Thesis on "Kuiper Leda Supply Chain Defense the Automotive"

Thesis 9 pages (3070 words) Sources: 6 Style: APA

[EXCERPT] . . . .

Kuiper Leda Supply Chain Defense

The automotive OEM industry is one that is characterized by long lead times, highly competitive design-in cycles, procurement and strategic sourcing strategies that demand a very high level of synchronization, and supply chains that can are continually attempting to manage unforeseen spikes in demand. Product assemblies can also significantly in mid-production as auto manufacturers and OEMs launch new models and products to stay competitive, attempting to leverage previous-generation componentry in the process. All of these factors contribute to very high degree of variability in supply chain forecasting, management and optimization. Kuiper Leda faces these uncertainties through a series of processes aimed at making the manufacturing of Electronic Control Units (ECUs) and Radio Frequency identification (RFIO) tags for automotive manufacturers and OEMs as accurate, efficient and profitable as possible.

The supply chain practices of Kuiper Leda form the basis of this paper, which seeks to defend their approaches and strategies and also define Key Performance Indicators (KPIs) and metrics of performance the company can use to better manage its supply chain performance. At the most strategic level, Kuiper Leda needs to concentrate on making their supply chain as efficient, transparent and quality-based as possible to. Inherent in this analysis is an assessment of the current level of supplier collaboration at the system and process level, and the ability of Kuiper Leda to also integrate suppliers into their new product development and introduction (NPDI) process as well. This latter process is illustrated by Kuiper Leda's introduction of a new RFID tag. The combined effects of supply chain collaboration and interprocess integration to support the NPDI process also evident how the company is using Just-In-Time (JIT) inventory management to increase inventory turns and reduce carrying costs.

Kuiper Leda Supply Chain Defense

The catalyst of Kuiper Leda's use of supply chain planning, collaboration and optimization strategies is their continual pursuit of lean manufacturing strategic objectives as evidenced in the combining Kaizen, supply chain management (SCM), schedule optimization and JIT inventory strategies. Lean manufacturing is widely considered to be the result of the maturation of JIT scheduling methods combined with intensive supply chain collaboration, knowledge transfer, and supply chain synchronization (Holweg, 2007). The impetus of the research that combined these factors originated and continues at the Massachusetts Institute of Technology (MIT) International Motor Vehicle Program (IMVP) and its studies of the Toyota Production System (Holweg, 2007). For Kuiper Leda, their efforts at knowledge transfer and knowledge integration is critical to their ability to transform having a series of disconnected supply chain processes and provides the impetus for them to be unified as part of a lean strategy (Ferdows, 2006). To see a progression of lean manufacturing from JIT please see Appendix A: Progression of Lean Manufacturing from JIT for an overview of studies that support the direction Kuiper Leda continues to take in this area of their supply chains.

JIT as a supply chain strategy has many implications on how effective Kuiper Leda will be in serving customers as well. As the simulation shows, there is an immediate and direct correlation of the ability of the company to manage JIT inventory and the ability to meet production and delivery dates. This in turn entirely defines if their customers' orders for Electronic Control Units (ECUs) and Radio Frequency identification (RFIO) tags will be able to be met or not. JIT then becomes a catalyst for meeting or exceeding customers' expectations or not. For Kuiper Leda this is a critical part of their role as a supplier in the automotive value chain as well. They need to concentrate on managing expectations of their customers from the execution of their own supply chain strategies as automotive manufacturers and OEMs typically have design-in cycles which are defined during the NPDI process (Quesada, Syamil, Doll, 2006). This translates into the need for Kuiper Leda to perform at a JIT level as a supplier as well to their customers. In effect this is the essence of an efficient, profitable supply chain, where lean manufacturing processes ensure a sufficiently high level of demand management and demand sensing (Truss, Wu, Saroop, Sehgal, 2006). JIT then for Kuiper Leda is essential to their ability to hold onto their OEM customers and gain new ones. The ability to earn and keep the trust of their auto manufacturer and OEM component customers is directly related to the ability of Kuiper Leda to execute JIT-based supply chain, sourcing and manufacturing strategies daily. There is also the direct influence of JIT on the cost of capital, which is a critical rate of interest that Kuiper Leda will have to pay for new development over time. The adherence and strong execution to a JUT strategy over time delivers all of these benefits with one of the most valuable being the reduction in cost of capital, increase in inventory turns and ability to meet or exceed the expectations of customers over time (Kros, Falasca, Nadler, 2006).

