(Mt) – MGT 322 SEU Logistics Management Questions

Instructions – PLEASE READ THEM CAREFULLY • The Assignment must be submitted on Blackboard (WORD format only) via allocated folder. • Assignments submitted through email will not be accepted. • Students are advised to make their work clear and well presented, marks may be reduced for poor presentation. This includes filling your information on the cover page. • Students must mention question number clearly in their answer. • Late submission will NOT be accepted. • Avoid plagiarism, the work should be in your own words, copying from students or other resources without proper referencing will result in ZERO marks. No exceptions. • All answered must be typed using Times New Roman (size 12, double-spaced) font. No pictures containing text will be accepted and will be considered plagiarism). • Submissions without this cover page will NOT be accepted. Logistics Management Learning Outcome: 1. Ability to explain and distinguish between the concepts of logistic system operations using logistic systems, time based management and lean thinking. 2. Analyze and identify challenges and issues pertaining to logistical processes. Critical Thinking The global marketplace has witnessed an increased pressure from customers and competitors in manufacturing as well as service sector (Basu, 2001; George, 2002). Due to the rapidly changing global marketplace only those companies will be able to survive that will deliver products of good quality at cheaper rate and to achieve their goal companies try to improve performance by focusing on cost cutting, increasing productivity levels, quality and guaranteeing deliveries in order to satisfy customers (Raouf, 1994). Increased global competition leads the industry to increasing efficiency by means of economies of scale and internal specialization to meet market conditions in terms of flexibility, delivery performance and quality (Yamashina, 1995). The changes in the present competitive business environment characterized by profound competition on the supply side and keen indecisive in customer requirements on the demand side. These changes have left their distinctive marks on the different aspect of the manufacturing organizations (Gomes et al., 2006). With this increasing global economy, cost effective manufacturing has become a requirement to remain competitive. To meet all the challenges organizations try to introduce different manufacturing and supply techniques. Management of organizations devotes its efforts to reduce the manufacturing costs and to improve the quality of product. To achieve this goal, different manufacturing and supply techniques employed. The last quarter of the 20th century witnessed the adoption of excellent, lean and integrated manufacturing strategies that have drastically changed the way manufacturing firm’s leads to improvement of manufacturing performance (Fullerton and McWatters, 2002). Consult chapter 7 of your textbook or secondary available data through internet and answer the following questions. Question: 1. Why Companies adopted Lean Thinking and JIT model? (1.5 Mark) 2. Discuss major types of Waste, companies has to keep in mind during production. (1.5 Mark) 3. Due to pandemic COVID 19 emergency, do you think agile supply chain is the right concept in this kind of situation? Give reason with example. (1.5 Mark) 4. Reference (0.5 Mark) The Answer must follow the outline points below: • Each answer should be 300 to 500 range of word counts. • Lean Thinking and JIT Concept • Agile Supply chain • Their Main functions • Reasons with suitable Examples • Reference use APA style of referencing CHAPTER 7 Just-in-time and the agile supply chain Objectives The intended objectives of this chapter are to: ● explain how just-in-time can be used to avoid the build-up of waste within and between supply chain processes; ● introduce the concept of the agile supply chain as a broad-based approach to developing responsiveness advantages; ● explore the challenges of coping with volatile demand situations; ● explain how capabilities can be developed and specifically targeted at thriving in conditions of market turbulence. By the end of this chapter you should be able to: ● understand how lean thinking can be used to improve performance of the supply chain in meeting end-customer demand by cutting out waste; ● recognise enemies of flow in the supply chain; ● understand the distinctions between lean and agile strategies, and how the two can work together; ● identify the type of market conditions under which agile strategies are appropriate, and how they can be operationalised. In Chapter 9 we consider another key aspect of the agile supply chain – the virtual organisation. Introduction In Chapter 5, we reviewed the importance of time in supply chain thinking. Time is one of the ‘hard objectives’ (section 1.3.1), and some supply chains compete on time by delivering products to the end-customer faster than competition. Here, the focus is on reducing the time taken for each process. But time can also be used to alter the trade-offs between competitive priorities – for example, costs do not have to rise proportionately as lead times are reduced (section 5.1.1). This can be achieved by squeezing non-value-adding activities (delays, transport, storage and inspection) from the supply chain by time-based process mapping (section 5.3). Such activities are referred to generically as waste, the Japanese word for which is 222 Chapter 7 • Just-in-time and the agile supply chain muda (the concept of waste was introduced in Chapter 5 and is explored further in section 7.1.2). Such thinking has been developed into a philosophy and accompanying tools and techniques under the banner of ‘just-in-time’ (JIT). The aim of JIT (Harrison, 1992) is: To meet demand instantaneously with perfect quality and no waste. All three targets (demand – quality – waste) are ideals which can never be fully achieved. But we can get closer to them over time through continuous improvement. The elimination of waste has been promoted under the banner of ‘lean thinking’ (Womack and Jones, 2003), who advise: To hell with your competitors; compete against perfection by identifying all activities that are muda and eliminating them. This is an absolute rather than a relative standard which can provide the essential North Star for any organization. JIT and lean thinking share the same roots, and originate from competitive strategies developed by the Japanese. Toyota Motor Company is held up as the role model and, although the Toyota brand has been severely damaged