Running head: INTEGRATED LOGISTICS SOLUTION FOR DUPONT ENGINEERING

Integrated Logistics Solution for DuPont Engineering Polymers/Gard Automotive Manufacturing

COURSE ID
May 12, 2014
NAME
INSTRUCTOR
INTEGRATED LOGISTICS SOLUTION FOR DUPONT ENGINEERING 2

Introduction
DuPont Engineering Polymers (DEP) are one of the top polymer manufacturers in the
country. Through continued investment in the latest manufacturing technology, they have
managed to produce the highest quality polymer available on the market for a number of years.
This has allowed them to enjoy a great measure of profitability through winning contract bids
over their competitors easily, in some cases directly.
One of DEPs biggest customers is Gard Automotive Manufacturing (GARD). GARD are
renowned suppliers of plastic parts to makers of automobiles and small trucks as well as after-
market retailers in the United States. Over the past fifteen years, DEP and GARD have had a
successful and productive business relationship where DEP was directly sourced as the sole
supplier of polymers. Polymers are a critical component of the GARD manufacturing process.
GARD are undergoing transition in the procurement department, with the current head,
Mike OLeary, set to retire in six months. They have identified Richard Binish, an ambitious and
qualified manager, as his replacement. Binish intends to revolutionize the GARD procurement
process in order to enhance efficiency. He has a set of measures in the pipeline to be
implemented progressively as he takes charge of the companys procurement.
Some of the benchmarks he intends to implement are currently not being met by DEP,
and they currently have only a one year contract to work with. Tom Lippet, the sales
representative from DEP, also learns that his competitors have caught up with DEP in terms of
polymer quality, meaning that DEP will have to seek alternative avenues of differentiating
themselves away from the product if they are to remain competitive.
Present Situation
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The most fundamental weakness identified that threatens the future of DEPs dealing
with GARD is an inefficient product delivery setup. Presently, DEP is required to deliver the
polymer ten days after the order, with an acceptable window of five days and a 95% minimum
service threshold. They easily meet this requirement, posting impressive service threshold of
96.2%. However, Binish intends to shrink the delivery window to 3 days, while also increasing
the minimum service threshold to 96%. After three years, Binish intends to have achieved same-
day delivery (one day acceptable window) with delivery threshold of 96.5%. DEP are faring
poorly at the enhanced standards, achieving only 80% service on same-day delivery.
The first step in improving DEPs service delivery is to review their supply chain process
(Hanfield & Nichols, 1999). The following image represents a supply chain diagram for DEPs
operation. After an order is received from a client, it is communicated electronically to the
manufacturing department. They are able to order the six chemical compounds required to
manufacture the polymer from their six supplying companies. The actual manufacturing then
takes place, followed by warehousing of the produce before it is processed and ready for
shipping. The manufacturing and shipping stages add value in the process. This is because in
manufacturing, a less useful substance is converted to a more useful substance. The shipping
stage bridges the geographical gap between the customer and the product he requires, hence
adding value. The other stages do not add value but are a required part of the whole process to
facilitate smooth operation.

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DEP enlists the services of three suppliers for each raw material annually. They are
assigned delivery quotas of 60%, 25% and 15% depending on their performance during the
yearly bidding process. The minimum delivery stage process cycle for primary producers is 4
days. The limiting factor in this case are Companies 4 and 5, which have a minimum delivery
time of 4 days from the order date. When we take into consideration a minimum warehousing
period of three days before the product is shipped to the customer, the minimum performance
cycle becomes 7 days.
On the other hand, when seeking the maximum performance cycle, we take into account
worst-case scenarios in terms of delays (Hanfield & Nichols, 1999). The maximum delay in raw
material delivery is 9 days, by Company 4. Coupled with a worst-case 6 day warehousing period
and a 6 day shipping period for distant customers, the maximum performance cycle for DEP is
therefore 21 days. This is a very huge delay for a company seeking to be successful in an
increasingly competitive market.
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The 25% and 15% suppliers are a handy asset to DEP. In addition to ensuring that there
exists an assured supply of raw materials throughout the year, the company is also able to use
them as a shield against price increase by any individual company. The non-primary suppliers
actually deliver very impressive performances in terms of the time between order and delivery.
For example, it is noted that five non-primary-supplier arrangements provide a minimum delay
of 2 days between order and delivery, compared to only one primary-supplier arrangement.
To use these supplementary suppliers more effectively, DEP should adapt a flexible
delivery arrangement which does not bind it to buy specified amounts from specific suppliers for
a long time. For example, if a company shows impressive delivery records, the contracts should
allow for more orders to be given to that supplier. In addition, the bid evaluation during the
tendering process should move beyond merely comparing prices, placing stronger emphasis on
performance cycles and service delivery thresholds. Admittedly, this will increase the cost of
procuring raw materials for DEP. However, the payoff in terms of shorter production cycles will
be a handsome reward for such a small price.
Recommendations
If I was Tom Lippet, the first project I would suggest a review of all contracts with our
suppliers. I would propose new contracts with shorter delivery deadlines and higher delivery
thresholds to reduce the total performance cycle. Secondly, I would float an idea for tighter
integration between the manufacturing and warehousing teams. According to Thomas and
Griffin (1996), Historically, the three fundamental stages of the supply chain, procurement,
production and distribution, have been managed independently, buffered by large inventories.
They go further to mention that the need to better meet customer needs has led to companies
adopting coordinated planning between two or more stages of the supply chain.
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I would suggest increasing the manufacturing area to provide space for some of the
processes that take place in the warehouse at present (Hanfield & Nichols, 1999). Some activities
such as labelling, palletizing, shrink wrapping and matching manufacturing tickets with purchase
orders can easily be done at the tail end of the production line. This would reduce the time spent
by products at the warehouse, as some can then be shipped immediately after manufacturing has
been completed. This would further contribute to shortening the production cycle.
With these proposals implemented, our service record with GARD will improve
significantly. We will be able to post better service delivery thresholds, even with the narrower
delivery acceptability window being considered. I would emphasize to Binish the ever-
improving quality of our polymer due to the continuous investment we make in improving our
processes.
However, the keynote of the sales pitch will focus on our service delivery benchmarks. I
will mention that todays polymer manufacturers have upped their game, almost commoditizing
the product. This makes having a high quality product merely a qualifying criteria for the
contract. I will point out how our company is able to deliver the product within narrow time
requirements to very impressive levels. I will sell to him that our efficiency is also beneficial to
them as it helps them streamline their internal manufacturing processes without suffering from
interruptions (Thomas & Griffin, 1996). I will market this as a key differentiator, and the
cornerstone of an order winning criteria.
The change in our strategy is a reflection of the highly dynamic nature of supply chain
management. Businesses are continually reinventing themselves in pursuit of increased growth
and opportunities to attain higher profits. The business landscape means that supply chain
management must drive the change to keep businesses ahead of the curve. Supply chain
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managers must have a dynamic mindset that is able to perceive oncoming change and act
suitably in good time to the advantage of the company.
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References
Hanfield, R. & Nichols, E. (1999). Introduction to supply chain management. Upper Saddle
River: Prentice Hall.
Stevens, G.C. (1989). Integrating the supply chain. International Journal of Physical
Distribution & Logistics Management, 19(8), 3-8.
Thomas, D. J. & Griffin, P.M. (1996). Coordinated supply chain management. European Journal
of Operational Research, 94(1), 1-15.