Chapter 8 Integrating the supply chain

1
Chapter 8Integrating the supply chain
2
Content
3
Integration in the supply chain

• Key issue

4
Integration in the supply chain

• What is Supply Chain Integration
• the degree to which the firm can strategically
  collaborate with their supply chain partners and
  collaboratively manage the intra- and
  inter-organization processes to achieve the
  effective and efficient flows of
• Product and services
• Information
• Money
• Decisions
• With the objective of providing the maximum value
  to the customer at low cost and high speed

5
Integration in the supply chain

• Measures of integration
• Access to planning system
• Sharing production plans
• Joint EDI access / networks
• Knowledge of inventory mix / levels
• Packaging customization
• Delivery frequencies
• Common logistical equipment / containers
• Common use of third-party logistics

6
Integration in the supply chain

• Internal integration function to function

Purchasing
Production
Distribution
7
Integration in the supply chain

• Inter-company collaboration a manual approach

8
Integration in the supply chain

• Electronic collaboration

Transactional The electronic execution of
transaction
Electronic collaboration
Information sharing The electronic sharing or
exchange of information
Collaboration planning Strategic, tactical and
operational exchange
9
Integration in the supply chain
Information flow in apparel supply chain
10
Content
11
Efficient consumer response

• Key issue

12
Efficient consumer response

• Category management

13

• Continuous replenishment

14
Efficient consumer response

• Enabling technologies
• Scanning data
• Data warehousing
• Data mining
• The data include
• Demand / consumption / sales information
• Cash flow
• Stocks of finished goods / work in progress
• Delivery and output status

15
Efficient consumer response
Category management Continuous replenishment Enabling technologies
Required capability Account management Demand management Multifunctional selling teams Price list restructuring Effective and customized promotions Joint inventory management Cross-dock operations Continuous replenishment Effective logistics and product flows Quick response Effective information sharing Automated order generation Bar-coding and the use of other scanning technology
16
Content
17
Collaborative planning, forecasting and
replenishment

• Key issue

18
Collaborative planning, forecasting and
replenishment

• CPFR Model
• Develop front-end agreement
• Create joint business plans
• Create individual sales forecasts
• Identify exceptions to sales forecasts
• Resolve / collaborate on exception items
• Create order forecast
• Identify exceptions to order forecast
• Resolve / collaborate on exception items
• Generate orders

Planning
Forecasting
replenishment
19
(No Transcript)
20
Wal-marts CPFR Process
Goal Link buyer and Seller Electronically
21
Wal-Marts CPFR Program

• CPFR has blurred the lines between supplier and
  customer
• Suppliers buy into their program because they
  have to to work with Wal-Mart, but more
  importantly, because Wal-Marts Systems provide
  increased profits for Wal-Mart and their
  suppliers
• Wal-Mart teaches their suppliers how to
  minimize shipping, inventory and other costs by
  showing them their own model.

22
Content
23
Managing supply chain relationships

• Key issue

24
Managing supply chain relationships

• Creating closer relationships

Partnership
Arms length transaction
RD
Marketing
Marketing
RD
Logistics
Operations
Operations
Logistics
Information system
Information system
Information system
Information system
supplier
customer
supplier
customer
Bow tie
Diamond
25
Managing supply chain relationships

• Factors in forming supply chain relationships
• The order winner
• The method making sourcing decisions
• The nature of electronic collaboration
• The attitude to capacity planning
• Call-off requirements
• Price negotiations
• Managing product quality
• Managing research and development
• The level of pressure

26
Content
27
A framework for managing the supply chain

• Key issue

28
A framework for managing the supply chain
6 Develop measurement system for supply chain
performance
4 Pilot new supply chain solutions
5 Organize for supply chain performance
1 Develop a supply chain strategy
2 Gather supply chain information
3 Develop effective partnerships and alliances
29
A framework for managing the supply chain

• Develop a supply chain strategy
• Customer service requirements
• Plant and distribution center network design
• Inventory management
• Outsourcing and third-party logistics
  relationships
• Business processes
• Organizational design and training requirements
• Performance metrics and goals

30
A framework for managing the supply chain

• Pilot new supply chain solutions
• Successful supply chain improvement including
• Involvement of key stakeholders, suppliers,
  customers and employees
• Selection of scope and environment, focusing on
  avoiding risk
• Identification of the key questions that the
  pilot must answer

31
A framework for managing the supply chain

• Develop measurement systems for supply chain
  performance
• On time in full, outbound
• On time in full, inbound
• Internal defect rates
• New product introduction rate
• Cost reduction
• Stock turns
• Order to delivery lead time
• Fiscal flexibility