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  • Notes: - QR: Focus on technologies; what are they? How do they help, etc.; Discussion is not exhaustive.
  • Notes: Also seen in NOVA; access to sell-thru data by manufacturer allows him to schedule production based on sales rather than orders. Reduce transaction costs - EDI - CAO - McKesson’s “Economost” Discounts for ordering assortments rather than single product full-truckloads. Coordination of delivery schedules. Third party logistics can consolidate orders from multiple retailers.
  • Notes: EDLP Synchronize delivery and purchase. That is, manufacturer may give hi-lo prices and retailers may order large quantities, but mfr. will deliver them over multiple periods. Special Purchase contracts - E.g., discounts for total minimum commitments.
  • Notes: EDLP Synchronize delivery and purchase. That is, manufacturer may give hi-lo prices and retailers may order large quantities, but mfr. will deliver them over multiple periods. Special Purchase contracts - E.g., discounts for total minimum commitments.
  • Notes: Direct marketing channels not subject to bull whip effect due to demand signal processing. E.g., Dell-Direct of Dell Computers. The manufacturer has control of the entire supply chain.
  • Notes: Allocate supply in proportion to retailers market share in previous period. GM, TI, HP … Real shortage vs. Perception of shortage. Perception of shortage can be avoided by information sharing. Special contracts that restrict ordering (e.g., HP, SUN) - our paper on forecasts and flexibility - reserve capacity (Seagate reserves a portion of supplier’s capacity) Free return policies and generous order cancellation can lead to gaming.
  • Notes: Allocate supply in proportion to retailers market share in previous period. GM, TI, HP … Real shortage vs. Perception of shortage. Perception of shortage can be avoided by information sharing. Special contracts that restrict ordering (e.g., HP, SUN) - our paper on forecasts and flexibility - reserve capacity (Seagate reserves a portion of supplier’s capacity) Free return policies and generous order cancellation can lead to gaming.
  • Notes: These are some other concepts related to QR and ECR. We have already discussed EDLP. The key purpose of that is to smooth the demand pattern to the extent possible and minimize the excess inventory generated because of forward buying. Mention Bob Blattberg’s retail institute and its work related to category management. We discuss CRP in detail.
  • Notes:
  • Notes: After defining cross docking show the film and discuss the different aspects of cross docking. With X-Docking, a retailer can increase variety . Pre-X-Doc you store the product at your DC; so you stock limited variety, if they’re slow moving items. Post-X-Doc, you virtually pull from Mfr.’s DC who has a larger item selection.
  • Notes: Here stress when DEX and when NEX are most appropriate. When orders are being automatically generated, the customer does not necessarily have all details of an order to compare delivery with. Note that in this case there is no problem with closing a purchase order since the invoice only contains what was delivered. There are two options here- When an order is shipped on a truck the details of the delivery are sent electronically to the receiving store. This is NEX. When the truck drives in the receiver is ready with the invoice and can compare delivery with the invoice. When unloading the truck the driver uses a hand held terminal to prepare an electronic invoice that is delivered to the store along with the delivery. This is DEX. The added flexibility here is that the the precise order can be configured at the delivery site. Useful in Direct Store Delivery (DSD). Contrast this to manual version. Truck pulls up. Enter every line item in truck into the computer; increases costs and time of receiving orders.
