This document discusses strategies that companies use to integrate demand and supply chains in the Asian context. It describes three main strategies:
1. Segmenting the supplier base and focusing integration efforts on critical suppliers while outsourcing generic parts. This reduces costs.
2. Supplier aggregation where key suppliers produce modules of components, further reducing complexity. Hyundai Mobis was given as an example.
3. Actively synchronizing supply and demand through a planning system, as done by Bossard, to reduce inventory risks from a lack of visibility between sales, planning, and purchasing across business units.
This chapter discusses the key dimensions and perspectives of logistics systems. It explains how logistics has evolved from focusing on physical distribution and materials management to integrated supply chain management. The chapter outlines how effective logistics contributes to economic efficiency on a macro level and interfaces between other business functions like marketing and manufacturing on a micro level. It also analyzes different approaches to evaluating logistics systems and factors that influence logistics costs.
LOGISTICS AND SUPPLY CHAIN INFORMATION SYSTEMAshish Hande
This chapter discusses the importance of information systems to logistics and supply chain management. It covers key issues like quality of information, architecture and objectives of information systems, and how technologies are impacting logistics processes. Contemporary issues include customers, productivity and performance as top priorities. Effective information management can help ensure customer needs are met and firms competitively price products. Logistics information systems encompass planning, execution, research/intelligence, knowledge management and reporting to make relevant information available to logistics managers.
Trial exam questions+answers logistics and supply chain management 2Khaoula Marai
The document provides answers to 20 end-of-chapter questions about supply chain management concepts from Chapter 2. Key points addressed include:
- The differences between supply chains and supply chain management, with the latter requiring overt management efforts and an enterprise perspective.
- Two models (SCOR and GSCF) of supply chain management that identify important processes and the role of logistics.
- Four key attributes of supply chain management are customer power, long-term orientation, leveraging technology, and enhanced communication.
- Contemporary supply chains need to be fast and agile to respond quickly to changing customer needs and demands.
This document discusses supply chain management systems and strategies. It covers:
1. What a supply chain is and how it links suppliers, manufacturers, retailers, and customers.
2. How supply chain management systems help manage relations with suppliers through constant information exchange.
3. Strategies like just-in-time to balance distribution and synchronize product flow with the aim of getting the right amount of products in the least amount of time at the lowest cost.
4. Walmart's supply chain strategy of strategic sourcing, cross-docking, and using technology to accurately forecast demand and track inventory.
The document discusses third party logistics (3PL) providers. It begins by defining 1PL, 2PL, 3PL and 4PL providers and their roles in the supply chain. It then covers the evolution of 3PL, services provided, benefits of using 3PL, types of 3PL providers including transportation-based, warehouse/distribution-based and more. New technologies in 3PL and relationship management are also discussed. The document concludes with a case study on selecting a 3PL using multi-criteria decision making.
Supply chain management is the systemic, strategic coordination of the traditional business functions and the tactics across these business functions within a particular company and across businesses within the supply chain, for the purposes of improving the long-term performance of the individual companies and the supply chain as a whole
Seminar Report on Supply Chain ManagementAnkur Mehta
This document is a seminar report submitted by Mehta Ankur Dilipbhai to fulfill requirements for a Master's degree in Industrial Engineering at Gujarat Technological University. The 73-page report discusses supply chain management, including definitions of SCM, its evolution, key concepts like logistics, push-pull systems, the bullwhip effect, emerging practices, outsourcing and procurement, the role of information technology, and challenges in implementing SCM. The report contains acknowledgments, certificates, tables of contents, references and is intended to provide an overview of supply chain management concepts.
This chapter discusses the key dimensions and perspectives of logistics systems. It explains how logistics has evolved from focusing on physical distribution and materials management to integrated supply chain management. The chapter outlines how effective logistics contributes to economic efficiency on a macro level and interfaces between other business functions like marketing and manufacturing on a micro level. It also analyzes different approaches to evaluating logistics systems and factors that influence logistics costs.
