Supply chain management Collaboration


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Supply chain management Collaboration

  2. 2. Content Lecture Collaboration Basics of Supply Chain Management The evolving Supply Chain Analysing Relationships Questions Inter-organizational Relationships Assignments
  3. 3. What Is the Supply Chain? Also referred to as the logistics network Suppliers, manufacturers, warehouses, distribution centers and retail outlets – “facilities”and the Suppliers Manufacturers Warehouses & Distribution Centers Customers Raw materials Work-in-process (WIP) inventory Finished productsthat flow between the facilities Transportatio Transportation n Costs Material Costs Costs Transportation Manufacturing Costs Costs Inventory Costs
  4. 4. The Supply Chain – AnotherView Plan Plan Source Source Make Make Deliver Deliver Buy Buy Suppliers Manufacturers Warehouses & Customers Distribution Centers Transportation TransportationMaterial Costs Costs Costs Transportation Manufacturing Costs Inventory Costs Costs
  5. 5. Illustration of the supply chain network, using BraunOral-B as an example
  6. 6. What Is Supply ChainManagement (SCM)?Plan Source Make Deliver Buy A set of approaches used to efficiently integrate – Suppliers – Manufacturers – Warehouses – Distribution centers So that the product is produced and distributed – In the right quantities – To the right locations – And at the right time System-wide costs are minimized and Service level requirements are satisfied
  7. 7. Why Is SCM Difficult?Plan Source Make Deliver Buy Uncertainty is inherent to every supply chain – Travel times – Breakdowns of machines and vehicles – Weather, natural catastrophe, war – Local politics, labor conditions, border issues The complexity of the problem to globally optimize a supply chain is significant – Minimize internal costs – Minimize uncertainty – Deal with remaining uncertainty
  8. 8. Today’s Marketplace Requires: Shared visibility for trading partners Personalized content and services for their customers Collaborative planning with design partners, distributors, and suppliers Real-time commitments for design, production, inventory, and transportation capacity Flexible logistics options to ensure timely fulfillment Order tracking & reporting across multiple vendors and carriers
  9. 9. Content Lecture Collaboration Basics of Supply Chain Management The evolving Supply Chain Analysing Relationships Questions Inter-organizational Relationships Assignments
  10. 10. Supply Chain Integration –Push Strategies Classical manufacturing supply chain strategy Manufacturing forecasts are long-range – Orders from retailers’ warehouses Longer response time to react to marketplace changes – Unable to meet changing demand patterns – Supply chain inventory becomes obsolete as demand for certain products disappears Inefficient use of production facilities (factories) – How is demand determined? Peak? Average? – How is transportation capacity determined? Examples: Auto industry, large appliances, others?
  11. 11. Supply Chain Integration –Pull Strategies Production and distribution are demand-driven – Coordinated with true customer demand None or little inventory held – Only in response to specific orders Fast information flow mechanisms – POS data Decreased lead times Decreased retailer inventory Decreased variability in the supply chain and especially at manufacturers Decreased manufacturer inventory More efficient use of resources More difficult to take advantage of scale opportunities Examples: Dell, Amazon
  12. 12. Supply Chain Integration – Push/Pull Strategies  Hybrid of “push” and “pull” strategies to overcome disadvantages of each  Early stages of product assembly are done in a “push” manner  Final product assembly is done based on customer demand for specific product configurations  Supply chain timeline determines “push-pull boundary” Push- Pull “Generic” Product Boundary “Customized” Product Push Strategy Pull Strategy Raw EndMaterials Consumer Supply Chain Timeline
  13. 13. Choosing Between Push/Pull Strategies Pull High Where do the Industries where: Industries where: following industries fit • Customization is High • Demand is uncertain in this model: • Demand is uncertain • Scale economies are High • Scale economies are Low • Low economies of scale  Automobile? Demand Uncertainty  Aircraft? Computer Furniture equipment  Fashion?  Petroleum refining?  Pharmaceuticals? Industries where: Industries where:  Biotechnology? • Uncertainty is low • Standard processes are the  Medical Devices? • Low economies of scale norm • Push-pull supply chain • Demand is stable • Scale economies are High Books, CD ’s Grocery, BeveragesPush Low Low Economies of Scale High Pull Push
  14. 14. Characteristics of Push, Pull andPush/Pull Strategies PUSH PULL Objective Minimize Cost Maximize Service Level Complexity High Low Focus Resource Allocation Responsiveness Lead Time Long Short Processes Supply Chain Order Fulfillment Planning
