Part grouping: angioplasty for the supply chain: a part grouping system, however, effectively leverages a supply chain by arranging the production of individual items into groups that are based on common manufacturing processes - Agile Combat Support

Air Force Journal of Logistics, Spring, 2003 by Michael C. Yusi

On the other hand, smoothing demand variability through a part grouping system (Figure 2) between supplier and manufacturer allows better production planning from the very start across broad groups of items instead of just piecemeal. In this type supply chain, more demand predictability is gained, and production efficiency is achieved based on this predictability. This production efficiency in a dynamic supply chain results in optimum production capacity utilization and reduces PLT since items are produced with less impact because of demand spikes or interruptions. The bottom line is a supply chain equation that is conducive to agile support in the warfighting business: Agile Combat Support (fx)[[down arrow] manufacturer demand variability] * [[down arrow] PLT] * [[up arrow] steady deliveries to supplier] * [[down arrow] inventory costs] * [[down arrow] customer back orders]. Results of this kind of algorithm are enhanced mission capability for warfighters. In addition, the more done across a broad part grouping supply chain, the more strategic leverage in efficiencies is achieved.

After 11 September 2001, John Rapp, senior vice president of operations for the US Postal Service stated, "Every organization with a supply chain should have contingency plans that help deal with demand surges and interruptions." (14) The part grouping supply chain can actually build in contingency planning by systemically smoothing demand surges or interruptions created by unplanned operations tempo increases in weapon system flying hours, steam time, or tank miles. In doing so, it creates inherent production efficiencies and reduces PLT overall. This is not unlike smoothing blood flow with angioplasty, improving efficiency of the cardiovascular system, and reducing high bloodpressure levels.

Improve Parts Availability and Lower Costs

With improved production efficiency and subsequent reduction in PLT, availability of parts (to include previously hard-to-get parts for aged weapon systems), across a broad part grouping system, remains consistently higher. By doing so, it lowers the need for the supplier and manufacturer to maintain higher inventories of safety level stocks, lowering holding costs on their end of the supply chain. There are less out-of-stock opportunities since part throughput is more assured, given optimization using common manufacturing processes among supply chain partners. Also, with higher efficiencies lowering PLT, the unit cost of parts is sustained and even reduced. Why? Less production schedule disruptions mean overall reduction in queue time buildup. With this achieved, materiel production setup times are economized because of efficiencies gained within the common processes used. This drives reduction in machine and production floor setup changes, leading to more efficient use of shift work and less overtime needs, especially during periods of unplanned demand spikes. Overall, the effectiveness in improved parts availability, cost savings achieved with lower holding costs based on less buffer stocks, and lower unit costs because of production efficiencies can be passed on to an end user such as the warfighter. The patient begins to experience the benefits of the angioplasty procedure and is back on the road to good health.