Supply Chain Architecture

by Walker; William T.

• ISBN13: 9781574443578
• ISBN10: 1574443577
• Format: Hardcover
• Copyright: 2004-10-14
• Publisher: CRC Press

Summary

Supply Chain Architecture: A Blueprint for Networking the Flow of Material, Information, and Cash applies five crucial business principles to solve network problems for geographically separated workers who must team together to deliver products and services.These five principles, Velocity, Variability, Vocalize, Visualize, and Value, simplify the design and operation of complex, real-world supply chain networks for broad use throughout the manufacturing and service sectors. Written by an accomplished practitioner in common sense language, this "how to" book provides a complete blueprint for transforming marginal business relationships into exceptionally competitive networks.

Table of Contents

About the Author	v
Preface	xix
Acknowledgments	xxiii
About This Book	xxv
A False Start	1	(10)
Friday, June 7	2	(3)
The Network Context	5	(4)
Defining the Customer's Context	6	(1)
Defining the Value Context	6	(2)
The Threshold of Competitiveness	8	(1)
Barriers to Success	9	(1)
In Summary	9	(2)
Conceptualizing a New Business Model	11	(32)
Monday, June 10	11	(4)
The Network Big Picture	15	(9)
Supply Chain Definition	15	(2)
The Upstream Supply Chain Network	17	(1)
The Midstream Supply Chain Network	18	(1)
The Downstream Supply Chain Network	19	(1)
The Reverse Stream Supply Chain Network	20	(1)
Follow the Material Flow	21	(1)
Separating Interwoven Networks	22	(2)
Network Mapping	24	(7)
Analyzing a Competitor's Network	24	(2)
Analyzing a Network from Internal Company Data	26	(2)
Analyzing a Reverse Supply Chain Network	28	(3)
Focus First on the Customer	31	(1)
Competitive Competencies	31	(1)
Thinking Outside the Box	32	(7)
Who's Keeping Score?	32	(1)
Imagine a Different Way of Doing Business	33	(6)
In Summary	39	(4)
Collaborating Network Relationships	43	(42)
Wednesday, June 26	43	(4)
Classifying Network Organizations	47	(5)
The Trading Partner	48	(1)
The Nominal Trading Partner	48	(1)
The Strategic Nominal Trading Partner	49	(1)
The Network Orchestrator	49	(2)
Network Relationship Dynamics among the Trading Partners	51	(1)
Designing the Core Network	52	(26)
Focus on Trading Partners and the Material Flow	52	(1)
Designing Downstream Fulfillment	53	(7)
Designing Midstream Manufacturing	60	(8)
Designing the Upstream Supply Base	68	(4)
Designing the Reverse Stream	72	(6)
Managing Risk in Trading Partner Relationships	78	(4)
The Relationship Life Cycle	78	(1)
The Partnership Agreement	79	(3)
In Summary	82	(3)
Designing a Competitive Network	85	(44)
Friday, June 28	85	(4)
Linking the Trading Partners	89	(4)
The Basic Building Block of Network Flows	89	(3)
Adding Nominal Trading Partners	92	(1)
APICS Supply Chain Management Principles	93	(1)
Evaluating a Competitive Network Design	94	(2)
Network Partitioning to Reduce Landed Cost	96	(7)
At One Extreme: The Vertically Integrated BOM	96	(2)
At The Other Extreme: The Internationally Partitioned BOM	98	(3)
The Elements of Landed Cost	101	(2)
Network Length and Width Relationships with the Product BOM	103	(1)
The Velocity Principle	103	(8)
The Order-to-Delivery-to-Cash Cycle	103	(1)
Process Mapping the Order-to-Delivery-to-Cash Cycle	104	(4)
Maximizing Velocity	108	(3)
The Variability Principle	111	(14)
Physical Distribution Connections---Transit Time	111	(1)
Express Small Parcel [Next Day/Days]	111	(1)
Motor Freight [Hours/Days/Week]	112	(1)
Airfreight [Half Day/Days]	112	(1)
Rail Freight [Days/Week]	112	(1)
Ocean Freight [Days/Weeks]	113	(1)
Intermodal	113	(1)
Special Transportation	113	(1)
Incoterms	114	(1)
Physical Distribution Connections---Customs Clearance Time	114	(1)
Import Duty Compliance	114	(3)
Anti-Terrorism Security Measures	117	(1)
Free Trade Zone/Foreign Trade Zone	117	(1)
Export License Compliance	117	(1)
Information Flow Connections	118	(1)
Cash Flow Connections	119	(1)
Letter Of Credit [Days/Weeks/Months]	119	(1)
Check Sent by Surface Mail [Days/Week]	120	(1)
