Avion Case 1

3. How can supply chain design and integration help John Wolf reduce investment and space requirements while maintaining adequate service levels?

The average lead time of a corporation is 15 weeks from production to consumption. Benchmark firms have a lead time of 8 weeks which is the goal for the supply chain (Heizer & Render 2010). The 8 week number will be achieved by analyzing opportunities to streamline the process thereby creating efficiencies and driving down the amount of time it takes to produce and ship products. Setting a goal for an 8 week lead time will give the firm an opportunity to assess their forecasting and production capabilities presenting a way to identify and address inefficiencies.

(Taken from “Managing Operations Across the Supply Chain” 2nd Edition, by Swink, Melnyk, Cooper, Hartley, Publisher McGraw-Hill, ISBN: 13: 978-1-12-180339-8)

1. What parts of the supply chain are most closely involved with the situation in this case? What is the responsibility of each part in order to maintain a smooth flow of material?

Prepare Contingency Plans: Supply chain risks must be identified and planned for. It is important to consider supply chain disruptions such as natural disasters, terrorism, security threats, piracy, supplier’s financial collapse, and infrastructure or process failure and there are other risks that all businesses face such as demand volatility and compliance issues. (book, p.241). Developing back up processes and plans takes considerable time yet preparation can be the difference between business continuity and end.

Lastly, the purchasing organization of the supply chain plays a large role in this case. Their roles are supply sourcing, supplier management, cost control, and legal controls. Cost control and legal control are a very important part of the purchasing

Another potential problem is high variability between what the customer wants and what is provided by the company. The high lead times are delaying orders by 40 percent. There are three

Define the situation (case summary) Define the major issues, conflicts, and the network . Describe the options (alternatives) for solving these issues. Several internal and external influences serve as contributing factors in the reconsideration of the company’s current system. Changes in customer demands, domestic and global competition, and a unique decentralized management system is now forcing the Westminster Company to reevaluate their traditional supply chain practices. (Bowersox & M.B., 2014) Westminster’s domestic operations consist of three separate companies that sell and distribute products to several of the same customers. (Bowersox & M.B., 2014) At first glance consolidation of the systems can significantly improve

The company expects their procurement and supply chain organizations to provide purchased materials and assemblies on time, all the time, to meet their customer demands. Faced with these poor market forecasts buyers often over buy requirements which in turn constitutes to the company loosing a lot of money; this creates excess inventories. Purchasing department cannot afford long material lead-times; and on the other hand if suppliers cannot deliver consistently on time, they are replaced or contracts get

As we all know supply chain is one of the most important areas which if handled properly can provide competitive edge to the companies. Supply Chain Supply change management is the control of resources, information, and capital Management of supply chain management is the most challenging and complex task because of ever changing needs of companies, products and customers. The instabilities in the market are also one of the reasons. When a company faces problem of excessive inventory, increasing costs, decreasing profits, poor return on assets and poor customer satisfaction then the company has to improve or look after its supply chain or if a company is entering into a new market or new technologies then it should have a well settled plan for its supply chain management. Same was the case here as well.

Shorter lead times: Shorter lead times led to more accurate short term forecasts about what and how much would sell. As a rule of thumb, marketers believe that by reducing the lead time by half, the forecasting error is reduced by roughly the same amount (Stalk and Hout, 1990 cited in Lo et al., 2004). Short lead times not only dealt with inventory obsolescence, thereby lowering sale mark-downs, but also made possible the postponement of fabric dying, ultimately contributing to larger profit margins. Shorter lead times also enabled Zara to deliver new items to stores twice a week, a rate of delivery which might have been ‘common in the grocery business, but . . . was unheard of’ in fashion retailing (New Yorker, 2000, 74; Ferdows et al.,2004).

lead-time of 12 weeks (it is now down to 5 weeks). To be able to keep cutting prices on

They cannot process whatever orders that comes along their way. They have to be justified, they can look into alternatives such as making the materials internally or making use of similar kinds of materials which are already in stock.

Generally, there is a requirement to reduce costs, reduce the time to market and improve the capacity and flexibility of equipment. This means that while the costs and lead times must be reduced, the utilization of the tooling should be maximized.

The lead time reductions which could be realized with a change from the current to the proposed purchasing strategy would lead to several improvements for the warehouse planning which are presented in the following. Shorter lead times would facilitate a more flexible and customer oriented planning and would lead to a reduction of uncertainty. According to the BAAS planners, this uncertainty could be reduced especially in the context of forecasting the demand during the lead time. Obviously, the lead time demand forecasts would be more accurate when the lead times could be reduced because the shorter the demand period which has to be forecasted is, the more precise will be the forecast.30 In addition, shorter lead times would consequently lead to lower demands during the lead time and would result in less variability. Lower lead time demands, less variability and a reduction of uncertainty would automatically reduce the necessary safety stocks at the warehouse. Hence, shorter lead times would also result in a reduction of average inventories, reorder levels and order up-to levels. Decreasing average inventories imply less capital tied up in inventory and higher stockturns. Moreover, less average inventories mean less inventory holding costs. The head of the BAAS planning department mentioned two additional positive aspects of shorter lead times. Firstly, large and