Department of Engineering and Applied Science
Principles of Engineering Management I
EAS 521 (Fall 2002)
Dr. Carl M. Chang
Abstract: A “ best practice” is a process, technique, or innovative use of resources that represents the state-of-the-art industry behavior. Firms making use of best practices in their supply chains can achieve significant improvements in cost, schedule, quality, performance, safety, environment, or other measurable factors that impact the bottom line in the organization. The role of engineering in the attainment of the benefits of utilizing best practice methods is critical. It is important to have engineers not only participate in these efforts, but play a lead role in their implementation.
Supply chains are networks of logistic and manufacturing activities starting with raw material sourcing and ending with the distribution of finished goods to markets. A complete supply chain usually involves several companies and several production/warehouse facilities.
The role of an engineer in the supply chain spans the many tasks beginning with project approval and ending with the building of the first production unit. Early efforts to define the supply chain of manufacturing ( similar to where I am employed ) focused on the business processes that began with securing materials for production and ending with the logistics required to deliver finished products to the consumer. This disregards an earlier , crucial set of activities that are extremely time consuming and costly, being the active process of designing the product to be built. It is here where the contributions of engineering can be found. Important to note is that several independent studies have shown that a very high proportion of the total costs of a new product program are incurred or committed during the engineering supply chain phase. This can add up to many hundreds of millions of dollars for a major manufacturing company. Businesses can gain tremendous benefits by making this phase shorter and more effective. Such benefits are both cost-related, such as reduced development cost, and revenue oriented, such as faster time to market.
I. Engineering Challenges in the Supply Chain
A European funded research project recently cast some interesting light on the problem of engineering contributions in the supply chain. This study concluded that in general, only a relatively small amount of an engineer’s time ( 11% ) can be considered productive. 89% of an engineer’s time is spent either waiting for information, exchanging information, or administering information. Any industry best practice that can promise to reduce the amount of time spent on non-productive activities has the potential to increase considerably, the capacity for a engineer to deliver productive work. Although administration, communication, and decision-making is essential to the quality of the production activities of an engineer, there remains a significant opportunity to eliminate unproductive time and maximize productive output.
II. Supply Chain Best Practices
Managing supply chain operations is critical to any company’s ability to compete effectively. The supply chain has traditionally been managed by a series of simple, compartmentalized business functions. It was driven by manufacturers who managed and controlled the pace at which products were developed, manufactured, and distributed. In recent years, customers have forced increasing demands on manufacturers for options, styles, features, and quick order fulfillment and fast delivery. Success for many companies now depends on their own ability to balance a stream of product and process changes with meeting customer demands for delivery and flexibility. It is critical that the companies wishing to remain competitive in their respective industries to be able to identify and implement industry best practice