Supplier Relationship Management
Supply chain Tiers
Transactions in a Supply-Chain Non-linear flows can be enabled by the Internet technology Linear Flows
Future Supply Chain
Demand-supply chain: order penetration point
Demand-supply chain: value offering point
Demand-supply chain: text book
Process Misalignments <ul><li>Information content and format </li></ul><ul><ul><li>Information items may be buyer and/or v...
Modes of Collaboration <ul><li>Information Sharing </li></ul><ul><li>Coordinated  planning </li></ul><ul><li>Conflict Reso...
Information Exchange <ul><li>Catalogs, terms of transactions, customer  preferences, promotions </li></ul><ul><li>Data con...
Shared information categories <ul><li>Inventory status </li></ul><ul><ul><li>Fritz who manages Apple’s warehouse provides ...
Models of Information Sharing <ul><li>Information transfer </li></ul><ul><ul><li>Transfer information to a  partner  who m...
Information Hub Information Hub Logistics Providers Supplier s Financial Institutions Distributors Customers Contract Manu...
Coordinated Planning <ul><li>Information Visibility </li></ul><ul><ul><li>Adaptec based in California (data transfer produ...
<ul><ul><ul><ul><ul><li>Customer </li></ul></ul></ul></ul></ul>Adaptec TSMC ASAT Manufacturer Assembler
Collaborative Execution Order Receiving Shipping Warehouse Sales Warehouse Order Placement Shipping Assembly Component War...
Collaborative Ordering <ul><li>Without collaboration </li></ul><ul><ul><li>Assembler’s order of Q units may be partially f...
Process Sharing <ul><li>Event based triggers </li></ul><ul><ul><li>On receiving an order assembler triggers two processes ...
Mail order processing Publisher 1 Amazon Billing Co. Customer Publisher 2 Publisher 3 Shipping Co.
Mail order processes <ul><li>Customer orders three books (three publishers) </li></ul><ul><li>Amazon places orders, one fr...
Workflow <ul><li>Follows partners’ business rules to transfer information to them </li></ul><ul><li>Users select tasks for...
Public / Private Processes Request PO Change   Decide Next Steps   Process PO Change       Supplier   Customer   Rejected ...
Project Management <ul><li>Project tasks </li></ul><ul><ul><li>Sequencing of tasks that share critical resources </li></ul...
CPFR http://www.cpfr.org/
Vendor Managed Inventory <ul><li>Customer shares demand forecasts with the vendor </li></ul><ul><li>Customer and vendor ag...
Trading Network <ul><li>Partners business processes may differ  </li></ul><ul><ul><li>orders placement, logistics, payment...
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L3

  1. 1. Supplier Relationship Management
  2. 2. Supply chain Tiers
  3. 3. Transactions in a Supply-Chain Non-linear flows can be enabled by the Internet technology Linear Flows
  4. 4. Future Supply Chain
  5. 5. Demand-supply chain: order penetration point
  6. 6. Demand-supply chain: value offering point
  7. 7. Demand-supply chain: text book
  8. 8. Process Misalignments <ul><li>Information content and format </li></ul><ul><ul><li>Information items may be buyer and/or vendor specific </li></ul></ul><ul><ul><li>Purchasing constraints of buyers may differ </li></ul></ul><ul><ul><li>Product change notification not up-to-date </li></ul></ul><ul><ul><li>Reduced information transparency and bullwhip effect </li></ul></ul><ul><li>Lot size mismatch between buyer and seller </li></ul><ul><li>Unsynchronized production and promotion schedules </li></ul><ul><li>Process reengineering by partners (e.g. re-sequencing for delayed differentiation) (Benetton) </li></ul><ul><li>Unnecessary hand offs </li></ul><ul><ul><li>Procuring lots of assembly parts or procuring the product assembled by suppliers in a sequence (Li and Fung) </li></ul></ul><ul><ul><li>Parts assembled in transit vs. parts assembled by the manufacturer (Dell) </li></ul></ul>
  9. 9. Modes of Collaboration <ul><li>Information Sharing </li></ul><ul><li>Coordinated planning </li></ul><ul><li>Conflict Resolution </li></ul><ul><li>Real time execution </li></ul>
  10. 10. Information Exchange <ul><li>Catalogs, terms of transactions, customer preferences, promotions </li></ul><ul><li>Data conversion to standard format </li></ul><ul><ul><li>Bilateral standards (m x n) </li></ul></ul><ul><ul><li>Information hub (m + n) </li></ul></ul><ul><li>Specification of message to be exchanged </li></ul><ul><ul><li>Purchase order schema, content </li></ul></ul><ul><li>Specification of transport and receiving points </li></ul><ul><li>Specification of Security </li></ul><ul><ul><li>Signature, authentication </li></ul></ul><ul><ul><li>Specification of exchange behavior among parties </li></ul></ul><ul><ul><li>Operation sequence, timing constraint </li></ul></ul>
