chapter 8 integrating the supply chain
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Chapter 8 Integrating the supply chain. Integration in the supply chain. Efficient consumer response. Collaborative planning, forecasting and replenishment. Managing supply chain relationships. A framework for managing the supply chain. Content. - PowerPoint PPT PresentationTRANSCRIPT
Chapter 8Chapter 8
Integrating the Integrating the supply chainsupply chain
ContentContent
Integration in the supply chain
Efficient consumer response
Collaborative planning, forecasting and replenishment
Managing supply chain relationships
A framework for managing the supply chain
Integration in the supply Integration in the supply chainchain
1111How can we integrate internally, externally and electronically?
Key issueKey issue
• What is Supply Chain IWhat is Supply Chain Integrationntegration• the degree to which the firm can the degree to which the firm can
strategically collaboratestrategically collaborate with their supply with their supply chain partners and collaboratively chain partners and collaboratively managemanage the intra- and inter-organization the intra- and inter-organization processes to achieve the effective and processes to achieve the effective and efficient flows ofefficient flows of
• Product and servicesProduct and services• Information Information • MoneyMoney• DecisionsDecisions
• With the objective of With the objective of providing the maximum providing the maximum
value to the customer at low cost and high speedvalue to the customer at low cost and high speed
Integration in the supply Integration in the supply chainchain
Measures of integrationMeasures of integration– Access to planning systemAccess to planning system– Sharing production plansSharing production plans– Joint EDI access / networksJoint EDI access / networks– Knowledge of inventory mix / levelsKnowledge of inventory mix / levels– Packaging customizationPackaging customization– Delivery frequenciesDelivery frequencies– Common logistical equipment / Common logistical equipment /
containerscontainers– Common use of third-party logisticsCommon use of third-party logistics
Integration in the supply Integration in the supply chainchain
Internal integration: function to Internal integration: function to functionfunction
Integration in the supply Integration in the supply chainchain
PurchasingPurchasing ProductionProduction DistributionDistribution
Low price
Unreliable delivery and low quality
High productivity of machine and labor
High batch size
Poor available distribution
Keep warehousing operation smooth
Post-manufacturing operation being
resisted
Additional complexity of customizing
products
Inter-company collaboration: a manual Inter-company collaboration: a manual approachapproach
Integration in the supply Integration in the supply chainchain
Strategic Collaboration
Decision FlowDecision Flow
RA
W M
AT
ER
IAL
S
EN
D C
US
TO
ME
RS
Information & Knowledge Flow
Products & Services Flow
Financial Flow
Decision FlowDecision Flow
Enterprise
A
Enterprise
BInformation & Knowledge Flow
Products & Services Flow
Financial Flow
Integration in the supply Integration in the supply chainchain
Electronic collaborationElectronic collaboration
TransactionalThe electronic execution of
transactionInformation sharing
The electronic sharing or exchange of informationCollaboration planningStrategic, tactical and operational exchange
Electronic Electronic collaborationcollaboration
Integration in the supply Integration in the supply chainchain
Information Information flow in flow in apparel apparel
supply chainsupply chain
ContentContent
Integration in the supply chain
Efficient consumer response
Collaborative planning, forecasting and replenishment
Managing supply chain relationships
A framework for managing the supply chain
Efficient consumer Efficient consumer responseresponse Key issueKey issue
1111How can collaboration be extended across the supply chain to focus on meeting consumer demand?
Efficient consumer Efficient consumer responseresponse Category managementCategory management
Establish infrastructu
re
Optimize introduction
s
Optimize assortments
Optimize promotions
Integrated suppliers
Synchronized
production
Continuous replenishme
nt
Automated store
ordering
Category manageme
nt
Product replenishme
nt
Reliable operations
Cross-docking
EDI EFT
Item coding and
database maintenanc
e
ABCEnabling
technologies
Con
tinu
ou
s re
ple
nis
hm
en
tC
on
tinu
ou
s re
ple
nis
hm
en
t
Enabling technologiesEnabling technologies– Scanning dataScanning data– Data warehousingData warehousing– Data miningData mining
The data includeThe data include– Demand / consumption / sales informationDemand / consumption / sales information– Cash flowCash flow– Stocks of finished goods / work in progressStocks of finished goods / work in progress– Delivery and output statusDelivery and output status
Efficient consumer Efficient consumer responseresponse
Efficient consumer Efficient consumer responseresponse
Category Category managementmanagement
Continuous Continuous replenishmentreplenishment
Enabling Enabling technologiestechnologies
RequireRequired d
capabilitcapabilityy
Account managementDemand managementMultifunctional selling teamsPrice list restructuringEffective and customized promotions
Joint Joint inventory inventory managementmanagementCross-dock Cross-dock operationsoperationsContinuous Continuous replenishmentreplenishmentEffective Effective logistics and logistics and product flowsproduct flowsQuick Quick responseresponse
Effective Effective information information sharingsharingAutomated Automated order order generationgenerationBar-coding Bar-coding and the use and the use of other of other scanning scanning technologytechnology
ContentContent
Integration in the supply chain
Efficient consumer response
Collaborative planning, forecasting and replenishment
Managing supply chain relationships
A framework for managing the supply chain
Collaborative planning, Collaborative planning, forecasting and forecasting and replenishmentreplenishment Key issueKey issue
1111How can collaboration be extended to strategic as to well as operational levels?
