Chapter 13


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Chapter 13

  1. 1. CHAPTER 13- SUPPLY CHAIN PROCESS INTEGRATION Principles of Supply Chain Management: A Balanced Approach Prepared by Daniel A. Glaser-Segura, PhD
  2. 2. Introduction <ul><li>Primary Goal of Supply Chain Management- create value for the end customers as well as the firms in the supply chain network. Firms in the supply chain network must integrate process activities internally & with other firms in the network. </li></ul><ul><ul><li>Process integration means coordinating & sharing information & resources to jointly manage a process. </li></ul></ul><ul><ul><li>Process integration is often a difficult task & requires: </li></ul></ul><ul><ul><ul><li>Training </li></ul></ul></ul><ul><ul><ul><li>Willing & competent partners </li></ul></ul></ul><ul><ul><ul><li>Trust </li></ul></ul></ul><ul><ul><ul><li>Organizational culture change </li></ul></ul></ul>
  3. 3. The Supply Chain Management Integration Model
  4. 4. The Supply Chain Management Integration Model- Cont. <ul><li>Identify Critical Supply Chain Trading Partners </li></ul><ul><ul><li>Enable sale & delivery of end products to final customers </li></ul></ul><ul><ul><li>Identifying primary trading partners allows the firm to concentrate on managing these links </li></ul></ul><ul><li>Review & Establish Supply Chain Strategies regarding: </li></ul><ul><ul><li>Parts purchased & suppliers </li></ul></ul><ul><ul><li>Shop layout & manufacturing processes </li></ul></ul><ul><ul><li>Design of the products manufactured </li></ul></ul><ul><ul><li>Mode of transportation </li></ul></ul><ul><ul><li>Warranty & return services </li></ul></ul><ul><ul><li>Employee training methods </li></ul></ul><ul><ul><li>Types of information technologies used </li></ul></ul>
  5. 5. The Supply Chain Management Integration Model- Cont. <ul><li>Align SC Strategies with Key SC Process Objectives </li></ul>
  6. 6. The Supply Chain Management Integration Model- Cont. <ul><li>Develop Internal Performance Measures for Key Processes </li></ul><ul><ul><li>Performance should be continuously measured w/metrics for each process. </li></ul></ul><ul><ul><li>ERP systems support internal performance measures </li></ul></ul><ul><ul><li>Firm is able to track progress for each of the key processes. </li></ul></ul><ul><li>Assess & Improve Internal Integration of Key SC Processes. Internal integration requires: </li></ul><ul><ul><li>Empowered teams & cooperation across all functions </li></ul></ul><ul><ul><li>Management support & resources </li></ul></ul><ul><ul><li>ERP system </li></ul></ul><ul><ul><li>an understanding of the internal supply chain </li></ul></ul>
  7. 7. KPI Dashboard Manhattan Associates Videos
  8. 8. The Supply Chain Management Integration Model- Cont. <ul><li>Develop SC Performance Measures for Key Processes </li></ul><ul><ul><li>Monitor the links with trading partners in the key SCM processes. </li></ul></ul><ul><ul><li>Trading partners should monitor a number of cost-oriented measures averaged across the member firms for each of the key supply chain processes. </li></ul></ul><ul><li>Assess & Improve External Process Integration & Performance </li></ul><ul><ul><li>Build, maintain & strengthen relationships </li></ul></ul><ul><ul><li>Share information concerning: </li></ul></ul><ul><ul><ul><li>Sales, forecast information, new products, expansion plans, new processes, & new marketing campaigns process integration will enable firms to collaborate & share this information. </li></ul></ul></ul>
  9. 9. The Supply Chain Management Integration Model- Cont. <ul><li>Extend Process Integration to Second-Tier SC Partners </li></ul><ul><ul><li>Integrate process to second-tier partners & beyond </li></ul></ul><ul><ul><li>Radio-frequency identification (RFID) tag - Microchip device relays information on product’s whereabouts as it moves through the supply chain. </li></ul></ul><ul><ul><li>Price of RFID tags is economical (about 5 cents each). </li></ul></ul><ul><ul><ul><li>RFID Video </li></ul></ul></ul><ul><li>Reevaluate the Integration Model Annually </li></ul><ul><ul><li>Trading partners should revisit the integration model annually to identify changes within supply chains & to assess the impact these changes have on integration efforts. </li></ul></ul>
  10. 10. Obstacles to Process Integration Along the Supply Chain <ul><li>The Silo Mentality </li></ul><ul><ul><li>“ I win, you lose” </li></ul></ul><ul><ul><li>Using the cheapest suppliers. </li></ul></ul><ul><ul><li>Ignoring customers. </li></ul></ul><ul><ul><li>Assigning few resources to new product & service design. </li></ul></ul><ul><li>Firm must strive to align SC goals & the goals & incentives of the firm </li></ul><ul><li>Performance reviews of managers must include their ability to integrate processes internally & externally. </li></ul>
  11. 11. Obstacles to Process Integration Along the Supply Chain- Cont. <ul><li>Lack of Supply Chain Visibility </li></ul><ul><ul><li>In a 2002 survey, 67% of manufacturers had not yet successfully synchronized their supply chain operations with those of their trading partners </li></ul></ul><ul><ul><li>And 67% said they used different supply chain management applications than their partners 1 </li></ul></ul><ul><li>RFID technology promises to add real-time information visibility to supply chains. </li></ul><ul><ul><li>Technology boards & user boards are being formed now to develop standards & electronic product codes (ePCs) for the RFID industry. </li></ul></ul><ul><li>[1] Anonymous, “Survey Finds Manufacturers’ Supply Chains Come Up Short,” Logistics Management 41, no. 9 (2002): 19-20. </li></ul>
  12. 12. Obstacles to Process Integration Along the Supply Chain- Cont. <ul><li>Lack of Trust </li></ul><ul><li>Successful process integration between partners requires trust. </li></ul><ul><li>Trust occurs over time- Partners earn trust. </li></ul><ul><ul><li>Creating collaboration & trust are based on: </li></ul></ul><ul><ul><li>Start small : Pick a project likely to provide a quick return. </li></ul></ul><ul><ul><li>Look inward : establishing trust with internal constituents. </li></ul></ul><ul><ul><li>Gather ‘round : meet face-to-face. </li></ul></ul><ul><ul><li>Go for the win-win : optimize business for all SC members. </li></ul></ul><ul><ul><li>Do not give away the store : Some information should remain proprietary </li></ul></ul><ul><ul><li>Just do it : Simple start - sharing information. </li></ul></ul>
  13. 13. Obstacles to Process Integration Along the Supply Chain- Cont. <ul><li>Lack of Knowledge </li></ul><ul><ul><li>In a survey of 122 executives practicing SCM, 43 % said lack of core SCM skills & knowledge was the greatest obstacle within their own organizations, & 54 % echoed this opinion for their trading partners. 1 </li></ul></ul><ul><ul><li>Firms successfully managing their supply chains must spend significant time influencing & increasing the capabilities of themselves & their partners. </li></ul></ul><ul><ul><li>[1] Bachelor, B “Implementation Imperative Information Week (28 April 2003), 62-66 </li></ul></ul>