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Exam: Case Study - Adidas Article Theme Digitisation (T8: Lean…
Exam: Case Study - Adidas Article Theme Digitisation
T3: Process design and analysis
Layout / location
Digitisation: Has made location less of a barrier but as organisation have embraced this idea to reduce costs, i.e. cheap labour, they have added other costs/barriers, i.e. transport costs or cultural communication issues
Adidas: Are applying 'fixed-position' methods to a product that is generally accepted to be more suitable to 'product layout'. If they can pull this off it will likely transform the industry and create a new efficient frontier.
Fixed-position / functional / cell / product
Adidas: They are also locating closer to their market which is bucking the trend of the last several decades of going increasingly off-shore. This could have a major impact on economic growth all over the world.
Job design
Digitisation: Robot automation is changing the face of mass production, and this will only continue exponentially
Adidas: They will need to completely rethink their workforce as they move towards greater automation throughout their operations. This will be a huge transformation for their company and will require strong and brave leadership, with high moral direction to avoid damaging their brand in the process.
Scope / Job enrichment / Job rotation / etc
Volume-variety requirements
Digitisation: Technology bridging the gap between volume and variety
Adidas
Aiming for system that could perform well for a batch size of one, but ultimately producing boutique batches.
If there is minimal efficiency loss between making 1 pair, or 500 pairs, then expand that out to efficiencies to make 10,000 pairs, and out further to gain efficiencies in making 100,000 or 1m pairs
Process flow objectives - flow rate, throughput time, WIP inventory, and resource utilisation
T1: Introduction to operations and process management
Concept: Top-down and bottom-up alignment -
Digitisation is narrowing the gap between the top and bottom of the organisation and providing efficient ways to communicate and pull information / data / ideas / innovations from every level of the organisation
Concept: Performance Objectives - Speed / Cost / Flexibility / Quality / Dependability -
Digitisation is also challenging the accepted norm that Quality has inevitable and significant trade-offs with Cost and Speed. It is providing innovative ways to excel in all of these areas
Concept: Four Vs (Variety/Volume/Visibility/Variability) -
Digitisation is challenging the accepted logic of this, no longer is high volume/low variety the only way for certain products to reach the mass market in a profitable way, this may in time lead to a move away from a mass market focus for all but the most mundane, everyday necessities
Concept: Getting closer to the customer / Pull approach -
Dell demonstrated that getting closer to the customer could elevate a company to being an industry leader, digitisation is taking this concept to the next level and making it available to product lines that would not have been viable in the past
Concept: The efficient frontier model -
Digitisation is a tool by which organisations can become leaders, such as Adidas, in pushing out the efficient frontier. By doing this they force their competitors to play catch up. Organisations need to have long-term vision in this regard as there is a lot of up-front cost and high risk in being an innovation leader
T2: Supply network design and capacity planning
Concept: Coopetition -
Concept: Disintermediation -
Concept: Outsourcing -
Concept: Vertical integration -
Concept: Operation locations -
Concept: Capacity-leading -
Concept: Capacity-lagging -
T5: Capacity management and planning
Demand side
Demand management
Yield management
Supply side
Level-capacity
Chase-capacity
Capacity leakage
Digitisation:
Adidas:
Shortening planning cycles - reducing from 12-18 months to under 12 months and further. This allows them to take advantage of fashion trends that don't last that long.
T4: Supply chain management
Demand side
Adidas: Selling specialty lines in own local stores only, plus fairs and online. This
Supply side
Selecting appropriate suppliers
Planning and controlling ongoing supply
Developing and improving supplier capabilities
Adidas: Partnership with Oechslar - German injection molding specialist - shares R&D/Risk/Cost - huge committment
T8: Lean synchonisation
Concept: Exacting nature of Lean Synchronisation -
Digitization supports potential customer interface that provides the information that will allow for exact quality / quantity / time / location / cost matches to occur.
Concept: Jidoka -
Digitization enhances this concept of fail-safeing, line-stop authority and visual control, by putting presenting information in a timely and specific manner employees can be empowered to act with greater confidence.
Concept: Just-in-time (JIT) -
Digitization support this concept by allowing information to be simultaneously and accurately available to multiple parts of the supply chain, allowing consistent forward-planning and visibility like never before.
Concept: Barrier - Failure to eliminate waste from irregular flow -
Digitization can be used to create digital versions of physical environments, i.e. factories, and then running simulations of different layouts to help determine the most efficient option, e,g, Adidas is doing this in software developed by Siemens
Concept: Barrier - Failure to eliminate waste from irregular flow -
Digitization can further help in areas of transport, things like route-optimization planning, traffic management, platooning, are all a reality because the information required is live and accurate.
Concept: Barrier - Failure to eliminate waste from inflexible responses -
Digitization is allowing companies to reduce their batch sizes without completely loosing economies of scale, this will only get better as orgs get more innovative in this area.
Concept: Barrier - Failure to eliminate waste from inflexible responses -
Digitization further support better synchronisation between activity mix and customer demand allowing a faster response to changes in demand and therefore eliminating waste in this area
Concept: Barrier - Failure to involve people -
This is significant improved with digitization as it provides a platform for information to be shared in an accurate and timely manner from all levels inside and outside the organisation.
Concept: Barrier - Failure to adopt continuous improvement principles (kaizen) -
One difficulty with this is dealing with the resistance of people who struggle to see or understand the benefits or even the improvements themselves. Digitization can help in this regard as it can provide the starting data and ongoing measurements on the improvements in a quantifiable manner.
