Procurement Of Parts Research Articles

Multi-criteria decision making on total inventory cost and technical readiness

XYZ Company spends millions of dollars in the procurement of spare parts and tools every year. The maintenance part plays the role of sustaining the technical readiness of the equipment and vehicles. This research will try to find ways to reduce total inventory cost while maintaining the targeted level of technical readiness. The research consists of two phases of multi-criteria decision making on total inventory cost and technical readiness. First phase is to apply a 2-dimentional material classification technique to the selected data. Thus, a combination of ABC- and 123-analysis is used to simplify the problem by focusing on costly items only. The second phase is to apply a deterministic inventory model to the results of the material classification. A detailed analysis of the technical readiness and total inventory cost is covered for the deterministic inventory model. The objective of this research is to design a new system to balance readiness and the associated total inventory cost by finding the relationship between the desired level of technical readiness and cost. Finally, a comparison between the current inventory system and the proposed one shows around 42% savings in the total inventory cost over a period of 3 years, (Adi in Optimizing total inventory cost and enhancing technical readiness level. Master’s thesis, ESM at AUS, Sharjah, UAE, 2005).

Supplier selection and supply quantity allocation of common and non-common parts with multiple criteria under multiple products

With limited capacity of suppliers, how to reduce the total operating cost of the enterprise by determining the most suitable production capacity allocation has become the major issue faced by various enterprises in producing multiple types of products. In addition, when manufacturing multiple types of products, due to the high demand of common and non-common parts, which is applicable to various products, enterprises will place special emphasis on the procurement of common and non-common parts, to select most suitable suppliers of parts with the highest quality and minimum time and costs, in order to cut down on operating costs of enterprises. This research first lists parts of various products through bill of material (BOM), and constructs an optimal mathematical model suitable for multi-phase products’ parts, in order to assess the assembling relationship of various parts; it makes use of the linkage among those to select the supplier of common and non-common parts when assessing multiple products. Then considering the limited production capacity of suppliers, it selects the best combination of suppliers of special common and non-common parts. To solve the optimal mathematical model, a genetic algorithm (GA) is proposed to find the acceptable results of the supply selection and quantity allocation problem. It then provides a benchmark for enterprise in current diversified market to purchase and assess common and non-common parts, and makes such benchmark a normal standard for selection of suppliers in the future.

The strategic decisions and success factors of the global integration-local responsiveness of Japanese MNCs in China

This article applies Foreign Direct Investment (FDI) theories to the strategic management analysis of the global integration-local responsiveness of multinational corporations (MNCs) in China, from the perspective of company characteristics (ownership advantages and internalization advantages) and environmental dynamics (locational factors) in order to analyze the success factors influencing the sales activities of Japanese MNCs in China. Based on the analysis of a survey conducted on 230 Japanese parent companies with investments in China, the empirical research findings include: Japanese MNCs in China favor global integration strategies; the more significant the ownership advantages and internalization advantages are, the greater the global integration is; the success factors of their operations in China due to global integration are present in manufacturing know-how, procurement of parts and supplies, financial power, previous investment experience in China as well as sales networks and technologies; locational advantages mainly lie in labor cost among other things; internalization factors do not have any significant correlation with the success and performance of the subsidiary company.

3212 衛星開発における設計/製造品質の向上と効率化(OS4-4 デジタルエンジニアリング-4)CAD・CAM・CAEの応用)

In order to receive more order of commercial satellite through international bid, continual efforts is highly needed in reducing delivery time and cost using corporate technology accumulation. So, we are working hard on standardizing the total design process including spacecraft production, parts procurement, testing, launch, and operation on orbit. Furthermore, we are improving quality and efficiency of design productivity in whole processes using IT. The spacecraft system consists of a lot of parts and multidisciplinary technical fields. Therefore, it is important to handle the design data exactly and efficiently among many design sections. Also, it is effective to connect the design data to the facility, and to make the system that guides the handwork of the worker using 3D-data at the timing of production, assembly and testing phase. This paper introduces our activities to improve quality and efficiency of the spacecraft design productivity using 3D design production process.