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  • chopra.ppt

    1. 1. Supply Chain Coordination The role of Information Technology
    2. 2. Learning Objectives <ul><li>What is coordination? </li></ul><ul><li>Obstacles to coordination: The Bull-Whip Effect </li></ul><ul><li>Countermeasures to achieve coordination </li></ul><ul><li>The role of information technology in a supply chain </li></ul>
    3. 3. Information Coordination: The Bullwhip Effect Consumer Sales at Retailer 0 100 200 300 400 500 600 700 800 900 1000 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 Consumer demand Retailer's Orders to Wholesaler 0 100 200 300 400 500 600 700 800 900 1000 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 Retailer Order Wholesaler's Orders to Manufacturer 0 100 200 300 400 500 600 700 800 900 1000 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 Wholesaler Order Manufacturer's Orders with Supplier 0 100 200 300 400 500 600 700 800 900 1000 1 4 7 10 13 16 19 22 25 28 31 34 37 40 Manufacturer Order
    4. 4. Impact of the Bullwhip Effect
    5. 5. Bull Whip Effect - Operational Obstacles (Batching) <ul><li>Contributing factors </li></ul><ul><ul><li>High Order Cost </li></ul></ul><ul><ul><li>Full TL economies </li></ul></ul><ul><ul><li>Random or correlated ordering </li></ul></ul><ul><li>Counter Measures </li></ul><ul><ul><li>EDI & Computer Assisted Ordering (CAO) </li></ul></ul><ul><ul><li>Discounted on Assorted Truckload, consolidated by 3rd party logistics </li></ul></ul><ul><ul><li>Regular delivery appointment </li></ul></ul><ul><ul><li>Volume and not lot size discounts </li></ul></ul><ul><li>State of Practice </li></ul><ul><ul><li>McKesson, Nabisco, ... </li></ul></ul><ul><ul><li>3rd party logistics in Europe, emerging in the U.S. </li></ul></ul><ul><ul><li>P & G </li></ul></ul>
    6. 6. Bull Whip Effect - Pricing Obstacles <ul><li>Contributing factors </li></ul><ul><ul><li>High-Low Pricing leading to forward buy </li></ul></ul><ul><ul><li>Delivery and Purchase not synchronized </li></ul></ul><ul><li>Counter Measures </li></ul><ul><ul><li>EDLP </li></ul></ul><ul><ul><li>Limited purchase quantities </li></ul></ul><ul><ul><li>Scan based promotions </li></ul></ul><ul><li>State of Practice </li></ul><ul><ul><li>P&G (resisted by some retailers) </li></ul></ul><ul><ul><li>Scan based promotion </li></ul></ul>
    7. 7. Bull Whip Effect - Incentive Obstacles <ul><li>Contributing factors </li></ul><ul><ul><li>Incentives based on sell-in leading to forward buy </li></ul></ul><ul><li>Counter Measures </li></ul><ul><ul><li>Focus sales force on increasing sell-thru </li></ul></ul><ul><ul><li>Incentives based on rolling horizon </li></ul></ul><ul><ul><li>Sales force do not compete with each other but with the competition </li></ul></ul>
    8. 8. The Bullwhip Effect: Information Processing Obstacles <ul><li>Contributing factors </li></ul><ul><ul><li>No visibility of end demand </li></ul></ul><ul><ul><li>Multiple forecasts </li></ul></ul><ul><ul><li>Long lead-time </li></ul></ul><ul><li>Counter Measures </li></ul><ul><ul><li>Access sell-thru or POS data </li></ul></ul><ul><ul><li>Direct sales (natural on web) </li></ul></ul><ul><ul><li>Single control of replenishment </li></ul></ul><ul><ul><li>Leadtime reduction </li></ul></ul><ul><li>State of Practice </li></ul><ul><ul><li>Sell-thru data in contracts (e.g., HP, Apple, IBM) </li></ul></ul><ul><ul><li>CFAR, CPFR, CRP, VMI (P&G and Walmart) </li></ul></ul><ul><ul><li>Quick Response Mfg. Strategy </li></ul></ul>