T10: Project management
Concept: Critical path analysis -
The use of a digital platform to manage the massive task of project management and particularly critical path analysis is a huge boost in this area. Having this information be quickly updated and revised is a significant cost benefit to any project.
Concept: Project evaluation -
Being able to efficiently evaluate a project and record the learning in a that can be useful for future project is a significant advantage.
Concept: Gantt Charts -
Producing these manually would be inefficient and unhelpful for modelling and control where frequent updates would occur, digitization make these a live, efficient tool to be used throughout a project. This also enhances communication to interested parties in an efficient and useful way.
T9: Quality management and operations improvement
Concept: Quality costs -
Again digitization can support this concept in two ways, 1. identifying what the real costs are by tracking and analysis data, then presenting it in a useful way, and 2. by tracking this data over time to identify the impact and trends of improvement initiatives, quickly determining if an improvement path should continue.
Concept: Quality as a means of protection -
When quality of input resources is vital, digitization supports this by providing greater visibility to the entire supply chain, e.g. a supply of rubber for shoe soles is found to fail quality standard, knowing the source of this rubber precisely and its exact pathway to the organisation can help identify where accountability for the low quality lies and help avoid this problem in the future.
Concept: Quality gap model -
Digitization can support this model in two ways, 1. by identifying where significant gaps are through surveying customers to understand their perceptions, and 2. by enhancing communication and marketing methods in order to close the gaps
T6: Inventory management
Concept: ROP or ROL -
Not only can digitization speed up the process of calculating these figures, it can also automate to process of ordering when these levels are hit.
Concept: Period review system -
Similar to above, digitization can automate the process of calculating and then ordering the appropriate quantities. This can be enhanced across the supply chain to factor in unexpected losses or bottlenecks up or down the chain.
Concept: EOQ or EBQ -
Digitization can support accurately calculating these figures, but also updating the information regularly to keep current and modelling different scenarios to determine trade-offs
Concept: ABC Inventory and Pareto (80/20) curve -
Calculating this information manually would be prohibitive for even small inventories, especially considering it is only truly valuable if kept up-to-date and used to guide ongoing improvements in inventory management. Digitization makes the initial calculations and ongoing upkeep much more viable and useful for any organisation. With increased digital capabilities, it may be possible for inventory control systems to build in the complexities that complicate the ABC method, such as high-value items, bulk items, or slow-moving stock.
T7: Resource planning and control
Concept: Enterprise resource planning (ERP) -
Looking for efficiencies across the organisation and wider supply chain, rather than in isolated pockets that simply create bottlenecks or inefficiencies in other parts.
Concept: Enterprise resource planning (ERP) -
Communication with customers and suppliers is enhanced and timeliness means the information is actually helpful and relevant when it is received, rather than just being a learning process for future improvement.
Concept: Enterprise resource planning (ERP) -
The vast amount of information required to make this sort of system useful is only possible through the advances in digitization.
Concepts: Core mechanism of planning and control = loading / sequencing / scheduling / monitoring and control -
Decisions around these areas need high levels of accurate, up-to-date and easy to understand information which can only be achieved through enhanced digitization.
Concept: Theory of constraints (TOC) -
Modelling through digital platforms to try and eliminate bottlenecks minimises the risk and simply moving the bottleneck somewhere else. Considering the knock-on effects of any potential improvements will make the improvement process as efficient as possible.
Adidas Article
Speedfactory
Based in Germany (1)
Robotic factory - almost entirely automated (1)
A move to customisation and small batches, from mass market production (1)
Contains most of the supply chain in one place, rather than separate factories producing different parts of the shoe (2)
Speedfactories will be centralised in the market they are supplying (2)
Factory capacity will be 500,000 (3)
Another one in Atlanta will have similar capacity (3)
Only a fraction of Adidas' 360 million shoes produced in 2016 (4)
Expect this to be a prototype to help revamp current supply chain in Asia (4)
Intended to keep consumers at front and centre - using them for beta testing and feeding back information and change (4)
Digitisation
Manufacturing
Speedfactory is almost entirely robotic automation (1)
Complete digital replica of the factory, so they can simulate production and work out the best optimisation (Siemens tech) (3)
Moving capabilities to a lot size one, but marketing to a community or group level (3)
Different coloured patches on shoes provide different stretch depending how they are configured on the shoe, as such there is little change to the production process to produce this variation (4)
Sales / Marketing
Sales for specialised lines will be online (2)
Only other outlet will be the Adidas retail store in the location they were designed for, i.e. London / Paris, etc (2)
Scarcity and exclusivity will be prominent and will be reflected in the price (2)
Speed - the new processes allow Adidas to adjust faster to the market, faster than their competitors - fast fashion (4)
R&D
Hooked runners up to sensors (1)
Motion capture (1)
Product
FUTURE: Use 5G network to send product performance data back to Adidas for improvements (3)
Cost of such individualisation is and may continue to be too prohibitive for the average consumer and mass production may prevail, or remain the dominant force at least (3)
NFC chips (near-field communication, like paywave) in some shoes to send data to a user app (3)
Design
First, Computer-aided drafting (CAD) (3)
Now, 3D software - developed by Adidas (3)
This allows design and manufacturing to be happening simultaneously, not sequentially (3)
ARAMIS software (used by NASA and Boeing) allows Adidas to run digital trials on product before having a physical prototype using 3D motion-capture and analysis technology (4)
Digitization
The ability to transmit data in efficient and durable ways
'Digital is an approach and an ability, not any one particular piece of technology'