Tailored Supply Chain Strategy Of Electric Equipment Manufacturing

Engineering To Order is a mode of manufacturing by order, which is also production mode as customized. Under this mode, the customer orders are acquired and operated per project management methodology. The related processes are called Frond-End processes including quotation& tendering, signing the contracts, project management and engineering design, and so on. The manufacturing processes are called Back-Office including industrialization(operations management), TQM, HRBP, financial management, EHS, and so on. The purchasing processes are centralized as well as dot line reported singly to head of purchasing and managed in parallel with plant management, which also provide the plant with the supports of materials acquisition and quality management and directly control the master data of suppliers via ERP systems.The manufacturing processes of electric equipment are assembly, wiring and testing, which are to purchase the components and parts in line with customers' specific schemes as well as finally offer the total solutions to customers. The mode is absolutely a mode as customized and pretty nonstandard and customer-oriented.Furthermore, the acquisition of orders, production, shipment and commissioning of electric equipment are more seasonable. Normally, the Q1 will be stack season due to the impact of Chinese Spring Festival. The Q2 and Q3 will be highly demanded due to the impact of warm weather and high temperature, which are called “Valley” and “Peak” and also called “Fluctuation” or “Jump”. Importantly, the Chinese marketing of electric equipment is very challenging. Roughly 30 thousand manufacturers are involved in the competition, which causes the frond-end never to care the balance between load and capacity as acquiring the customer orders. Based on the pressure of survival or development, the back-office must try their best to meet the on time to delivery to meet the customers' requirements under the quality requirements to be met.The parts and components of electric equipment are various. The lead time of some suppliers are max. 4 months(mainly imported parts). The customers' lead time is average 40 days. The key raw material can be divided into OFO materials, materials customer provide, standard parts and consumption materials.Based on the above, the customer orders acquired by frond-end are designed in terms of projects from customers and executed per project management methodology. The fluctuation of demands and variety of PLT cause the difficulties of controlling the raw materials, WIP, finished goods, total inventory and DIN. In addition, due to long PLT, even some of OFO materials, especially the components as customized will arrive at plants after the suppliers receive the payment related, which cause the cash flow not to be fluent and the financial expense with high pressures. Research and elaborate a SCM mode to be adopted for ETO manufacturing mode, which will have the below significance:1- Standardize the flow and methodology from front-end to back-office; 2- Improve OTDC% and CNPS;3- Lower total inventory to ensure the cash flow fluent and financial expense effectively; 4- Fully understand and master planning functions and the control the operations as well; 5- Make sense the VSM from front-end to back-office. The topic's content as researched: 1- Value Stream Mapping including the processes of front-end and backoffice 2- Responsibilities and Authorities of SCM and JD thereof; 3- The key modules of SCM:- Sales, Inventory & Operations Plan – SIOP- Master Scheduling- Production Plan- Material Plan- Procurement & Upstream Flow- Logistics & Downstream Flow- Warehouse Management- Materials Providing& Handling- MPHThe topic is based on the characteristics of manufacturing of electric equipment and in terms of the varieties of SCM flows of customized offers, and is to adopt the methodologies of DMAIC of Lean-Sigma to pack up and standardize SCM's metrics and useful flows and methodologies. The aim is to improve the OTDC and CNPS in the pretty competitive marketing so that the market shares will be higher to validate that growth is the priority.The detailed DMAIC methodologies as below:D – Define, to audit and research typical ETO plant's business and current status to get the findings. Based on the baseline of electric industry, to lay down the project charter to set up the anticipated objectives and try to go for the benchmarks as well; M – Measure, to present the current VSM to gather KPIs of actual processes and the data output thereof; A – Analyze, to analyze the current status to figure out the similarity after classification of findings per professional tools; I – Improve, to find out the projects that need Kaizen to elaborate the corrective actions and methodologies as standardized and solidified per analysis of current flows and data; C – Control, to streamline the processes as standardized and monitor the execution during 3~6 months as well as to observe the trend of KPIs to validate the effectiveness of these flows and methodologies.The competition of marketing of electric equipment is very much sharp. Lower price, high technical requirements, on time to delivery and shorter lead time are regarded as precondition of competition. The manufacturers try to realize agile manufacturing to meet the requirements as customized. In terms of these requirements as customized, the strategy of tailored supply chain occurs to occupy the marketing shares. The detailed initiatives are elaborated by the top company in the electric industry as below:I. Do more II. Digitize III. Innovate IV. Step up V. SimplyFor instance, Do more means to be close to our customers from frontend to back-office and stand on the customers' benefits to become the boosters to our customers absolutely. The strategy of tailored SCM is to realize agile manufacturing to meet customers' technical requirements and OTD requirements, also to ensure the effectiveness of projects' execution to improve the ENPS. So considering from entire strategic level, the Do more is tag line for our customers. Among of them, the tailored SCM is the focus of this thesis, in which how to deploy the SCM strategy will be stated for more details. The other initiatives will be clarified the detailed processes and significances as melt each other.