LOGISTICS AND SUPPLY CHAIN INFORMATION SYSTEMAshish Hande
This chapter discusses the importance of information systems to logistics and supply chain management. It covers key issues like quality of information, architecture and objectives of information systems, and how technologies are impacting logistics processes. Contemporary issues include customers, productivity and performance as top priorities. Effective information management can help ensure customer needs are met and firms competitively price products. Logistics information systems encompass planning, execution, research/intelligence, knowledge management and reporting to make relevant information available to logistics managers.
Trial exam questions+answers logistics and supply chain management 2Khaoula Marai
The document provides answers to 20 end-of-chapter questions about supply chain management concepts from Chapter 2. Key points addressed include:
- The differences between supply chains and supply chain management, with the latter requiring overt management efforts and an enterprise perspective.
- Two models (SCOR and GSCF) of supply chain management that identify important processes and the role of logistics.
- Four key attributes of supply chain management are customer power, long-term orientation, leveraging technology, and enhanced communication.
- Contemporary supply chains need to be fast and agile to respond quickly to changing customer needs and demands.
This document discusses supply chain management systems and strategies. It covers:
1. What a supply chain is and how it links suppliers, manufacturers, retailers, and customers.
2. How supply chain management systems help manage relations with suppliers through constant information exchange.
3. Strategies like just-in-time to balance distribution and synchronize product flow with the aim of getting the right amount of products in the least amount of time at the lowest cost.
4. Walmart's supply chain strategy of strategic sourcing, cross-docking, and using technology to accurately forecast demand and track inventory.
The document discusses third party logistics (3PL) providers. It begins by defining 1PL, 2PL, 3PL and 4PL providers and their roles in the supply chain. It then covers the evolution of 3PL, services provided, benefits of using 3PL, types of 3PL providers including transportation-based, warehouse/distribution-based and more. New technologies in 3PL and relationship management are also discussed. The document concludes with a case study on selecting a 3PL using multi-criteria decision making.
Supply chain management is the systemic, strategic coordination of the traditional business functions and the tactics across these business functions within a particular company and across businesses within the supply chain, for the purposes of improving the long-term performance of the individual companies and the supply chain as a whole
Seminar Report on Supply Chain ManagementAnkur Mehta
This document is a seminar report submitted by Mehta Ankur Dilipbhai to fulfill requirements for a Master's degree in Industrial Engineering at Gujarat Technological University. The 73-page report discusses supply chain management, including definitions of SCM, its evolution, key concepts like logistics, push-pull systems, the bullwhip effect, emerging practices, outsourcing and procurement, the role of information technology, and challenges in implementing SCM. The report contains acknowledgments, certificates, tables of contents, references and is intended to provide an overview of supply chain management concepts.
Understand the relationship between supply chain management (SCM) and organisational business objectives
Explain the importance of effective supply chain management in achieving organisational objectives
Explain the link between supply chain management and business functions in an organisation
Discuss the key drivers for achieving an integrated supply chain strategy in an organisation
Be able to use information technology to optimize supplier relationships in an organisation
Evaluate the effectiveness of strategies used by an organisation to maintain supplier relationships
Task 2.2: Use information technology to create strategies to develop an organisation’s relationship with its suppliers
Develop systems to maintain an organisation’s relationship with its suppliers
Case Study of a maintaining organization’s relationship with suppliers:
Understand the role of information technology in supply chain management
Assess how information technology could assist integration of different parts of the supply chain of an organisation
Task 3.2: Evaluate how information technology has contributed to the management of the supply chain of an organisation
Assess the effectiveness of information technology in managing the supply chain of an organisation
Understand the role of logistics and procurement in supply chain management
Explain the role of logistics in supply chain management in an organisation
The paper illustrates the role of Supply Chain Management in a Hotel’s Performance. It describes how supply chain management (SCM) system can help hotels to attain a sustainable competitive advantage by improving product quality and service while reducing cost at same time. As integrity of Supply chain is essential so to get benefited by its advantages, on this account, factors affecting the integration of supply chain management are explained. In conclusion Supply Chain Management has strong effects on overall hotel performance.