Also implicit in how Kuiper Leda is executing its supply chain strategies and systems is the reliance on collaboration at the order management, process and system level with key customers. This reliance on order management synchronization is apparent in how the company is defining forecasts with suppliers and then re-ordering manufacturing scheduling as a result. The progression the company has made from Material Requirements Planning (MRP) to Enterprise Resource Planning (ERP) is apparent in how the case shows Kuiper Leda sequencing production levels to align with production schedules. The progression from MPR to ERP is also seen in how well Kuiper Leda perceives their limitations in terms of production capacity for ECUs and the propensity of the processes involved in their manufacturing capable of being outsourcing. For all of these factors to be integrated from a process standpoint, an ERP system is critical. The role of ERP systems is to provide a means of unifying processes essential for the operation of a company, giving manufacturing companies the ability to attain their lean manufacturing and process objectives (Motwani, Akbulut, Nidumolu, 2005). Kuiper Leda's grasp of their limitations in terms of ECU and RFIO production also illustrates how the company has progressed beyond merely managing production via MRP and has a more enterprise-wide mindset. There are many dependent factors involved in constraint-based modeling of production schedules that are clearly evident in how Kuiper Leda defined their approach to outsourcing ECU product. The best possible decision is clearly to outsource ECU production for Midland Motors as the order dwarfs their production capacity. Yet it is not as simple as just the scalability of their production operations. Through the use of an ERP system the company has realized that the processes underlying the production of the ECUs are mature and stable enough to not change over time. This translates into a significant competitive advantage for Kuiper Leda relative to competitors who also may be considering outsourcing the production of large orders. For any outsourcing effort to be successful regardless of its scale there must be a very clear, well-understood series of processes that can be transferred to the outsourcing manufacturing partner (Ferdows, 2006). In many respects this is the same dynamic that occurs in the context of the Toyota Production System (TPS) as well, where knowledge transfer is the primary goal, as Toyota sees this as critical to their ability to withstand uncertainty in turbulent market conditions (Holweg, 2007). For the ECUs to be outsourced it is an absolute prerequisite that their underlying processes be well understood and capable of being taught by the teams responsible for getting the outsourcing manufacturer up to speed on them. This strategy of outsourcing them on such a large order confirms that the company has exceptional command of their ECU production process and also has the ability to train outsource partners, suppliers, and internal staff on them. To the extent an organization can capture and then communicate their production processes is the extent they can scale beyond reaction to market demands and attain their long-range objectives in the process (Ferdows, 2006). Just as the processes are in place for the outsourcing of the ECUs, it is apparent that the company must concentrate on capturing, creating meaningful context of, and packaging the knowledge for the production of the RFIOs as well

For Kuiper Leda, the foundational elements of being able to transform their supply chains from being reactive to market-driven is predicated on their ability to monitor and predict demand, integrate JIT processes, and coordinate with outsource partners for the production and delivery of the ECUs. All of these strategies however must be solidified around demand management quantified through forecasts. To the extent a manufacturer can ensure their supply chains are demand-driven vs. being defined by internal process inefficiencies is the extent to which they will be able to scale to fluctuations in customer orders and unique requests (Barrett, 2007). Staying market driven also requires a continual focus on improvement as connoted by the Kaizen processes, systems, and strategies in place at Kuiper Leda as well. It takes… READ MORE

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