Kuiper Leda Supply Chain Defense Report

Kuiper Leda Supply Chain Defense

Introduction

Kuiper Leda Inc. is an electronic components manufacturer. It specializes in the production of Electronic Control Units (ECUs) and sensors for the automotive industry. Its clients include automobile manufacturers and Original Equipment Manufacturers (OEMs) for the Automotive Industry.

The company has been in operation for the past 10 years. It began with an investment of $100 million and the revenue has touched $400 million this year. Kuiper Leda has an assembly plant that assembles ECUs and a production line dedicated to microchips.

The company has recently entered into another product line: Radio Frequency Identification Devices. Kuiper Leda now has installed a new production line for Radio Frequency Identification Device (RFID) Tags. The line has been in operation for nearly six months. Its strong technology base has enabled it to make progress in the international Market.

Kuiper Leda has been working with smaller customers and has a daily capacity of 1,250 units for ECUs and 250 units for RFIDs. Although Kuiper Leda is smaller than its competitors, it is known for quality and delivery responsiveness.

Kuiper Leda will have an opportunity to exploit its RFID capability with a large consumer. This large consumer is a channel distributor with a significant customer base. Kuiper Leda is a mature business and has not adapted to newer business practices. After initial dealings with Kuiper Leda, the distributor is concerned about Kuiper Leda's current practices. The distributor wants Kuiper Leda to re-evaluate Kuiper Leda's practices.

This report will help Kuiper Leda to re-examine the current practices and present the best scenario to the new customer.

Kuiper Leda Supply Chain Defense

Process Description

The Supply Chain Process of Kuiper Leda refers to all the processes from the raw materials to consumption of the finished product. It also covers functions outside the company that enable the value chain to make products and provide services to the customers.

This process consists in 6 major steps:

1. The Production Plan Ð'ÐŽV The Production Plan is the starting point for the supply chain. It provides a clear direction in terms of the sales revenue, closing inventory, and capacity utilization target for a financial year.

2. The Master Production Schedule Ð'ÐŽV The MPS is the companyÐ'ÐŽÐ'¦s production plan as the direct input to the Materials Requirement Plan. It lays the foundation for all plans in the Supply Chain.

3. Materials Requirement Plan (MRP) Ð'ÐŽV The Materials Requirement Plan takes into account the MPS for the particular year and Ð'ÐŽÐ'§explodesÐ'ÐŽÐ'Ё it down the Bill of Materials (BOM) to determine individual requirements for components and/or sub-assemblies for a product.

4. Capacity Requirements Planning (CRP) Ð'ÐŽV This step checks the capacity in detail. This step s performed once the MRP is ready and takes into consideration Work in Process (WIP) on the shop floor, machine load factor per work center, sequence of production and capacity utilization.

5. Production Activity Control (PAC) Ð'ÐŽV After the CRP is performed, the Production Activity Control (PAC) inputs to the production process and the resulting output. It manages work center utilization and sequences orders in the production system.

6. Delivery Ð'ÐŽV After the product is manufactured, it is checked packaged and shipped to the customer. This process is recorded and the production plan is updated with the new information.

The Figure 1 below represents the process flow of the Supply Chain System of Kuiper Leda Incorporation:

Figure 1 - Process Flow of Kuiper Leda's Supply Chain

It is important to mention that the Distribution Warehouse provides information to the Forecasts and orders from the distribution system. This information goes into the Master Production Schedule to determine the needs for different products in demand. The Rough Cut Capacity Planning will feed the Production Plan, Business Plan and Master Production Schedule (MPS) to determine the net requirements of the company.

Kuiper Leda has some facets that need to consider in its Supply Chain System. The supply chain refers to all the members in the product conversion process. The supply chain may vary in depth and complexity depending on the number of levels it extends downwards. In the visual, the supply chain extends five levels down, this representation is similar to a Bill of Materials, which is an engineering document depicting the structure of the final product. It is important to notice that the depth of the levels indicate time and dependency. Below, the facets are explained in detail per Kuiper LedaÐ'ÐŽÐ'¦s System:

Ð'„X Time and Demand: Time is an important factor for Kuiper Leda because more levels imply a higher cumulative time to manufacture the final product. This is because each component or raw material will have its own respective manufacturing lead time and delivery lead time. The dependency functions of demand from a higher level in the BOM. While demand for a car is independent, any orders emanating from such a forecast or from an actual order received from the Original Equipment Manufacturer/Automobile manufacturer triggers orders for entities on the lower level in the Bill of Materials. Therefore, the demand created on lower levels in the BOM is called as dependant demand. Kuiper Leda takes care of this problem by reducing the levels in the assembly and subassembly process.

Ð'„X Ability to meet demand: Another side to demand is the ability to meet it. This is the reason why Kuiper Leda needs to supply 250,000 cars and therefore it needs to schedule the capacity and production to meet this requirement. The lower levels in the supply chain of Kuiper Leda must do the same and each level should coordinate the schedules to meet dependent demand from higher levels. Scheduling means that each level in the supply chain should meet delivery deadlines according to he original plan.

Ð'„X Distortions in the Supply Chain: They could be the result of batch manufacturing and lot size management Techniques. Kuiper Leda and certain manufacturers may only product discrete units while others may produce in batches. Also, every manufacturer has limited capacity to accommodate orders in a short time frame. As a result distortion creates large quantities of work-in-process