المملكة العربية السعودية وزارة التعليم الجامعة السعودية اإللكترونية Kingdom of Saudi Arabia Ministry of Education Saudi Electronic University College of Administrative and Financial Sciences Assignment 2 MGT322 (3rd Term 2022-2023) Deadline: 03/6/2023 @ 23:59 Course Name: Logistics Management Course Code: MGT322 Student’s Name: Semester: 3rd CRN: Student’s ID Number: Academic Year: 1444 H (2022-2023) IIIrd Term For Instructor’s Use only Instructor’s Name: Students’ Grade: /15 Level of Marks: High/Middle/Low Instructions – PLEASE READ THEM CAREFULLY • • This assignment is an individual assignment. Due date for Assignment 2 is 3/06/2023 • The Assignment must be submitted only in WORD format via allocated folder. • Assignments submitted through email will not be accepted. • Students are advised to make their work clear and well presented, marks may be reduced for poor presentation. This includes filling your information on the cover page. • Students must mention question number clearly in their answer. • Late submission will NOT be accepted. • Avoid plagiarism, the work should be in your own words, copying from students or other resources without proper referencing will result in ZERO marks. No exceptions. • All answered must be typed using Times New Roman (size 12, double-spaced) font. No pictures containing text will be accepted and will be considered plagiarism). • Submissions without this cover page will NOT be accepted. المملكة العربية السعودية وزارة التعليم الجامعة السعودية اإللكترونية Kingdom of Saudi Arabia Ministry of Education Saudi Electronic University College of Administrative and Financial Sciences Logistics Management ASSIGNMENT -2 Submission Date by students: Before the end of Week- 11th Place of Submission: Students Grade Centre Weight: 15 Marks Learning Outcome: 1. Demonstrate an understanding of how global competitive environments are changing supply chain management and logistics practice. 2. Apply essential elements of core logistic and supply chain management principles. 3. Analyze and identify challenges and issues pertaining to logistical processes. Assignment Workload: This assignment is an individual assignment. Critical Thinking The global marketplace has witnessed increased pressure from customers and competitors in manufacturing as well as the service sector (Basu, 2001; George, 2002). Due to the rapidly changing global marketplace, only those companies will be able to survive that will deliver products of good quality at a cheaper rate to achieve their goal companies try to improve performance by focusing on cost-cutting, increasing productivity levels, and quality and guaranteeing deliveries in order to satisfy customers (Raouf, 1994). Increased global competition leads the industry to increase efficiency by means of economies of scale and internal specialization so as to meet market conditions in terms of flexibility, delivery performance and quality (Yamashina, 1995). The changes in the present competitive business environment are characterized by profound competition on the supply side and keen indecisive in customer requirements on the demand side. These changes have left their distinctive marks on the different aspect of the manufacturing organizations (Gomes et al., 2006). With this increasingly global economy, cost-effective manufacturing has become a requirement to remain competitive. Kingdom of Saudi Arabia Ministry of Education Saudi Electronic University المملكة العربية السعودية وزارة التعليم الجامعة السعودية اإللكترونية College of Administrative and Financial Sciences To meet all the challenges organizations, try to introduce different manufacturing and supply techniques. Management of organizations devotes their efforts to reducing manufacturing costs and improving the quality of the product. To achieve this goal, different manufacturing and supply techniques have been employed. The last quarter of the 20th century witnessed the adoption of world-class, lean and integrated manufacturing strategies that have drastically changed the way manufacturing firms leads to improvement of manufacturing performance (Fullerton and McWatters, 2002). Read textbook chapter 7 or secondary data on the internet and answer the following questions. Question: 1. Differentiate between lean Thinking and the JIT model. Why have Manufacturing Companies adopted Lean Thinking and the JIT model? (3.5 Marks) 2. Briefly describe major types of Waste, out of all types of waste which one is the biggest waste companies must keep in mind during production. (3.5 Marks) 3. What are the benefits from Suppliers to end users for using lean thinking? Assess the reasons (suitable examples), (3.5 Marks) 4. The arrival of artificial intelligence. The agile supply chain is a perfect concept for future SCM? Give reasons with suitable examples. (3.5 Marks) 5. Reference ((1.0 Marks)) Each answer should be within the limit of 250- 300 words. The Answer must follow the outline points below: • Lean Thinking and JIT Concept • Agile Supply chain • Their Main functions • Reasons with suitable Examples • Reference Kingdom of Saudi Arabia Ministry of Education Saudi Electronic University المملكة العربية السعودية وزارة التعليم الجامعة السعودية اإللكترونية College of Administrative and Financial Sciences Ans 1: Ans 2: Ans 3: Ans 4: Saudi Electronic University Logistics Management Chapter 7 Chapter 7: Just-in-time and the agile supply chain Chapter 7: Just-in-time and the agile supply chain Chapter 7: Just-in-time and the agile supply chain 7.1 Just-in-time and lean thinking Just-in-time is actually a broad philosophy of management that seeks to eliminate waste and improve quality in all business processes. The partial view of JIT is an approach to material control based on the view that a process should operate only when a customer signals a need for more parts from that process. Chapter 7: Just-in-time and the agile supply chain 7.1 Just-in-time and lean thinking A supply network can be conceived of as a chain of customers, with each link coordinated with its neighbours by JIT signals. The two systems of controlling materials can be distinguished as follows: • Pull scheduling: a system of controlling materials whereby the user signals