  11. 11. Shared information categories <ul><li>Inventory status </li></ul><ul><ul><li>Fritz who manages Apple’s warehouse provides visibility of its inventory pipeline to Apple. </li></ul></ul><ul><li>Sales </li></ul><ul><ul><li>Sharing point-of-sales (POS) data by retail stores (P&G, IBM, HP) </li></ul></ul><ul><li>Order status for tracking </li></ul><ul><ul><li>UPS’s Host Access System for order tracking </li></ul></ul><ul><li>Demand/sales forecast </li></ul><ul><ul><li>Sun, HP, and TI share their forecasts with suppliers </li></ul></ul><ul><li>Production/delivery schedule </li></ul><ul><ul><li>Component manufacturers share production schedules with Motorola </li></ul></ul>
  12. 12. Models of Information Sharing <ul><li>Information transfer </li></ul><ul><ul><li>Transfer information to a partner who maintains the database for decisions </li></ul></ul><ul><ul><ul><li>VMI requires the retailer to send the sales and inventory information to the vendor </li></ul></ul></ul><ul><ul><ul><li>MicroAge transfers its orders to UPS who plans and executes deliveries </li></ul></ul></ul><ul><li>Third-party model </li></ul><ul><ul><li>The third party is to collects information and maintains it in a database for the supply chain </li></ul></ul><ul><ul><ul><li>Fritz plays the third party role in the Apple VMI </li></ul></ul></ul><ul><ul><ul><li>Digital Market sells aggregated information on vendors </li></ul></ul></ul><ul><li>Information hub </li></ul><ul><ul><li>An information hub plays the role of a third party </li></ul></ul><ul><ul><ul><li>Information exchange hub for the transportation industry - </li></ul></ul></ul>
  13. 13. Information Hub Information Hub Logistics Providers Supplier s Financial Institutions Distributors Customers Contract Manufacturers                                     http://www.dtrac.com/etrac.html
  14. 14. Coordinated Planning <ul><li>Information Visibility </li></ul><ul><ul><li>Adaptec based in California (data transfer products) and TSMC based in Taiwan (fabricated microchips) </li></ul></ul><ul><ul><li>Adaptec’ six-month forecasts are made visible to TSMC and SMC’s WIP data are made visible to Adaptec </li></ul></ul><ul><ul><li>TSMC’s shipments to ASAT (a supplier of Adaptec) are also made visible to Adaptec </li></ul></ul><ul><li>Rules of conflict resolution </li></ul><ul><ul><li>Customer orders not synchronized with supplier’s production plan </li></ul></ul><ul><ul><li>Front end agreement </li></ul></ul><ul><ul><li>Early identification of conflicts </li></ul></ul><ul><ul><ul><li>Cisco’s intelligent planning software </li></ul></ul></ul>
  15. 15. <ul><ul><ul><ul><ul><li>Customer </li></ul></ul></ul></ul></ul>Adaptec TSMC ASAT Manufacturer Assembler
  16. 16. Collaborative Execution Order Receiving Shipping Warehouse Sales Warehouse Order Placement Shipping Assembly Component Warehouse Order Receiving Finished Produtct Warehouse Order Placement Supplier Assembler Customer                                                              
  17. 17. Collaborative Ordering <ul><li>Without collaboration </li></ul><ul><ul><li>Assembler’s order of Q units may be partially filled, who must then look for other suppliers </li></ul></ul><ul><li>With collaboration </li></ul><ul><ul><li>Prior to ordering, assembler checks supplier’s warehouse and orders only what the supplier can supply = Q 1, (Q 1 < Q) </li></ul></ul><ul><ul><li>Assembler may desire visibility of supplier’s warehouse </li></ul></ul><ul><ul><li>Supplier may desire visibility of assembler’s production plan, to synchronize its component manufacturing </li></ul></ul><ul><li>Sharing of inventory information less sensitive than sharing production plans </li></ul>
  18. 18. Process Sharing <ul><li>Event based triggers </li></ul><ul><ul><li>On receiving an order assembler triggers two processes </li></ul></ul><ul><ul><ul><li>ship to customer </li></ul></ul></ul><ul><ul><ul><li>assemble the next unit </li></ul></ul></ul><ul><ul><li>Assembly process triggers component delivery from the supplier </li></ul></ul><ul><ul><li>Supplier triggers shipment to assembler and manufacture of a replacement part </li></ul></ul><ul><li>Run partner’s business processes (a set of applications) for information extraction </li></ul><ul><li>Public/Private Processes </li></ul>
  19. 19. Mail order processing Publisher 1 Amazon Billing Co. Customer Publisher 2 Publisher 3 Shipping Co.
