Logistics

Concerning Postponement and the Balance of Supply and Demand

Logistical postponement allows for late stage customization, which is advantageous because units can remain in modular form longer, reducing lead times. Standard modules can be preassembled when necessary, harnessing the forward loading advantages of push style production. The higher the degree of customization required, the longer the lead times will be. MCC’s usage of standardized parts mean customization of the Smart Car involves the exchange of essentially equivalent components, whose lead times for fitting will vary little. Short lead times are therefore achievable.

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Concerning Lead Times

The observation that a Smart Car roles off the assembly line on average every 96 seconds elicits an important question: If lead times average between two and three weeks, is the discrepancy between a possible lead time of minutes and an actual lead time of weeks due to intended postponement or undesired logistical causes? 

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Measuring and Assuring Partners’ Performance: Structuring-in Quality

Integrated suppliers provide their finished products to the main assembly line via conveyor. We assume this process requires suppliers to register order receipt and subsequent dispatch, as this would allow downstream work centres foreknowledge. This data would also be used to chart progress, calculate the mean processing times of the various work centres, and ultimately provide estimations of entire lead time (Taylor, 2001). The information system will also record supplier inventory, and depletion levels should trigger outward calls for replenishment, which will come directly from Tier 2 suppliers.

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Why MCC Assembles the Smart Car[1: Efficiency

The centrality of MCC and the Smartville information system means the manufacturing process resembles a closed loop/MRP[2] system. The closed loop MRP system operates in a cycle and includes planning, execution, feedback, and corrective action (Shim and Siegel, 1999). Constant feedback and monitoring is an essential element, allowing any changes in demand to be known, ensuring sufficient capacity is available (Filipini et al, 1998; Capkun et al, 2009). MCC needs to retain real-time control of the internal supply chain/manufacturing process, and does so through a combination of the information system and direct involvement viz. the final assembly process.

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Balancing Supply and Demand: The MCC Pull System

MCC uses a pull-based supply chain, in so far as production is driven by orders. MCC’s inventory consists of pre-assembled modules that MCCs requests from suppliers only when an order pulling a car is received. Hence, the system is based on present demand information, which allows MCC to supply from manufacturing rather than inventory whenever possible (Harrison and van Hoek, 2002).

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In electronics, Porter’s “Five Forces” are powerful. Logistics represent a means by which economies can be achieved through efficiency improvements. Such improvements can translate into better service, which provides differentiation. Resultant cost savings can benefit the customer, who can pay lower prices.

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