tag:blogger.com,1999:blog-339181707720390012024-03-13T03:40:00.945-07:00Manajemen OperasiPusin PPM Manajemenhttp://www.blogger.com/profile/18207522539634214763noreply@blogger.comBlogger12125tag:blogger.com,1999:blog-33918170772039001.post-88558088168569174342012-11-18T23:02:00.001-08:002012-11-18T23:02:09.288-08:00Retailers Should Invest More in Employees<div class="separator" style="clear: both; text-align: center;">
<a href="http://assets.nydailynews.com/polopoly_fs/1.326236!/img/httpImage/image.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="127" src="http://assets.nydailynews.com/polopoly_fs/1.326236!/img/httpImage/image.jpg" width="200" /></a></div>
Doug Rauch, the former president of Trader
Joe's, visited my Service Operations class at MIT last week. When he
mentioned that Trader Joe's invests in its employees a lot more than its
competitors do, he was challenged by one of my students: "Isn't it a
bad idea to invest in employees in settings like yours where shopping is
transactional and can easily be done online?" <br />
<br />
Doug had a strong reaction. "Nowadays you can go through an entire
day without a single person acknowledging your existence. But don't
forget that we are people who generally like connecting with other
people." He went on to explain how profitable it is to invest in
employees, even for a supermarket that competes on the basis of low
prices, and how most online grocers have not found a way to make money. <br />
<br />
My class had already discussed QuikTrip, a convenience store chain
with over 500 stores, and Mercadona, Spain's largest supermarket chain.
We also talked briefly about Costco, a large and publicly-traded
wholesale club. All of these retailers, along with Trader Joe's, invest
significantly more in their employees than is typical for their retail
peers.<br />
<br />
They also have high profits, low prices for their industry,
excellent operational metrics, and a reputation for great customer
service. These retailers deliver great value to their customers,
employees, and investors all at the same time. (My article in the
January-February 2012 issue of <em>Harvard Business Review</em>, <a href="http://hbr.org/2012/01/why-good-jobs-are-good-for-retailers/ar/1"><em>Why "Good Jobs" Are Good for Retailers,</em></a> analyzes how they manage to do this.)<br />
<br />
Even so, I was not surprised that my student was questioning Doug on
his company's choice to invest in its employees. Many in the business
community still see employees in low-cost retail as interchangeable
parts. They can see with their own eyes that most large retailers, such
as Wal-Mart, do not invest much in their employees. And it makes sense
to them, as it made sense to my student, that low-cost retailers really
have only one thing to offer their customers: the quick, cheap sale.
That's what the customers are there for and there's no point in offering
more.<br />
<br />
These people miss two things. <br />
<br />
<strong>1. Even in low-cost retail, it takes a lot of human effort
and judgment to get the right product to the right location at the right
time and to make an efficient transaction. </strong><br />
<br />
It's the low-paid employee, not the inventory-management software,
who notices that a shelf looks messy or that some of the products are in
the wrong place. It's the low-paid employee who notices that some of
the lettuce has gone bad or that there are still signs up for last
week's promotion. It's the low-paid cashier who can tell the difference
between serrano peppers and jalapeno peppers during checkout. It's the
low-paid employee who notices that there are too many customers waiting
in the checkout and offers to open an additional cash register. When
retailers don't invest in human capital, operational execution suffers
and the company pays with lower sales and lower profits than it could
have had. <br />
<br />
<strong>2. Even in low-cost retail, there is still interaction between customers and employees. </strong><br />
<br />
It's the employee who notices a customer standing in the aisle
looking lost and offers help. It's the employee who can read from a
familiar customer's face that he's had a bad day and could use a
friendly smile. It's also the employee who can turn a customer off —
maybe permanently — by being rude or even just not very helpful. It's
the people who make you want to shop here even though you can easily buy
the same stuff there. Yet most low-cost retailers forget about that. <br />
<br />
Those are what we could call the business reasons for more investment
in employees. But business on the scale of these retail chains is never
just business. It's people's lives — the employees' and the customers'.
<br />
I care that millions of retail employees are not given decent wages,
benefits, work schedules and an opportunity for growth, even though
doing so is free for retailers. I care that a lot of human talent is
wasted.<br />
<br />
When I'm shopping with my children, I care what view they are
forming of the society they live in. I try to go to places where they
will see what people are like at their best, not at their most
disengaged. I want them to live in a society in which people
acknowledge each other's presence and are kind and respectful to each
other, and I think that begins with being brought up to see kindness and
respect as normal. What Doug Rauch and others have shown is that what I
want for my children is not at all incompatible with what they want for
their companies.<br />
<div>
<br /></div>
<div id="pageFooterAuthor">
<a href="http://hbr.org/search/Zeynep%20Ton" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img alt="Zeynep Ton" class="headline-image" src="http://static2.hbr.org/mt-static/support/assets_c/userpics/userpic-1438-100x100.png" /></a>
<div class="headline-text">
<h3>
</h3>
<a href="http://www.zeynepton.com/">Zeynep Ton</a> is a visiting assistant professor in the operations management group at MIT's Sloan School of Management.<br />
<br />
<a href="http://blogs.hbr.org/cs/2011/12/retailers_should_invest_more_i.html">Source</a> <br />
</div>
</div>
Pusin PPM Manajemenhttp://www.blogger.com/profile/18207522539634214763noreply@blogger.com0tag:blogger.com,1999:blog-33918170772039001.post-74725183295430146042012-11-11T23:53:00.001-08:002012-11-11T23:55:28.061-08:00Don't Put Your Customers at Risk<a href="http://feeds.inc.com/~r/home/updates/~3/HFz1Naoq20I/story01.htm">Don't Put Your Customers at Risk</a>: <img align="left" alt="" src="http://www.inc.com/uploaded_files/image/100x100/testing_800x800_21628.jpg" style="margin-right: 10px;" /><br />
In the wake of the deadly meningitis contamination, your business needs to keep its supply chain squeaky clean. It's not enough to blindly trust your suppliers, you have to check and check again. Here's how.<br />
<br />
For Flowering Tree Botanicals, monitoring the supply chain that goes into making its all-natural bath and body products is crucial.<br />
<br />
Layla Colegrove, the company's chief executive, uses only United States-based companies for sourcing the ingredients such as Shea butter, olive oil, goat milk, and witch hazel that go into her soaps and shampoos. She performs regular checks that her suppliers meet U.S. Food and Drug Administration standards for production, handling, and storage. And for an upcoming line of cosmetics, she has chosen suppliers that have agreed to do regular microbial tests themselves. Colegrove also plans to hire a testing laboratory to do even more close examination of all her products in the coming months.<br />
<br />
While that may sound like overkill, it's not. It's a sign of the new world we live in.<br />
<br />
