Managing the Supply Chain

Abstract

Much effort has been directed to the reduction of cost, reduction of lead-time and reduction of inventory within factories. However, in most high-technology industries a greater proportion of the manufacturing cost is associated with the products and materials supplied from the supplier network. It is therefore vitally important that the very same disciplines, controls and philosophies that apply in-house to manufacture on time, at minimum cost with minimum working capital, are applied to the components, materials and services supplied from outside the industry. This paper reviews the actions necessary in order to ensure that the supplier chain is managed with maximum effectiveness for quality production, minimum cost, with secure lead-times and delivery. The paper reviews the importance of supplier involvement in the influence of design details, working to ‘should costs’, sealing of manufacturing methods and also a commitment to just-in-time delivery, as well as just-in-time manufacture. The paper concludes with the declaration that the competitiveness of British industry largely depends on how the larger companies contribute to the international competitiveness of their suppliers.