LOGISTICS RELATIONSHIPS AND THIRD PARTY LOGISTICSAshish Hande
This chapter discusses logistics relationships and third-party logistics. It outlines a six-step process for developing successful supply chain relationships: strategic assessment, deciding to form a relationship, evaluating alternatives, selecting partners, structuring the operating model, and implementing and improving continuously. Third-party logistics providers perform logistics functions like transportation and warehousing for other companies. They can be transportation-based, warehouse-based, forwarder-based, financial-based, or information-based. Establishing collaborative relationships with information sharing facilitates effective supply chain management.
This document discusses the evolution of supply chain management. It began in the 1980s when the term was coined, focusing on integration between traditional business functions. In the 1990s, companies specialized their supply chains and outsourced manufacturing and distribution. More recently, supply chain management has become globalized and specialized further as a service. The document also introduces the concept of "Supply Chain Management 2.0" which leverages proven solutions to help companies navigate increasing supply chain complexity.
The 2017 21st Annual Third-Party Logistics Study shows that shippers and their third-party logistics providers continue to move away from primarily transactional relationships and toward meaningful partnerships. Since the study began 21 years ago, researchers have seen the continued improvement in the strategic nature of relationships between shippers and third-party logistics providers.
This year’s survey suggests 3PLs and their customers continue to improve the quality of their relationships. Both parties—91% of 3PL users and 97% of 3PL providers—reported that their relationships are successful and that their work is yielding positive results.
How to Coordinate The Uncoordinated Supply Chain Case Study ApproachAbhijeet Ghadge
The document discusses coordination in supply chain management. It provides examples of how coordinating locations of franchisees and warehouse decisions can improve overall supply chain efficiency and reduce costs. Coordinated demand forecasting between different supply chain members also reduces the "bullwhip effect" and leads to better forecasts. Coordinating these types of decisions across an organization and its supply chain partners results in benefits like reduced costs, improved service levels, and increased total profits for the whole supply chain.
Creating competitive advantages through supply chain finalKurnia Rosyada
This document provides a case study on Samsung Electronics and how their supply chain management practices have helped create competitive advantages and resilience. It discusses trends in supply chain management like resilience, value chain networks, and demand-driven excellence. It also analyzes Samsung's practices like extended supplier partnerships, customer collaboration, and how these have contributed to strategic positioning, product innovation, and differentiation. The document concludes Samsung has implemented best practices that view supply chain management holistically and have created competitiveness and market resilience.
Put your supply chain to the test in Every Angle's brand new supply chain efficiency quiz. Will you discover new supply chain opportunity that will drive operational improvements across your entire value chain? Or better yet, are you running a world-class outfit that will achieve 100% efficiency?
During this quiz we test five key supply chain elements we've repeatedly found to absorb and waste astonishing amounts of working capital. Cash that could be released and reinvested elsewhere in the business, whilst improving the overall performance of the supply chain!
Remember to let us know how you score. You can follow us on Twitter @EveryAngleUK.
the committed delivery window
The document provides an overview of the logistics and supply chain management space in India. It discusses key aspects of supply chain management including integration across businesses. It estimates the potential market size for logistics and supply chain management in India to be around 8 trillion rupees across various industries like manufacturing, retail, transportation, and services. The document also outlines career opportunities and typical job roles in supply chain management at different experience levels.
This document provides an overview of key concepts in supply chain management from a chapter in a textbook. It discusses:
1) The different phases of supply chains including acquisition, transformation, and distribution and key functions within purchasing, receiving, and supplier certification.
2) The changing role of purchasing from transactional to strategic. Purchasing now focuses on developing long-term supplier relationships and providing strategic information to support make-or-buy decisions.
