PREDICTIVE METRICS FOR SUPPLY CHAINS

Transcription

1 Massachusetts Institute of Technology PREDICTIVE METRICS FOR SUPPLY CHAINS By: Linda Haydamous Advisor: Dr. Larry Lapide May 21, 2009

2 Outline 1. What are Predictive Metrics? 2. Research Question and Scope 3. Motivation 4. Approach 5. Results A Framework for Predictive Metrics 6. Conclusion 7. Future Research 2

3 This is what predictive metrics aim to show. This is what reactive metrics show

4 1. What are Predictive Metrics? Metrics Quantitative or qualitative verifiable measures. Defined with respect to a reference point. Reactive metrics Backward-looking they measure past performance. Can be used, at best, for damage control. Predictive metrics Forward-looking they assess future performance. Aim to prevent problems rather than correct them. 4

5 2. Research Question and Scope What are the most effective metrics to predict supply chain future performance in the areas of: Cost Schedule Quality Technical Focused on Aerospace & Defense production programs No maintenance supply chain No Product Development Engineer-to-Order Type Product No Demand Planning No Inventory Policies 5

6 3. Motivation A&D companies develop large-scale systems Require numerous suppliers Have highly intertwined supply chains Current performance management systems typically: Have a blizzard of metrics Measure past performance to determine corrective action Lead to the wrong kind of behavior Continuous performance surprises Corrective action very costly 6

7 4. Approach Data Analysis System Dynamics Models Predictive Metrics Framework Case Studies 7

8 How to Predict Supply Chain Performance? (1/2) Sub-tier Supplier Performance Purchase Orders, Specifications Problem Parts, Technical Problems Root Cause Analysis of Supplier Position Intrinsic Changes within Supplier 8

9 How to Predict Supply Chain Performance? (2/2) Data Trending Statistical Process Control Quality of Supplier Orders 9

10 Critical Supply Chain Performance Factors People Process Business Product Factor Cost Schedule Quality Technical 1Skilled Labor x x x x 2Critical Skills Per Project x x x 3Employee Retention (or Attrition) x x 4 Management Cost Change x x x 5Employee Morale x x Schedule 6Labor Cost x 7First Time Quality Quality (or Rework) x x x 8Backlog Technical x x x 9 Expediting x x 10 Inspection x 11 Process Improvement x 12 Training People x x 13 Plant Process Uptime x x 14 Research Product and Development x Business 15 Financial Stability x x x x Determined from System Dynamics Models Repetitive feedback loops across the 4 areas of performance : Separated in 4 types: 16 Growth 10 x x

11 Comparing Predictive Metrics to Reactive Metrics 11

12 Developing Predictive Metrics Framework Supplier Segmentation Power Matrix Adapted from Cox (2003) Program Segmentation Customer Response Operational Performance Triangle Adapted from Lapide (2006) 12 Efficiency Asset Utilization

13 Concept of Operation Program Focus (Objectives) Supplier Type Supply Chain Operation Predictive Predictive Metrics Metrics System Dynamics Model Root Cause Factors Corrective Action 13

14 5. Results A Predictive Metrics Framework Sample Predictive Metrics Attrition Backlog Critical Skills Per Project Expediting Financial Stability Plant Uptime Use of Substitute Material 14

15 6. Conclusion Predictive metrics: Provide early warnings of problems and early indications of successful completion. Do not eliminate the need of historical reporting, they provide smarter ways to look at them. Business strategy, supply chain and predictive metrics should be aligned. There is no one-size-fits-all different metrics per program type and supplier type. 15

16 7. Future Research Predictive metrics for maintenance supply chains. Predictive metrics for developmental programs. Introduction of software 16

17 Thank you! Q&A

18 Backup Slides

19 Cost Causal Loop Diagram Employee Stress Level Production Knowledge and Efficiency R Skilled Labor Production Capability Plant Capacity Trainees Layoff/Quit Labor Cost Cost of Raw Material or Subassembly Components Tendency to Expand Tendency to Introduce Change R Management Change Hiring Rate Executives Executive Executive Hiring Firing/Quit Rate Rate Trainees Available Budget for Personnel Training Rate Skilled Labor B Labor Cost Skilled Labor Layoff/Quit Rate - Employee Wages and Benefits Financial Stability - - Profit - Total Cost R First-Time Quality Rework Rejection Rate Defect Rate Defect Introduction Rate - Quality - Expediting Defect Elimination Rate B Expediting Schedule Pressures - R Growth Ability to Make On-Time Deliveries - Access to Capital Pressure to Cut Cost Tendency to Use Substitute Material Order Rate Backlog Order Fulfillment Rate Company Rating 19 Customer Orders Revenue