in recent years by widespread quality problems (section 1.3.1), this focal firm’s operational excellence has had a major influence on logistics thinking today. A common view is that lean thinking works best where demand is relatively stable – and hence predictable – and where variety is low. But in situations where demand is volatile and customer requirement for variety is high, the elimination of waste in itself becomes a lower priority than the need to respond rapidly to a turbulent marketplace. So the second part of this chapter reviews developments under the banner of the ‘agile supply chain’. In Chapter 6, we reviewed quick response and other time-based approaches to developing the capabilities needed to support the speed advantage. While such logistics capabilities are important enablers to lean and responsive supply chains, the ‘agile supply chain’ takes the argument a significant step further. Marketplaces of the 21st century are often characterised by proliferation of products and services, shorter product lifecycles and increased rates of product innovation. Simply responding quickly and at the right time are not enough to meet the needs of such marketplaces. The mission of modern logistics is to ensure that it is the right product – to meet exact end customer needs – that gets delivered in the right place at the right time. Such a mission means that the end-customer comes first. This chapter proposes the agile supply chain as an approach that elevates speed capabilities in a given supply chain to much higher levels than would be possible using the tools and techniques discussed so far. Key issues This chapter addresses two key issues: 1 Just-in-time and lean thinking: the impact of just-in-time on supply chain thinking. Cutting out waste in business processes. Simple, paperless systems v central control. Use and misuse in planning and control. 2 The agile supply chain: the dimensions of the agile supply chain, and the environments that favour agility. Agile practices: addressing the challenges of market turbulence, rapid response logistics and managing low volume products. Just-in-time and lean thinking 223 7.1 Just-in-time and lean thinking Key issue: What are the implications of just-in-time and lean thinking for logistics? How can just-in-time principles be applied to other forms of material control such as material requirements planning? Just-in-time is actually a broad philosophy of management that seeks to eliminate waste and improve quality in all business processes. JIT is put into practice by means of a set of tools and techniques that provide the cutting edge in the ‘war on waste’. In this chapter, we focus on the application of JIT to logistics. This partial view of JIT has been called little JIT (Chase et al., 2005): there is far more to this wide-ranging approach to management than we present here (see, for example, Harrison, 1992). Nevertheless, little JIT has enormous implications for logistics, and has spawned several logistics versions of JIT concepts. The partial view of JIT is an approach to material control based on the view that a process should operate only when a customer signals a need for more parts from that process. When a process is operated in the JIT way, goods are produced and delivered just-in-time to be sold. This principle cascades upstream through the supply network, with subassemblies produced and delivered just-in-time to be assembled, parts fabricated and delivered just-in-time to be built into subassemblies, and materials bought and delivered just-in-time to be made into fabricated parts. Throughout the supply network, the trigger to start work is governed by demand from the customer – the next process (Schonberger, 1991). A supply network can be conceived of as a chain of customers, with each link coordinated with its neighbours by JIT signals. The whole network is triggered by demand from the end-customer. Only the end-customer is free to place demand whenever he or she wants; after that the system takes over. The above description of the flow of goods in a supply chain is characteristic of a pull system. Parts are pulled through the chain in response to demand from the end-customer. This contrasts with a push system, in which products are made whenever resources (people, material and machines) become available in response to a central plan or schedule. The two systems of controlling materials can be distinguished as follows: ● Pull scheduling: a system of controlling materials whereby the user signals to the maker or provider that more material is needed. Material is sent only in response to such a signal. ● Push scheduling: a system of controlling materials whereby makers and providers make or send material in response to a pre-set schedule, regardless of whether the next process needs them at the time. The push approach is a common way for processes to be managed, and often seems a sensible option. If some of the people in a factory or an office are idle, it seems a good idea to give them work to do. The assumption is that those products can be sold at some point in the future. A similar assumption is that building up a stock of finished goods will quickly help to satisfy the customer. This argument seems particularly attractive where manufacturing lead times are long, if quality is a problem or if machines often break down. It is better and safer to 224 Chapter 7 • Just-in-time and the agile supply chain make product, just in case there’s a problem in the future. Unfortunately, this argument has severe limitations. Push scheduling and its associated inventories do not always help companies to be more responsive. All too often, the very products the organisation wants to sell are unavailable, while there is too much stock of products that are not selling. And building up stock certainly does not help to make more productive use of spare capacity. Instead it can easily lead to excess costs, and hide opportunities to improve processes. 