  15. 15. Supply Chain Collaboration – What Is It? Many different definitions depending on perspective The means by which companies within the supply chain work together towards mutual goals by sharing – Ideas – Information – Processes – Knowledge – Information – Risks – Rewards Why collaborate? – Accelerate entry into new markets – Changes the relationship between cost/value/profit equation
  16. 16. Supply Chain Collaboration  Cornerstone (= something very important that something else depends on) of effective SCM  The focus of many of today’s SCM initiatives Retailers Suppliers Synchronized Manufacturer Production Scheduling Collaborative Distributors/ Demand Collaborative Wholesalers Planning Product Development Collaborative Logistics Planning •Transportation services •Distribution center services Logistics Providers 16
  17. 17. Benefits of Supply ChainCollaboration CUSTOMERS MATERIAL SERVICE SUPPLIERS SUPPLIERS Reduced inventory  Reduced inventory  Lower freight costs Increased revenue  Lower warehousing costs Faster and more reliable Lower order management  Lower material acquisition deliverycosts costs  Lower capital costs Higher Gross Margin  Fewer stockout conditions  Reduced depreciation Better forecast accuracy  Lower fixed costs Better allocation ofpromotional budgets  Improved customer service  More efficient use of human resources
  18. 18. Supply Chain Collaboration Spectrum Extensive Not Viable Synchronized  Thegreen arrow Collaboration describes increasing complexity and sophistication of: – Information systems Extent of Collaboration – Systems infrastructure – Decision support systems Coordinated – Planning mechanisms Collaboration – Information sharing – Process understanding  Higher levels of Cooperative collaboration imply the Collaboration need for both trading partners to have equivalent (or close) levels of supply chain maturity  Synchronized Transactional collaboration demands Limited Collaboration Low Return joint planning, R&D and sharing of information Many Few and processing models Number of Relationships – Movement to real-time customer demand information throughout the Source: Cohen & Roussel supply chain 18
  19. 19. Successful Supply Chain Collaboration  Try to collaborate internally before you try external collaboration  Help your partners to work with you  Share the savings  Start small (a limited number of selected partners) and stay focused on what you want to achieve in the collaboration  Advance your IT capabilities only to the level that you expect your partners to manage  Put a comprehensive metrics program in place that allows you to monitor your partners’ performance  Make sure people are kept part of the equation – Systems do not replace people – Make sure your organization is populated with competent professionals who’ve done this before
  20. 20. Content Lecture Collaboration Basics of Supply Chain Management The evolving Supply Chain Analysing Relationships Questions Inter-organizational Relationships Assignments
  21. 21. 1. Comparison of B2C and B2Brelationships B2C – Product driven – Maximize the value of transaction – Large target market – Single step buying process, shorter sales cycle – Brand identity created through repetition and imagery – Merchandising and point of purchase activities – Emotional buying decision based on status, desire or price
  22. 22. 1. Comparison of B2C and B2Brelationships B2B – Relationship driven – Maximize the value of the relationship – Small, focused target group – Multi-step buying process, longer sales cycle – Brand identity created on personal relationship – Educational and awareness building activities – Relational buying decision based on business value
  23. 23. Relations hips in the value
  24. 24. 2. Advantages and disadvantages ofcreating relationships with consumersfor a manufacturer Advantages – Retain consumers is more profitable in general – Long-term relationships maintain a competitive advantage Disadvantages – Calculate the effects on a company’s profit costs (CRM program) – Miss new opportunities through focusing on current consumers
  25. 25. 3. Motorola and Hewlett-Packard Co-opetition  if both elements of cooperation and competition are visible, the relationship between the competitors is named co-opetition. – A firm with a strong position, but lacking resources held by the competitor must focus on a co-opetitive relationship. – Within the process, firms develop mechanisms that attempt to deal with competitiveness
  26. 26. Five types of relationship between a firm and its competitor
  27. 27. 4. Properly incorporatingsuppliers in their productdevelopment process Suppliers can do much more than deliver reasonably priced items on request. Exploiting some of the potential of a supplier requires that operations of the two companies become more closely integrated in the various facets of the relationship.