to the maker or provider that more material is needed. Material is sent only in response to such a signal. • Push scheduling: a system of controlling materials whereby makers and providers make or send material in response to a pre-set schedule, regardless of whether the next process needs them at the time. Chapter 7: Just-in-time and the agile supply chain 7.1.1 The just-in-time system Chapter 7: Just-in-time and the agile supply chain 7.1 Just-in-time and lean thinking 7.1.2 The seven wastes There are seven total types of waste: • The waste of overproduction • The waste of waiting • The waste of transporting • The waste of inappropriate processing • The waste of unnecessary inventory • The waste of unnecessary motions • The waste of defects Chapter 7: Just-in-time and the agile supply chain 7.1 Just-in-time and lean thinking 7.1.3 JIT and material requirements planning • MRP is a logical and systematic way of planning materials. • It links downstream demand with manufacture and with upstream supply. • It can handle detailed parts requirements, even for products that are made infrequently and in low volumes. • On the other hand, MRP is based on a centrally controlled, bureaucratic approach to material planning. • JIT pull scheduling is good at handling relatively stable demand for parts that are made regularly. • JIT has become associated with jidoka, the Japanese way of cutting out waste, doing the simple things well and getting better every day. Chapter 7: Just-in-time and the agile supply chain 7.1 Just-in-time and lean thinking 7.1.4 Lean thinking • The term lean thinking refers to the elimination of waste in all aspects of a business. • Lean thinking is a cyclical route to seeking perfection by eliminating waste (the Japanese word is muda) and thereby enriching value from the customer perspective. • The end-customer should not pay for the cost, time and quality penalties of wasteful processes in the supply network. • Four principles are involved in achieving the fifth, seeking perfection: ● specifying value; ● identifying the value stream; ● making value flow; ● pull scheduling. Chapter 7: Just-in-time and the agile supply chain Chapter 7: Just-in-time and the agile supply chain 7.1 Just-in-time and lean thinking 7.1.4 Lean thinking SPECIFY VALUE • Value is specified from the customer perspective. • From the end-customer perspective, value is added along the supply network as raw materials from primary manufacture are progressively converted into finished product bought by the end-customer, such as the aluminium ore being converted into one of the constituents of a can of coke • From a marketing and sales perspective the can of coke should be ‘always within reach of your thirst’. Chapter 7: Just-in-time and the agile supply chain 7.1 Just-in-time and lean thinking 7.1.4 Lean thinking IDENTIFY THE VALUE STREAM • Following on from the concept of value, the next principle is to identify the whole sequence of processes along the supply network. MAKE VALUE FLOW • Minimising delays, inventories, defects and downtime supports the flow of value in the supply network. Simplicity and visibility are the foundations to achieving these key factors. Chapter 7: Just-in-time and the agile supply chain 7.1 Just-in-time and lean thinking 7.1.4 Lean thinking PULL SCHEDULING • Enforce the rules in section 6.1: make only in response to a signal from the customer (the next process) that more is needed. • This implies that demand information is made available across the supply chain. • Supply from manufacturing, not from stock. • Use customer orders not forecasts. Chapter 7: Just-in-time and the agile supply chain 7.1 Just-in-time and lean thinking 7.1.5 Application of lean thinking to business processes Working back from the customer, a focal firm should consider the following processes: ● order to replenishment; ● order to production; ● product development Chapter 7: Just-in-time and the agile supply chain 7.1 Just-in-time and lean thinking 7.1.6 Role of lean practices Lean thinking is associated with a number of operational practices that help to deliver the aim of waste minimisation. Two of the most significant are: • small-batch production; • rapid changeover. These two practices are closely associated with each other, but are considered separately here to aid clarity. Chapter 7: Just-in-time and the agile supply chain 7.2 The concept of agility • The ‘agile supply chain’ is an essentially practical approach to organising logistics capabilities around end-customer demand. • It is about moving from supply chains that are structured around a focal company and its operating guidelines towards supply chains that are focused on end customers Chapter 7: Just-in-time and the agile supply chain 7.2 The concept of agility Capabilities of the supply networks are ‘all about flexibility, response time, small production runs, small minimum order quantities, and the ability to shift direction as the trends move’. While some of these ideas reflect JIT approaches, the key is to organise logistics from the customer order back – or ‘outside in’ – as opposed to pushing product-service offerings into the market – or ‘inside out’. Important requirements for that change in mindset include: ● A relentless focus on drivers of customer value in all logistics processes. ● Developing capabilities for responsiveness and flexibility in advance. ● Using those capabilities to align supply chains operations in a dynamic manner Chapter 7: Just-in-time and the agile supply chain Chapter 7: Just-in-time and the agile supply chain 7.2 The concept of agility Supply capabilities Allocation of finished goods to given customer orders is a familiar way of responding quickly to demand – for example, selling cars from a dealer forecourt. But this approach to supply means that inventories of finished goods must first be built up. The problem is that they must be built up in anticipation of unknown demand. If stocks pushed by a manufacturer onto its dealer network are too high, they will have to be discounted. If they are too low, sales are lost to competitors. Delaying the exact specification of the car until the customer order is known, and then delivering it within an acceptable