8 integrating the supply chain

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8 integrating the supply chain

  1. 1. Chapter 8Integrating the supplychain
  2. 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. 3. Integration in the supplychain Key issue How can we integrate 1 internally, externally and electronically?
  4. 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. 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. 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. 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. 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. 9. Integration in the supply chain Informationflow in apparel supply chain
  10. 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. 11. Efficient consumerresponse Key issue How can collaboration be 1 extended across the supply chain to focus on meeting consumer demand?
  12. 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. 13. Continuous replenishmentContinuous replenishment
  14. 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. 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. 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. 17. Collaborative planning,forecasting andreplenishment Key issue How can collaboration be 1 extended to strategic as to well as operational levels?
  18. 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. 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. 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. 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. 22. Managing supply chain relationships  Key issue How can broader-based 1 relationships be formed between trading partners in the supply chain?
  23. 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. 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. 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. 26. A framework for managingthe supply chain Key issue What are the management 1 implications of integrating the supply chain?
  27. 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. 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. 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. 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

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