  28. 28. 5. A manufacturer how wants tointegrate end-consumers in theproduct development process Formal way: conjoint analysis Informal way: sales representative comes home to the HQ with some inspiration for the new product development
  29. 29. 6. How can ‘distance’ be reducedin cross-cultural buyer-sellernegotiations Cultural dimensions that affect the distance: – Different understanding of the national and industry culture – Different understandings of the organisational culture – Different personal behaviour because of the different mental programming
  30. 30. 6. How can ‘distance’ be reducedin cross-cultural buyer-sellernegotiations It is possible to reduce the ‘psychic distance’ by an intercultural learning process. In this learning process, the company transfers knowledge about reduction of ‘psychic distances’ in different cultures – Psychic: Having a special mental ability, for example so that you are able to know what will happen in the future or know what people are thinking
  31. 31. 7. Dell entered into a relationshipwith IBM’s Global Service Division Dell has maybe evaluated is own competences and realised that service support is not its core competence. It is better in PC-manufacturing. Therefore, it has outsourced the service support to IBM, which sees this as one of its existing and future core competences. That is a relationship of value for both partners.
  32. 32. 8. Describe the interactionsbetween buyer and seller in the‘diamond’ model In the ‘diamond’ model, the boundaries between buying and selling firms become more transparent. Interactive, cross functional teams openly exchange ideas for improving efficiency and effectiveness. The goal is to create new value together.
  33. 33. Organisation of buyer–seller relationship
  34. 34. Content Lecture Collaboration Basics of Supply Chain Management Efficient consumer response Analysing Relationships Questions Inter-organizational Relationships Assignments
  35. 35. Summary Inter-organizational relationships The network perspective on supply chains requires a holistic approach. (dealing with of treating with the whole of something) It recognizes the interdependence not only of immediate partners but also among the entire network of relationships
  36. 36. Summary Inter-organizational relationships The movement of organizations toward network relationships places new challenges on management – to define the core and establish the boundaries of the firm – to create the most effective governance mechanism – to develop the most appropriate relationships with partners
  37. 37. Summary Inter-organizational relationships Trust relationships are a necessary condition in supply chain management. Without it, partners won’t share information or commit to specific high-risk investments. – It is time consuming and is based on building positive experience
  38. 38. Summary Inter-organizational relationships The essential characteristics of the supply chain is its inter-organizational relationships. The ability to develop and manage the supply chain becomes a core competency, along with product technology, knowledge, and market access these relationships govern future actions of the corporation.
  39. 39. Content Lecture Collaboration Basics of Supply Chain Management Efficient consumer response Analysing Relationships Questions Inter-organizational Relationships Assignments
  40. 40. Assignments: Innovationand entrepreneurship Working assignments 1 and 2  Page 9 Question: Are large firms better innovators than small firms  Page 10 Questions: Skype: innovators and entrepreneurs  Page 13 Article: Innovation Management in Supply Chains  Summary
  41. 41. Benetton’s Supply networks’ Assignment – Combine several subjects in a professional report. The size of the report must not exceed 5 A4, excluding the cover, contents and appendixes. Then there will be at the end a talk of around 30 minutes about the report
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