Logistics and Supply Chain Management, 4th Edition

THE SYNCHrONOUS SUPPLY CHAIN

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information of the US textile company Milliken with the Seminole Manufacturing

Company (a manufacturer of men’s slacks) and the retailer Wal-Mart. Information

on end-user demand was captured at the point-of-sale and rapidly fed back up

the supply chain, enabling dramatic reductions in lead times to be achieved and

hence substantial reductions in inventory.

Another case from the US is provided by the chain of retail fashion stores, The

Limited. Each of the several thousand stores in the chain tracks consumer pref-

erences daily using their point-of-sale data. Based upon this, orders are sent by

satellite links to the suppliers around the world. Using Hong Kong as a consolida-

tion centre, goods are flown back to The Limited’s distribution centre in Columbus,

Ohio. At the distribution centre the goods are price-marked and re-sorted for

immediate onward shipment by truck and plane to the retail stores. The whole

cycle from reorder to in-store display can be achieved in six weeks. Conventional

systems take more like six months.

Production strategies for quick response

As the demand by all partners in the supply chain for a quick response increases,

the greater will be the pressure placed upon manufacturing to meet the customer’s

needs for variety in shorter and shorter time-frames.

The answer has to lie in flexibility. As we have already observed, if it were pos-

sible to reduce manufacturing and logistics lead times to zero then total flexibility

could be achieved. In other words the organisation could respond to any request

that was technologically feasible in any quantity. Whilst zero lead times are obvi-

ously not achievable, the new focus on flexible manufacturing systems (FMS) has

highlighted the possibility of substantial progress in this direction.

The key to flexibility in manufacturing is not just new technology, e.g. robotics,

although this can contribute dramatically to its achievement. The main barrier to

flexibility is the time taken to change; to change from one level of volume to another

and to change from making one variant to another. Typically we call this ‘set-up

time’. It will be apparent that if set-up times can be driven as close as possible to

zero then flexible response to customer requirements presents no problem.

The Japanese, not surprisingly, have led the way in developing techniques for

set-up time reduction. ‘Single minute exchange of die’, or SMED, is the goal in

many Japanese plants. In other words continuous attention by management and

the workforce is focused upon the ways in which set-up times can be reduced.

Sometimes it will involve new technology, but more often than not it is achieved

through taking a totally different look at the process itself. In many cases set-up

times have been reduced from hours down to minutes, simply by questioning the

conventional wisdom.

What in effect we are seeing is a fundamental shift away from the economies of

scale model, which is volume based and hence implies long production runs with

few change-overs, to the economies of scope model, which is based upon pro-

ducing small quantities of a wider range, hence requiring more change-overs.