8 integrating the supply chain

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  • 1. Chapter 8Integrating the supplychain
  • 2. Content Integration in the supply chain Efficient consumer response Collaborative planning, forecasting and replenishment Managing supply chain relationships A framework for managing the supply chain
  • 3. Integration in the supplychain Key issue How can we integrate 1 internally, externally and electronically?
  • 4. Integration in the supply chain• What is Supply Chain Integration • 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
  • 5. Integration in the supplychain Measures of integration – Access to planning system – Sharing production plans – Joint EDI access / networks – Knowledge of inventory mix / levels – Packaging customization – Delivery frequencies – Common logistical equipment / containers – Common use of third-party logistics
  • 6. Integration in the supply chain Internal integration: function to function Purchasing Production Distribution High productivity of Keep warehousing Low price machine and labor operation smooth Unreliable delivery Post-manufacturing High batch size and low quality operation being resisted Poor available Additional complexity of distribution customizing products
  • 7. Integration in the supply chainInter-company collaboration: a manual approach Strategic Collaboration Decision Flow Products & Services Flow Enterprise Enterprise Information & Knowledge Flow A B Financial Flow END CUSTOMERS RAW MATERIALS Products & Services Flow Information & Knowledge Flow Financial Flow Decision Flow
  • 8. Integration in the supplychain Electronic collaboration TransactionalThe electronic execution of transaction Information sharing Electronic The electronic sharing or collaboration exchange of information Collaboration planning Strategic, tactical and operational exchange
  • 9. Integration in the supply chain Informationflow in apparel supply chain
  • 10. Content Integration in the supply chain Efficient consumer response Collaborative planning, forecasting and replenishment Managing supply chain relationships A framework for managing the supply chain
  • 11. Efficient consumerresponse Key issue How can collaboration be 1 extended across the supply chain to focus on meeting consumer demand?
  • 12. Efficient consumer response  Category management Category Establish Optimize Optimize Optimizemanagement infrastructure introductions assortments promotions Product Integrated Synchronized Continuous Automatedreplenishment suppliers production replenishment store ordering Reliable Cross- operations docking Enabling Item coding EDI EFT and database ABCtechnologies maintenance
  • 13. Continuous replenishmentContinuous replenishment
  • 14. Efficient consumerresponse Enabling technologies – Scanning data – Data warehousing – Data mining The data include – Demand / consumption / sales information – Cash flow – Stocks of finished goods / work in progress – Delivery and output status
  • 15. Efficient consumer response Category Continuous Enabling management replenishment technologies Account Jointinventory Effective management management information Demand Cross-dock sharing management operations AutomatedRequired Multifunctional Continuous ordercapability selling teams replenishment generation Price Bar-coding list Effective restructuring logistics and and the use of Effective product flows other scanning and customized Quick technology
  • 16. Content Integration in the supply chain Efficient consumer response Collaborative planning, forecasting and replenishment Managing supply chain relationships A framework for managing the supply chain
  • 17. Collaborative planning,forecasting andreplenishment Key issue How can collaboration be 1 extended to strategic as to well as operational levels?
  • 18. Collaborative planning, forecasting and replenishment  CPFR Model CPFR Model 1. Develop front-end agreement Planning 2. Create joint business plans 3. Create individual sales forecasts 4. Identify exceptions to sales forecasts Forecasting 5. Resolve / collaborate on exception items 6. Create order forecast 7. Identify exceptions to order forecastreplenishment 8. Resolve / collaborate on exception items
  • 19. Wal-mart ’s CPFR SellerProcess FRONT END AGREEMENT Collaborative JOINT BUSINESS PLAN Planning CREATE SALES FORECAST Collaborative IDENTIFY Link buyer and Seller Goal : EXCEPTIONS Forecasting Electronically RESOLVE EXCEPTIONS Collaborative CREATE ORDER FORECAST Replenishment IDENTIFY EXCEPTIONS RESOLVE EXCEPTIONSBuyer GENERATE ORDER
  • 20. Wal-Mart’s CPFRProgram CPFR has “blurred the lines between supplier and customer” Suppliers buy into their program because they have to to work with Wal-Mart, but more importantly, because Wal-Mart’s Systems provide increased profits for Wal-Mart and their suppliers Wal-Mart “teaches” their suppliers how to minimize shipping, inventory and other costs by showing them their own model.
  • 21. Content Integration in the supply chain Efficient consumer response Collaborative planning, forecasting and replenishment Managing supply chain relationships A framework for managing the supply chain
  • 22. Managing supply chain relationships  Key issue How can broader-based 1 relationships be formed between trading partners in the supply chain?
  • 23. Managing supply chainrelationships  Creating closer relationships Arm’s length transaction Partnership R&D Marketing R&D Marketing Logistics Operations Logistics Operations Information Information Information Information system system system system supplier customer supplier customer Bow tie Diamond
  • 24. Managing supply chainrelationships Factors in forming supply chain relationships – The order winner – The method making sourcing decisions – The nature of electronic collaboration – The attitude to capacity planning – Call-off requirements – Price negotiations – Managing product quality – Managing research and development – The level of pressure
  • 25. Content Integration in the supply chain Efficient consumer response Collaborative planning, forecasting and replenishment Managing supply chain relationships A framework for managing the supply chain
  • 26. A framework for managingthe supply chain Key issue What are the management 1 implications of integrating the supply chain?
  • 27. A framework for managing the supply chain 6 Develop measurement system for supply chain performance 4 5 Pilot new supply Organize for supply chain solutions chain performance 3 1 2 Develop effectiveDevelop a supply Gather supply chain partnerships and chain strategy information alliances
  • 28. A framework for managing the supply chain Develop a supply chain strategy – Customer service requirements – Plant and distribution center network design – Inventory management – Outsourcing and third-party logistics relationships – Business processes – Organizational design and training requirements – Performance metrics and goals
  • 29. A framework for managing the supply chain Pilot new supply chain solutions – Successful supply chain improvement including  Involvement of key stakeholders, suppliers, customers and employees  Selection of scope and environment, focusing on avoiding risk  Identification of the key questions that the pilot must answer
  • 30. A framework for managing the supply chain Develop measurement systems for supply chain performance – On time in full, outbound – On time in full, inbound – Internal defect rates – New product introduction rate – Cost reduction – Stock turns – Order to delivery lead time – Fiscal flexibility