Check Sent Overnight by the US Postal Service, FedEx or DHL [Day]	120	(1)
Factoring [Days]	120	(1)
Credit Card/Procurement Card [Minutes]	120	(1)
Electronic Funds Transfer [Minutes]	121	(1)
Methods of Paying Duty	121	(1)
The Normal Distribution	121	(1)
Minimizing Variability	122	(3)
In Summary	125	(4)
Overcoming Information Boundaries	129	(40)
Tuesday, July 9	129	(3)
Scoping the Information System Discussion	132	(1)
Assessing the Information System as an Asset or a Liability	133	(6)
Provides Information versus Data	133	(2)
Meets All Process Coverage Requirements	135	(2)
Minimizes Risk Exposure	137	(1)
Costs Minimized for Information Systems Maintenance	138	(1)
Basic Data Structures	139	(9)
Subcycle Data Structures	139	(3)
BOM Data Structures	142	(3)
Physical Inventory and Cash Inventory Data Structures	145	(2)
Public, Private, and Trade Secret Information	147	(1)
Partitioned Networks	148	(6)
Nonubiquitous Information	148	(2)
Auditing the Network Design	150	(1)
A Virtual Enterprise Example	150	(4)
Tracking and Tracing	154	(3)
Trading Information for Inventory	154	(3)
Subtlety in Tracing	157	(1)
Competing with Parallel Information Flows	157	(8)
Subcycles in Serial Networks	157	(3)
Paralleling Subcycles to Overlap Orders	160	(3)
Paralleling Subcycles to Eliminate Invoicing	163	(2)
Industry Standards and Best Practices	165	(2)
The Supply-Chain Council Interindustry Best Practices	166	(1)
The VICS Interindustry Standards	167	(1)
In Summary	167	(2)
Leading Change in Performance Measurement	169	(40)
Thursday, July 11	169	(4)
Moving From a Cost View to a Throughput View	173	(4)
State a Clear Objective	173	(1)
Speak to a Compelling Vision	174	(1)
Fully Disclose the Rewards and the Risks	175	(1)
Define the Right Global Performance Measures	176	(1)
Business Process Orientation	177	(2)
The BPO Components of Supply Chain Management	177	(1)
Levels of BPO Maturity Drive Competitive Results	178	(1)
Defining a Global Performance Measure	179	(7)
The Equivalent Throughput Global Performance Measure	179	(4)
Integrating the Performance Measure into a Network Dashboard	183	(1)
A Food Industry Example	184	(2)
Negotiate---Communicate---Educate	186	(5)
Negotiate---Communicate---Educate	191	(6)
What Is the Message?	191	(1)
How Is It Communicated?	192	(1)
When Is It Communicated?	192	(2)
An Example Communications Plan	194	(2)
Feedback and Damage Control	196	(1)
Negotiate---Communicate---Educate	197	(1)
Project Management for Performance Measures	198	(7)
Set the Project Scope and Organize the Team for Success	198	(2)
The Red Dot/Green Dot Project Management and Communication Tool	200	(2)
Risk Management: Scenario Planning, Contingencies and Triggers	202	(2)
Project Tracking with Contingency Triggers	204	(1)
In Summary	205	(4)
Operating a Competitive Network	209	(48)
Thursday, July 18	209	(4)
An Introduction to Network Operations	213	(3)
The Composite BOM	213	(2)
The Push/Pull Boundary	215	(1)
Evaluating a Competitive Network Operation	216	(1)
The Impact of Network Partitioning on Working Capital	217	(5)
Outsourcing Implications on the Balance Sheet	218	(3)
The Downside of Outsourcing	221	(1)
The Vocalize Principle	222	(14)
A Continuum of Network Operating Modes	222	(3)
Production and Inventory Control Inside the Four Walls	225	(1)
Production and Inventory Control in Distributed Networks	225	(1)
Network Operational Control	226	(1)
Manufacturing Resource Planning	226	(2)
Vendor Managed Inventory	228	(1)
Kanban	228	(1)
Synchronization	229	(1)
Network Routing of the Demand Signal in a Synchronized Operation	229	(2)
Optimizing the Network Throughput Engine	231	(2)
Locating the Network Push/Pull Boundary	233	(1)
Percent of the Network Vocalized	234	(2)
The Visualize Principle	236	(17)
The Capable Network	237	(1)
The Network Constraint	237	(2)
Determining the Required Network Constraint Capacity	239	(1)
Classifying Network Inventory	240	(1)
Determining the Required Inventory Buffer Size	241	(1)
The Total Network Inventory Performance Measure	242	(2)
The Impact of Variability and Uncertainty on Total Network Inventory	244	(3)