"It has become very important to us as a small business to make sure our products are good quality and that they are not going to harm any of our customers," Colegrove says.<br />
<br />
You can never lose track of what's in your business' supply chain--and who, exactly, is contributing to it. Ignoring those basics can lead to catastrophes, such as the one <a href="http://www.neccrx.com/">allegedly caused by</a> New England Compounding Center in October. The center's steroidal drug was reportedly laced with bacterial meningitis, which killed dozens and sickened hundreds after doctors used the tainted drug--because they trusted the pharmacies that provided it.<br />
<br />
It's also a potent reminder that microscopic mishaps can permanently damage your brand--or even shut down your business forever.<br />
<br />
Nearly every small business has a supply chain that needs careful tending. So, how do you make sure the components you put in your own product are perfectly safe, sanitary, and non-defective?<br />
Fortunately, lots of data exists about potential supply partners. As a preliminary step, you can dig into credit reports and legal proceedings through databases such as Lexis Nexis and Dunn & Bradstreet.<br />
<br />
To dig deeper, you may want to sign on the help of one of many companies that specialize in even broader searches that can help you get a clearer picture of a company's total risk to you. One is <a href="http://www.briefcasedata.com/" rel="nofollow">Briefcase Analytics</a>, of Cambridge, Massachusetts. Another is <a href="http://www.ariba.com/about/sap-ariba" rel="nofollow">SAP's Ariba</a>, which provides an Internet-based service that provides continuous supply-chain monitoring.<br />
<br />
Here's how they work: Briefcase, for example, lets companies do a comprehensive records search on any firm that small-business owners might want to enlist as a supplier. To do so it taps 600 databases in 50 countries. Briefcase then compiles a report that factors in financial strength, business integrity, labor and human-rights record, health, safety, and the environment, and the company's record on privacy and intellectual property to create a total risk score.<br />
<br />
Such a service could have been important in shutting down NECC earlier than this year, as the company had documented operations violations stretching back to the 1990s, according to an <a href="http://www.nytimes.com/2012/10/23/health/documents-in-meningitis-case-show-complaints-in-1999.html?)">October story</a> in the New York Times.<br />
<br />
"Part of this is the diligence of pharmacies," says Shanton Wilcox, a principal and North America Lead of logistics and fulfillment for the consulting firm Cap Gemini, which is headquartered in New York City. "The pharmacy is engaging with the compounding company, so are they auditing the records?"<br />
<br />
Regularly reviewing supply chains is a relatively new concept to many smaller United States-based businesses. But the practice has gained popularity over the past five years as imports, primarily from China, have been found tainted with lead, melamine, and other poisons, or have had severe defects leading to <a href="http://www.nytimes.com/2007/06/26/business/worldbusiness/26tire.html">fatalities</a>. That's because profit motives have generally driven production in past decades, emphasizing cost containment over safety, experts say. <br />
<br />
"The entire supply chain succeeds and fails together," Richard J. Cellini, chief executive officer of Briefcase says. "It is only as strong as the weakest link and [European and Asian companies] have gotten this rather more quickly than North Americans companies who are more focused on cost, not risk."<br />
<br />
Even if your company is so small that your supply chain monitoring needs are minimal, you may be particiapting as a vendor to a much bigger company, such as Walmart or Sears. Such companies have elaborate supply chain monitoring systems themselves, and you'll be asked to interact with them by entering data about your own production process. <br />
<br />
One such system--from <a href="http://www.aravo.com/">Aravo Solutions</a>, a supply-chain management company with about 100 employees, in San Francisco--contracts with companies such as General Electric and Best Buy, allowing big businesses to continuously monitor all the vendors in a supply chain to check for problems. Similar to that of Briefcase, the Aravo system queries databases that look up legal and other documents on companies to provide a risk score. It also includes things like research into commodities supplies in particular regions. That can be critical in determining if supply will be a problem at a certain point. <br />
<br />
While Aravo, Ariba, and Briefcase can help you get your house in order, the rest of your supply-chain monitoring system will be more internally focused on production. It is likely to be a home-grown network that taps a database, or a series of databases, that contain and systematize all of your product information, and which analyzes various points of your production.<br />
<br />
The typical system must also have in place controls that sort your different product types, forcing regular reviews by pulling samples for quality inspections."A robust, quality system is the crux of this whole thing," Wilcox says, and it should go beyond what regulatory agencies such as the FDA require, especially because the FDA is not staffed to fully monitor all companies.<br />
<br />
While managing a clean supply chain is complex, some small businesses have found a way to get an extra boost from doing so. Consider the All American Clothing Co., in Arcanum, Ohio, which has found it can blend its supply-chain-monitoring efforts with a clever marketing campaign.<br />
<br />
AACC has designed a system, using Unix and Microsoft servers and SQL (structured query language) programming, that lets the company--and its customers--identify the fields and mills in which the cotton that makes every item was grown and processed. The system operates in real time for the company, and provides an after-the-fact look for customers. Each of the company's jeans includes a <a href="http://www.allamericanclothing.com/traceability.html">"certificate of authenticity"</a> that lets customers go online, punch in a unique identifying number, and find out about the more than 11,0000 farmers, millers and clothing finishers who contribute to the making of the 60,000 pairs of jeans AACC produces annually in the United States.<br />
<br />
B.J. Nickol, a co-owner and vice president of marketing, says the company had to put the system in place for its own tracking and to meet FDA requirements. The side effect is that it helps the company trace potential product problems more quickly, and customers seem to love it. <br />
<br />
"We target a niche of customer that demands 'USA-made' and have a lot of patriotism, so they love to see who they are helping out by purchasing a USA garment," Nickol says.<br />
<img border="0" height="1" src="http://inc.com.feedsportal.com/c/34760/f/640480/s/256dce59/mf.gif" width="1" /><br />
<br />