An Information System Development Method Connecting Business Process Modeling and its Experimental Evaluation

Business process modeling (BPM) is gaining attention as a measure for analysis and improvement of the business process. BPM analyzes the current business process as an As-Is model and solves problems to improve the current business, and also aims to create a business process that produces value as a To-Be model. However, research into techniques that connect the business process improvement acquired by BPM to the implementation of the information system seamlessly is rarely reported. If the business model obtained by BPM is converted to UML, and the implementation can be carried out by the technique of UML, one can expect an improvement in the efficiency of information system implementation. In this paper, we describe a method for system development that converts the process model obtained by BPM into UML. The method is evaluated by modeling a prototype of a parts procurement system. In the evaluation, a comparison with a case in which the system is implemented using the conventional UML techniques without BPM is performed. © 2009 Wiley Periodicals, Inc. Electr Eng Jpn, 169(4): 9–20, 2009; Published online in Wiley InterScience (www.interscience.wiley. com). DOI 10.1002/eej.20856

Outsourcing engineering commodity procurement

PurposeThe purpose of this paper is to introduce and provide an insight into the benefits of outsourcing the procurement function for engineering commodity items.Design/methodology/approachResearch into the literature presents the development of outsourcing procurement functions and this manuscript adds to the body of knowledge through introducing the outsourcing of engineering commodity procurement, illustrated with the case study example.FindingsA US Aerospace Fortune 50 company has made savings by outsourcing the procurement of commodity engineering parts. This has occurred in two stages. Firstly the commodity procurement was locally outsourced and staff migrated to the service provider to whom commodity procurement was a core competence enabling them to offer cost savings. Secondly the back office and telephone service was moved to India, further reducing cost whilst enhancing the service through an increased headcount.Originality/valueThe paper provides the first example of the two stages of outsourcing engineering commodity procurement.

Logistical Considerations for Endoscopy Simulators

A variety of endoscopy simulators have been produced during the last several decades. Multiple factors have influenced the types of simulators that have been developed and the ongoing evolution of existing models. Realistic simulation is only one issue in providing simulation-based training in GI endoscopy. Details such as cost, technologic limitations, management and availability of training facilities, personnel, animal welfare and the procurement, handling, and disposal of animal parts are all major factors when considering the options available among existing endoscopy simulators. Table 1 summarizes the logistical factors for the different types of endoscopy simulator. These considerations clearly are of major importance in simulator design and development and in the conceptualization and organization of simulator-based curricula and courses.

Supply chain modularisation: Cases from the French automobile industry

In recent years car manufacturers have been gradually moving from the procurement of discrete parts to the procurement of modular systems. However, research into this development has not yet sought to identify how such a shift is likely to influence the operations of key suppliers within a modular supply chain and more specifically, how such suppliers are likely to interpret their respective approaches to modular provision. The aim of this research is to address these issues using a case-based approach of a modular supply chain currently engaged in supplying cockpit modules to a French car manufacturer. The findings accord broadly with research undertaken in the United Kingdom [Doran, D., 2004. Rethinking the supply chain: an automotive perspective. International Journal of Supply Chain Management 9(1), 102–109] which indicated that accommodating modular supply is both complex and challenging and requires a discrete set of competencies that move beyond traditional approaches to product procurement. Specifically the findings suggest that strategies commensurate with supplying on a modular basis are likely to involve an increased degree of risk sharing, a strategy for acquiring a cohesive set of supply chain management capabilities and a readiness to dispose non-core activities while acquiring those activities that will enhance modular capabilities.

Generating k-best solutions to auction winner determination problems

Auction participants cannot always articulate their requirements and preferences. Sometimes, for instance, the buyer in a procurement auction cannot quantify the value of non-price solution attributes or delineate between hard and soft constraints. This precludes formulating the winner determination problem (WDP) as an optimization problem. Existing decision-support aids for such situations extend an optimization framework. We present an approach that frames the decision problem as one of exploration rather than optimization. Our method relies on an algorithm that generates k -best solutions to auction WDPs. Our algorithm can incorporate hard constraints into the generation process and can scale to practical procurement auctions. We show how to extract useful guidance from k -best WDP solutions, and we evaluate our method using real bids submitted by real suppliers in an HP material parts procurement auction.

Supply Auctions and Relational Contracts for Procurement

We examine the competition between procurement auctions and long-term relational contracts that emerges from the increased usage of electronic marketplaces. Procurement auctions create supply chain efficiencies by selecting the least costly bidder, and long-term relational contracts ensure the quality of the procured products or services when these have nonverifiable attributes. The following two-layer supply chain model is analyzed: Suppliers of an industrial part with nonverifiable quality trade with several manufacturers that utilize that part in the production of an end product. A price-based reverse auction is used for the procurement of low-quality parts, and a relational long-term contract is used for high-quality parts. A formal model of the competition between the two procurement models identifies conditions under which the two coexist, and conditions under which one will push the other out of the market. Market and product parameters that increase the relative economic appeal of the relational contract are determined. It is demonstrated that the competition from the auction market can either facilitate or undermine the relational contract compared with a benchmark case of a monopolist supplier. This implies that competition between the two procurement models plays an important role in the supply of high-quality products.