7.1.1 The just-in-time system Companies achieve the ability to produce and deliver just-in-time to satisfy actual demand because they develop a production system that is capable of working in this way. Such a system can be envisaged as a number of ‘factors’ that interact with each other, as shown in Figure 7.1. This shows JIT capability as founded on layers of factors that interact together to form a system that is designed for flow. Excellence in each of the six factors determines the effectiveness with which JIT capability can be achieved: that is, how easy it is to get to the top of the pyramid. Level 1 Just-in-time 1 Level 2 Minimum delay 2 4 3 Level 3 Minimum inventory Minimum defects Minimum down time 6 5 Simplicity and visibility Figure 7.1 The pyramid of key factors that underpin JIT Factor 1 The top of the pyramid is full capability for just-in-time supply. This is the level at which a focal firm can produce and deliver according to the demand that is placed on it. The relationships operating within and between levels 2 and 3 form the system that ultimately underpins the achievement of JIT. They are complex, and in some cases there is a long time delay between taking actions and seeing the effects. Factor 2 The two factors delay and inventory interact with each other in a system of positive amplification; that is, they go up together and they go down together. This Just-in-time and lean thinking 225 interrelationship results in either a virtuous cycle, where things keep getting better, or a vicious cycle, where they keep getting worse. For example, extra delay in a process will result in extra inventory being held to compensate for the delay. Adding more inventory causes further delays as products take longer to flow through the process, which leads to the need for more inventory. Conversely if delays are reduced then less inventory is needed, which results in fewer delays, meaning that inventory can be further reduced. Making sure this relationship operates as a virtuous cycle of reducing delay and inventory instead of a vicious one where they increase depends on the underpinning factors in level 3. Factor 3 Defects lead to delays, either through requiring rework or necessitating increased production to compensate for scrap. The likelihood of defects leads to safety stocks being held as a buffer against potential problems. This thinking amplifies quality problems by increasing the time between a defect occurring and its discovery. Not only is the cause harder to identify, but more production will be affected. The attitude that holding inventory can mitigate the effect of quality problems is fundamentally flawed. It stands in opposition to the only successful approach to defect minimisation, where problems are quickly identified, their causes are traced, and permanent solutions are devised and applied. Factor 4 Machine downtime relates to a number of issues: ● unplanned downtime – that is, breakdowns; ● planned maintenance; ● changeover times. Downtime, and particularly the risk of unplanned downtime, is a key cause of the need for safety stocks in a process. Other JIT tools and techniques can help to minimise the problems here. For example, total productive maintenance (TPM; Nakajima, 1989) seeks to answer the question ‘What can everyone do to help prevent breakdowns?’ Regular planned preventive maintenance, closer cooperation between production and maintenance personnel, and equipment sourcing for ease of maintenance are some of the actions that can be taken in response. In other words, increasing planned maintenance costs often results in reduced overall costs of machine downtime. Minimising changeover time is a JIT tool that can be used not only to reduce lost production time but also improve production flexibility. Inflexible facilities delay the rapid production of customer orders. Factor 5 Where the flow through a process is easily seen, people in the process will have a better understanding of their colleagues’ work and how they themselves affect others. A simple process results from having first focused operations around a family of compatible products. Layout is then organised to bring together all the 226 Chapter 7 • Just-in-time and the agile supply chain people and equipment needed to undertake the process. These are arranged so that there is a logical flow between the process steps. Arranging the process so that the stations for undertaking the steps are close together not only helps to reduce inventory but also will itself be made easier when inventory is low. A simple process will be more visible, allowing it to be better maintained. Not only should there be fewer things to go wrong, they will be more obvious when they do, and will be easier to fix. This attribute helps to minimise both machine downtime and product defects. Maintenance of the process is underpinned by housekeeping and cleanliness. This starts with designing processes and facilities to create order. There is a place for everything, and everything has its place. Orderliness depends on a thinking workforce that has accepted ownership and responsibility for organising the work place. Attention to detail in terms of ‘respect for human’ issues is an essential part of JIT philosophy (Harrison and Storey, 2000). Factor 6 The levels of work in progress and other types of inventory have a significant impact upon the visibility of a process. It becomes increasingly difficult to see the flow of a process as inventory increases. This may be literally true on a shop floor or in a warehouse, where piles and stacks of goods can isolate workers. The same is true in offices when the process flow becomes lost in assorted piles of work on people’s desks. In order to highlight the limitations of push production we next consider the case of how a focal firm took a rather traditional approach to responding to new demands being placed on the production process. CASE STUDY 7.1 Smog Co. The Smog Co. production system This is the case of Smog Co., a small supplier of well-engineered components. Smog produces a range of products grouped into families. Production of one of the highervolume product families has been organised into a flow process made up of four steps, which follow one after the other in sequence. Changeover from one product to another is relatively simple, but takes around ten minutes per machine. To minimise delays caused by changeovers, products tend to be made in batches. These batches move from one step to the next, where they queue on a first in, first out basis to be worked on, after which they move to the next step. This process is shown in Figure 7.2. Step 1 Step 2 Figure 7.2 The Smog production process Step 3 Step 4 Just-in-time and lean thinking 227 Key measures of the performance of this process are the utilisation of people and of machines. The objective is to keep utilisation of both as high as possible. In this situation, if people or machines are idle – and material is available – they are used to make something. Naturally it wouldn’t make sense to make anything. Instead the production manager has a feel for what is needed, and uses a forecast from the sales depart…

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