3) Global sourcing involves more than just international transactions but integrating suppliers worldwide. Effective global sourcing requires executive commitment, rigorous processes, resources, IT integration, and measuring savings.
Supply Chain Management, Sourcing Pricing and Procurement Process ,
Presentations By Rajendran Ananda Krishnan, https://www.facebook.com/ialwaysthinkprettythings
Presentation on supply chain managementAnkur Mehta
This document provides an outline for a seminar on supply chain management. It covers topics such as the definition of supply chain management, logistics, dynamics of the supply chain including the bullwhip effect, vendor managed inventory, third party logistics, outsourcing, and the role of information technology in supply chain management. Key points discussed include the necessity of SCM for industry, objectives of SCM, drivers of the supply chain, decision making factors, and benefits of approaches like VMI.
2016 #3PLStudy: The State of Logistics OutsourcingCapgemini
Over the span of 20 years, the Third Party Logistics (3PL) study has documented the evolution of 3PLs, which are shifting, in many instances, from tactical service providers to collaborative partners delivering a comprehensive suite of integrated logistics services. Additionally, providers have become more proficient at the provision of 3PL services, and customers have become better buyers and users of 3PL services. The study includes four streams of research: surveys, desk research, focus interviews and intensive, one-day facilitated shipper workshops.
The study, which is based on responses from more than 260 shippers and logistics service providers in North America, Europe, Asia-Pacific, Latin America and other regions, also looks at supply chain risk management and new competition within the industry. It is produced by Capgemini Consulting, the global strategy and transformation consulting brand of the Capgemini Group, Penn State University, the executive recruiting firm Korn/Ferry International and Penske Logistics, a global logistics and supply chain management provider.
To help document changes within the supply chain, the 20th Annual Third-Party Logistics (3PL) Study examines the global supply marketplace across a range of topics, including how shippers and 3PLs are aligning relationships, the 3PL competitive landscape and workforce innovating and agility.
Strategic supply chain management and logisticsBhavi Bhatia
3.1 assess how information technology could assist integration of different parts of the supply chain of an organization
3.2 evaluate how information technology has contributed to the management of the supply chain of an organization
3.3 assess the effectiveness of information technology in managing the supply chain of an organization
4.1 explain the role of logistics in supply chain management in an organization
4.2 evaluate procurement practices in an organization
4.3 discuss the factors that must be
considered when improving logistics and procurement practices in an organization
5.1 plan a strategy to improve an organisation’s supply chain
5.2 assess how a supply chain improvement strategy will benefit overall business performance in an organization
5.3 explain how barriers will be overcome in an organization when implementing a supply
chain improvement strategy
Supply chain management involves integrating key business processes from suppliers to end users in a way that provides value for customers. A supply chain consists of all parties involved in fulfilling customer requests, including manufacturers, suppliers, transporters, warehouses, and customers. Effective supply chain management requires determining optimal transportation methods, inventory levels, and information sharing across the chain.
This chapter discusses how supply chain strategies can impact a company's financial statements and profitability. It shows how cost savings can be converted to equivalent sales increases using a company's profit margin. The chapter analyzes the financial impact of reducing transportation, warehousing and inventory costs for a company called CBL Distributors.com. It demonstrates that these supply chain reductions increase CBL's net income, profit margin and return on assets. The chapter also examines the financial implications of improving on-time delivery and order fill rates for CBL's supply chain.
Logistics management 100 marks assignmentYashuu Parekh
Logistics is the management of the flow of goods between the point of origin and the point of use in order to meet customer requirements. It involves integrating information, transportation, inventory, warehousing, material handling, and packaging to deliver the right items to the right place at the right time. As logistics systems improved, production and consumption were able to separate geographically, allowing for more specialization and international trade. Effective logistics management is important for businesses operating in global markets.