Solar energy trial in Folovhodwe South Africa: Lessons for policy and decision-makers

In Mutale Local Authority of South Africa, a photovoltaic pilot project was commissioned to provide off-grid electricity to 582 households residing in Folovhodwe village. The aim was to try a renewable source of energy supply in a rural settlement area. The Beneficiaries Assessment method was used to assess the problems of the implementation and operation of the solar energy project in Folovhodwe. The project initiators did not realize that there would be the problem of the sustainable implementation of the project. The problem of sustainability was related to the inadequate definition of the role of each stakeholder. For example the end users were not taught how to properly operate and repair faulty equipment because it was not built into the planning and implementation stages of the project. Skill acquisition through capacity building for the end users can promote the sustainability of the project on a long-term basis. In Folovhodwe, improper planning and implementation of the project was responsible for the failure of the project. The project initiators did not foresee the problem of theft of materials, problems related to the procurement of spare parts and who would bear the cost of maintenance of the facilities. The failure of the project was also related to the inability of the policy makers to tackle the question of the role that each stakeholder should play to ensure the success of the project in a rural setting. The suggestion to policy and decision-makers is that pilot projects with relatively new technology input in a rural area should reconsider the importance of culture, capacity development and the level of income of the end users at the initial planning stage and implementation.

Electronic technology and parts procurement: a case of the automobile industry

Inter-firm information systems in the automobile industry have evolved from firm-specific networks to industrial standard networks and, further, to the internet. This paper examines how electronic parts procurement systems in the automobile industry affected its patterns of inter-firm transactions through empirical studies on information networks, transaction systems and architectural characteristics of automobile parts. We argue that selection of a certain parts transaction system tends to affect choice of the mode of information system that might best fit the transaction information between the firms. Conversely, once a particular type of information is chosen, the mode of information exchanges and patterns of competition between suppliers and transaction systems would also be changed. In this way, inter-firm information systems, transaction patterns, and architectures of the parts would co-evolve through dynamic interactions among them.

Investigating the decision criteria used in electronic components procurement

Previous research has reported that the decision criteria used to evaluate suppliers differs by product category. Rather than investigating the “key buying criteria” across the entire gamut of products and services, this research takes a novel approach by investigating the evaluation criteria used in the procurement of component parts. The survey results suggest that the content and structure of the decision criteria used by business customers to assess their suppliers does not differ across an array of electronic components. The business implication is that business customers that formally track the performance of their suppliers along the critical evaluation criteria will be in a better position to gain a competitive advantage by effectively managing the inbound supply chain.

The procurement of strategic parts. Analysis of a portfolio of contracts with suppliers using a system dynamics simulation model

In this paper, we present a simulation study to extend current methods for real options strategies in the management of strategic commodity-type parts. Real options are used by procurement and financial managers to secure price and availability in the face of volatile world demand. We define, characterize and simulate three generic types of supplier contracts to accomplish varying degrees of security and flexibility. We then simulate a portfolio of these contracts applied to secure a single part, with the purpose of extending and refining portfolio valuation. We focus our attention on business dynamics based on current best practices in portfolio management, as evidenced by leaders in volatile technology businesses. The strategic part procurement system, as modeled here, includes in-transit and warehoused inventories to accommodate demand variability as well as asynchronous production and shipping lead times. In addition, the portfolio structure itself periodically creates excess inventory as negotiated terms and policies are executed in various conditions. Given these inventories and related costs, we show how optimization techniques can be used to measure the tradeoffs between alternative portfolio structures. A modified Powell method is used to carry out these optimizations properly. Finally, we describe how this more complete valuation of the portfolio is critical to option pricing models, with the ultimate potential for indexing as seen in other commodity markets.

MODELS FOR SUPPLY CHAIN VENDOR SELECTION IN E-MARKETS

ABSTRACT One of the projected applications of internet technology, in the product manufacturing industry, is the procurement of parts from suppliers through E-Markets. In an E-Market the manufacturer or buyer and the supplier will be linked up through a web based electronic exchange, which acts as a cyber intermediary. The primary motivation for the evolution of this form of parts procurement is that the resulting disintermediation and global networking will significantly reduce procurement costs. More importantly, it is expected that less resourceful manufacturers will be able to establish effective supply chains in less time and less cost as compared to large global reach manufacturers. A key question in this proposition is how does the manufacturer identify candidate suppliers and then select the best set of suppliers from the proposals presented to it by the E-Market. In this paper we present first a schema for constructing an E-Market and second a model to support the supplier selection decision. The E-Market schema includes a description of the Vendor Performance History database, which is used to derive two key measures that can be used by the manufacturer to get an evaluation of the supplier's performance and thus build enough confidence to issue a supply order. An Intelligent Vendor Selection model that evaluates the submitted E-Market proposals and prescribes a supply strategy is also presented. This model is formulated as a mixed integer program which is solved with thin the E-Market negotiation template.

