Relationship Management & Technology Issues
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Relationship Management & Technology Issues Presentation Transcript

  • 1. Value creation through supply chain integrations: relationship management & technology issues Prof. Xiande Zhao Director, Center for Supply Chain Management & Logistics Li & Fung Institute of Supply Chain Management/ Logistics Chinese University of Hong Kong
  • 2. Enhancing competitive advantages through supply chain integration
    • What is Value and how do you create value?
    • What is Supply Chain Integration (SCI)?
    • What are the different types of SCIs?
    • Cases and Research Findings on SCIs
    • What are the key factors that influence SCI?
      • Relationship Management Issues:
        • Trust,
        • Relationship Commitment
      • Technology Issues
  • 3. Some Basic Questions
    • How do you win over your customers?
    • What is value?
    • How do you provide better value to your customer?
  • 4. What is value?
  • 5. Some Basic Questions
    • How do you provide better value to your customer?
  • 6. What are the Order Qualifiers and Order Winners? Exhibit 2.5
  • 7. Time Line for Operations Strategies
  • 8. What can we do to enhance our capabilities in:
    • Delivery speed/Dependability?
    • Flexibility?
    • Services?
    • Innovation?
  • 9. The Answer is:
    • Supply chain Integration (SCI)
  • 10. What is Supply Chain I ntegration?
    • 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
  • 11. Supply Chain Integration Strategic Collaboration Decision Flow Decision Flow
  • 12. How LI & FUNG Adds Value? Li & Fung does the high-value-added front-and back-end tasks front end back end design quality control engineering testing production planning logistics it organizes the lower-value-added middle stages through its network of 7,500 suppliers, 2,500 of which are active at any one time. raw material and component sourcing managing production
  • 13.
    • What are some of the major types of integrations?
  • 14. Strategic Integration
    • Focus on core competencies
    • Outsource other activities
    • Leverage over the strength of the strategic partners to gain competitive advantages
    • Jointly develop strategies with partners
    • structure the strategic goals and objectives into consensus and contractual agreements
    • share resources, rewards and risks across organizations in order to achieve competitiveness.
  • 15. Internal Integration
    • Linking the internally performed work by different functional units into a seamless process to support customer requirements
    • Cross-functional team work: managers of cross functional teams use information from multiple sources to and are empowered to make immediate decisions.
    • Standardization: Establishment of cross-functional policies and procedures to facilitate synchronous operations
    • Simplification: Identification, adoption, implementation, and continuous improvement of best practices
    • Compliance: Adherence to established operational and administrative policies and procedures
  • 16. External Integration
    • the degree to which a firm can partner with its key supply chain members (customers / suppliers)
      • to structure their inter-organizational practices, procedures and behaviors
      • into collaborative, synchronized and manageable processes in order to fulfill the customer requirement.
  • 17. Customer Integration
    • Building lasting and distinctive relationships with customers of choice
      • development of customer specific programs designed to generate maximum customer success.
      • customer focus to continuously match changing expectations
      • Accommodation of unique and/or unplanned customer requirements
  • 18. Supplier Integration
    • Linking externally performed work into a seamless congruency with internal work process
      • development of a common vision of the total value creation process and planning clarity concerning shared responsibility
      • linkages of systems and operational interfaces to reduce duplication, and redundancy while maintaining operational synchronization.
      • extended management to include the supplier’s suppliers
  • 19. Information Integration
    • the degree to which a firm can coordinate the activities of information sharing and combine core elements from heterogeneous data management systems, content management systems, data warehouses, and other enterprise applications into a common platform in order to substantiate the integrative supply chain strategies.
      • Commitment and capabilities to facilitate supply chain resource allocation through seamless transactions across the total order to delivery cycle
      • Capability to exchange information across internal factional boundaries in a timely, responsive and usable format
      • Capability to exchange information with external supply chain partners in a timely, responsive and usable format
      • Collaborative Forecasting and Planning: Customer Collaboration to develop shared visions and mutual commitments to jointly generated action plans.
