Supply Chain Material Management Framework In Assemble To Orders (ATO)

Irwana Abd Malek
University of Technology Malaysia, Johor, Malaysia

Abdul Rahman Abdul Rahim
University of Technology Malaysia, Johor, Malaysia

This study investigates and analyzes CSFs construct in SCM implementation to minimize product lead-time and to identify the relationship between reducing raw material lead-time and improving product lead time. Short delivery lead time and efficient management on material inventories are two crucial elements that determine the competitiveness of many contract assembly manufacturers, especially in contract manufacturing. Assemble-to-Order (ATO) environment has become popular because companies do not want to keep finished goods inventories that lead to an increase in operational cost. ATO manufacturing involves production only upon receiving confirmed orders from customers. Thus, this study focuses on Critical Success Factors (CSFs) in Supply Chain Management (SCM) implementation and develops a comprehensive SCM framework for ATO contract manufacturing. Raw material lead time and material management process flow are the main concerns in the SCM context and ATO manufacturing environment. This study investigates the CSF construct in SCM implementation to minimize the issues caused by the long product lead time and to identify the relationship between reducing raw material lead time and improving product lead time. Material classification, raw material improvement strategy, and suppliers’ relationships are reviewed to develop and enhance current material strategy in accordance with present situations. An overall supplier material management system will be developed to improve the entire supply chain system as well as information sharing and identification methods. Information sharing from manufacturers to suppliers and vice versa is important to ensure that manufacturers can obtain scheduled and timely production information. Information from manufacturers to suppliers provides an advantage for the suppliers to prepare the raw materials and capacity plan to meet ATO requirements. The framework is unique as it addressed the importance of CSFs constructs, planning and monitoring processes to continue the success in SCM implementation. This framework integrates most of the planning process as the first input. This includes demand planning, supply planning, demand fulfillment, replenish planning and lead time planning. The planning process covered all demand and supply from customers, suppliers and manufacturers perspectives. The framework integrates most of CSFs constructs namely product classification, material management strategy, information sharing, logistic management and supplier relationship. The monitoring process in this framework is a guideline to companies on continuous SCM implementation.

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