<a href="http://da.feedsportal.com/r/148658771427/u/49/f/640480/c/34760/s/256dce59/kg/321-335-340-341-342/a2.htm"><img border="0" src="http://da.feedsportal.com/r/148658771427/u/49/f/640480/c/34760/s/256dce59/kg/321-335-340-341-342/a2.img" /></a><img border="0" height="1" src="http://pi.feedsportal.com/r/148658771427/u/49/f/640480/c/34760/s/256dce59/kg/321-335-340-341-342/a2t.img" width="1" /><img height="1" src="http://feeds.feedburner.com/~r/home/updates/~4/HFz1Naoq20I" width="1" />Pusin PPM Manajemenhttp://www.blogger.com/profile/18207522539634214763noreply@blogger.com0tag:blogger.com,1999:blog-33918170772039001.post-88614173648289320532012-10-30T01:37:00.001-07:002012-10-30T01:37:50.681-07:00Apple Can't Innovate or Manage Supply Chain<a href="http://www.forbes.com/sites/petercohan/2012/10/26/apple-cant-innovate-or-manage-supply-chain/">Apple Can't Innovate or Manage Supply Chain</a>: Stock in media-worship-object, Apple (AAPL), is trading about 14% below its all-time high. When Steve Jobs passed, Apple lost its source of innovation. And when supply chain expert, Tim Cook, took the CEO slot, I thought he would at least be able to make sure the trains ran on time.Pusin PPM Manajemenhttp://www.blogger.com/profile/18207522539634214763noreply@blogger.com0tag:blogger.com,1999:blog-33918170772039001.post-27580504580271117582012-10-24T23:40:00.002-07:002012-10-24T23:40:48.945-07:00Is Apple Supply Chain Really the No. 1? a Case Study <h3 class="post-title entry-title" itemprop="name">
</h3>
<div class="post-header">
</div>
Everything about Apple Inc is the talk of the town, for example, the new
Ipad, Iphone 5, Apple Map or even environmental and labor issues at its
suppliers' facilities. Surprisingly, IT research firm Gartner ranks
Apple Supply Chain as the best supply chain in the world for 3 years in a
row. Without a doubt, Apple Inc is the world leader in Innovation,
Branding and Software Ecosystem. But, is Apple's Supply Chain really the
number 1? This case study will show you the analysis of Apple Supply
Chain core processes, challenging issues and complexities of its
operations.<br />
<br />
<b><u>1) How Apple Supply Chain Works?</u></b><br />
Information about Apple Supply Chain is a bit here, there and
everywhere, it's kinda tough to find the actual case study. To the best
of my knowledge, many business schools still use the case study "<a href="https://gsbapps.stanford.edu/cases/detail1.asp?Document_ID=1315">Apple Computer's Supplier Hubs: A Tale of Three Cities</a>"
from Stanford University (1996). To get a closer look at modern day
supply chain at Apple Inc, this case study utilizes content analysis
technique. <a href="http://investor.apple.com/financials.cfm" rel="nofollow">Annual Report</a> (SEC Filing) of 2011 is analyzed and simplified supply chain processes are constructed as below,<br />
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="http://1.bp.blogspot.com/-v9GswSJtAqY/UHmEpfndNWI/AAAAAAAAC-I/GHPqIjRatkE/s1600/Supply+Chain+Planning+at+Apple+Inc.png" style="margin-left: auto; margin-right: auto;"><img border="0" height="488" src="http://1.bp.blogspot.com/-v9GswSJtAqY/UHmEpfndNWI/AAAAAAAAC-I/GHPqIjRatkE/s640/Supply+Chain+Planning+at+Apple+Inc.png" width="640" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><i>Supply Chain Planning at Apple Inc</i></td></tr>
</tbody></table>
<br />
Supply Chain Planning at Apple Inc is the classic example of New Product
Development Process (NPD). It's the integration of R&D, Marketing
and various function under supply chain management. From the above
graphic, Apple Inc accelerates the new product introduction by acquiring
licensing and 3rd party businesses. The whole process looks very
similar to that of other industries. Interesting point is that Apple Inc
has to make pre-payments to some suppliers to secure strategic raw
materials.<br />
<br />
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="http://3.bp.blogspot.com/-DzfzEBzSMU8/UHmGvfJeauI/AAAAAAAAC-Q/sT9b4dhJIRg/s1600/Supply+Chain+Map+of+Apple+Inc..png" style="margin-left: auto; margin-right: auto;"><img border="0" height="430" src="http://3.bp.blogspot.com/-DzfzEBzSMU8/UHmGvfJeauI/AAAAAAAAC-Q/sT9b4dhJIRg/s640/Supply+Chain+Map+of+Apple+Inc..png" width="640" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><i>Supply Chain Model of Apple Inc</i></td></tr>
</tbody></table>
<br />
Supply Chain Map is the way to express large system from points of
origin to points of consumption in simple to understand manner.
Information from annual report is also used to produce Apple Supply
Chain Map.<br />
<br />
Apple Inc purchases raw materials from various sources then get them
shipped to assembling plant in China. From there, assembler will ship
products directly to consumers (via UPS/Fedex) for those who buy from
Apple's Online Store. For other distribution channels such as retail
stores, direct sales and other distributors, Apple Inc will keep
products at Elk Grove, California (where central warehouse and call
center are located) and supply products from there. At the end of
product's life, customer can send products back to nearest Apple Stores
or dedicated recycling facilities.<br />
<br />
<b><u>2) Apple Supply Chain Challenges</u></b><br />
What does it feel like to be "Apple Inc"? One journalist indicated that the life of Apple Inc is <a href="http://www.businessweek.com/magazine/apples-supplychain-secret-hoard-lasers-11032011.html" rel="nofollow">fairly easy</a>
by utilizing its negotiation power. Believe me, Apple Supply Chain has
very high risks. There are many challenges to overcome, for example,<br />
<br />
<blockquote class="tr_bq">
- Global economy could affect the Company.<br />
- Some re-sellers may also distribute products from competing manufacturers.<br />
- Inventories can become obsolete or exceed anticipated demand.<br />
- Some components are currently obtained from single or limited sources.<br />
- Some custom components are not common to the rest of the industries.<br />
- Ability to obtain components in sufficient quantities is important.<br />
- Supply chain disruption such as natural and man-made disasters can be serious.<br />
- Company depends on logistical services provided by outsourcing partners.<br />
- Company also relies on its partners to adhere to supplier code of conduct.</blockquote>
<br />
The above information is also from annual report. As you can see, most of the risks are on supply side.<br />
<div>
</div>
<b><u>3) How Complex is Apple Supply Chain?</u></b><br />
<div>
Some people in blogosphere said that Apple Supply Chain is not that
complicated. So this section will explain some characteristics of Apple
Supply Chain through various metrics and compare them with Amazon Supply
Chain.<br />
<br />
<b>Inventory Turnover </b><br />
Inventory Turnover is traditional financial measure to determine how
efficient company uses its financial resources to create sales, the
higher number is the better. Supply chain professionals also use this
metric in inventory management function. Generally accepted calculation
is [Cost of Goods Sold / Average Inventory]<br />
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="http://4.bp.blogspot.com/-hIAS5xTugXo/UHoQf2TVQhI/AAAAAAAAC-o/c94Pmh55siA/s1600/Inventory+Turnover+Apple+vs+Amazon.PNG" style="margin-left: auto; margin-right: auto;"><img border="0" height="185" src="http://4.bp.blogspot.com/-hIAS5xTugXo/UHoQf2TVQhI/AAAAAAAAC-o/c94Pmh55siA/s320/Inventory+Turnover+Apple+vs+Amazon.PNG" width="320" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><i>Inventory Turnover of Amazon vs Apple Inc</i></td></tr>
</tbody></table>
<br />
The above picture shows that inventory turnover of Amazon and Apple is
10 and 59 respectively (cost of goods sold of digital
content/downloadable products are excluded). From the face value, Apple
seems to be more efficient. Anyway, there is a reason for this. Apple
Inc is now marketing company with no manufacturing facility but Amazon
is a distributor of general merchandise. It's pretty natural that Amazon
has to keep more stocks then inventory turnover can be much lower.<br />
<br />
<b>Number of Key Suppliers</b><br />
Supply chain management is about relationship between trading partners.