  • 20. Some cases of SCI
    • Luen Thai’s D2S supply chain model
    • ASTEC’s SCI with Customers and Supplier
    • Ford Motor Company’s integration with its suppliers
  • 21. Winning Model in the New Era 新时代的 致胜 模型 Manufacturing 生产 Logistics 物流 Store 零售店 Design & Development 设计及开发 Sourcing 采购 Winning Model: Design and Logistics Driven 致胜 模型﹕由设计及物流所推动 Pioneering the New Model 新模型的先驱 联泰 Information Technology Platform 信息科技平台 Logistics and Compliance Platform 物流及 推行 平台
  • 22. 雅达电子产品 DC/DC Industry standard pin-out Series (10W - 150W) - Industry standard pin-out - High efficiency - Zero load operation AC - DC Family 1W – 6KW DC - DC Modules 1W - 1200W Adapter (7.5W - 100W) - Multi - O/P - Wide-range AC input - OVP, S/C protection - High efficiency - High MTBF Lower Power Series (25W - 350W) - Auto ranging input - Build-in EMI filter - Active power factor correction - Multi - O/P - Medical safety approval - OVP, OCP Medium Power Series (400W - 1200W) - Wide-range AC input - C-share - Power factor correction - Multi - O/P - Warning signal DC/DC module (50W-300W) - Secondary side control - 24V, 48V, 300V input - High efficiency - Low noise/ripple Fast Transient VRM (100W) - Programmable output - High efficiency Server PSU (250W - 3000W) - Active power factor correction - N+1 parallel redundant operation, hot pluggable - I 2 C port for Vital Product Data and fault status - Built-in fans (in series) with temperature controlled speed Mobile phone charger (2W-5W) - standard/Custom design - constant current AC, DC Router 1360W - N+1 redundancy - Hot plug, hot swap - Current share on all outputs - Status signals - EEprom
  • 23. Example: Nokia customer hub process ASTEC Bao’an, China Hub Planning
    • 1 week trans-shipment
    13 weeks Forecast Pick & pack inventory HUB Nokia manufacturing facilities Periodic Inventory Report Weekly total Pull Report Hungary Nokia in Europe Finland Germany
    • 6 weeks in-transit time
    ISR Forecast Production Requirements Outbound Shipment Invoicing based on pull information Global Commodity Manager Goods flow Information flow
  • 24.  
  • 25. FORD’s Case
  • 26. Supply chain nodes of Ford Distant Suppliers Other Plants Logistic Centre Local Suppliers Almussafes Ford Plant Seq/ JIT Seq/JIT DAD DAD Industrial Park Seq/JIT Logistic Operator Seq/JIT Seq/JIT Logistic Operator Seq/JIT
  • 27. Relationships and flows
    • Products & services flow; Information & knowledge flow; and Financial flow
    J.I.T. Supplier Sequence Supplier D.A.D. Supplier Dealer OEM (Original Equipment Manufacturer) Carriers Planning & Sequence Info $ Order Goods $ Planning & Sequence Info. $ Sub Assemblies (JIT & Seq) Parts (O.C.) Planning Info. Sub Assembly Info. $ Constraints Constraints Parts (O.C.) /Empties Sequence Sub Assemblies Part s (O.C.) /Empties Planning & Sequence Info $ Constraints Goods Info J.I.T. Sub Assemblies Sub Assembly Info. Sub Assembly Info. D.A.D. Sub Assemblies Logistic Operator $ Routes & Material s info. Traditional Supplier Parts Planning Info $ Order Delivery Note Delivery Note Delivery Note Time Windows & M a terial s info. Time Windows & Materials Info Goods, services, revenue Information & Knowledge
  • 28.
    • The V-CHAIN Virtual Enterprise Reference Model, the TO-BE Model, has been conceived as the framework needed to obtain an integrated problem solving approach
    Assembler Logistics Operator ( O perator for P lanning and S equencing) Other actors Carriers VE BUSINESS REFERENCE MODEL: OVERVIEW Suppliers
  • 29. Our Research on Relationship Management and Supply Chain Integration in China
    • Research Questions:
    • How do SCI influence supply chain performance and the financial performance of the firm?
    • How do trust and relationship commitment influence supply chain integration (supplier integrations (SI, CI and II)?
  • 30. Research Methods
    • Surveys of manufacturers in 12 industries and 5 cities :
      • Chongqing, Tianjin, Guangzhou, Shanghai, and Hong Kong.
      • Respondents are people who are most knowledgeable on SCM, customer and supplier relationships
      • Top three industries :
        • Metal, Mechanical & Engineering. Textile and Apparel, Electronics & Electrical
    • Response rate:
    • 617 usable questionnaires from 4,569 contacted companies (13.5%) or 1356 questionnaires (45.5 %) sent out.
  • 31. Internal Integration (II)
    • Data integration among internal functions
    • Enterprise application integration among internal functions
    • Integrative inventory management
    • Real-time searching of the level of inventory
    • Real-time searching of logistics-related operating data
    • The utilization of periodic interdepartmental meetings among internal functions
    • The use of cross functional teams in process improvement
    • The use of cross functional teams in new product development
    • Real-time integration and connection among all internal functions from raw material management through production, shipping, and sales
  • 32. Customer Integration (CI)
    • The level of linkage with major customer through information network
    • The level of computerization for our major customer ordering
    • The level of sharing of market information from our major customer
    • The level of communication with our major customer
    • The establishment of quick ordering system with our major customer
    • Follow-up with our major customer for feedback
    • The frequency of periodical contacts with our major customer
    • Our major customer shares Point of Sales (POS) information with us
    • Our major customer shares demand forecast with us
    • We share our available inventory with our major customer
    • We share our production plan with our major customer
  • 33. Supplier Integration (SI)
    • The level of information exchange with our major supplier through information network
    • The establishment of quick ordering system with our major supplier
    • The level of strategic partnership with our major supplier
    • Stable procurement through network with our major supplier
    • The participation level of our major supplier in the process of procurement and production
    • The participation level of our major supplier in the design stage
    • Our major supplier shares their Production Schedule with us
    • Our major supplier shares their production capacity with us
    • Our major supplier shares available inventory with us
    • We share our production plan with our major supplier
    • We share our demand forecast with our major supplier
    • We share our inventory level with our major supplier
    • We help our major supplier to improve their process to better meet our needs
  • 34.  
