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COPYRIGHT AND CITATION CONSIDERATIONS FOR THIS THESIS/ DISSERTATION o Attribution — You must give appropriate credit, provide a link to the license, and indicate if changes were made. You may do so in any reasonable manner, but not in any way that suggests the licensor endorses you or your use. o NonCommercial — You may not use the material for commercial purposes. o ShareAlike — If you remix, transform, or build upon the material, you must distribute your contributions under the same license as the original. How to cite this thesis Surname, Initial(s). (2012). Title of the thesis or dissertation (Doctoral Thesis / Master’s Dissertation). Johannesburg: University of Johannesburg. Available from: http://hdl.handle.net/102000/0002 (Accessed: 22 August 2017). THE INTERACTION BETWEEN SUPPLY CHAIN MANAGEMENT AND MANUFACTURING PLANNING IN AN ELECTRONIC DEFENCE SYSTEMS COMPANY By ME MASHININI MINOR DISSERTATION Submitted in partial fulfilment of the requirements for the degree MASTER COMMERCII in BUSINESS MANAGEMENT in the FACULTY OF MANAGEMENT at the UNIVERSITY OF JOHANNESBURG Supervisor: PROF J. DU PLESSIS OCTOBER 2012 ABSTRACT Many manufacturing companies around the world, including South African companies, experience a shortfall in desired outcomes in relation to the potential supply chain management benefits that contribute to efficient manufacturing planning and improved delivery performance. These benefits can be translated into an improved balance sheet, income statement and cash flow. Most companies are aware of the view that supply chain excellence yields more economic benefits by directly linking the benefits of increased shareholder value, but lack the understanding of how to unleash the power of the integrated supply chain approach and systematic intervention. As stated by Slone, Dittmann, and Mentzer (2010:7), the supply chain controls up to 70% of the operating cost, including inventory management, and manages most of the physical assets of the business. However, little research currently exists in terms of directly linking the benefits of best fit between supply chain management and a manufacturing planning approach in an engineering-to-order manufacturing environment. This dissertation investigates the misalignment between supply chain management and manufacturing planning in an electronic defence company. This study addresses the possible shortfalls in the interaction between the supply chain management approach and the manufacturing planning approach at an electronic defence systems company and focuses on supply chain planning, manufacturing planning, the influence of design and development and the silo organizational structure. Relevant supply chain management interventions are investigated through a literature review, including the supply chain management approach, the value chain and manufacturing planning. The study was conducted in two ways: Firstly, the relevant literature was reviewed and, secondly, an empirical study was conducted at the research site by administering self-administered questionnaires to selected respondents and by collecting data from the enterprise resource planning (ERP) system to gain a rich understanding of the problem addressed by this research. - 1 - The importance of a supply chain approach to sustaining manufacturing planning excellence, and the value chain as a whole, is explained. Summaries of findings are presented and recommendations are made to assist the military defence organization to balance irregular customer demands and the scale of manufacturing. Areas for future research are also outlined, including researching improved tools and application methods to manage and evaluate forecasts demands in the defence industry. Manufacturing planning in the defence industry is complex as compared to other industries, such as the fast moving consumer goods industry. Consequently, in order to compete globally, organisations require the development of supply chain excellence, as well as the construction of a competitive value chain. One fundamental difference established by the study is that engineering-to-order versus make-to-stock in managing customer demands throughout the supply chain. This dissertation also highlights that the importance of engineering resources in the engineer-to-order case is somewhat different from that in the make-to-stock cars in an electronics defence company in South Africa, and that there is still a gap to be covered for the organization if it is to realize its full potential in terms of integrated supply chain benefits. The research study found that the application of material requirements planning system in these types of organization should be reviewed and an advanced planning system be considered that provides flexibility in a changing environment, in material changes and resources (including engineering resources) changes resulting from product enhancement during production requested by customers or as a result of performance. Product safety enhancement is crucial in the high-tech global competitive environment as well. - 2 - STATEMENT OF ORIGINALITY This work has not previously been submitted for a degree or diploma in any University. To the best of my knowledge and belief, the dissertation contains no material previously published or written by another person except when due reference is made in the dissertation itself. ----------------------------------- -------------------------------------------- Mangisi Edwin Mashinini Date - 3 - ACKNOWLEDGEMENTS Thanks firstly to my supervisor, Prof. J. H. Du Plessis, who has been completely supportive and extremely helpful for the duration of the research project. You have been truly inspirational. Secondly, a special word of thanks goes to my colleagues Mr Lefti Katsaitis and Mr Evert Geldenhuys for their support and encouragement. It has been a great learning experience and great fun; most of all, thank you to my wonderful and supportive family, who have helped to shape my career into what it is today. - 4 - TABLE OF CONTENTS Page ABSTRACT .......................................................................................................... 1 STATEMENT OF ORIGINALITY ......................................................................... 3 ACKNOWLEDGEMENTS .................................................................................... 4 TABLE OF CONTENTS ....................................................................................... 5 LIST OF TABLES ................................................................................................ 9 LIST OF FIGURES ............................................................................................. 10 LIST OF ABBREVIATIONS ............................................................................... 14 CHAPTER 1 ....................................................................................................... 16 1. INTRODUCTION AND ORIENTATION ..................................................... 16 1.1 Introduction to supply chain management and ITS benefits ...................... 16 1.1.1 Supply chain management ............................................................... 16 1.1.2 Supply chain integration ................................................................... 18 1.2 Manufacturing planning supported by supply chain systems ..................... 22 1.2.1 Manufacturing execution approaches ............................................... 22 1.2.2 Enterprise resource planning (ERP) ................................................. 24 1.2.3 Manufacturing resource planning (MRPII) ........................................ 26 1.2.4 Inventory management ..................................................................... 27 1.3 Study orientation background .................................................................... 29 1.4 Problem statement ..................................................................................... 34 1.5 Purpose of the study .................................................................................. 34 1.5.1 Primary research objectives ............................................................. 34 1.5.2 Secondary research objectives......................................................... 35 1.6 Significance of the research study ............................................................. 35 - 5 - 1.7 Scope of the research case study .............................................................. 36 1.8 Research Design and Methodology ........................................................... 37 1.8.1 Research design approach ............................................................... 37 1.8.2 Sample design and decisions ........................................................... 38 1.8.3 Data collection .................................................................................. 38 1.8.4 Limitations of the study ..................................................................... 39 1.9 Structure of the study ................................................................................. 40 1.10 Summary and conclusion ........................................................................... 42 CHAPTER 2 ....................................................................................................... 43 2. SUPPLY CHAIN MANAGEMENT ............................................................. 43 2.1 Introduction ................................................................................................ 43 2.2 Overview of integrated supply