SUPPLY CHAIN MANAGEMENT
CASE STUDY 3
MA2N0203: LE THI THUY HANG
MA2N0205: LE MANH HUY
1. Why are the lead times so long?
According case study, the data showed that the average customer lead time was under
7 weeks, however the manufacturing lead time just over 2 weeks, with 75 percent
complete in three weeks. One possibility is that there was a shortage of material, with no
raw-material inventories from which to produce. Furthermore the problem lay in the sales
order to goods issue phase – all that time between when the sales department entered the
order in to SAP, and when the plant actually started manufacturing. This long lag time
can be partially explained by the slow manual process of transmitting orders, and
partially by the current production policy.
2. How might Starck reduce or affect the lead times?
To reduce or affect the lead times, there are some ways that Starck can do:
 Analysis products should produce to stock and how much for it: For example,
Our product demand analysis shows that for all products being made out of
Alloy#1, The top 8 (a class inventory)(20%)products contribute 80% of the
sales volume the respective standard deviations and the relative standard
deviations percentages are shown as below
Since the standard deviation for these products is fairly high, a higher level of
inventory level is advisable for these series of products, also most of the products
are in the form of sheets, which can be modified or value added to arrive at an
alternative product, these can form a part of the raw material inventory being kept
in the system. Further on Alloy#1, the balance products from 20% (B class
inventory) of the customer requirement and are characterized by low standard
deviations, hence they can be manufactured as and when an orders come in.
 The company should continue with the practice of drum beat (DB) meetings as
they are a good means to reduce distortions in communications, identifying
urgencies and expediting resolution of pressing issues
3. What are the costs from reducing the lead times? What are the benefits from
reducing the lead times?
Reducing the lead times means that H C Starck can decrease large quantities of raw
material inventory, and save a lot of money. The company can begin by hiving off the
raw material procurement division, and develop the same as a centre of excellence,
supplying quality raw material. Moreover, they also reduce the cost of holding the
safety stock for 7 and 3 weeks lead times.