Working closely with strategic suppliers will bring competitive
advantage to the firm.<br />
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="http://3.bp.blogspot.com/-t1O24z22X0o/UHoSDRgkkjI/AAAAAAAAC-w/Va00l_bzffk/s1600/Number+of+Key+Vendors+Apple+vs+Amazon.PNG" style="margin-left: auto; margin-right: auto;"><img border="0" height="231" src="http://3.bp.blogspot.com/-t1O24z22X0o/UHoSDRgkkjI/AAAAAAAAC-w/Va00l_bzffk/s400/Number+of+Key+Vendors+Apple+vs+Amazon.PNG" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><i>Number of Key Vendors Amazon vs Apple</i></td></tr>
</tbody></table>
<br />
Apple recently said that they have about 156 key vendors across the
globe. This amount of suppliers is quite manageable. According to this <a href="http://www.crunchbase.com/company/amazon" rel="nofollow">information</a>, Amazon has about 3 million suppliers in total. Top 5% of this is 300,000 suppliers, way more than that of Apple Inc.<br />
<br />
<b>Number of Warehouse Facilities</b><br />
In the United States, transportation cost is the big portion of total
logistics cost. Then, good management of related function is essential.<br />
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="http://3.bp.blogspot.com/-NXbsJJIZoKQ/UHoTfaHUErI/AAAAAAAAC-4/xX8_Fz5bXk4/s1600/Number+of+Warehouse+Facility+Apple+vs+Amazon.PNG" style="margin-left: auto; margin-right: auto;"><img border="0" height="231" src="http://3.bp.blogspot.com/-NXbsJJIZoKQ/UHoTfaHUErI/AAAAAAAAC-4/xX8_Fz5bXk4/s400/Number+of+Warehouse+Facility+Apple+vs+Amazon.PNG" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><i>Number of Warehouse Facilities Amazon vs Apple</i></td></tr>
</tbody></table>
<br />
Apple inc has central warehouse in California but Amazon has
approximately 28 warehouses from coast to coast. What Apple has to do is
to synchronize data between central warehouse and its own 246 stores +
customers. With appropriate level of automation, this kind of operations
can be done efficiently.</div>
<div>
</div>
<div>
For Amazon, thing is more complicated than that. Amazon is known to
employ many PhD graduates in operations research/industrial engineering.
The reason is that Amazon distribution environment must
be mathematically solved through optimization method. Typically, they
have to determine how many facilities they should have, where serves
which market, items/quantity stored in each location, how to
manage transportation between warehouse-to-warehouse and warehouse to
customers in order to minimize cost and increase service level.</div>
<div>
</div>
<div>
<b>Number of Items (Stock Keeping Unit)</b></div>
<div>
Stock Keeping Unit aka SKU is another indication of supply chain
complexity. One model of phone but different software inside is
considered different item/SKU.</div>
<div>
</div>
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="http://4.bp.blogspot.com/-JMWzUk2oxGY/UHoVyDiw0AI/AAAAAAAAC_A/EUBxI6R6E3k/s1600/Number+of+SKUs+Apple+vs+Amazon.PNG" style="margin-left: auto; margin-right: auto;"><img border="0" height="231" src="http://4.bp.blogspot.com/-JMWzUk2oxGY/UHoVyDiw0AI/AAAAAAAAC_A/EUBxI6R6E3k/s400/Number+of+SKUs+Apple+vs+Amazon.PNG" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><i>Number of SKUs Amazon vs Apple</i></td></tr>
</tbody></table>
<br />
According to <a href="http://www.amazon.com/mn/search/?ref_=nb_sb_noss&url=search-alias%3Daps&field-keywords=-sdfdfs&x=0&y=0&rd=1#/ref=nb_sb_noss?url=search-alias%3Daps&field-keywords=-sdfdfsasdfaf&rh=i%3Aaps%2Ck%3A-sdfdfsasdfaf" rel="nofollow">this</a>, Amazon has about 170 million items on its catalog. About 135 million items are physical products. For Apple, they have about <a href="http://www.amazon.com/s/ref=bl_sr_electronics?_encoding=UTF8&field-brandtextbin=Apple&node=172282" rel="nofollow">26,000 items</a> (rough
estimate, subject to change). The point is that, if you have to make
demand forecast, which one will more difficult for you, 135 million
items or 26k items.<br />
<div>
<br />
<b>Product Life Cycle</b><br />
Put it simple way, product life cycle is how long you can sell products (the longer is the better).<br />
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="http://4.bp.blogspot.com/-Lj3QzShpBR8/UHoXW0cdm0I/AAAAAAAAC_I/IWgWpL1HV8s/s1600/Product+Life+Cycle+Apple+vs+Amazon.PNG" style="margin-left: auto; margin-right: auto;"><img border="0" height="231" src="http://4.bp.blogspot.com/-Lj3QzShpBR8/UHoXW0cdm0I/AAAAAAAAC_I/IWgWpL1HV8s/s400/Product+Life+Cycle+Apple+vs+Amazon.PNG" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><i>Product Life Cycle Amazon vs Apple</i></td></tr>
</tbody></table>
<br />
From rough estimate, Amazon has some seasonal products such as summer
ware. They can only sell it for 3 months max. The life of Apple's key
products are way more than 12 months. It goes without saying that demand
forecast of seasonal, short life cycle products is very very difficult
to estimate.</div>
<div>
</div>
<div>
As you may notice, based on example characteristics, Amazon's Supply Chain is far more complicated than that of Apple Inc.</div>
<div>
</div>
<b><u>4) Conclusion</u></b><br />
The results from the analysis of Apple's processes, challenging issues
and complexities indicates that the success of its supply chain
operations depends on how well they manage supplier relationship. This
includes early supplier involvement in new product development, close
communication and supplier performance improvement/evaluation. Then,
Apple Inc is dubbed as "<i>King of Outsourcing</i>".<br />
<br />
In your opinion, does Apple Supply Chain deserve the number one spot?<br />
<br />
<a href="http://bx.businessweek.com/strategic-management/view?url=http%3A%2F%2Fwww.scm-operations.com%2F2012%2F10%2Fapple-supply-chain-case-study.html">Source </a>Pusin PPM Manajemenhttp://www.blogger.com/profile/18207522539634214763noreply@blogger.com0tag:blogger.com,1999:blog-33918170772039001.post-81995769880149490082012-10-21T23:27:00.001-07:002012-10-21T23:27:10.859-07:00Procurement -- Subcontracting and Product Quality in China<a href="http://knowledge.wharton.upenn.edu/index.cfm?fa=viewfeature&id=2004">Procurement -- Subcontracting and Product Quality in China</a>: Marshall W. Meyer, professor of management at Wharton, has made many trips to China to research the rapid growth of its economy and the successes and difficulties it has had in growing so quickly. In this interview, Meyer discusses the recent controversy surrounding China's exports of substandard toys and pharmaceuticals to the United States, and the implications for supply-chain management.Pusin PPM Manajemenhttp://www.blogger.com/profile/18207522539634214763noreply@blogger.com0tag:blogger.com,1999:blog-33918170772039001.post-64723098534140355862012-10-21T23:26:00.001-07:002012-10-21T23:26:15.907-07:00Raising the Bar: Can China Meet the Quality Challenge?