Kuiper Leda

Running head: KUIPER LEDA SUPPLY CHAIN DEFENSE

Introduction

Kuiper Leda Supply Chain Defense The Managing Inventory in a Supply Chain simulation (University of Phoenix, 2007) provided numerous issues at risk for the shareholders at Kuiper Leda. This company is looking at the effectiveness and efficiency of the supply chain. By assessing the existing supply chain management Kuiper Leda will be able to adjust for improvement to the process. This paper will defend the optimal simulation outcomes for the company.

Kuiper Leda, Incorporated (Inc.), a manufacturer of electronic components, is experiencing problems with keeping up with the competitors and management's demands to move the company into web and enterprise technology based manufacturing. To be more competitive, Kuiper Leda must find ways to accept and fill larger orders while managing the inventory. With the company only dealing with small companies, it will be more difficult to fill larger orders and maintain inventory in the supply chain. Key components of the supply management process for Kuiper Leda include outsourcing, inventory management, demand and distribution strategy, and supplier and procurement selection. This paper will address the concepts behind the selections that Kuiper Leda has made. Supply chain metrics that measure success will be cited and discussed. The paper will conclude with a summary of key points.

Kuiper Leda Supply Chain Defense

Outsourcing

At the beginning of the University of Phoenix simulation, Kuiper Leda must make a decision in regards to outsourcing of either Electronic Control Units (ECU's) or Radio Frequency Identification (RFID) tags. The company's main area of production is in the ECU industry, but an area of growth defined by the company's strategic plan is entry into the RFID market. Kuiper Leda is unable to fill a new order because of constraints within the company's supply chain. By outsourcing, the company is able to use resources in a manner that allows the company to fulfill the new order for RFID tags. Chase (2006, p. 413) states that outsourcing allows a company to focus upon core competencies. The strategic plan for the company includes developing RFID tag production as a core competency for the company. In the simulation, the optimal solution for outsourcing is for Kuiper Leda to outsource production and management of ECU's via a contract manufacturing process. Contract manufacturing will allow Kuiper Leda to redirect company resources towards the production of RFID tags. Chase (2006) cites that 11 % of all electronic manufacturing is performed by contract manufacturers. As Kuiper Leda is involved in the electronic industry, this is an acceptable form of outsourcing. By outsourcing the ECU's, the company is then able to focus efforts on the manufacturing of the RFID tags.

Inventory Management

Inventory management is an important aspect within supply chain management. Kuiper Leda uses Materials Requirement Planning (MRP) as a method of planning and controlling the supply chain. MRP is a demand dependent, it is the demand caused by another demand for a higher-level item (Chase, 2006, p. 630). More simply stated, the demand for the components occurs when there is a demand for the ECU's or RFID tags. The MRP method works best when a company is "involved in a process where a number of products are made in batches using the same production equipment" (Chase, 2006, p. 630). MRP systems calculate the exact amount of parts needed to manufacture an exact number of the end product. A key aspect of the MRP system is that the parts are needed for the production cycle. The purpose of MRP is to control inventory levels while assigning priorities and also planning the capacity for the operating system (Chase, 2006, p. 635). The MRP system also includes a philosophy of hurrying up when lack of parts would affect production schedule, and also slowing down when the speed would cause and excess amount of end product. The Materials Requirement Planning system works well for Kuiper Leda because the company is involved in batch production of ECU's and RFID tags. The use of MRP assists Kuiper Leda in ordering the correct amount of parts to arrive at the correct time for production of the end product.

Demand and distribution strategy

Kuiper Leda uses a centrally regulated demand policy and a central warehousing and five additional distribution warehouses in order to get the product to the consumer. A central warehouse is where the product is stored. The demand occurs when there is an order placed that is managed by the central warehouse. Not only must a company worry about supplying the product, but a company must also plan for the replacement of the sold product within the supply chain. The five additional warehouses are strategically located throughout the United States. A centrally regulated demand is used to prompt the shipment of products to the five distribution warehouses from the central warehouse. In addition to this, a supply of safety stock is kept at each of the five warehouses. This use of safety stock helps keep product flow consistent throughout the chain. The safety stock level is kept at 50% above the predicted level. Use of safety stock keeps product available and the use of the five warehouses to store the stock allows for variation of demand throughout the country.

Supplier and procurement selection

Kuiper Leda weighs several factors when considering supplier and procurement selection. In the of Phoenix simulation, the company decided to drop a supplier. When a company drops a supplier, there are several areas that the company will need to consider. A company does not want to drop a supplier without having a plan in place that will address the need for the replacement component. Large amounts of product from one supplier many not necessarily be the best company for Kuiper Leda to drop. Procurement deals with the obtaining of product from a supplier. Specialty items are sometimes difficult to procure, so Kuiper Leda will need to consider if there are additional