Strategic Supply Chain Management - Supply Chain Online

CHAPTER 2 Core Discipline 2: Develop an End-to-End Process Architecture 83
boost asset utilization, more and more companies are using external partners
to execute some or all of their make activities, such as production,
testing, certification, and packaging. This requires sharing performance
objectives and processes across this extended network.
There are four principles for process excellence in make:
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Focus on business priorities. All make scheduling decisions should
integrate customer and market priorities. Your company’s business
managers should provide these priorities as formally defined business
rules. Give priority to key accounts and higher-margin products
when resources and production capacity are limited.
Aim for speed and flexibility, not just low costs. Reduce cycle
times and inventory levels with demand-pull and other lean manufacturing
techniques. For example, when time or cost prohibits
making customized products, finish products to a generic level
and only finalize them on receipt of a customer order. Speed and
flexibility require almost real-time visibility. Timely and accurate
information on key areas, such as order status, production output,
line stoppages, quality performance, and inventory levels, is
needed to support rapid adjustments to the production schedule.
Set and monitor quality standards. Capture and review quality
information at each step of the production process based on preset
standards. Timely data on quality must be accessible to
everyone involved in manufacturing activities and then analyzed
using a structured approach such as Six Sigma. This focus on
quality should cover the whole product life cycle. Products
should be traceable at the lot and unit levels to ensure that the
source of quality problems can be identified and corrected.
Synchronize all manufacturing activities. Provide information on
production schedules, consumption, and inventory levels to suppliers
so that they can better monitor and respond to demand.
Define and agree on rules to guide supplier decision making for
replenishment. To ensure that production schedules are both feasible
and accurate, production rules, information, and performance
data need to be managed; this requires defining and
maintaining formalized processes and accountabilities both internally
and with supply partners.
For the supply chain to operate effectively, make must be integrated
with the plan, source, deliver, and return processes. For example, plan
provides make with a production plan stating the amount of product to be