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Pioneer Hi-Bred Case

Were the critical assumptions correct? Had any important possibilities regarding production and distribution operations been overlooked? Had the plan adequately taken into account possible deviations in production resulting from the effects of weather, insects, and crop disease? Given the effects of competition, weather, government regulations, and consumption, were demand estimates reasonable? And were the analytic models used as robust and informative as they could be? Dave Browning, Senior Executive Pioneer Hi-Bred
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Source: HBR case 9-898-238, Pioneer Hi-Bred International.

Basic supply chain model


Dec 96 Feb 97

Supply Management Decisions

Time

Process
Planning for seed corn sales.

Description
What seed corn hybrids to be produced, how much at each location and where to be processed. Contracts to farms under Pioneer supervision and technical support including detasseling. Shipping, husking, drying, conditioning, packing, and storing hybrid corn for distribution. Growing in Southern Hemisphere as a supplement to normal field production in Northern Hemisphere. Distribution, transportation, and inventory management.

Apr 97 Sept 97

Field production.

Sept 97 Feb 98

Post-Harvest Production.

Sept 97 Jan 98

Winter production.

Dec 97 Apr 98

Distribution and shipping.

Source: Effective Supply Chain Management, Tom Davis, Sloan Management Review, Summer 1993.

Source: HBR case 9-898-238, Pioneer Hi-Bred International.

Planning Growing
Work-in-process inventory

The reason we keep inventory is simple. Inventory is insurance protection against life in an uncertain world.

F E E D B A C K Finished goods inventory

Processing

Winter production

Distribution

Customer
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Source: HBR case 9-898-238, Pioneer Hi-Bred International. Source: Effective Supply Chain Management, Tom Davis, Sloan Management Review, Summer 1993.

A Few Key Issues: Carryover rate Yield International production


A sound supply chain modeling methodology can address long term problems. Focusing on the uncertainties in the system and the way they propagate up and down the chain can lead to new operating policies and objectives. Using tactical tools like transportation models, scheduling algorithms, or fast MRP programs can fine-tune the performance of the system.
Source: HBR case 9-898-238, Pioneer Hi-Bred International.

Source: Effective Supply Chain Management, Tom Davis, Sloan Management Review, Summer 1993.

Use analysis tools in an iterative manner.


Demand Data Yield Data Production Cost Data Transportation Costs Capacities

LP / Production Models

33 major hybrids, 16 major markets, 22 core growing regions and 20 processing locations
Source: HBR case 9-898-238, Pioneer Hi-Bred International.

Source: Effective Supply Chain Management, Tom Davis, Sloan Management Review, Summer 1993.

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Output of analysis tools.

Source: Effective Supply Chain Management, Tom Davis, Sloan Management Review, Summer 1993.

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Source: Effective Supply Chain Management, Tom Davis, Sloan Management Review, Summer 1993.

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chief culprit is demand uncertainty.

Source: Effective Supply Chain Management, Tom Davis, Sloan Management Review, Summer 1993.

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Source: Effective Supply Chain Management, Tom Davis, Sloan Management Review, Summer 1993.

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The Future???
The thermostat, light bulb, clock radio everything should be connected to the internet. Sun Microsystems CEO Scott McNealy

Every single object manufactured will be created with a wireless address and will carry an identifier. Sun Microsystems Chief Scientist Bill Joy

Fortune, April 17, 2000, page 162.

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Material order quantities And reorder points Fill rate targets Bill of materials Cost data Production Requirement Supplier lead time

Material Material response Control Times Submodel


Production Lot size

Production Control Submodel

Production Requirement Cost data Time data Process structure

Production Lot size

Production lead times

Transportation Time data Demand data Cost data Network data Fill rate targets

Distribution Finished goods Submodel Lead time

Finished Goods Stockpile Submodel

Cost data Fill rate targets

Demand for Finished goods Distribution Inventory ordering policies Stockpile reorder points
Source: Cohen and Lee, Op R, M-Apr 88

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