Using Network Visibility to Reduce Total Network Inventory	247	(2)
Driving Inventory Out of a Network	249	(2)
Percent of the Network Visualized	251	(2)
In Summary	253	(4)
Planning for Network Operations	257	(50)
Saturday, August 10	257	(3)
Setting a Network Context for Planning	260	(6)
Basic Network Operations	261	(1)
Matching Supply with Demand	262	(2)
Demand Distortion and the Bullwhip Effect	264	(1)
Exchange Curves	264	(2)
Network Operations Complexity	266	(7)
Constant, Repetitive Demand as the Planning Baseline	266	(2)
Operating under Dynamic Demand Patterns	268	(2)
Operating with Different Sets of Planning Rules	270	(1)
Operating with Discontinuities in the Supply Chain Network	271	(1)
Operating While Integrating or Disintegrating the Network	272	(1)
Forecasting	273	(7)
Forecasting the Right Things	273	(1)
Forecasting Demand	273	(1)
Forecasting Supply	274	(1)
Forecasting Supply for Remanufacturing	274	(1)
Forecasting Things Right	275	(1)
The Level Forecast	275	(2)
The Trend Forecast	277	(1)
The Seasonal Forecast	277	(1)
The Econometric Forecast	278	(1)
Calculating Forecast Error	278	(2)
Practical Push Planning Techniques	280	(11)
The Big Picture	280	(2)
Push Planning Examples	282	(5)
Time-Phased Offsets and Net Requirements Logic	287	(2)
The Impact of Lot Sizing	289	(1)
Purchase Orders versus Vendor Managed Inventory	290	(1)
Practical Pull Planning Techniques	291	(6)
Planning the Dynamic Range of a Capable Network	291	(1)
Subordinating Information and Cash Constraints to Material Constraints	292	(1)
Operating Rules at the Push/Pull Boundary	293	(1)
Preload Inventory for Synchronous Operation	293	(1)
A Detailed Pull Example	294	(2)
Synchronizing the Cash Flow	296	(1)
Synchronized versus Kanban Pull Operations	296	(1)
Closing the Network Planning Loop	297	(7)
Operations Replanning	298	(1)
A Network Example of Buffer Inflation	299	(1)
Risk Management	300	(4)
In Summary	304	(3)
Generating Top Line Growth and Bottom Line Profit	307	(48)
Sunday, September 1	307	(3)
The Value Principle	310	(5)
Value in the Eye of the Beholder	310	(1)
Value Cause and Effect	311	(1)
The Value Circle	312	(1)
Return On Invested Capital	313	(2)
Optimizing the Network	315	(3)
Networking the Flow of Material, Information, and Cash	315	(1)
An Excel Spreadsheet Analogy	316	(2)
First Level Network Optimization	318	(7)
Rationalizing the Core Network Footprint	318	(2)
An Example of Rationalizing the Core Network Footprint	320	(5)
Second Level Network Optimization	325	(4)
The Essential Node Connections	325	(1)
Rationalizing the Core (Nominal) Trading Partner Subcycles	326	(1)
An Example of Rationalizing the Subcycles	327	(2)
Third Level Network Optimization	329	(7)
Responsiveness, Flexibility, and Adaptability	330	(2)
Closing the Feedback Loop for Planning	332	(1)
Closing the Feedback Loop for Performance Measures	333	(1)
An Example of Optimizing Responsiveness	334	(2)
Matching Demand with Supply	336	(5)
The Pricing Interface	337	(1)
Dynamic Pricing	338	(3)
The Top and Bottom Line	341	(9)
Network Optimization (Cause) and the Income Statement (Effect)	341	(4)
Network Optimization (Cause) and the Balance Sheet (Effect)	345	(2)
The Cash-To-Cash Cycle	347	(1)
Network Risk Management Related to Financial Performance	348	(2)
In Summary	350	(5)
A New Start	355	(26)
Symptoms of a Deeper Problem	355	(8)
What is the Business, and What Markets are Served by This Organization?	360	(1)
What is the Product Delivered by This Organization?	360	(1)
What are the Main Commodities Supplied to This Organization?	361	(1)
Who are the Other Trading Partners in the Current Network?	362	(1)
Prepare for Success	363	(10)
Where Does This Organization Fit into the Current Supply Chain Network?	363	(3)
What Is the Business Strategy?	366	(1)
Who Should Be Part of the Solution?	366	(4)
Where Is the Organization Competitively?	370	(1)
How Does This Organization Currently Measure Its Performance?	370	(1)
How Should the Organization Be Measured?	370	(1)
What Is the Program Objective and Deadline for Change?	371	(2)