<a href="http://knowledge.wharton.upenn.edu/index.cfm?fa=viewfeature&id=2252">Raising the Bar: Can China Meet the Quality Challenge?</a>: After being stung by consumer backlash and stiffer penalties for piracy, counterfeiting and contamination, China is working hard to overcome its reputation for poor quality. Many experts see quality issues as the simple growing pains of an accelerating economy. After all, China already makes high-quality products such as iPods. The challenge today for foreign partners: How to set and enforce effective quality benchmarks.Pusin PPM Manajemenhttp://www.blogger.com/profile/18207522539634214763noreply@blogger.com0tag:blogger.com,1999:blog-33918170772039001.post-12704611600225885762012-10-21T23:25:00.001-07:002012-10-21T23:25:58.448-07:00Chinese Manufacturing in an Age of Resource Price Volatility<a href="http://knowledge.wharton.upenn.edu/index.cfm?fa=viewfeature&id=2253">Chinese Manufacturing in an Age of Resource Price Volatility</a>: China is slowly moving away from energy subsidy policies that hold down prices -- especially for industry. Those subsidies protected exporters from devastation when energy prices shot up to record-setting levels in 2008 and helped to keep social unrest somewhat under wraps. No one knows for sure how far China will go in reducing energy subsidies for business in the future, but China could use subsidy policies as a tool in pushing particular industries away from low-value exports that generate a lot of waste to higher-value goods that produce less waste.Pusin PPM Manajemenhttp://www.blogger.com/profile/18207522539634214763noreply@blogger.com0tag:blogger.com,1999:blog-33918170772039001.post-25023374218789446352012-09-17T01:02:00.001-07:002012-09-17T01:02:18.801-07:00Winning in Two Worlds: Supply Chain Flexibility<a href="http://knowledge.wharton.upenn.edu/index.cfm?fa=viewfeature&id=2683">Winning in Two Worlds: Supply Chain Flexibility</a>: Companies must create adaptable supply chains in a two-speed world that work for both slow- and fast-growing markets -- without sacrificing sales volumes or margins. In high-growth emerging economies, this often means creating high volumes of low-cost -- and sometimes low-margin -- products, and distributing them at the lowest possible cost. In low-growth developed economies, supply chains must enhance efforts to defend or steal market share through better and faster innovation, and exceptional service.Pusin PPM Manajemenhttp://www.blogger.com/profile/18207522539634214763noreply@blogger.com0tag:blogger.com,1999:blog-33918170772039001.post-33815020378408888642012-09-17T00:58:00.001-07:002012-09-17T00:58:31.016-07:00The Lean Evolution: From Factory Floor to Service Centers -- and Beyond<a href="http://knowledge.wharton.upenn.edu/index.cfm?fa=viewfeature&id=2375">The Lean Evolution: From Factory Floor to Service Centers -- and Beyond</a>: Toyota's legendary lean production system emerged after World War II and transformed the auto industry. Since then, lean principles have moved into every area of an organization and every industry. One Wharton professor remembers trying to talk with hospitals about lean initiatives several years ago. "They thought I was evil. They said, 'We're doctors. We help people. We are not Toyota!' Now these same institutions have chief medical officers saying, 'We want to run this place like Toyota!'"Pusin PPM Manajemenhttp://www.blogger.com/profile/18207522539634214763noreply@blogger.com0tag:blogger.com,1999:blog-33918170772039001.post-8685074946005099522012-09-17T00:56:00.001-07:002012-09-17T00:56:57.615-07:00Manufacturing in a Two-speed World<a href="http://knowledge.wharton.upenn.edu/index.cfm?fa=viewfeature&id=2682">Manufacturing in a Two-speed World</a>: Whether a company operates in a high-growth or slow-growth market, lean products and systems are a must. They allow companies in low-growth markets to respond quickly to customer needs, and in high-growth markets they keep costs down while supporting customization and rapid increases in output when needed. Another step up in efficiency: shared production platforms that allow high-end and low-end products to be built at the same facility -- sometimes even on the same assembly line. But all of these considerations -- including geographic location and labor costs -- must be balanced against logistical costs and risks. Customers want lower cost <i>and</i> quick delivery.Pusin PPM Manajemenhttp://www.blogger.com/profile/18207522539634214763noreply@blogger.com0tag:blogger.com,1999:blog-33918170772039001.post-16500766097138382782012-09-17T00:50:00.001-07:002012-09-17T00:50:43.845-07:00The Value of Collaborative Forecasting in Supply Chains<a href="http://msom.journal.informs.org/cgi/content/short/14/1/82?rss=1">The Value of Collaborative Forecasting in Supply Chains</a>: <br />
Motivated by the mixed evidence concerning the adoption level and value of collaborative forecasting (CF) implementations in retail supply chains, in this paper, we explore the conditions under which CF offers the highest potential. We consider a two-stage supply chain with a single supplier selling its product to consumers through a single retailer. We assume that both the supplier and the retailer can improve the quality of their demand forecasts by making costly forecasting investments to gather and analyze information. First, we consider a <i>noncollaborative</i> model where the supplier and the retailer can invest in forecasting but do not share forecast information. Next, we examine a <i>collaborative forecasting</i> model where the supplier and the retailer combine their information to form a single shared demand forecast. We investigate the value of CF by comparing each party's profits in these scenarios under three contractual forms that are widely used in practice (two variations of the simple wholesale price contract as well as the buyback contract). We show that for a given set of parameters, CF may be Pareto improving for none to all three of the contractual structures, and that the Pareto regions under all three contractual structures can be expressed with a unifying expression that admits an intuitive interpretation. We observe that these regions are limited and explain how they are shaped by the contractual structure, power balance, and relative forecasting capability of the parties. To determine the specific value of collaborative forecasting as a function of different factors, we carry out a numerical analysis and observe the following. First, under noncoordinating contracts, improved information as a result of CF has the added benefit of countering the adverse effects of double marginalization in addition to reducing the cost of supply–demand mismatch. Second, one may expect the value of CF to increase with bargaining power, however this does not hold in general: The value of CF for the newsvendor first increases and then decreases in his bargaining power. Finally, whereas one may expect CF to be more valuable under coordinating contracts, rather than a simple wholesale price contract that is prone to double marginalization, the <i>magnitude of the gain</i> from CF is in many cases higher in the absence of quantity coordination.Pusin PPM Manajemenhttp://www.blogger.com/profile/18207522539634214763noreply@blogger.com0tag:blogger.com,1999:blog-33918170772039001.post-37042204658565168522012-09-03T21:38:00.001-07:002012-09-03T21:38:43.294-07:00Manufacturing Resource Productivity <br />