Available online at [www.ijeete.com] IMPLEMENTATION OF SUPPLY CHAIN MANAGEMEN...Ankur Bindal
This paper aims to convey how to do a conceptual work during supply chain design, planning and operation, and how to improve performance. In present work, efforts have been made to analyze techniques like logistic management, quick customer service, vendor base management, inventory management etc. The key effective to supply chain management is supply chain integration, ensuring that all parts of the supply chain work together, rather than cross purpose. The supplier selection is no more based on factor like having low cost or speed of delivery alone. Productivity and quality have become perquisite. Trustworthiness, speed flexibility and responsiveness are main issues. K
Kamalesh V is a student studying Logistics Management at Ayyanar Janaki Amma College. The document defines supply chain as the system involved in supplying products to consumers, from raw materials to finished goods. Logistics management is defined as planning and controlling the efficient flow of goods and services from origin to consumption. The objectives of supply chain management are also outlined. Key differences between logistics and supply chain management are identified as aims, number of departments involved, and relationships. Supply chain integration, advantages, disadvantages, types of tools, and essential features are also discussed.
Mr. Shan Senthil - global logistics trends & opportunitieskuwaitsupplychain
1) Global logistics management involves managing worldwide distribution, production, procurement, inventory and other aspects of a corporation's global supply chain.
2) Two critical concepts for effective global logistics are managing global supply chains and just-in-time production and delivery.
3) Logistics trends include companies outsourcing more logistics functions, forming new collaborative supply chain relationships, and increasing use of information technology.
The document discusses supply chain network optimization and design. It notes that companies can significantly reduce supply chain costs and improve service levels through optimizing their network design using modeling approaches. The modeling incorporates end-to-end costs across purchasing, production, warehousing, inventory and transportation. Companies should periodically revisit their network design considering changes in factors like demand, supply sources, products, and fiscal policies to ensure their network remains optimized over time. Case studies demonstrate how modeling approaches can determine the optimal network configuration and facility locations to minimize total costs while meeting service level targets.
Understand the relationship between supply chain management (SCM) and organisational business objectives
Explain the importance of effective supply chain management in achieving organisational objectives
Explain the link between supply chain management and business functions in an organisation
Discuss the key drivers for achieving an integrated supply chain strategy in an organisation
Be able to use information technology to optimize supplier relationships in an organisation
Evaluate the effectiveness of strategies used by an organisation to maintain supplier relationships
Task 2.2: Use information technology to create strategies to develop an organisation’s relationship with its suppliers
Develop systems to maintain an organisation’s relationship with its suppliers
Case Study of a maintaining organization’s relationship with suppliers:
Understand the role of information technology in supply chain management
Assess how information technology could assist integration of different parts of the supply chain of an organisation
Task 3.2: Evaluate how information technology has contributed to the management of the supply chain of an organisation
Assess the effectiveness of information technology in managing the supply chain of an organisation
Understand the role of logistics and procurement in supply chain management
Explain the role of logistics in supply chain management in an organisation
The paper illustrates the role of Supply Chain Management in a Hotel’s Performance. It describes how supply chain management (SCM) system can help hotels to attain a sustainable competitive advantage by improving product quality and service while reducing cost at same time. As integrity of Supply chain is essential so to get benefited by its advantages, on this account, factors affecting the integration of supply chain management are explained. In conclusion Supply Chain Management has strong effects on overall hotel performance.
LOGISTICS RELATIONSHIPS AND THIRD PARTY LOGISTICSAshish Hande
This chapter discusses logistics relationships and third-party logistics. It outlines a six-step process for developing successful supply chain relationships: strategic assessment, deciding to form a relationship, evaluating alternatives, selecting partners, structuring the operating model, and implementing and improving continuously. Third-party logistics providers perform logistics functions like transportation and warehousing for other companies. They can be transportation-based, warehouse-based, forwarder-based, financial-based, or information-based. Establishing collaborative relationships with information sharing facilitates effective supply chain management.