  20. 20. Mail order processes <ul><li>Customer orders three books (three publishers) </li></ul><ul><li>Amazon places orders, one from each publisher </li></ul><ul><li>Publisher’s ok </li></ul><ul><ul><li>Must satisfy customer’s conditions (delivery deadlines etc.) </li></ul></ul><ul><li>Amazon finds a shipper </li></ul><ul><li>Shipper coordinates shipments </li></ul><ul><ul><li>Books arrive separately </li></ul></ul><ul><ul><li>Batch them in one or more shipment </li></ul></ul><ul><li>Billing by Amazon once shipment is confirmed </li></ul><ul><ul><li>Single or batched </li></ul></ul><ul><li>Order cancellation/alteration by customer </li></ul><ul><li>Shipper does not deliver on time </li></ul>
  21. 21. Workflow <ul><li>Follows partners’ business rules to transfer information to them </li></ul><ul><li>Users select tasks for execution from a list of tasks outstanding </li></ul><ul><li>Identifies and Assigns resources to tasks </li></ul><ul><li>Places tasks in queue if resources unavailable </li></ul><ul><li>Activates appropriate procedures for task execution and updates data and status </li></ul><ul><li>Tracks task performance </li></ul>
  22. 22. Public / Private Processes Request PO Change   Decide Next Steps   Process PO Change       Supplier   Customer   Rejected   Get Customer Information   Look up items to be changed   Post updated PO to ERP   Call ERP Session   Continue   Original PO found OK   Items not found   Original PO not found   Items found OK   Customer found OK   END Update last PO change date Customer Reject Public Processes Private Processes Item Not Found Item Not Found Change Accepted                                      
  23. 23. Project Management <ul><li>Project tasks </li></ul><ul><ul><li>Sequencing of tasks that share critical resources </li></ul></ul><ul><ul><li>Transfer of resources between partners </li></ul></ul><ul><ul><li>Progress monitoring </li></ul></ul><ul><ul><li>Accounting of resource sharing </li></ul></ul><ul><ul><li>Course of task execution </li></ul></ul><ul><li>Coordinating multiple suppliers who supply different components of the same product to a customer </li></ul><ul><li>The components may differ in delivery schedules, specifications, and order quantities </li></ul><ul><li>Coordinate multiple suppliers working on different aspects of a common component </li></ul>
  24. 24. CPFR http://www.cpfr.org/
  25. 25. Vendor Managed Inventory <ul><li>Customer shares demand forecasts with the vendor </li></ul><ul><li>Customer and vendor agree on ordering policy (periodic review, base-stock etc.) </li></ul><ul><li>Vendor is responsible for replenishing customer’s warehouse inventory </li></ul><ul><li>Customer pays for the inventory only when it uses the item </li></ul>
  26. 26. Trading Network <ul><li>Partners business processes may differ </li></ul><ul><ul><li>orders placement, logistics, payment </li></ul></ul><ul><li>Split orders and allocate to partners </li></ul><ul><li>Information on returns, new products, and inventory must be routed to appropriate partners </li></ul><ul><li>Distributed entities must be synchronized to work off the same information </li></ul><ul><li>Select partners based on capability and availability </li></ul><ul><li>Negotiate commitments and remuneration </li></ul><ul><li>Coordinate service delivery </li></ul><ul><li>Resolve execution problems </li></ul>
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