<div class="separator" style="clear: both; text-align: center;">
<a href="http://w1.siemens.com.cn/manufacturing-management-en/images/improve-productivity-tia-innovation-532x299.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="179" src="http://w1.siemens.com.cn/manufacturing-management-en/images/improve-productivity-tia-innovation-532x299.jpg" width="320" /></a></div>
<span class="cHead">Rapid growth in</span> emerging markets is causing a
dramatic increase in demand for resources, and supplies of many raw
materials have become more difficult to secure. Commodity prices are
likely to continue to rise and will remain volatile. Manufacturers are
already feeling the effects in their operations and bottom lines, and
these challenges will persist, if not intensify. <br />
<br />
Consequently, manufacturers’ variable costs have increased. Between 2000
and 2010, for instance, the variable costs of one Western steel company
rose from 50 to 70 percent of its total production expenses, mainly due
to jumps in commodity prices. For one Chinese steel company, 90 percent
of production costs are now variable. And for a manufacturer of LCD
televisions, energy represents 45 percent of the total cost of
production. <br />
<br />
But companies that take steps to increase resource productivity could
unlock significant value, minimizing costs while establishing greater
operational stability. Our experience suggests that manufacturers could
reduce the amount of energy they use in production by 20 to 30 percent.
They could also design their products to reduce material use by 30
percent while increasing their potential for recycling and reuse. <br />
<br />
Indeed, companies could cut their product costs in half by reusing
materials and components. Some companies have even begun to pioneer new
business models that enable them to retain ownership of the materials
used in the products they sell. This can involve establishing mechanisms
that prompt customers to return a product to its manufacturer at the
end of its consumer utility, enabling the manufacturer to extract
additional value from it. <br />
<br />
A number of manufacturers have launched resource-productivity
initiatives that are already paying dividends. But most efforts focus on
operational slivers within the four walls of their business, and
classic improvement approaches—such as lean manufacturing and
material-and-information-flow analysis—typically fail to fully address
energy or resource costs and constraints. Because they lack a systematic
approach that focuses attention on resources throughout the value
chain, manufacturers have tended to think narrowly about what is
actually a broad landscape of opportunity. <br />
<br />
This article offers a practical set of tools to help manufacturers and
waste-management companies capture the resource-productivity prize.
Manufacturers are likely to achieve the quickest impact if they start by
focusing on their areas of core competency. But to secure the full
value of their efforts, companies must optimize their operations for
resource productivity in four broad areas that cut across their business
and industry: production, product design, value recovery, and
supply-circle management
(see exhibit, and visit the McKinsey & Company Web site for a <a href="http://www.mckinsey.com/Features/circular_economy" target="">full infographic</a> exploring opportunities for manufacturers to increase resource productivity).<a href="http://www.mckinseyquarterly.com/Operations/Manufacturing_resource__productivity_2982#footnote1" name="footnote1up"><sup>1</sup></a>
By taking a comprehensive approach to resource productivity, companies
can improve their economics while strengthening their value propositions
to customers and benefiting society as a whole.<br />
<br />
<a href="http://www.blogger.com/blogger.g?blogID=33918170772039001" id="1" name="1"></a>
<br />
<div class="exhibit exhibitThreeCol">
</div>
<h3 class="bHead">
Prioritize areas of high impact</h3>
<br />
Companies should first focus on activities within their operations,
where they can exercise the most control; they can turn their attention
later to activities that require the cooperation of other organizations,
customers, or other stakeholders. Specifically, companies should
prioritize the activities that offer the greatest potential for impact
given their position on the production circle.<br />
<br />
<span class="cHead"><b>Upstream manufacturers</b>.</span> Companies that are
focused primarily on transforming materials into inputs used by other
companies should start by optimizing production for resource
productivity. Such companies have the most to gain by reducing the
amount of material or energy they use in production. Indeed, the
operations of mining companies are often as much as 10 times more energy
intensive than the operations of companies that use their products. As a
second step, manufacturers should prioritize waste recovery, which can
enable them to secure access to materials through activities such as
recycling and reuse. <br />
<br />
<span class="cHead"><b>Downstream manufacturers</b>.</span> Companies focused
primarily on making components or final products should start by
optimizing their products in order to use materials more efficiently.
These companies will gain most by designing products to reduce material
requirements, minimize energy consumed while using them, and ensure they
are optimized to be recycled or reused at the end of their life cycle.
Downstream companies can also benefit from reducing the energy required
to manufacture their products, but this may be a second priority, since
the operations of downstream players are not as energy intensive as
those of upstream players. <br />
<br />
<span class="cHead"><b>Waste-management companies</b>.</span> Companies that
handle waste materials—including those that collect, process, and manage
waste—should start by optimizing processes and developing new markets
for material reuse. They should develop the sorting and collection
technologies and capabilities necessary to mine the highest-value
materials from the general waste stream at the lowest possible cost.
