Milk Run Inc Case Study

The main problems within a just-in-time system are:

• Supply Shocks. JIT leaves manufacturers venerable to supply shocks. Both supply or demand shocks can cause a major problem in JIT. A large demand shock or a supply shock can lead to the inability to meet current demand.

• Price Shocks. In JIT, prices for parts involved in the production process are assumed to remain constant. When there are price shocks, the company’s profit margin can be greatly affected.

• Stress on Equipment. A negative aspect to JIT manufacturing is the stress on-demand production places on equipment. Under normal operating conditions, machines are used systematically and controlled to operate with set production requirements. This allows mechanics and operators

In this case, the supplier brings its competence and background to create a product in a quicker way, with lower costs and higher quality;

• Milk Run: the intention is to have a supplying system with pre-defined routines and schedules for material collection in the supplier field. The main objective is to reduce logistic supplying costs via scale economies and route enhancement, as well as to increase process reliability as a whole;

• Modular Consortium: it was created in the automotive field and is based on the transfer of all assembling operations to the first level suppliers called Modulates. This new system aims, among other things, a more effective production and cost reduction when compared to the traditional assembling model. Firmo and Lima (2005) points out that one of the most relevant aspects within this new industrial model is the need of information exchange among all their constituting parts.

All the production decisions are carried out together, searching for the best option for the different

Especially in the automotive industry, SCM has presented some initiatives and practices that aim the generation of a competitive differential for the sector focusing on the immediate chain for the automotive companies (Tier 1). The proposal was to analyze and suggest improvements on the automotive sector chain, that is, auto parts companies and their suppliers (Tier 2). Although some SCM initiatives and practices can be observed among assembler and auto parts companies, these practices are usually not implemented in the chain continuation, specially between auto parts companies and their suppliers. Even though participants show theoretical knowledge about SCM, such concepts and steps are not applied in the daily relationship among auto parts companies and suppliers, which denotes some improvement opportunities. It is recommended to…… Thus, the need to use SCM initiatives and practices in all supply chain levels was evidenced, so that processes were optimized, reducing financial and relationship costs and finally making enterprise daily routines part of the organization objectives and activities. The increasing use of information technology represents a great opportunity window and stands as a fundamental part of SCM, as it allows information