This document discusses the evolution of supply chain management. It began in the 1980s when the term was coined, focusing on integration between traditional business functions. In the 1990s, companies specialized their supply chains and outsourced manufacturing and distribution. More recently, supply chain management has become globalized and specialized further as a service. The document also introduces the concept of "Supply Chain Management 2.0" which leverages proven solutions to help companies navigate increasing supply chain complexity.
The 2017 21st Annual Third-Party Logistics Study shows that shippers and their third-party logistics providers continue to move away from primarily transactional relationships and toward meaningful partnerships. Since the study began 21 years ago, researchers have seen the continued improvement in the strategic nature of relationships between shippers and third-party logistics providers.
This year’s survey suggests 3PLs and their customers continue to improve the quality of their relationships. Both parties—91% of 3PL users and 97% of 3PL providers—reported that their relationships are successful and that their work is yielding positive results.
How to Coordinate The Uncoordinated Supply Chain Case Study ApproachAbhijeet Ghadge
The document discusses coordination in supply chain management. It provides examples of how coordinating locations of franchisees and warehouse decisions can improve overall supply chain efficiency and reduce costs. Coordinated demand forecasting between different supply chain members also reduces the "bullwhip effect" and leads to better forecasts. Coordinating these types of decisions across an organization and its supply chain partners results in benefits like reduced costs, improved service levels, and increased total profits for the whole supply chain.
Creating competitive advantages through supply chain finalKurnia Rosyada
This document provides a case study on Samsung Electronics and how their supply chain management practices have helped create competitive advantages and resilience. It discusses trends in supply chain management like resilience, value chain networks, and demand-driven excellence. It also analyzes Samsung's practices like extended supplier partnerships, customer collaboration, and how these have contributed to strategic positioning, product innovation, and differentiation. The document concludes Samsung has implemented best practices that view supply chain management holistically and have created competitiveness and market resilience.
Put your supply chain to the test in Every Angle's brand new supply chain efficiency quiz. Will you discover new supply chain opportunity that will drive operational improvements across your entire value chain? Or better yet, are you running a world-class outfit that will achieve 100% efficiency?
During this quiz we test five key supply chain elements we've repeatedly found to absorb and waste astonishing amounts of working capital. Cash that could be released and reinvested elsewhere in the business, whilst improving the overall performance of the supply chain!
Remember to let us know how you score. You can follow us on Twitter @EveryAngleUK.
the committed delivery window
The document provides an overview of the logistics and supply chain management space in India. It discusses key aspects of supply chain management including integration across businesses. It estimates the potential market size for logistics and supply chain management in India to be around 8 trillion rupees across various industries like manufacturing, retail, transportation, and services. The document also outlines career opportunities and typical job roles in supply chain management at different experience levels.
This document provides an overview of key concepts in supply chain management from a chapter in a textbook. It discusses:
1) The different phases of supply chains including acquisition, transformation, and distribution and key functions within purchasing, receiving, and supplier certification.
2) The changing role of purchasing from transactional to strategic. Purchasing now focuses on developing long-term supplier relationships and providing strategic information to support make-or-buy decisions.
3) Global sourcing involves more than just international transactions but integrating suppliers worldwide. Effective global sourcing requires executive commitment, rigorous processes, resources, IT integration, and measuring savings.
Supply Chain Management, Sourcing Pricing and Procurement Process ,
Presentations By Rajendran Ananda Krishnan, https://www.facebook.com/ialwaysthinkprettythings
Presentation on supply chain managementAnkur Mehta
This document provides an outline for a seminar on supply chain management. It covers topics such as the definition of supply chain management, logistics, dynamics of the supply chain including the bullwhip effect, vendor managed inventory, third party logistics, outsourcing, and the role of information technology in supply chain management. Key points discussed include the necessity of SCM for industry, objectives of SCM, drivers of the supply chain, decision making factors, and benefits of approaches like VMI.