Why Will Focusing on Supply Chain Management Make a Difference when the Issue Is a Revenue Shortfall? Why not Just Increase the Sales Effort?	373	(1)
Navigating an Aggressive Course	373	(3)
A New Start	376	(4)
Epilogue	380	(1)
Appendix A The Network Blueprint	381	(24)
First Steps and the Environmental Context	381	(2)
Step 1: State the Network Objective in the Context of the Business Strategy (Chapter 2)	381	(1)
Step 2: Identify Customer Requirements in the Context of the Competitive Environment (Chapter 2)	382	(1)
Step 3: Benchmark the Competition (Chapter 2)	382	(1)
Network Blueprint Sheet #1: Network Design	383	(6)
The Network Design Specification	383	(1)
Step 4: Assemble a Set of Value-Adding Trading Partners to Transverse the Network (Chapter 3)	384	(1)
Step 5: Test that the Organizations in the Core Network are All Trading Partners (Chapter 3)	384	(1)
Step 6: Ensure That the Core Network Aligns with the Business Strategy (Chapter 2)	385	(1)
Step 7: Optimize the Product Cost Structure within the Core Network (Chapter 4)	385	(1)
Step 8: Rationalize the Length and Width of the Core Network (Chapter 3)	386	(1)
Step 9: Define the Set of Information-to-Material Subcycles (Chapter 4)	386	(1)
Step 10: Define the Set of Information-to-Cash Subcycles (Chapter 4)	387	(1)
Step 11: Maximize the Order-to-Delivery-to-Cash Velocity Among Trading Partners (Chapters 4, 5)	387	(1)
Step 12: Extend the Core Network to Reach Every Customer, to Complete the Composite BOM, and to Access Every Supplier (Chapter 4)	388	(1)
Step 13: Minimize Network Order-to-Delivery-to-Cash Variability (Chapters 4, 5)	388	(1)
Network Blueprint Sheet #2: The Composite BOM	389	(3)
The Product BOM Specification	390	(1)
Step 14: Generate a Composite BOM (Chapter 7)	391	(1)
Step 15: List All SKUs and Pareto the List by Revenue and by Contribution Margin (Chapter 9)	391	(1)
Step 16: Determine a Predominant BOM Type from the Composite BOM (Chapters 7, 9)	391	(1)
Step 17: Fit the BOM to the Network and Decide the Network Operating Mode (Chapter 7)	392	(1)
Network Blueprint Sheet #3: Network Operations	392	(11)
The Network Operation Specification	393	(1)
Step 18: Locate the Push/Pull Boundary of Inventory Buffers and Cash Buffers Based on Customer Expectations and Competitive Delivery (Chapter 7)	394	(1)
Step 19: Determine Network Capability Over the Expected Demand Uncertainty (Chapters 7, 8)	394	(1)
Step 20: Identify the Network Constraint and the Network Orchestrator (Chapters 3, 8)	394	(1)
Step 21: Position and Size the Inventory Buffers (Chapters 7, 8)	395	(1)
Step 22: Analyze the Composite BOM for Opportunities to Postpone and to Risk Pool Inventory. Use Statistical Safety Stock on Unique Materials to Support Mix Variation (Chapters 7, 8)	396	(1)
Step 23: Forecast the Right Things and Forecast Things Right (Chapter 8)	396	(1)
Step 24: Broadcast Demand in Parallel to Minimize the Bullwhip Effect (Chapter 7)	397	(1)
Step 25: Use Collaborative Pull Planning in the Pull Zone (Chapter 8)	397	(1)
Step 26: Use Collaborative Push Planning in the Push Zone (Chapter 8)	397	(1)
Step 27: Maximize the Vocalization of Demand Across the Network (Chapter 7)	398	(1)
Step 28: Synchronize the Flow of Cash Across the Network (Chapters 5, 8)	398	(1)
Step 29: Plot the Principle Axes on the Value Circle (Chapters 4, 7)	398	(2)
Step 30: Plot Global Performance Measures on the Value Circle (Chapters 4, 6, 7, 9)	400	(1)
Step 31: Maintain Network Alignment with the Business Strategy (Chapter 9)	401	(1)
Step 32: Optimize the Inventory and Cash Assets in the Nodes and Pipelines (Chapters 5, 7, 9)	401	(1)
Step 33: Maximize Visualization Throughout the Network (Chapters 6, 7)	401	(1)
Step 34: Use the Perfect Order As a Measure of Quality to the Customer (Chapter 9)	402	(1)
Step 35: Use ROIC to Measure Shareholder Value (Chapter 9)	402	(1)
Step 36: Optimize Network Planning and Performance Measurement Feedback (Chapter 9)	402	(1)
Final Steps	403	(2)
Step 37: Fit an Information System to the Network (Chapter 5)	403	(1)
Step 38: Manage Change Continuously (Chapters 6, 10)	404	(1)
Appendix B
Bibliography	405	(2)
Index	407