E-Book Content
SUPPLY CHAIN SCIENCE
Wallace J. Hopp
c 2003 Wallace J. Hopp
ii
PREFACE This is a management book. As such, it has only one purpose—to help managers do their jobs better. Why then does it have the word “science” in the title? Isn’t science the arcane pursuit of nerdy guys in lab coats? Doesn’t a scientist seek only to understand the world, not improve it? Aren’t scientists about as far removed from management as any group of people we can think of (other than artists maybe)? It is certainly true that managers are not generally interested in science for its own sake. But many professionals with no intrinsic interest in science nonetheless rely on it heavily. A civil engineer uses the science of mechanics to design a brige. A physician uses the science of physiology to diagnose an illness. Even a lawyer (to stretch a point) uses the science of formal logic to argue a case. The main premise of this book is that managers need science too. But what kind of science? By its very nature, management is interdisciplinary. Managers deal regularly with issues that involve questions of finance, marketing, accounting, organizational behavior, operations and many other disciplines. Hence, a comprehensive science of management is probably a hopeless pipe dream. But the fact that there is no unified science of medicine does not stop physicians from relying on several different scientific frameworks. So why should it stop managers from looking to science for help. In this book we focus specifically on the science of supply chains. This addresses the collection of people, resources, and activities involved in bringing materials and information together to produce and deliver goods and services to customers. Our goal is to provide a framework for understanding how complex production and supply chain systems behave and thereby provide a basis for better decision making. Specifically, the science we present here is useful in answering questions such as the following: • You have read the literature on JIT and lean and are up to your eyeballs in stories about Toyota. But your business is very different from the automotive industry. Which elements of the Toyota Production System are relevant and which are not? • You have implemented some lean manufacturing practices and have reduced in-process inventories. What should be your next step? How do you identify the portion of your system that offers the greatest leverage? iii
iv • You are managing a service operation and (since services cannot be inventoried) are wondering whether any of the underlying ideas of lean manufacturing apply to you. How can you decide what can be adapted? • You are managing a multi-product manufacturing system. Which of your products should be made to order and which should be made to stock? What should you consider in controlling stock levels of both components and finished goods? • You have problems getting on-time deliveries from your suppliers. How much of an impact does this have on your bottom line? What are your best options for improving the situation? • You are considering entering into some kind of collaborative relationship with your suppliers. What factors should you consider in deciding on an appropriate structure for the partnership? • You feel that better supply chain management could be a source of competitive advantage. How do you identify the improvements that would make the most difference? Once you identify them, how do you justify them to upper management? Of course, these questions are only the tip of the iceberg. Because each system is unique, the range of problems faced by managers dealing with supply chains is almost infinite. But this is precisely the reason that a scientific approach is needed. A book that tells you how to solve problems can only provide answers for a limited set of situations. But a book that tells you why systems behave as they