Surviving Supply Chain Integration Strategies for Small Manufacturers (2000) / Chapter Skim
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2 Manufacturing Supply Chains
2 Manufacturing Supply Chains
Pages 16-23
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From page 16... ...
U.S. manufacturers, having substantially reduced internal costs, began searching for additional opportunities for increasing their competitiveness.
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From page 17... ...
The trend toward outsourcing was reinforced during the 1990s by Wall Street, as securities analysts increasingly focused on return on assets as a measure for valuing corporations. In response, OEMs have increasingly sold off parts-fabrication operations, which tend to require substantial investments in assets, and have focused on final assembly and services.
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From page 18... ...
In an attempt to gain even more benefits from its suppliers, Chrysler is increasingly involving them in product development and mandating annual improvements in production efficiency. This has resulted in further cost reductions and faster development of increasingly innovative products.
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From page 19... ...
· Platform teams select suppliers early in the concept stage from lists of prequalified suppliers with the best track records and the most advanced engineering and manufacturing capabilities. Suppliers are given major responsibilities for component design, cost, quality, and on-time delivery.
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From page 20... ...
Potential cost savings were a key motivator for the merger, and the new corporation immediately announced that it intended to optimize supplier performance further, building stronger relationships with key suppliers to more effectively manage the entire chain down to the raw material level. First-tier suppliers are expected to play increased roles in managing their own supply chains, producing better products at lower cost and taking the lead in programs, ranging from research and development to the design and production of complete modules.
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From page 21... ...
Benefits of Outsourcing OEMs may reap the following benefits from outsourcing: · improved focus, quality, and simplification of remaining in-house operations · lower cost manufacturing operations, including reduction of inhouse inventories · shorter product realization cycles (faster time to market) and lower product development costs if suppliers are directly involved in product design · access to capabilities and technologies that could not be readily developed or cost-effectively acquired · additional manufacturing capacity and faster response to changing market demands often without additional capital investment by the OEM Despite these benefits, OEMs may elect to retain aspects of vertical integration, such as capabilities that provide sustainable competitive advantage or identify a product with the OEM.
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From page 22... ...
The supply chain includes all of the capabilities and functions required to design, fabricate, distribute, sell, support, use, and recycle or dispose of a product, as well as the associated information that flows up and down the chain. Supply chains are typically comprised of geographically dispersed facilities and capabilities, including sources of raw materials, product design and engineering organizations, manufacturing plants, distribution centers, retail outlets, and customers, as well as the transportation and communications links between them.
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From page 23... ...
New, ad hoc teams are formed and disbanded, as needed, for each new job or product. Similar examples can be found in the defense industry, where prime contractors create ad hoc teams, bringing together only the skills required to win and execute a specific contract.
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