They should also develop business models to help other companies with
their material-sourcing and reuse strategies.<br />
<br />
<h3 class="bHead">
Optimize for resource productivity</h3>
<br />
Depending on where they are located on the production circle,
companies should prioritize four broad areas for resource productivity:
production, product design, value recovery, and supply-circle
management. <br />
<h4 class="bHead">
Production</h4>
Most manufacturers have already made tremendous gains by implementing
programs to improve labor and capital productivity (for example,
through lean manufacturing). Such efforts can improve resource
productivity if they are adapted to include criteria for reducing the
consumption of energy and raw materials. Here we focus on energy—a
particular concern for upstream manufacturers, since energy costs can
account for as much as 20 percent of their overall production costs.
Manufacturers can take four steps to increase energy productivity. <br />
<br />
First, companies can adapt the methodology for lean-value-add
identification to map energy consumption at every step of their
operating processes. This will enable them to calculate the
thermodynamically minimum energy required and evaluate actual
consumption relative to this theoretical limit (an approach known as
“pinch analysis”). The analysis reveals where energy is wasted and how
losses can be avoided. <br />
One US surfactant maker that conducted a heat-value-add analysis found
that only 10 percent of its steam-heat inputs were thermo-dynamically
required to make its products; 90 percent were wasted. The manufacturer
implemented about 20 measures and captured steam savings worth 30
percent of its baseline energy costs, enabling it to recoup what it
invested to launch the effort within three years. One measure, which
involved implementing a new software algorithm to control the company’s
heating and cooling control loop, enabled it to reduce its need for
steam by 5 percent. Another company, a car manufacturer, reduced the
amount of energy it used in assembly by 15 percent by optimizing
ventilation processes. <br />
<br />
Second, moving beyond pinch analysis, companies can extend their lean
programs to improve energy efficiency by optimizing energy integration
in heating and cooling operations. For instance, one chemical company
changed its process to release heat more quickly during polymerization,
allowing evaporation to start sooner, thus reducing the energy it used
in the subsequent drying stage by 10 percent. <br />
<br />
Third, companies can use lean approaches to identify process-design and
equipment changes that can deliver greater energy efficiency. One
Chinese steel mill saved 8 million renminbi (about $1.2 million)
annually by lowering the leveling bar in a coke furnace an extra few
centimeters, which reduced the mill’s total energy cost by 0.4 percent.
The mill achieved an additional 5 million renminbi ($730,000) in annual
savings by adding an insulation layer to ladles used in steelmaking.<br />
<br />
Fourth, lean-energy approaches can eliminate waste and capture savings
by optimizing the interface between producers—for example, steam-boiler
operators, cooling-water-unit operators, and power suppliers—and
consumers. One chemical plant managed to avoid a $2 million investment
to increase its boiler capacity by improving consumption
planning—specifically, ensuring that demand would not pass the threshold
that triggered pressure drops during demand spikes. <br />
<h4 class="bHead">
Product design</h4>
By incorporating energy and materials parameters into their
product-design approaches, companies could reduce the use of materials
that are hazardous, nonrenewable, difficult to source, or expensive.
Changes to product design could increase opportunities for recycling and
reusing components and materials at the end of a product’s life cycle.
And designers could prioritize the incorporation of sustainable features
into their products to reduce the impact products have on the
environment. These principles constitute a philosophy known as “circular
design,” which extends beyond products to systems and business models. <br />
Companies that take these steps could reduce costs and facilitate
compliance with regulations while bolstering their reputation and
building relationships with consumers and other stakeholders.
Additionally, they can often expand existing “design to cost”
methodologies to quantify the financial or brand impact of incorporating
sustainable features in their products. <br />
<br />
Several approaches touch on product design: for example, companies can
conduct product teardowns, disassembling and analyzing competitors’
products to identify opportunities to increase resource productivity;
they can use linear performance pricing, which enables comparisons among
product attributes that provide different levels of performance for
users; or they can pursue “design for manufacturing,” which involves
optimizing product design to minimize the resources needed during
manufacturing and assembly. <br />
<br />
One manufacturer, for example, redesigned its shampoo bottles so that
they were thinner—but still met strength specifications—and reduced
material consumption by 30 percent. The bottle’s new shape enabled
higher packing density during shipping, and with a flat “hat,” it could
be stored upside down, allowing customers to more easily extract all of
its contents before disposal. The cap was redesigned to use the same
material as the rest of the bottle, thus eliminating the need to
separate materials before they could be recycled. The manufacturer also
optimized the bottle’s production process to reduce cycle time by 10
percent. <br />
<br />
In another example, a vehicle manufacturer redesigned its forklifts to
reduce fuel consumption and total cost of ownership for customers.
Analysis showed that it could either redesign the power train or reduce
the weight of the forklift to achieve its goal, but the power-train
option was costly and complex. To reduce the weight of the forklift, the
company increased the leverage of the cast-iron counterweight used to
provide stability during lifting. This removed 200 kilograms (almost 450
pounds) of cast iron with no sacrifice in stability, which in turn
allowed the manufacturer to reduce fuel requirements by 4 percent and
cut material costs by $200 per vehicle. <br />
<br />
And a home-appliance manufacturer analyzed its competitors’ coffee
makers and discovered an opportunity to improve heating efficiency by
adjusting the insulation of hot pipes and optimizing the flow of water.
It also changed the mounting of the heating system, using springs rather
than screws, to make it easier to separate materials during recycling.