2016 #3PLStudy: The State of Logistics OutsourcingCapgemini
Over the span of 20 years, the Third Party Logistics (3PL) study has documented the evolution of 3PLs, which are shifting, in many instances, from tactical service providers to collaborative partners delivering a comprehensive suite of integrated logistics services. Additionally, providers have become more proficient at the provision of 3PL services, and customers have become better buyers and users of 3PL services. The study includes four streams of research: surveys, desk research, focus interviews and intensive, one-day facilitated shipper workshops.
The study, which is based on responses from more than 260 shippers and logistics service providers in North America, Europe, Asia-Pacific, Latin America and other regions, also looks at supply chain risk management and new competition within the industry. It is produced by Capgemini Consulting, the global strategy and transformation consulting brand of the Capgemini Group, Penn State University, the executive recruiting firm Korn/Ferry International and Penske Logistics, a global logistics and supply chain management provider.
To help document changes within the supply chain, the 20th Annual Third-Party Logistics (3PL) Study examines the global supply marketplace across a range of topics, including how shippers and 3PLs are aligning relationships, the 3PL competitive landscape and workforce innovating and agility.
Strategic supply chain management and logisticsBhavi Bhatia
3.1 assess how information technology could assist integration of different parts of the supply chain of an organization
3.2 evaluate how information technology has contributed to the management of the supply chain of an organization
3.3 assess the effectiveness of information technology in managing the supply chain of an organization
4.1 explain the role of logistics in supply chain management in an organization
4.2 evaluate procurement practices in an organization
4.3 discuss the factors that must be
considered when improving logistics and procurement practices in an organization
5.1 plan a strategy to improve an organisation’s supply chain
5.2 assess how a supply chain improvement strategy will benefit overall business performance in an organization
5.3 explain how barriers will be overcome in an organization when implementing a supply
chain improvement strategy
Supply chain management involves integrating key business processes from suppliers to end users in a way that provides value for customers. A supply chain consists of all parties involved in fulfilling customer requests, including manufacturers, suppliers, transporters, warehouses, and customers. Effective supply chain management requires determining optimal transportation methods, inventory levels, and information sharing across the chain.
This chapter discusses how supply chain strategies can impact a company's financial statements and profitability. It shows how cost savings can be converted to equivalent sales increases using a company's profit margin. The chapter analyzes the financial impact of reducing transportation, warehousing and inventory costs for a company called CBL Distributors.com. It demonstrates that these supply chain reductions increase CBL's net income, profit margin and return on assets. The chapter also examines the financial implications of improving on-time delivery and order fill rates for CBL's supply chain.
Logistics management 100 marks assignmentYashuu Parekh
Logistics is the management of the flow of goods between the point of origin and the point of use in order to meet customer requirements. It involves integrating information, transportation, inventory, warehousing, material handling, and packaging to deliver the right items to the right place at the right time. As logistics systems improved, production and consumption were able to separate geographically, allowing for more specialization and international trade. Effective logistics management is important for businesses operating in global markets.
Available online at [www.ijeete.com] IMPLEMENTATION OF SUPPLY CHAIN MANAGEMEN...Ankur Bindal
This paper aims to convey how to do a conceptual work during supply chain design, planning and operation, and how to improve performance. In present work, efforts have been made to analyze techniques like logistic management, quick customer service, vendor base management, inventory management etc. The key effective to supply chain management is supply chain integration, ensuring that all parts of the supply chain work together, rather than cross purpose. The supplier selection is no more based on factor like having low cost or speed of delivery alone. Productivity and quality have become perquisite. Trustworthiness, speed flexibility and responsiveness are main issues. K
Kamalesh V is a student studying Logistics Management at Ayyanar Janaki Amma College. The document defines supply chain as the system involved in supplying products to consumers, from raw materials to finished goods. Logistics management is defined as planning and controlling the efficient flow of goods and services from origin to consumption. The objectives of supply chain management are also outlined. Key differences between logistics and supply chain management are identified as aims, number of departments involved, and relationships. Supply chain integration, advantages, disadvantages, types of tools, and essential features are also discussed.
