Improvement of Material Flow in the Production and Supply Chain of ...

How to get the best value from a supply chain? First of all, one should understand the
processes. Investigations are necessary to get first a general ideal and then the details of
the whole supply chain or the special area that need to be optimized. After the
investigation, improve and reorganize the processes to match the best-in-class practice.
Then, match the information to the processes and measure the processes and
information performance. Sometimes if provided that circumstances permit, simulation
of the optimized supply chain can take place before the proposal is carried out.
(Clermiston Consulting Pty Ltd, viewed 2008).
There are many benefits of general supply chain optimization in the situation that the
optimization is not aim at a certain purpose. Sustained improvement in sales and profit,
problem can be fixed without necessarily major capital or big IT spends. Reduction in
warehouse and total inventory will be achieved if the approach is effective. After
optimization, a supply chain performance can be improved in variety areas (Larry
Lapide, viewed 2008):
• Reduced supply chain costs
• Improved product margins
• Lower inventories
• Increased manufacturing throughput
• Better return on assets
• Reduced lead times
By optimizing the supply chain, the goal of balance the benefit of factory and
customer will be achieved. Many theories can be used in optimizing the supply chain,
such as operation research and Six Sigma. Operation research has been applied in
Haier Co., Ltd’s products delivery process in 2004 and reduced the delivery time by
nearly 50%. Associate with the reduction of delivery time, inventory was reduced and
cash turnover was speeded up. (Haier, viewed 2008) Six Sigma is widely used in supply
chain optimization. Ford Motor Company has achieved significant success in applying
Six Sigma to its supply chain processes. (Marx, viewed 2008). Some other
methodologies can also be used in the supply chain optimization according to specific
requirement of different systems. In the supply chain of ADB products, optimization
also can be a method to balance the benefit between customers and the company and
make the products more competitive in the future market. Apropos of how to improve
the supply chain, the authors referred to selecting suitable suppliers in last chapter.
Beside of that, many other methods are suitable to be applied to improve the supply
chain of the ADB products. Detailed proposals will be discusses later in this chapter.
The main purpose of optimize the supply chain in this case is not only achieve better
performance of the current line, but also create a strategy to deal with the increasing
production volume.
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