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CHAPTER 12 : PURCHASING AND SUPPLY CHAIN ANALYSIS: TOOLS AND TECHNIQUES -…
CHAPTER 12 : PURCHASING AND SUPPLY CHAIN ANALYSIS: TOOLS AND TECHNIQUES
Project Management
Defining Project Success
Within allocated time and budget
At proper performance or specification level
At level accepted by customer, user, or management
With minimal or only mutually agreed-upon changes
Without disturbing main work flow of organization
Project Phases
Concept Phase
Project Definition Phase
Planning Phase
Preliminary Studies Phase
Performance Phase
Post-Completion Phase
Project Planning and Control Techniques
Gantt charts
Critical path method (CPM)
Program evaluation and review technique (PERT)
Project Management Example: Sourcing Strategy
Project Management with Time Estimates
PERT Network Steps
Identify each activity requiring completion and relationship between those activities
Construct network reflecting proper precedence relationships
Determine three time estimates
Optimistic (a)
Pessimistic (b)
Most likely (m)
Calculate expected activity time for each activity :
Expected activity time = (a + 4m + b) ÷ 6
Place activity times on network and identify critical path
Definitions
Early start (ES) : Earliest point in time an activity can begin
Late start (LS) : Latest point in time an activity can begin without delaying entire project
Late finish (LF) : Latest time activity can finish without delaying entire project
Early finish (EF) : Earliest time project can finish given expected activity time
Critical path : Longest time through network
Slack : Maximum amount of leeway in activity that will not delay the project
Rules for Constructing a Project Management Network
Identify each unique activity by capital letter that corresponds only to that activity
Unique branch or arrow represents each activity in project – circles or nodes represent events
This diagram means only that B cannot start until A is complete
Branch direction indicates general progression in time from left to right
When a number of activities end at one event, no activity starting at that event may begin until all activities ending at that event are complete
Two or more activities cannot share graphically same beginning and ending events
Networks start and finish at only single event
Learning-Curve Analysis
When to Use the Learning Curve
Not all processes or items benefit from learning curve effects
When supplier uses new production process for first time
When supplier produces technically complex item for first time
When item has high direct labor content
Learning Curve Illustrated
Learning-Curve Problem
Learning Curve Components
Ability of work force to learn and improve through repetitive effort and increased efficiency
Effort by management to pursue productivity gains
Modification to process
Value Analysis/Value Engineering
Who Is Involved in Value Analysis?
Executive management
Suppliers
Purchasing
Design engineering
Marketing
Production
Industrial/process engineering
Quality control
The Value Analysis Process
Gather Information Stage
Speculate Stage
Analyze Stage
Recommend and Execute Stage
Summarize and Follow Up Stage
Value = Function ÷ Cost
Tests for Determining Value
Process Mapping
Types
Sequential processes
Concurrent processes
Steps in Process Mapping
Search for better ways and methods to perform tasks
Replace sequential activities with concurrent activities wherever possible
Identify those activities that contribute to waste or add minimal value and target for elimination
Identify time associated with each part of process and identify how much is waste
Involve functional groups that impact process
Represent process graphically for clearer understanding
Value stream mapping
Categories of Waste
Overproduction
Waiting time
Unnecessary transport
Excess inventory
Unnecessary movement
Defect
Value-adding vs. Non-value-adding
Value is from customer’s perspective
Value-adding (keep)
Non-value-adding (remove)
Necessary non-value-adding (minimize)
VSM Process
Reach agreement on process
Establish boundaries for project
Observe process from start to finish
Record activities
Review records for dates, quantities,...
Create flow diagram, i.e., current state map
Create ideal state diagram
Make process improvements
Analyze and make corrections
Statistical Tools Used in VSM
Scatter plots
Pareto charts
Pie diagrams
Cause-and-effect diagrams
Quantity Discount Analysis
Allows buyer to verify that quantity discounts are reasonable
Buyer may be able to negotiate price improvements
Prices at specific quantities vs. prices at different quantity ranges