JamesHolt-TOC-Replenishment

©WashingtonStateUniversity-20101FundamentalExamReviewApplications:[e-mail]©WashingtonStateUniversity-20102TOCICOSegmentedFundamentalsExamFundamentalsCertificateMultipleChoiceExam(Identify,Exploit,Subordinate,Elevate,GotoStep1)FundamentalsCertificateofTOCPhilosophyFundamentalsCertificateofTOCThinkingProcessesFundamentalsCertificateofTOCApplicationsFundamentalsCertificateofTOCFinance&Measures•InherentPotential•InherentSimplicity•InherentWin-Win•FiveFocusingSteps•ThreeQuestions•ConflictCloud•NegativeBranch•AmbitiousTarget•DBR•T,I,OE•PQTypeProblem•ProjectManagement•Replenishment©WashingtonStateUniversity-20103TOCReplenishmentDistributionSystem•UnlikeaFactory,thereisnosinglepersonmanaging•RetailSystemsincludetimedelaybetweendemandcycles•Productionoccurstoforecast•DeliverySystemsfocusonefficiency--Transferinlargebatches(longtimebetweenshipments)•Errorsinforecastaremagnifiedtenfold•Toomuchofthewronginventory,toolittleoftheright•MagnitudeofMissedSalesisnotKnown©WashingtonStateUniversity-20104ForecastAccuracyNow---FutureAccuracyofForecast100%PointwheretheworldchangesEffectiveResponseZoneDeathResponseZone©WashingtonStateUniversity-20105TraditionalPushingInventorytotheRetailStoreManufacturingWarehouseDistributionStoresBEFORE©WashingtonStateUniversity-20106LocateInventoryWhereitProvidesBestProtectionAfter-FastProduction-FastDeliveryAggregatedVariabilityManufacturingWarehouseDistributionStores©WashingtonStateUniversity-20107SupplyChainProcesses•SupplyChainismadeupofmanyindependentlinks(BusinessesorBusinessUnits)•Individuallinksdonotprovideacompletedproduct•ThereissignificantinterfaceproblemsTiming,Quality,Price,Value•Linksareincompetitionwitheachother/Leverageeachother©WashingtonStateUniversity-20108TypicalSupplyChainRawMaterialsRefine/PrepareProduceTransportDistributeRetailCustomer©WashingtonStateUniversity-20109LongandShortDurationSupplyChainsDairyCowsCreameryDeliverRetailCustomerFarmerCanneryWholesaleRetailCustomer©WashingtonStateUniversity-201010ComplexCombinationsBrakesTiresBumpersUpholsteryEngineTransmissionManuf.CarCarLotCarLotCarLot©WashingtonStateUniversity-201011DedicatedChainsMineSmelterRollingMillProductSteelSalesIndependentBusinessUnitIndependentBusinessUnitIndependentBusinessUnitSingleFirm-TotallyOwnedIndustry-SoleSourceTransferPricesFixedbyPolicy©WashingtonStateUniversity-201012CompetitiveChainsOilWellRefineryChemicalPlantClothMillDressFactoryCustomerClothMillClothMillChemicalPlantChemicalPlantOilWellRefineryDressFactoryCustomerOilWellRefineryDressFactoryCustomerTransferPricesatMarketPrices©WashingtonStateUniversity-201013SupplyChainIssues•Inthefuture,competitionwillnolongerbebetweencompetitors,itwillbebetweencompetitivesupplychains.•Successfulsupplychainsmustrespondquicklytothechangingtastesofthefinalcustomer.•ThestumblingbocktoFASTistheInformationSystem•CurrentBusinesstoBusinesssoftwareoffersnearinstanttransferofdata•But,isdatawhatweneed?©WashingtonStateUniversity-201014TOCSupplyChainMeasures•TOCSupplyChainModelExample:DairyFarmersCooperative•ThefarmersowntheCoop•Individualsownthecows•IndividualssellmilktotheCoop•TheCooprunstheCreamery•TheCoopsellsthemilk,cheese,icecreamtothecustomers•TheCoopkeeps5%profit•Theotherprofitgoestothefarmers•Everyonehassomeownershipinthesuccessofthechain.©WashingtonStateUniversity-201015SharedRiskandProfit•MeasurestoPromoteSharedRisk/SharedProfit•CurrentMeasures:Whatdidwedothatweshouldhavedone?Whatdidn’twedothatweshouldn’thavedone?95%2%5%98%ShouldHaveShouldn’tHaveDidDidn’t©WashingtonStateUniversity-201016MoreSensitivity•Whilewehatenegatives,Itsbettertofocusonthem(sixsigma?)95%-96%1%gain5%-4%20%gain98%-99%1%gainShouldHaveShouldn’tHaveDidDidn’t2%-1%50%gain©WashingtonStateUniversity-201017Whatdon’twedo?•WhatDon’tWeDothatweshould?Deliverontime!(Qualityproblemsarereallydeliveryproblems)•WhatDoweDothatweshouldn’thavedone?Sloppy,in-effective,pooruseofresourcesCostoverruns©WashingtonStateUniversity-201018MissedDelivery•Consider:Wemissed1%ofparts•(10boltscountthesameas10engines)$1000inpartslate•Latebyoneday?Noproblem.•Lateby40days?DestroyedouroperationsWeneedValue(ThroughputThreatenedValue)WeneedTime(Dayslaterthanexpected)PeriodicDollar-Days:Sumof(Tthreatened)*(Dayslate)foralllateitemsovertheperiod.©WashingtonStateUniversity-201019UseofThroughputDollar-Days•HavemultipleVendorsforeachpurchasedpart.•GiveBestVendor(fewestdollardays)60%oforders•GivesnextbestVendor35%•Sharelast5%betweenpoorvendors.©WashingtonStateUniversity-201020But,WearesupposedtoShare!•WecaneasilyrateourvendorsonThroughputDollardays.•Wecanratetheboltvendorthesameastheenginevendor.EithercanjeopardizethelossofT.•But,Ifweaskthevendortowaitforourpaymentuntiltheprojectissoldatthefinalsale,howlongshouldtheywait?•Longerisworse.(Boltvs.Engine?)•Butwhataboutvolume?Ifyoutakemoreofmyproductisthatworseorbetter?Highvolumesarehighinvestment/riskforthevendor.©WashingtonStateUniversity-20