Kuiper Leda: Supply Chain Efficiency

Running Head: SUPPLY CHAIN EFFICIENCY

Supply Chain Efficiency

MBA550

University of Phoenix

February 11, 2008

Supply Chain Efficiency

Supply chain management (SCM) is the combination of art and science that goes into improving the way a company finds the raw components it needs to make a product or service and deliver items to customers, (Worthen 2008). Establishing supply chain efficiency should be a major focus for the manufacturing industry, among others. Kuiper Leda Inc. has been in operation over 10 years and specializes in production of Electronic Control Units (ECUs) and microchip sensors for the automotive industry. Recently, Kuiper Leda has entered into the production of Radio Frequency Identification Devices (RFIDs) and has a new RFID line that has been in operation for the past six months. Kuiper Leda has just received a large order for ECUs and RFIDs from Midland Motors, a major player in the automotive industry. In order to meet the demand Kuiper Leda must find a way to handle the urgent order and maintain current customer orders. This paper will present companies such as: Apple Computers, Dell Computers, Hewlett Packard, GE Healthcare, L.L. Bean, Seven Eleven Japan, Toyota, and Whole Foods, who have faced similar challenges and how these companies overcame those challenges. Kuiper Leda can benchmark these companies for guidance on how to improve and sustained supply chain efficiency in every way.

Domestic and Global Best Practices in Supply Chain Management

The global marketplace requires companies continuously to improve in order to sustain a competitive advantage and satisfy shareholder expectations. One of the essential tools for continuous improvement is a supply chain management process that allows the company to compete in the global marketplace. “Supply chain management is the process of planning, implementing, and controlling the operations of the supply chain with the purpose to satisfy customer requirements as efficiently as possible.” (Supply Chain Management, 2007) Supply chain management spans all movement and storage of raw materials, work-in-process inventory, and finished goods from point-of-origin to point-of-consumption. The term supply chain management was developed by the consulting firm Booz Allen Hamilton in 1982. “The idea is to apply a total system approach to managing the entire flow of information, materials, and services from raw materials suppliers through factories and warehouses to the end customer.” (Chase, Jacobs, & Aquilano, 2005) In the simulation, the company Kuiper Leda has a supply chain management process that requires significant improvements in order for the company to sustain a competitive advantage in the automotive industry. Kuiper Leda needs to analyze the best practices of companies on both a domestic and international marketplace to discover ways to improve the internal supply chain management process.

The industry leaders in supply chain management from a domestic and international perspective are Dell, Toyota, Hewlett Packard and Seven-Eleven Japan. The supply chain process must be well thought out with a logistical design that meets the changing marketplace and worldwide distribution channels. Therefore, Kuiper Leda needs to determine which vendors, suppliers, inventory model, databases needed, metrics for tracking and analyzing process improvement as well as the logistics for a renovated supply chain management process. This means the company will be making difficult decisions. Kuiper Leda should look at best practices from companies competing successfully with a supply chain process that achieves astounding efficiency. For example, “HP relies on a custom bill of materials database that can calculate the cost of materials, difference between using a contract electronics manufacturer and or an original design manufacturer.” (Supply Chain Management, 2007) This metric achieves cost saving for the company. Dell “through a combination of innovative product design, an Internet order-taking process, an innovative assembly system, and amazing cooperation from its suppliers, Dell Computer has been able to create a supply chain system that is extremely efficient.” (Chase, Jacobs & Aquilano, 2005) Dell and Seven-Eleven Japan uses a zero inventory management that could be applied to the Kuiper Leda creating significant dollar savings for the company and improving the supply chain management process. Dell and Seven-Eleven Japan do not maintain any warehouses. Additionally, Kuiper Leda can improve the supply chain efficiency process by implementing a strategy to reduce the need for warehousing space. Dell specifically “does not build a single computer until it has been ordered and credit cleared.” (Davies, 2005)

Assess Existing Supply Chain Management Practices

Another way to improve supply chain operating efficiency is through a process called global sourcing or outsourcing. The concept of global sourcing provides an opportunity for a company to bid out product needs on a worldwide basis therefore, allowing the company to obtain lower prices by searching the international marketplace for best quality and best prices. Global sourcing will allow Kuiper Leda to offer quality at a lower price, decrease cycle time, inventory levels and improve operating efficiency. Global sourcing is cost effective for companies like Hewlett Packard, Apple, and Seven-Eleven Japan because these companies use this to achieve economy of scale, operating efficiency, and customer satisfaction by providing the best quality products available domestically and or internationally. Global sourcing is dependent on an excellent distribution channel. “Seven-Eleven Japan introduced combined distribution in which items in the same category but from different manufacturers are delivered in the same vehicle. The idea of joint transport for Seven-Eleven Japan achieved significant cost savings.” (Seven-Eleven Japan.com, 2007) Basically improving operating efficiency provides an opportunity for cost savings, just-in-time inventory management and increases in productivity.

Opportunities for Improving Supply Chain Operating Efficiency

GE Healthcare and Toyota are two companies that determined a need to assess