Supply management of a contract manufacturer

Abstract

This thesis concerns the improvement of the supply management system of a contract manufacturer. Originally, the studied company had problems of untimely deliveries and high cost of material expedition. The problems were caused by unstable demands from customers in term of time and volume. These problems affected the overall performance of company as well as customer dissatisfaction. The improvement began with an extensive investigation of the existing system. Fish bone diagrams and Failure Modes and Effects Analysis (FMEA) were used to analyze problems and their causes. The analyses led to the development of a new system which can be divided into two areas: external and internal areas. The external area concerns mainly with localization of supply sourcing. The internal area involves the improvements of material planning and purchasing lead time reduction. The implementations of the improved system shows improvements of supply management system, Material shortages, and expediting costs, are reduced significantly. The material shortages could be reduced by more than 60% and the expediting costs could be decreased by approximately USD 67,000. There is also significant improvement of keeping delivery promises some due to the agreement on the suggested frozen-order time zone which makes order stable enough to manage. Lead time of most products and shortened satisfaction by localizing sources of suppliers. However, lead time of some products can not be shortened significantly because the customers insist on using some items from sources with long purchasing lead time.