Jimmy Earley, South Carolina
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Supply Chain Management Supply Chain Management Thinking Outside the Box: Budget Crisis Solutions Presenters: Jimmy Earley – Chief of Staff, South Carolina Department of Motor Vehicles and Michael Ristau – 3M Business Development Manager
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Transcript of Jimmy Earley, South Carolina
Supply Chain Management
Supply ChainManagement
Thinking Outside the Box: Budget Crisis SolutionsPresenters: Jimmy Earley – Chief of Staff, South Carolina Department of Motor Vehicles and
Michael Ristau – 3M Business Development Manager
Supply Chain Management
Supply ChainManagement
Budget Crisis SolutionsPresenter: Michael Ristau – 3M Business Development Manager
Supply Chain Management
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Budget Crisis Solutions
As we consider the theme of today’s session ‘Thinking Outside the Box’ there are many stories of change to offer
This theme is relevant not only for new business or improved service but also for maintaining business or survival
For every organization that innovates and succeeds, there may be one or several that fail to keep up
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Budget Crisis Solutions
Process, Product or Service innovation
Applications that transform the business Taking cost out of the system
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What Drives Cost in Your Organization?
People? Infrastructure? Systems?
Example: Inventory & Supply Chain Management Inventory can add cost at not just your location, but throughout
the supply chain
Note: A supply chain has been defined as the sequence of business processes and activities, from customers through suppliers, that provides the products, services, and information that drive customer satisfaction
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Inventory & Supply Chain Costs
Key factors: Number of steps in the supply chain Carrying costs Lead times Demand predictability Severity of shortage
Think Lean and how to eliminate touch-points
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Process Innovation
Dell Computers
Process change – building computers from stock parts to customer requirements rather than standard models sold by retail
Factory Warehouse Distributor Retailer Customer
Factory Assemble Customer
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Results
So what happened? Dell reduced the supplied cost of a computer,
monitor, accessories and software by about 50% Delivery was within 5 days No supply chain costs, sales costs The business model for PCs was changed
And Michael Dell did pretty well too….
Supply Chain Management
Supply ChainManagement
Production and Distribution of License Plates Presenter: Jimmy Earley – Chief of Staff, South Carolina Dept of Motor Vehicles
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License Plate Contract
In September 2007, SCDMV awarded a contract to 3M for license plate production.
3M contract represents two significant changes: Digital plates instead of embossed license plates Fulfillment services
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Embossed Plate Model
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Digital Plate Production
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Impact of Production Changes
Eliminate need for large minimum orders “Just in Time” production/inventory Produce plates faster Safer production method No paints, chemicals, solvents
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Fulfillment Services
3M now is responsible for: Plate design and production services Managing inventory of plates Production of registration forms and decals Packaging, labeling, and transporting plates Mailing plates to customers Shipping plates to 70 SCDMV field offices and authorized
agents
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Impact of Fulfillment Contract
3M manages entire supply chain State does not own/lease equipment SCDMV pays only when a plate/sticker is distributed
to a motorist or field office Reduced warehouse/inventory costs Tighter control of inventory Reorder points for field offices
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Accomplishments
Completed state mandated plate reissue Total Sunrise plates produced – 2,866,702
(FY2008) Plates Mailed – 1,963,226 Plates shipped to field offices – 903,476 Customer received plates within 3-5 business days Plates retuned to agency due to address/mailing
problems – 6,800
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Cost Analysis
Old Process New Process
Cost Per Plate $1.50 - $5.48 $2.26 - $2.68
Mailing
Shipping
$2.07 mailing costs
Plates shipped along with other supplies
$2.28 Mailing Costs (rate increase)
$.08 per plate to ship to field office
Registration Forms and Decals
$.16 for form/decalDoes not include: printing or administrative costs and field office shipping
$.217 for production/printing of each form with decal. Forms matched to plate and mailed
Information Technology
120 hours/year to add new plates to system
120 hours/year to add new plates to system;1230 hours required for initial system programming, interfaces
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Cost Analysis
Old Process New Process
Design Services N/A $21,900 in FY2008
Department of Corrections (Impact)
15-20 inmates involved in production process;
15-20 inmates involved in production process;Lower skill level and less training required;Actual cost plus salaries covered.
Warehouse Staff 7 FTEs 4 FTEsAn additional 12 FTEs would have been required for the reissue project (1.5 years)
Warehouse Space 2,000 square feet 1200 Square Feet - Approximately 40% reduction in floor space needed for plates to date. An additional 3,000 square feet would have been required for the reissue project (150% increase for 1.5 years).
