Integrating the value chain : a step-by-step approach for creating a world-class supply chain for Kodak professional digital cameras

Abstract

Manufacturers of electronic equipment today face a new competitive battle. This battle does not just focus on the most efficient methods of production, but also the effectiveness of the entire supply chain. The next competitive advantage in manufacturing will shift from competition between leaner production systems to fully integrated and optimized supply chains. To assimilate the effectiveness of their supply chains, manufacturers must answer the following questions: What is the appropriate supply chain model for the type of product and volume? How should inventory levels be calculated and optimized for the entire supply chain? Is the distribution network designed toward the needs of the final customer? How can communication in the supply chain be managed most effectively? This thesis focuses on each question as they relate to the development of a more integrated supply chain. It is important to note that there is no one optimal solution because much depends on product characteristics. The thesis is based on research done at Eastman Kodak Company on the supply chain for the professional digital cameras. The goal is to provide a framework and model that can be used in improving any supply chain based on optimizing inventory levels and modifying the structure of the supply chain. The tools utilized include the MIT Strategic Inventory Placement (SIP) Model and improved communication via the Internet. By applying the framework described in this thesis, the digital camera manufacturing and supply chain team identified opportunities to double inventory turns and reduce its worldwide finished goods inventory by approximately $1.8 million. Furthermore, a newly designed communication management system will improve supply chain delivery performance and customer service.