falling into a functional rut. This is exemplified in the approach Kuiper Leda also takes with regard to optimizing lead times throughout the productions scheduling and fulfillment processes as well.
In summary, Kuiper Leda has many of the foundational processes, systems and roles in place to enable an efficient demand-driven supply chain network (Barrett, 2007), including the ability to synchronize suppliers, inbound quality management and inspection, production scheduling, manufacturing, and fulfillment. The maturation from MRP to ERP is evident in the same factors which illustrate how the company is becoming more adept at accomplishing its lean manufacturing objectives, beginning with attainment of JIT. Outsourcing excess demand for the ECUs also indicates a relatively high level of process maturity, knowledge management (Ferdows, 2006) and quality management expertise as well (Yamazaki, 2003). Kuiper Leda shows the potential to scale into more collaborative processes with their suppliers, opening up the opportunity to create even greater cost reductions, more accuracy in their measurement and reporting of supply chain performance, and as a result create even more profitable operations as a result.
Kuiper Leda Measures and Metrics
It is common to find manufacturers measuring a limited set of processes that are often siloed or only in a specific area of their companies -- often the ones that have the highest levels of performance over time that are not dependent on any other departments' cooperation. Myopic and mis-guided as this strategy is, it often happens in companies with extensive supply chains that rival Kuiper Leda's. What this manufacturer of Electronic Control Units (ECUs) and Radio Frequency identification (RFIO) tags for automotive manufacturers and OEMs must concentrate on is more of a quantifying of the performance of bringing more collaborative processes into their supply chains. The ability of manufacturers in OEM-centric industries to create more collaborative process workflows through these of key performance indicators (KPIs) and metrics of performance has been shown to enable greater shared accomplishment over time (Chatterjee, Satpathy, Ganguli, Kumaresh, 2002). Kuiper Leda needs to re-evaluate the processes that are in place with suppliers and revise them to be more collaboratively-based so that both risk and more accurate knowledge is shared. As Dr. Kasra Ferdows (2006) has commented in his analysis of the variations in the roles and knowledge generated by factories and the supplier relationships that support them, the greatest differentiator over time is the ability to capture and transform knowledge into a competitive advantage. Measuring collaboration throughout their supply chain and rewarding it can set in motion the dynamics to turn knowledge generation and use as a competitive advantage. The Toyota Production System (TPS) is often held up as an example of this type of strategy, where knowledge has become the greatest competitive asset and the ability to manage costs to lower levels through shared collaboration and trust has been shown. Measuring shared, collaborative processes is going to be the most efficient strategy for Kuiper Leda to accomplish this level of competitive performance.
Specifically looking at measuring and improving the extent to which Kuiper Leda can increase their supply chain performance through more effective collaboration, the use of the framework of Collaborative, Planning, and Forecasting & Replenishment (CPFR) needs to be considered (Truss, Wu, Saroop, Sehgal, 2006). Figure 1 provides a graphical representation of this framework, which has been used extensively in auto components manufacturers globally.
Figure 1:
Collaborative Planning Forecasting & Replenishment (CPFR)
Applied to the Automotive Components Business
Source: (Truss, Wu, Saroop, Sehgal, 2006)
Putting into place a CPFR framework will give Kuiper Leda the ability to more effectively manage inventory levels and through more effective collaboration, be able to manage variation in demand as well. The CPFR framework can also serve as the basis for quantifying shared processes throughout the supply chain and creating measures of shared performance. The use of the AMR Research hierarchy of supply chain metrics (Hofman, 2004) where functional measures of shared process performance serve as the foundation for transaction-based metrics of order accuracy lead to the development of measures of order accuracy are also critical for Kuiper Leda. The use of the AMR Research hierarchy of supply chain metrics to define when the right order is delivered to the right customer, at the right price, in essence the perfect order (Hofman, 2004) needs to guide the use of metrics to measure collaboration as it relates to streamlining the Kuiper Leda's supply chains' use of metrics.
Second, the use of JIT in the context of broader supply chain collaboration and synchronization metrics needs to be put into the context of process and system integration, not measured by itself. The reliance on JIT as a means to reduce costs of capital and increase inventory turns while meeting customer delivery dates...
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