CHAPTER 12 : PURCHASING AND SUPPLY CHAIN ANALYSIS: TOOLS AND TECHNIQUES

Project Management

Defining Project Success

Project Phases

Project Planning and Control Techniques

Project Management Example: Sourcing Strategy

Project Management with Time Estimates

Learning-Curve Analysis

When to Use the Learning Curve

Learning Curve Illustrated

Learning-Curve Problem

Value Analysis/Value Engineering

Who Is Involved in Value Analysis?

The Value Analysis Process

Process Mapping

Value stream mapping

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

  1. Concept Phase
  1. Project Definition Phase
  1. Planning Phase
  1. Preliminary Studies Phase
  1. Performance Phase
  1. Post-Completion Phase

Gantt charts

Critical path method (CPM)

Program evaluation and review technique (PERT)

Rules for Constructing a Project Management Network

  1. Identify each unique activity by capital letter that corresponds only to that activity
  1. Unique branch or arrow represents each activity in project – circles or nodes represent events
  1. This diagram means only that B cannot start until A is complete
  1. Branch direction indicates general progression in time from left to right
  1. 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
  1. Two or more activities cannot share graphically same beginning and ending events
  1. Networks start and finish at only single event

PERT Network Steps

Definitions

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

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

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

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

Value = Function ÷ Cost

Executive management

Suppliers

Purchasing

Design engineering

Marketing

Production

Industrial/process engineering

Quality control

Tests for Determining Value

Gather Information Stage

Speculate Stage

Analyze Stage

Recommend and Execute Stage

Summarize and Follow Up Stage

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

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

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