Two papers in supply chain design : supply chain configuration and part selection in multigeneration products

Increasing competitive pressures are forcing companies to increase their rates of innovation. The increasing rate of innovation shortens each product's duration in the market, thereby compressing each product's life cycle. Without proper management, increasing product turnover will increase design and manufacturing costs. More frequent product development cycles require additional product development resources. Shorter production runs inhibit a company's ability to achieve manufacturing cost reductions by exploiting the learning curve and scale economies. Unless companies can efficiently manage multiple generations of the product, there is a substantial risk that costs will spiral out of control. Focusing on supply chain design is one way companies can combat the problems caused by increased competition and shorter product life cycles. Supply chain design attempts to create the appropriate supply chain for the company's operating environment. This dissertation addresses two problems that are relevant to supply chain design. The first problem addresses how to configure a new product's supply chain. In this problem, the product's design has already been fixed. The central question is determining what parts and processes to select. For example, various vendors can supply a certain raw material, multiple machines or processes can manufacture the assembly, and multiple shipping options can deliver the completed product to the final customer. Each of these different options is differentiated by its production time and direct cost added. Given these various choices along the supply chain, the problem is to select the options that minimize the total supply chain cost. The second problem addresses part selection for multigeneration products. When product life cycles are short, the company could opt to over engineer certain components or subsystems in the current generation. This would inquire the current period's costs but allow the company to forgo a development cycle in the next period and gain cost efficiencies by exploiting the higher volume from two generations of demand. This research considers development costs, manufacturing costs and part functionality requirements in order to determine the optimal upgrade path for components across multiple product generations.

Department dc:contributor.department

Sloan School of Management

Grantor dc:publisher

Massachusetts Institute of Technology

Year dc:date.issued

1999

Author dc:creator

• Willems, Sean Peter

Advisor dc:contributor.advisor

• Stephen C. Graves.

• Sloan School of Management

Statement dc:rights

• M.I.T. theses are protected by copyright. They may be viewed from this source for any purpose, but reproduction or distribution in any format is prohibited without written permission. See provided URL for inquiries about permission.

Licence dc:rights.uri

• http://dspace.mit.edu/handle/1721.1/7582

Language dc:language.iso

eng

Handle dc:identifier.uri

http://hdl.handle.net/1721.1/9682

OAI identifier oai:identifier

oai:dspace.mit.edu:1721.1/9682