Combined, these adaptations resulted in a product with an improved
footprint at a lower production cost; such “win win” opportunities are
not uncommon when focusing on resource productivity. <br />
<h4 class="bHead">
Value recovery</h4>
Companies may find they can satisfy their resource needs by recycling
and reusing materials historically discarded as waste. Those involved
in waste management have an opportunity to pave the way by developing
services that allow manufacturers to capture value from materials left
over after production or after a product has reached the end of its life
cycle. <br />
<br />
Great technological advances have been achieved in recycling, organics
processing, and waste- to-energy conversion, and these have revealed
opportunities in material and component recovery. Modern facilities
recover much more material than was possible using manual systems, and
they produce recyclates of a quality well above that required by most
recycling protocols. These facilities can sort large volumes of varied
waste, separating the valuable materials from those of less worth. They
can also adjust sorting criteria to optimize selection based on scrap
values in the spot market. <br />
<br />
Waste-collection operators and recyclers should focus on building new
business models by working with manufacturers to identify and develop
opportunities for value recovery. This could involve helping
manufacturers design products and production processes to facilitate
material reuse; it could also involve helping develop logistical
solutions that allow manufacturers to incorporate recovered material in
their production cycle. Companies such as Veolia Environnement and SUEZ
ENVIRONNEMENT have already begun to transform themselves from waste
operators into raw-materials and energy suppliers, in part by advising
other companies on how to design products that can more readily be
recycled and reused. <br />
<h4 class="bHead">
Supply-circle management</h4>
Many of the activities that affect resource productivity and
sustainability—such as acquiring and transporting raw materials,
assembling parts used in the manufacturing process, and using and
disposing of final products—take place outside the walls of
manufacturers’ facilities. Although companies do not have exclusive
control over these activities, they can exercise their influence to
increase the productivity of their supply chains. <br />
<br />
To that end, companies could transform their supply chains into supply
circles. Whereas the phrase “supply chain” may evoke an image in which
materials are collected in one place and ultimately disposed of in
another, the phrase “supply circles” emphasizes that materials can be
looped back into the production process after they have fulfilled their
utility over the life of a product. <br />
<br />
Companies looking to make this shift should first develop a complete
understanding of their supply footprint. This involves considering not
only which materials are used and in what volumes, but also how much
energy is required to use them and what impact they have on the
environment. The analysis enables companies to identify areas for
improvement in internal, as well as supplier, operations. Companies can
use the analysis to manage suppliers, reduce costs, and mitigate the
risks posed by potential regulatory changes, supply scarcity, and
volatile commodity prices—and to help initiate conversations with
suppliers that could result in strategic relationships that enhance the
capabilities of each party. <br />
<br />
In most cases, a footprint analysis will reveal “hot spots” for
manufacturers to prioritize to achieve environmental and economic
impact. For example, one beverage producer realized that more than 35
percent of the carbon dioxide emissions generated to produce a
half-gallon container of juice came from producing and applying
fertilizer to groves where the fruit was grown. It became clear that
working with farmers to reduce fertilizer use was one of the most
important steps to take to minimize the company’s carbon footprint. <br />
<br />
Companies will benefit from adopting tools to monitor and manage their
supply circles. Supplier scorecards and environmental profit and loss
(EP&L) statements can be used to place a monetary value on
environmental impact. Puma, for instance, developed an EP&L
statement and pledged that by 2015, half its international product lines
would be manufactured according to its sustainability standard. One
objective is to ensure that its suppliers use more sustainable
materials, such as recycled polyester. Desso, a European carpet
manufacturer, substantially increased its market share and profits after
it received Cradle to Cradle Certification for its entire product line.
<br />
<br />
In a resource-constrained world, value creation moves toward the owners
of the resources. Companies should therefore consider developing new
business models that enable them to retain ownership of the materials
used in their products so that they can recycle or reuse the product at
the end of its life cycle. This could enable companies to reduce supply
risks while creating high-margin profit centers. The Ellen MacArthur
Foundation championed this approach in a recent report, calling on
companies to evolve from selling products to selling the services those
products provide.<a href="http://www.mckinseyquarterly.com/Operations/Manufacturing_resource__productivity_2982#footnote2" name="footnote2up"><sup>2</sup></a>
Chemical-catalyst manufacturers have done this for decades, essentially
selling the functionality of catalysts to customers without
transferring ownership of the materials themselves. <br />
<br />
One lead-acid-battery manufacturer built a competitive cost advantage by
controlling not only battery production but also post-use collection,
disassembly, and reprocessing of batteries; control of the lead cycle
gives the company access to a low-cost source of raw materials. To take
an example from another industry, European manufacturers of household
appliances and furniture are shifting their business models from
customer ownership to lease agreements.<a href="http://www.mckinseyquarterly.com/Operations/Manufacturing_resource__productivity_2982#footnote3" name="footnote3up"><sup>3</sup></a> <br />
<br />
Upstream extraction and processing companies could play the same game.
Steel mills could retain ownership of the steel they sell and thereby
reduce their exposure to prices for iron ore and coal. And
waste-management companies may have opportunities to form joint ventures
with manufacturers to retain ownership of the materials they sell back
into the supply circle.<br />
<div class="endArticle">
<br /></div>
<div class="endArticle">
Over the past decade, supplies of various natural
resources have become scarcer, and thus more expensive and subject to
price volatility, increasing manufacturers’ costs and risks.
Nevertheless, the changing resource landscape also creates
opportunities. To capture them, companies must embark on a journey to
transform their operations and dramatically increase resource
productivity. They will have to dedicate as much effort to optimizing
resources in the future as they did to lean and other improvement
initiatives in the past, while at the same time rethinking their
business models to capture the value residing in resource ownership. If
they get it right, the effort will enable them to increase the stability
of supply and manage their costs while developing new products— and
even lines of business—that generate sustainable bottom-line value.</div>
<a href="http://www.blogger.com/blogger.g?blogID=33918170772039001" id="AboutTheAuthors" name="AboutTheAuthors"></a>
<br />
<div class="aboutAuthors">
<h5>
About the Authors</h5>
<b>Stephan Mohr</b> is an associate principal in McKinsey’s Munich office, <b>Ken Somers</b> is a consultant in the Antwerp office, <b>Steven Swartz</b> is a principal in the Chicago office, and <b>Helga Vanthournout</b> is a consultant in the Geneva office.</div>
<div class="backToTop">
</div>
<div class="notes">
<h6>
Notes</h6>
<div class="footnote">
<a href="http://www.mckinseyquarterly.com/Operations/Manufacturing_resource__productivity_2982#footnote1up" name="footnote1"><sup>1</sup></a>
We use the phrase “supply circle” in place of “supply chain” because it
more accurately reflects the closed-circle, end-to-end shifts in
manufacturing processes and objectives that will be necessary to realize
value in a resource-constrained world.
</div>
<div class="footnote">
<a href="http://www.mckinseyquarterly.com/Operations/Manufacturing_resource__productivity_2982#footnote2up" name="footnote2"><sup>2</sup></a><a href="http://www.thecirculareconomy.org/" target=""><i>Towards the Circular Economy: Economic and Business Rationale for an Accelerated Transition</i></a>, Ellen MacArthur Foundation, January 2012.
</div>
<div class="footnote">
<a href="http://www.mckinseyquarterly.com/Operations/Manufacturing_resource__productivity_2982#footnote3up" name="footnote3"><sup>3</sup></a>
In the United States, a rental and rent-to-own industry already exists,
though it is largely independent of manufacturers and not part of their
supply circles.
</div>
</div>
Pusin PPM Manajemenhttp://www.blogger.com/profile/18207522539634214763noreply@blogger.com0