  • 35. Financial Performance
    • Growth in sales
    • Growth in profit
    • Growth in market share
    • Return on investment (ROI)
    • Growth in ROI
    • Return on sales
    • Growth in return on sales
  • 36. Supply Chain Performance
    • Our supply chain has the ability to quickly modify products to meet customer’s requirements
    • Our supply chain allows us to quickly introduce new products into the markets
    • The length of the supply chain process is getting shorter.
    • We are satisfied with the speediness of the supply chain process
    • Based on our knowledge of the supply chain process, we think that it is efficient
    • Our supply chain has an outstanding on-time delivery record
    • The total inventory level in our supply chain is low
    • Our supply chain provides high level of customer services
  • 37. Manufacturer (Customer-oriented) Performance
    • Our company can quickly modify products to meet our major customer’s requirements
    • Our company can quickly introduce new products into the markets
    • Our company can quickly respond to changes in market demand
    • Our company has an outstanding on-time delivery record to our major customer
    • The lead time for fulfilling customers orders (the time which elapses between the receipt of customer's order and the delivery of the goods) is short
    • Our company provides high level of customer service to our major customer
    • Our company’s inventory level is low
  • 38. Supplier Performance
    • Our major supplier can quickly modify products to meet our company’s requirements
    • Our major supplier can quickly introduce new products into the markets
    • Our major supplier can quickly respond to changes in market demand
    • Our supplier has an outstanding on-time delivery record to our company
    • The supplier’s lead time for fulfilling our company’s orders (the time which elapses between the receipt of our order and the delivery of the goods) is short
    • Our major supplier provide high level of customer service to our company
    • Our major supplier has low level of inventory
  • 39.  
  • 40. What are some of the patterns of supply chain integrations?
  • 41.  
  • 42. What influences Integration?
    • Trust
    • Has been shown to significantly influence supply chain cooperation because:
    • trust is a useful lubricant in maintaining cooperation, avoiding conflicts and opportunistic behaviors
    • trust can significantly contribute to the long-term stability of a supply chain relationship
    • Trust increases the transaction specific investment
  • 43. What are some of the major types of trust?
    • Competence Trust
      • Refers to the technical and managerial expertise that the trustee is capable of performing and will perform their roles as expected
    • Contractual Trust
      • Refers to an expectation that a trustee can be relied upon to maintain the ethical standard and carry out a verbal or written promise
  • 44. What are some of the major types of trust?
    • Calculative Trust
      • Refers to a trustor’s expectation that the trustee’s costs of cheating or engaging in opportunistic behavior are greater than the benefits of such actions
    • Affective Trust
      • Refers to the mutual expectations of open commitment to one another, and the commitment is regarded as a willingness to do more than is formally expected
  • 45. What is Relationship Commitment?
    • Relationship commitment can be defined as the willingness of a party to invest resources into a relationship
    • It indicates the propensity for relational continuity and the establishment of long-term relationship
  • 46. What are the major types of relationship commitment?
    • Affective Commitment:
    • can be defined as one party’s identification with and emotional attachment to the goals and values of another party, and willingness to secure the relationship
    • Affective commitment is based on a generalized sense of liking, loyalty and belongingness towards the exchange partner and an enduring desire to continue a relationship for enjoyment
  • 47. What are the major types of relationship commitment?
    • Calculative Commitment:
      • can be viewed as one party’s identification with the benefits and costs of the relational exchange, and willingness of maintaining the relationship for satisfying his needs
  • 48. Relationship Between Trust, Relationship Commitment and Process Integration? Business Sense & Judgment Ability & Expertness Predictability Confidence Benevolence Integrity Calculative Trust Competence Trust Contractual Trust Affective Trust Calculative Commitment Affective Commitment Supply Chain Integration ? - + + + + + + + + + +
  • 49. Conclusions
    • Supply chain integrations (II, CI and SCI) significantly influence supply chain performance and the financial performance of the manufacturer.
    • Customer integration and internal integration seem to have great impact on performance than supplier integration.
    • To enhance integrations with customers and suppliers, manufacturers need to build trusts and enhance relationship commitments with them.
    • Affective relationship commitment is much more effective than calculative relationship commitment in enhancing SCIs
    • The use of expert power is much more effective than the use of reward or coercive power
    • Without trust and relationship commitment, technology is of no use
  • 50. THANK YOU Li & Fung Institute of Supply Chain Management/Logistics Q & A