CPFR ModelCPFR Model1.1. Develop front-end agreementDevelop front-end agreement2.2. Create joint business plansCreate joint business plans3.3. Create individual sales forecastsCreate individual sales forecasts4.4. Identify exceptions to sales forecastsIdentify exceptions to sales forecasts5.5. Resolve / collaborate on exception Resolve / collaborate on exception
itemsitems6.6. Create order forecastCreate order forecast7.7. Identify exceptions to order forecastIdentify exceptions to order forecast8.8. Resolve / collaborate on exception Resolve / collaborate on exception
itemsitems9.9. Generate ordersGenerate orders
Collaborative planning, Collaborative planning, forecasting and forecasting and replenishmentreplenishment
Planning
Forecasting
replenishment
BuyerBuyer
SellerSeller
Goal : Link buyer and Seller Goal : Link buyer and Seller ElectronicallyElectronically
Wal-mart’s CPFR Wal-mart’s CPFR ProcessProcess
GENERATE ORDER
FRONT END AGREEMENT
JOINT BUSINESS PLAN
CollaborativeCollaborativePlanningPlanning
CREATE SALES FORECAST
IDENTIFY EXCEPTIONS
RESOLVE EXCEPTIONS
CollaborativeCollaborativeForecastingForecasting
CREATE ORDER FORECAST
IDENTIFY EXCEPTIONS
RESOLVE EXCEPTIONS
CollaborativeCollaborativeReplenishmentReplenishment
Wal-Mart’s CPFR Wal-Mart’s CPFR ProgramProgram CPFR has “blurred the lines between CPFR has “blurred the lines between
supplier and customer”supplier and customer” Suppliers buy into their program because Suppliers buy into their program because
they have to to work with Wal-Mart, but they have to to work with Wal-Mart, but more importantly, because Wal-Mart’s more importantly, because Wal-Mart’s Systems provide increased profits for Systems provide increased profits for Wal-Mart and their suppliersWal-Mart and their suppliers
Wal-Mart “teaches” their suppliers how to Wal-Mart “teaches” their suppliers how to minimize shipping, inventory and other minimize shipping, inventory and other costs by showing them their own model.costs by showing them their own model.
ContentContent
Integration in the supply chain
Efficient consumer response
Collaborative planning, forecasting and replenishment
Managing supply chain relationships
A framework for managing the supply chain
Managing supply chain Managing supply chain relationshipsrelationships
Key issueKey issue
1111How can broader-based relationships be formed between trading partners in the supply chain?
Creating closer relationshipsCreating closer relationships
Managing supply chain Managing supply chain relationshipsrelationships
Bow tie
R&D
LogisticsInformation system
Marketing
Operations
Arm’s length transaction
Information system
Marketing
OperationsInformation system
Partnership
Information system
R&D
Logistics
Diamond
supplier customer supplier customer
Factors in forming supply chain Factors in forming supply chain relationshipsrelationships– The order winnerThe order winner– The method making sourcing decisionsThe method making sourcing decisions– The nature of electronic collaborationThe nature of electronic collaboration– The attitude to capacity planningThe attitude to capacity planning– Call-off requirementsCall-off requirements– Price negotiationsPrice negotiations– Managing product qualityManaging product quality– Managing research and developmentManaging research and development– The level of pressureThe level of pressure
Managing supply chain Managing supply chain relationshipsrelationships
ContentContent
Integration in the supply chain
Efficient consumer response
Collaborative planning, forecasting and replenishment
Managing supply chain relationships
A framework for managing the supply chain
A framework for A framework for managing the supply managing the supply chainchain Key issueKey issue
1111What are the management implications of integrating the supply chain?
A framework for A framework for managing the supply managing the supply chainchain
1Develop a supply
chain strategy
2Gather supply
chain information
3Develop effective partnerships and
alliances
4Pilot new supply chain solutions
5Organize for supply chain performance
6Develop
measurement system for supply chain performance
Develop a supply chain strategyDevelop a supply chain strategy– Customer service requirementsCustomer service requirements– Plant and distribution center network Plant and distribution center network
designdesign– Inventory managementInventory management– Outsourcing and third-party logistics Outsourcing and third-party logistics
relationshipsrelationships– Business processesBusiness processes– Organizational design and training Organizational design and training
requirementsrequirements– Performance metrics and goalsPerformance metrics and goals
A framework for A framework for managing the supply managing the supply chainchain
Pilot new supply chain solutionsPilot new supply chain solutions– Successful supply chain improvement Successful supply chain improvement
includingincluding Involvement of key stakeholders, suppliers, Involvement of key stakeholders, suppliers,
customers and employeescustomers and employees Selection of scope and environment, focusing Selection of scope and environment, focusing
on avoiding riskon avoiding risk Identification of the key questions that the Identification of the key questions that the
pilot must answerpilot must answer
A framework for A framework for managing the supply managing the supply chainchain
Develop measurement systems Develop measurement systems for supply chain performancefor supply chain performance– On time in full, outboundOn time in full, outbound– On time in full, inboundOn time in full, inbound– Internal defect ratesInternal defect rates– New product introduction rateNew product introduction rate– Cost reductionCost reduction– Stock turnsStock turns– Order to delivery lead timeOrder to delivery lead time– Fiscal flexibilityFiscal flexibility
A framework for A framework for managing the supply managing the supply chainchain