Chief Technology Officer (CTO) Decisions to Dare for Corporate/Country Survival

Develops an original 12‐step management of technology protocol and applies it to 51 applications which range from Du Pont’s failure in Nylon to the Single Online Trade Exchange for Auto Parts procurement by GM, Ford, Daimler‐Chrysler and Renault‐Nissan. Provides many case studies with regards to the adoption of technology and describes seven chief technology officer characteristics. Discusses common errors when companies invest in technology and considers the probabilities of success. Provides 175 questions and answers to reinforce the concepts introduced. States that this substantial journal is aimed primarily at the present and potential chief technology officer to assist their survival and success in national and international markets.

Silicon Valley in the South

ABSTRACT New trends are now taking place within manufacturing industries led by multi-national corporations (MNCs). Globalization and liberalization together with the information technology (IT) revolution has accelerated “fables” industry in the network economy, i.e. outsourcing production processes and global parts procurement by MNCs. As a consequence of this, the primary function of the MNC has changed from that of manufacturer to ‘service’ provider by outsourcing production processes to foreign contract manufacturers (CMs). NAFTA in fact mutated Mexico into a production platform toward the US and Canada as well as Latin American countries. We can observe these dramatic changes, for instance, in Guadalajara in Mexico, now called the “Silicon Valley in the South”. Since MNCs use their brand names to sell products, their business function becomes close to that of the fashion industry. They market their products in the same way as Gucci and Chanel sell products of original design carrying their brand names. Therefore, product design and marketing become highly important for MNCs to achieve success in business while domestic providers have been left behind for their parts and components supply in this new global supply chain.

American factory - Japanese factory

There are fashions in the academic world; and they come and go. In the 1980s, it was fashionable to talk about the 'miracle' of Japanese factory management in light of the successful achievement of its 'lean production' methods. Rather belatedly, the world realized that Japanese manufacturing of machinery, especially motor-vehicle production, demonstrated the highest levels of production efficiency, product quality and speed in new model development. Careful field studies discovered that there were indeed differences in managerial practices between Japanese and (say) US factories, which were directly responsible for the significant divergence in economic performances. Notable characteristics peculiar to Japanese machine factories included: (1) a system of parts procurement which drastically reduced inventories of parts and components for both assemblers and parts suppliers; (2) widely adopted total quality control (TQC) operations, which, having originated in the statistical quality control advocated and introduced to Japan by William Edwards Deming, had practically eliminated product defects from Japanese factory sites; and (3) strong networks of parts suppliers, who maintained long-lasting, stable relationships, typically with a single assembler despite a heavy stress on efficiency.' The timing of this intellectual fashion overlapped with the period when Japanese foreign direct investment was on the rise, accelerating awareness in the outside world of the distinct features of Japanese-style factory management. This undoubtedly was an added factor that contributed to heating up the popularity of the subject. The fashion came to a sudden halt, however, when the Japanese economic bubble burst in the early 1990s. In a trice, Japan lost not only a substantial portion of her accumulated wealth, but also

Making a Match

Engineering companies of all sizes are turning to the Internet to find parts suppliers, shaving sales and procurement costs in the process. Companies seeking parts suppliers can post requests for proposals on a Web site. The automakers chose to work together after General Motors and Ford announced on the same day in November 1999 that they planned to launch their own proprietary business-to-business exchanges to host supplier auctions. As evidence of the trend toward moving the vendor and supplier relationship from fax machine to Internet, big three automakers—DaimlerChrysler, Ford, and General Motors—banded together in February to create a Web-based marketplace called Covisint, where suppliers bid for the automakers’ parts contracts. Renault and Nissan signed on later and the site was unveiled in October. With the system, one of the automakers will be able to post data for a part it wants made for a car. However, without technology-equipped suppliers willing to use the service, Covisint could experience a dearth of business.

A just‐in‐time evaluation strategy for international procurement

Many manufacturers are considering the just‐in‐time (JIT) philosophy in order to become more competitive in global markets. An important element of the JIT strategy is the purchasing function. The procurement of parts and materials plays a key role in the successful implementation of a JIT strategy because it has a direct impact on increased productivity, reduced costs and improved quality. Experts agree that supplier selection is one of the most important activities of purchasing. Three popular methods for supplier performance evaluation appear in the literature: categorical, weighted point and cost ratio. However, these techniques have disadvantages associated with them and an alternative approach is suggested which applies dimensional analysis to selecting prospective suppliers. An international purchasing office (IPO), located in Hong Kong, has been applying the dimensional analysis approach to assessing suppliers. Using the IPO as a case study, the benefits of this approach over the traditional assessment methods are discussed, both as a means of measuring not only supplier performance, but also the contribution to the purchasing relationship from the buyer organisation.