Page 27 - DMGT523_LOGISTICS_AND_SUPPLY_CHAIN_MANAGEMENT

Logistics and Supply Chain Management

Notes and workmen. The PSGs maintained problems record register and recorded 126 problems
in the first month itself. Sharma identified some problem areas such as rework, storage
and handling damages, shortage of components and workmen sitting idle.
He found that 65% of the problems were due to inferior quality of components supplied
by the vendors. Sharma surveyed the vendor’s production units to check whether proper
testing was done at the suppliers’ site or not. Surprisingly, he found that the quality
testing system (inspection tools) of vendor’s was not at par with the desired standards. To
rectify this problem, the company designed certain customized calibrated gauges and
distributed to the vendors and also organized awareness camps at the plant and
demonstrated methods of quality check. To avoid storage and handling damages and
wastage time, DELTA-SIGMA provided customized racks and bins to the vendors for
specific components. Vendors started supplying the finished components in these racks to
the company and racks were moved directly to the shop floor, which reduced loading and
unloading time dramatically. The empty racks were sent back to vendors. Sharma also
explored the vendors who could supply complete subassembly to the company. This
would minimize the problem of rework as well as shortage of component. In case of
sudden purchase orders from the SIGMA-DELTA, many a time’s vendors had shown their
inability to supply the components on time. More vendors were explored. Some items
were being procured from Bangalore and it took around 48 hours to deliver the components
and they were suggested to identify warehouses near the plant to reduce the lead-time.
In order to minimize the workman sitting idle time, work-study was conducted. It was
found that improper movement of overhead cranes in assembly lines and shortage of
components were the major reasons. For optimum movement of cranes an amendment
was done to the layout. To identify the critical assembly points, PERT/CPM analysis was
also done. Workers were segregated on the basis of their specialization. Skilled workers
were given responsibility in each sub-assembly on the basis of their primary and secondary
specialization. Soon it was found that limitations of manual production scheduling were
being eliminated and ERP facilitated overcoming the irregularities of placing an order.
The assembly shop productivity was improved by 30%, rework was reduced from 9.6 to
2.1% and process capability was maintained above 1.33. Sharma was quite satisfied with
the output and was wondering what else should be done for future.
Questions

1. Comment on the merging of the three departments like Purchase, Quality Inspection
and Production.
2. Did the organization take right steps towards implementing ERP System?

3. If you were in Sharma’s place, what other strategies you would have adopted to
cope up with the fluctuating demands and strengthening the supply chain?
Source: Upendra Kachru, (2010), “Exploring the Supply Chain,” Excel Books

1.7 Summary

 ‘Supply Chain Management’ can be defined as the active management of supply chain
activities to maximize customer value and achieve a sustainable competitive advantage.
 Members of the supply chain act as partners who are “linked” together through both
physical and information flows.
 The general concept of an integrated supply chain is typically illustrated by a line diagram
that links participating firms into a coordinated competitive unit.

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