    9. 9. Bull Whip Effect - Operational Obstacles (Rationing Game) <ul><li>Contributing factors </li></ul><ul><ul><li>Proportional rationing scheme </li></ul></ul><ul><ul><li>Ignorance of supply conditions </li></ul></ul><ul><ul><li>Unrestricted orders & free return policy </li></ul></ul><ul><li>Counter Measures </li></ul><ul><ul><li>Allocation based on past sales. </li></ul></ul><ul><ul><li>Shared Capacity and Supply Information </li></ul></ul><ul><ul><li>Flexibility Limited over time, capacity reservation </li></ul></ul><ul><li>State of Practice </li></ul><ul><ul><li>Saturn, HP </li></ul></ul><ul><ul><li>Schedule Sharing (HP with TI and Motorola) </li></ul></ul><ul><ul><li>HP, Sun, Seagate </li></ul></ul>
    10. 10. Managerial Implications of the Bull Whip Effect - Behavioral Factors <ul><li>Contributing factors </li></ul><ul><ul><li>Lack of trust </li></ul></ul><ul><ul><li>Local reaction </li></ul></ul><ul><li>Counter Measures </li></ul><ul><ul><li>Building trust and partnership </li></ul></ul><ul><li>State of Practice </li></ul><ul><ul><li>Wal-Mart and P&G with CFAR </li></ul></ul>
    11. 11. Role of Information in Supply Chain Success
    12. 12. Information Technology in a Supply Chain: Legacy Systems
    13. 13. Information Technology in a Supply Chain: ERP Systems Supplier Customer Retailer Distributor Manufacturer Strategic Planning Operational ERP Potential ERP Potential ERP
    14. 14. Information Technology in a Supply Chain: Analytical Applications Supplier Customer Retailer Distributor Manufacturer Strategic Planning Operational Supplier Apps SCM MES Dem Plan Transport execution & WMS APS Transport & Inventory Planning CRM/SFA
    15. 15. Information Technology in a Supply Chain: Future Trends and Issues <ul><li>Best of breed versus single integrator </li></ul><ul><li>The role of application service providers (ASP) </li></ul><ul><li>The role of the Internet and B2B exchanges </li></ul>
    16. 16. Summary of learning objectives <ul><li>Coordination in the supply chain </li></ul><ul><li>Bullwhip effect </li></ul><ul><ul><li>Obstacles and Countermeasures </li></ul></ul><ul><li>The role of information technology in a supply chain </li></ul><ul><li>Future issues in information technology </li></ul>
    17. 17. Information Infrastructure: Required Technologies <ul><li>Basic EDI communication system </li></ul><ul><li>Perpetual inventory system </li></ul><ul><li>Technology to share forecast information </li></ul><ul><li>Technology to transfer promotional and one time orders </li></ul><ul><li>Sales incentives will have to be transferred from shipment driven to consumption driven (EDLP between supplier and retailer) </li></ul>
    18. 18. Transportation Infrastructure: Cross Docking <ul><li>The movement of materials directly from receiving to shipping with minimum dwell time in between. </li></ul><ul><li>Required information </li></ul><ul><ul><li>What is coming? How is it coming? </li></ul></ul><ul><ul><li>Quantity and configuration? Markings and identifications? </li></ul></ul><ul><ul><li>Where is it to be moved when unloaded? Interim and final destination? </li></ul></ul><ul><ul><li>Any special handling? </li></ul></ul><ul><li>Advance Ship Notice (ASN) : Key to improving cross docking efficiency </li></ul>
    19. 19. Receiving Infrastructure: Automated Receiving Technologies <ul><li>DEX ( D irect EX change) </li></ul><ul><ul><li>Supplier uses hand held terminal to build delivery invoice as product is being delivered. Transmits to receiver who verifies delivery. Used for direct store delivery since it provides flexibility. </li></ul></ul><ul><li>NEX ( N etwork EX change) </li></ul><ul><ul><li>Automated invoices transmitted electronically from supplier headquarters and available to receiver when delivery shows up. Used to verify delivery and close invoice. </li></ul></ul>
    20. 20. QR: Response time from Fabric at Mill to Product in Store
    21. 21. QR: Examples and Benefits
    22. 22. Apparel Industry Results with Modular Manufacturing

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