company familiar. This place employment, a car wash, a yard service company, . We a simple hotdog stand, run a mobile truck sells hotdogs Soldiers inprocessing center/bldg. This company sells hotdogs a bun, condiments, chips, soda.
Describe the company's supply chain
In order to differentiate itself from other similar companies, Hot Diggity Dogs has focused on the quality of its products. As a consequence, the company's management concluded that it is not enough to have a supplier deliver the hot dogs, chips, buns and soda, but that it would need to control the production process for the most important elements on its menu, namely the hotdogs, the chips and the buns.
As a consequence, Hot Diggity Dogs has expanded its supply chain to include raw materials (meat, potatoes) and the supplier manufacturing. The idea is to be involved in these processes in the quality assurance phases: personnel from Hot Diggity Dogs are involved in the testing of the meat and potatoes, to ensure that these raw materials respect the quality norms that Hot Diggity Dogs has in place. At the same time, other testers and quality assurances managers work with the manufacturers to ensure that the production process, namely making the hot dogs, the buns and the chips (different manufacturers for each of these elements on the menu), is run according to the same quality norms.
This is reflected in the diagram presented here. To maximize efficiency in the supply chain, Hot Diggity Dogs has taken over the freight/transport of the raw materials, as well as the transport of the products from the manufacturer to its stores. In order to ensure that the products are as fresh as possible, the company has given up on the possibility to have them stored in a warehouse. As a consequence, the transportation from manufacturer to the Hot Diggity Dogs mobile truck is done daily.
Describe the process internal to the company that you wish to analyze.
The most important part of the entire business appears to be the manufacturing aspect. There are several relevant elements regarding this internal business process. The first has been mentioned in the previous slide: the need to ensure the highest quality for the delivered products.
The second refers to the effectiveness of the business. Indeed, it is important to note that the profitability of this business is determined not only by the number of hot gods, buns or chips that the mobile truck sells or by the difference between revenues and costs, but by how well the company is able to estimate the number of hot dogs, buns and chips it is able to sell in a day. In order to maximize profitability, it is essential to have a perfect coordination between (1) the transport of raw materials in a day and the production cycle during that day and (2) the estimated number of sold products, as compared to the products that have been manufactured.
The arguments in favor of this rely on the fact that the core component of the business is quality, reflected by the fact that the company does not sell from one day to another. As shown, these are fresh, high quality hot dogs, buns and chips, made the same day. If this is the case, then anything that has been left over during a day is a loss, because it needs to be thrown out at the end of the day.
AS-IS Process Flow Chart
The AS-IS process flow chart shows the two important parts of the supply management chain where quality needs to be checked and where the products need to be send back if they are not up to standards. These are the raw materials phase, where the raw materials are selected and checked against the quality standards, and the manufacturing process.
The same procedure is applied in both cases: the quality assurance managers will look to fundamental characteristics, such as the freshness of the products (especially in the case of the meat) and resulting taste (in the case of the manufacturing process). The contracts with the raw materials suppliers and the producers specify in both cases, the same thing: that anything not up to standard can be returned. The quality assurance managers are instructed to apply an extremely rigorous process in both situations.
Identify at least one metric to measure the process and its application (how, what, when, and who)
According to the discussion from the previous slides, the best metric to be applied, taking into consideration the specificities that have been mentioned, is a metric that measures the output as compared to the input. This metric will be a ratio called Efficiency Indicator and is calculated as a ratio of output over input. The input will be the number of hot dogs, buns, soda and chips that the mobile truck receives in a day. The output will be the number of products that are sold during the respective day.
The Efficiency Indicator will have results between 0 and 1. The closer the efficiency indicator is in value to 1, the better the business is being run (with a caveat that will be discussed below). The closer to 0 the indicator is comes to show that the mobile truck is selling too few products as compared to the products it has ordered from its suppliers. It also shows that the supply chain needs to be regulated, either when it comes to raw materials or when it comes to the production.
There are several elements that need to be pointed out when it comes to the implementation of this metric. First, the applicability of this metric is daily. For each day, there will be a resulting Efficiency Indicator. The scope of the indicator is to create an efficient feedback and control mechanism that is based on this indicator. At the end of the month, this indicator will be thoroughly analyzed, so as to understand and correct its fluctuations. If the indicator is close to 1 as an average throughout the month, the company can decide to increase the number of products that are ordered: the indicator shows that sales are at good levels.
Evaluate the efficiency and effectiveness of the process selected above using the data collected
After an entire year of using the Efficiency Indicator, the feedback and control mechanism is evaluated to determine the effectiveness of the process. The data showed interesting results. For the first three months, the efficiency indicators had values over 1. This was a theoretical result, because the mobile truck could not have sold more than it had ordered. As a consequence, the indicator for the first three months showed, in fact, that there were unfulfilled orders: there were customers who came to the mobile truck to purchase some of the products on sale, but who had been turned away because of insufficient supplies.
At this point, the company decided to order more products and, at the same time, the mechanism also self-regulated, because a number of the customers who had been turned away refused to return. For the next nine months of the analyzed period of time, the indicator fluctuated between 0.75 and 0.90. No additional measures to regulate the manufacturing and delivery processes were undertaken.
In conclusion, the process can be judged as effective and efficient, but it should be noted that the indicator proved its effectiveness, because it helped to regulate the process and to automate the feedback and control mechanism. The company was able to improve its performance because of an indicator that showed it was ordering too few products in the manufacturing process.
Determine areas for improvement
This part will discuss areas where the indicator can be improved, but also the manufacturing process itself. One of the emphasized problems with the indicator is that it does not allow real time monitoring and action. It is a daily indicator, which is a positive aspect, but it is difficult to change things from one day to the next just by concluding that the indicator doesn't have the appropriate values. A period of several days is necessary to make a first evaluation, and at least three months to be able to compute averages and decide on whether there is a problem or not. The indicator should allow more flexibility in the decision making process.
Another problem that the indicator has is that it does not touch on the quality of the products, in any way. As mentioned, the manufacturing process is fundamental for the company business not only because it delivers the products for sale, but also because it ensures the appropriate levels of quality that the company has and has promoted as part of its brand.
The efficiency indicator can show optimal delivery and commercialization capacities, but cannot point out whether the quality levels are respected as well (customers could come and purchase because it is lunchtime, for example, and because the mobile truck is the easiest place to purchase something to eat). There needs to be a…