D-time, is called form postponement. The concept of ‘postponement’ is now increasingly widely employed by organisations in a range of industries (van Hoek, 2001). Chapter 7: Just-in-time and the agile supply chain 7.2 The concept of agility Postponement is widely used to improve responsiveness, and is defined (Skipworth and Harrison, 2004) as: The delay, until end-customer orders are received, of the final part of the transformation processes, through which the number of skus proliferates, and for which only a short time period is available. poned transformation processes may be manufacturing processes, assembly processes, configuration processes, packaging or labeling processes. Chapter 7: Just-in-time and the agile supply chain Chapter 7: Just-in-time and the agile supply chain 7.2 The concept of agility 7.2.1 Classifying operating environments Chapter 7: Just-in-time and the agile supply chain 7.2 The concept of agility 7.2.2 Preconditions for successful agile practice • There is another set of factors that need to be in place for the agile principles and practices to pay off or work at all. • These are cross-functional alignment and enterprise level focus on the contribution of logistics management and strategy. • Before investing in agile capabilities, it is important to do an • enterprise-level reality check and • a cost of complexity sanity check Chapter 7: Just-in-time and the agile supply chain 7.2 The concept of agility 7.2.2 Preconditions for successful agile practice Lowering the cost of complexity: avoiding overly expensive agility • The purpose of responding to customer demand is fundamental to the role of logistics. In this sense, agility is a natural goal. • A key qualification is: not at any cost, nor to compensate for mismanagement elsewhere in the organisation. Chapter 7: Just-in-time and the agile supply chain 7.2 The concept of agility 7.2.2 Preconditions for successful agile practice Forecasting; reducing the need for last-minute crises • As important as fast response may be, organisations cannot make all of their operational decisions in real time and in response to events already taking place. • Some advanced preparation and planning is required. Hence, even in the most agile supply chains, forecasting is needed and can be used to avoid expensive panic shipments against orders that could have been anticipated. Chapter 7: Just-in-time and the agile supply chain 7.2 The concept of agility 7.2.2 Preconditions for successful agile practice Forecasting; reducing the need for last-minute crises There are several management approaches to forecasting that will enhance its accuracy and relevance. • A ‘one forecast’ approach • Ensure forecast accountability • Make forecasting business relevant • Use one process Chapter 7: Just-in-time and the agile supply chain 7.2 The concept of agility 7.2.3 Developing measures that put the end-customer first to improve market sensitivity All companies include customer service in some form in their performance measurement system. However, almost all operationalise this measurement internally, leading to responsiveness that is misguided and focused wrongly and limiting the network integration across the supply chain. GE changed its measurement set towards what it calls Span measurement. Span stands for the range of delivery around customer requested due dates. The experience of GE suggests the value of several actions to improve measurement for agility: ● Share measurement dashboards with customers. ● Do not measure against your own measures of success, ask the customer what defines success for them. ● Hold all parts of the supply chain accountable against the customerdefined measure of success so that there is no escape from market sensitivity. Chapter 7: Just-in-time and the agile supply chain 7.2 The concept of agility 7.2.4 Shared goals to improve virtual integration • Agility requires the ability to be able to respond to local market requirements and opportunities. • Companies should still aim to leverage skills and capabilities across the regions in which they operate. • This means they need to establish and strive for shared goals across their business units as a form of virtual integration, with local operations remaining in place and the focus remaining on local customer service. • Most often however, companies trend either towards local responsiveness or strong global standardisation and organisation. Chapter 7: Just-in-time and the agile supply chain 7.2 The concept of agility 7.2.5 Boundary spanning S&OP process to improve process integration • The purpose of the sales and operations planning is to set sales forecasts and to translate them into operations plans for sourcing, making, storing and delivering to demand. • It requires internal integration, at least between sales and operations, to make the process work. • Additionally, forecasting is not just a numbers game, it is a key business process that supports supply chain readiness for market demand. • Alcoa has made some great strides across very diverse business that are very autonomous in their markets to develop a boundary spanning S&OP process to support process and internal integration. Three aspects are particularly noteworthy: • Forecast by market and not business unit • Coordinate between source-make-deliver • Link forecasts to improvement goals Chapter 7: Just-in-time and the agile supply chain 7.2 The concept of agility 7.2.5 Boundary spanning S&OP process to improve process integration A few ground rules for effective S&OP tables include: ● all key functions need to attend mandatory (sales, finance, production, logistics, procurement) and additional function can be invited if needed (R&D, engineering); ● all attendees need to come with real decision-making authority and mandate for the table to become effective; ● the discussion needs to focus not just on generating a forecast but also on diagnosing forecast errors from the past to learn from them and discuss trade-offs; ● there needs to be a structured (standing) agenda and set of measures used (most typically including forecast error, forecasted volumes and sales amounts, capacity utilisation, new products and upcoming events, sku review).