Posted by MIT Sloan Executive Education - 4 months and 5 days ago
MIT Sloan Executive Certificate holder Neil Ackerman is a highly successful supply chain and strategy executive currently serving as Senior Director of Global Supply Chain Advanced Planning and Innovation for healthcare giant Johnson & Johnson. His accomplishments in supply chain innovation throughout his career have been many—so, it’s hard to imagine a time when Ackerman wasn’t sure where he wanted to go, or how he was going to get there. But for the now-accomplished executive, there were several turning points in his career that required deep thought, new ways of thinking, and giants leaps of faith.
Posted by MIT Sloan Executive Education - 2 years and 5 months and 10 days ago
Commonality, or the reuse and sharing of components, manufacturing processes, architectures, interfaces, and infrastructure across the members of a product family, is a strategy targeted at improving corporate profitability. Companies from Toyota to GE use product platform strategies to deliver more variety to their customers and compete more effectively. For example, Black and Decker uses shared motors and batteries across a range of power tools. Volkswagen models such as the Jett and TT share similar underbody components and other aspects.
Typical benefits of a commonality, or a product platform strategy, include:
Shared development costs
Common testing procedures
Production economies of scale
Amortized fixed costs
By definition, commonality seems like an obviously good thing. Why incur the cost of making different parts for different products if the parts do the same thing? Because as it turns out, commonality is not always the right thing to do. And even when it is right, it can be difficult to achieve.
Dr. Bruce Cameron is a lecturer in MIT's Engineering Systems Division and a consultant on platform strategies. His research at MIT uses a healthy dose of systems thinking to tease out when commonality makes sense and how to get companies to pull it off. Cameron oversaw the MIT Commonality Study, which closely examined 30 firms over eight years. The study was the first work to uncover that many firms fail to achieve their desired commonality targets, showing weaker investment return on their platform investments. "That type of behavior and phenomenon is seen in studies that we did in automotive, consumer products, and transport," says Cameron.
Posted by MIT Sloan Executive Education - 2 years and 9 months and 25 days ago
If the nature of your business is manufacturing, chances are one of your biggest concerns is supply chain disruption. While there are plenty of traditional ways to manage ordinary risks, when dealing with high-impact occurrences like viral epidemics or devastating storms--when the risks are often difficult to quantify and prepare for--a different method can help.
A model developed recently by MIT Sloan Professor David Simchi-Levi and his colleagues William Schmidt and Yehua Wei offers an alternative solution that concentrates on quantifying supply chain risk by using a breakthrough Risk Exposure Index (REI). In essence, says Simchi-Levi, the model "focuses on the impact of potential failures at points along the supply chain (such as the shuttering of a supplier’s factory or a flood at a distribution center), rather than the cause of the disruption."
It's a mathematical depiction of the supply chain that can be computerized and updated by employing a common math technique, called linear optimization, to determine the best response to a disruption. Simchi-Levi says that a key component of the model is "time to recovery (TTR), or the time it takes for a particular node (e.g., a distribution center, supplier facility, or transportation hub) to be restored after a disruption." The model removes one node at a time and determines the supply chain response that would minimize the performance impact of the disruption at that node--allowing the company to identify the nodes that need the most attention.
Posted by MIT Sloan Executive Education - 3 years and 8 months and 21 days ago
According to David Simchi-Levi, Professor of Engineering Systems at MIT Sloan, “a growing number of U.S. executives are moving some production operations back from overseas.” While there are a great number of factors driving that trend, one is the need for supply chain flexibility. Today’s global supply chain presents a significant amount of risk, mostly due to the combination of geographically diverse supply chains and Just-in-time (JIT) manufacturing that results in low inventory levels.
Posted by MIT Sloan Executive Education - 4 years and 28 days ago
With globalization comes increased risk and uncertainty in nations, environments, communities, and businesses. As growing complexity makes it more difficult to determine the source of risk in these complex systems, it also reveals the interdependent nature of risk within a greater ecosystem. New studies show the best way to manage an organization in the face of risk is to build resiliency—the ability to withstand, recover from, and maintain function through a crisis. But in order to manage risk effectively, resiliency must be built into the entire interrelated system of an organization.
Posted by MIT Sloan Executive Education - 4 years and 2 months and 11 days ago
As MIT Sloan Professor John Sterman told MIT Technology Review, “there’s no actual beer in the Beer Game.” Instead, it’s an exercise for MIT Sloan students that simulates the supply chain of the beer industry. The roles include retailer, wholesaler, distributor, and brewer; the goal is to make operating costs as low as possible. The Beer Game demonstrates the fluctuations of inventories and backlogs and how they impact the bottom line.
Posted by MIT Sloan Executive Education - 4 years and 2 months and 27 days ago
The return of manufacturing to the U.S., also referred to as the “repatriation” or “re-shoring” by American and non-American companies alike, on the surface sounds like good news for employment. However, this is not necessarily the case. Although manufacturing output over the last 60 years has grown roughly by 3.7% annually, employment has stayed mostly flat during this time. Why does this continue to be true, even as many companies have been moving manufacturing back to the U.S. since 2010?
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