SIG Combibloc: Supply Chain Innovation, How Can the Forecasts be Improved?

SIG Combibloc: Supply Chain Innovation
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Question 1
(a) Map the current supply chain of SIG Combibloc.
The current supply of SIG Combibloc has its functions divided into several parts. For example, the order procession is grouped under sales while purchasing is grouped together with finance. Such variations and groupings are also present in other regions. There is no supply chain management center to consolidate all the essential knowledge needed to make better decisions. Instead, information is immensely distributed (EMC Corporation, 2007).
During the production, carton rolls are fed onto the line at the beginning of process; the cartons weigh 2 tons. An aluminum foil and polythene granulate from an overhead funnels are melted before they can be applied in a liquid stream to the carton from both sides. This is done to ensure that the cartons can withstand any forces from inside or outside, for example, the impacts of activities like printing. After this process, the carton rolls are printed using different colors depending on the customers design as ordered. Each design has a set of the printing cylinder (EMC Corporation, 2007).
The cylinders are unique sets produced by a specialist who engraves the desired shapes onto to a chrome surface. The whole process takes more than six weeks for a new design to be produced; this is because the cylinders are never delivered on time. The next phase involves the carton rolls being creased and cut into the desired shapes as required. In the final stages of the production, the carton is folded and sealed at once, making them into sleeves. The sleeves are delivered packed into carton and stack on pallets (EMC Corporation, 2007).
During the production, some machines require different cartons and aluminum thickness or even different types of polyethylene layers. The main changes in production occur during the printing, and when setting up for creasing and cutting. The set-up time usually takes more than thirty minutes to change from one design to the other while the actual production would take less time than even the setup times (EMC Corporation, 2007).
(b) Identify the challenges SIG Combibloc is facing within the supply chain?
Some of the challenges facing SIG Combibloc within the supply chain include the following:
Initially, the supply chain management was not a priority for the company. Hence, the available information was not adequate to make better decisions (Trebilcock, 2011). Besides, there are a lot of entry barriers in the market especially for aseptic carton packaging. This is as the result of strict quality standards requirement by customers. The complex aseptic filling technology requires companies to have the know –how especially in packaging and engineering sectors. New market entrants face difficulties to gain the grip in the markets because installing filling lines and constructing cardboard plants need huge capital investments (Harkharia & Shankar, 2005).
The main problem with the supply management started when SIG transferred its know –how it had acquired for several years, to other activities to come up with complementary business lines. This resulted to diversification as a way of minimizing cost. The company manufactured automobiles, planes, and vending machines but in small scale. Further diversification resulted to the packaging of chocolate and soup cubes. SIG Combibloc came up with three division of producing aseptic packaging for beverage and food, an integrated line for beverage products for plastic cans, glass, bottles, and the SIG pack manufacturing packaging systems machines for food. Even though the company expanded internationally to meet the customers demand, all its activities was centrally managed in Switzerland (Trebilcock, 2011).
The business model projected increased sales, but the prices charged for the machines did not adequately cover for the production and assembling costs. The Company could not achieve the projected levels to attract and retain some of its customers after installing the filling line. The only profit made came from one division that is the sale of aseptic packaging materials because they were continuously needed by customers. This was as a result of macroeconomic and also political environment by then. The September 11 terrorist attack and constant conflicts between Iraq and the US resulted to several investors being cautious and were reluctant to put more money in the new system (Bechtel & Jayaram, 1997).
The other challenge was the growing markets in Eastern Europe and China, especially in aseptic packaging goods. The beverage carton was part of packaged goods; due to cost comparisons and regulations by other countries, the company lost its market share to the new competitors. For example in Germany, the Federal Ministry of Environment amended its packaging legislation to permit beverage carton to be considered as deposit free (EMC Corporation, 2007).
In the past, the company had undertaken measures to decrease set-up time, but due to a high number of small orders received, they could not make a major reduction in production. The plant managers monitored inventory levels to benchmark with other plants. However, he did not have any influence on disposition; the plant manager could store it and leave the finished pallets in the warehouse until the sales people requested for shipment (Trebilcock, 2011).
The aluminum market was uneven, raw materials were mostly supplied by few big players, the main suppliers were chemical and oil processing companies who targeted big industrial markets, therefore, SIG Combibloc demand was not significant to them.
The other major challenge was that customers came up with design specifications. Therefore, the company ordered proof of print from specific manufacturers whereby some of them used faster technology while others used test cylinders first. This prolonged the whole approval process. Proof prints needed to go through long processes of adjustments before the final cylinder could be produced (Harkharia & Shankar, 2005).
Question 2
Develop key performance indicators (KPI's) which quantify the performance of the supply chain.
In 2000, when SGI Combibloc decided to ...