPIM, CIRM, CSCP, CSCA, CSCM, CLM VP, Transformance Advisors Inc. 720-244-0579 c 720-295-LEAN bforshay@emailTA.com