Mr. Shan Senthil - global logistics trends & opportunitieskuwaitsupplychain
1) Global logistics management involves managing worldwide distribution, production, procurement, inventory and other aspects of a corporation's global supply chain.
2) Two critical concepts for effective global logistics are managing global supply chains and just-in-time production and delivery.
3) Logistics trends include companies outsourcing more logistics functions, forming new collaborative supply chain relationships, and increasing use of information technology.
The document discusses supply chain network optimization and design. It notes that companies can significantly reduce supply chain costs and improve service levels through optimizing their network design using modeling approaches. The modeling incorporates end-to-end costs across purchasing, production, warehousing, inventory and transportation. Companies should periodically revisit their network design considering changes in factors like demand, supply sources, products, and fiscal policies to ensure their network remains optimized over time. Case studies demonstrate how modeling approaches can determine the optimal network configuration and facility locations to minimize total costs while meeting service level targets.
Simulation in the supply chain context a survey Sergio Terzia,.docxbudabrooks46239
Simulation in the supply chain context: a survey
Sergio Terzia,*, Sergio Cavalierib a Politecnico di Milano, Department of Economics, Industrial and Management Engineering, Piazza Leonardo da Vinci 32, 20133 Milan, Italy b Department of Industrial Engineering, Universita` di Bergamo, Viale Marconi 5, 24044 Dalmine, Italy Received 29 January 2003; accepted 13 June 2003
Abstract
The increased level of competitiveness in all industrial sectors, exacerbated in the last years by the globalisation of the economies and by the sharp fall of the final demands, are pushing enterprises to strive for a further optimisation of their organisational processes, and in particular to pursue new forms of collaboration and partnership with their direct logistics counterparts. As a result, at a company level there is a progressive shift towards an external perspective with the design and implementation of new management strategies, which are generally named with the term of supply chain management (SCM). However, despite the flourish of several IT solutions in this context, there are still evident hurdles to overcome, mainly due to the major complexity of the problems to be tackled in a logistics network and to the conflicts resulting from local objectives versus network strategies. Among the techniques supporting a multi-decisional context, as a supply chain (SC) is, simulation can undoubtedly play an important role, above all for its main property to provide what-if analysis and to evaluate quantitatively benefits and issues deriving from operating in a co-operative environment rather than playing a pure transaction role with the upstream/downstream tiers. The paper provides a comprehensive review made on more than 80 articles, with the main purpose of ascertaining which general objectives simulation is generally called to solve, which paradigms and simulation tools are more suitable, and deriving useful prescriptions both for practitioners and researchers on its applicability in decision-making processes within the supply chain context. # 2003 Elsevier B.V. All rights reserved. Keywords: Parallel and distributed simulation; Supply chain management; High level architecture; Survey 1. Introduction Modern industrial enterprises operate in a rapidly changing world, stressed by even more global competition, managing world-wide procurement and unforeseeable markets, supervising geographically distributed production plants, striving for the provision of outstanding products and high quality customer service. More than in the past, companies which are not able to revise periodically their strategies and, accordingly, to modify their organisational processes seriously risk to be pulled out from the competitive edge. In the 1990s, companies have made huge efforts for streamlining their internal business processes, identifying and enhancing the core activities pertaining to the product value chain, and invested massively in new intra-company information and communicat.
GRA Retail Supply Chain Whitepaper - Perspectives on Strategic InvestmentRebecca Manjra
Australian retail supply chains today must be capable of managing increasing customer expectations (lead-times, pricing, options), channel diversification (online, store, multi-channel, omni-channel) as well as increasingly complex product sourcing strategies.
There are few decisions in an executive’s career which can define one’s stewardship as a success. In today’s economic climate, where company boards are more cost conscious, increasingly such opportunities are emerging from significant supply chain investments with complex and sensitive payback timetables stretching over several years.
LOGISTICS AND SUPPLY CHAIN CHALLENGES FOR THE FUTUREAshish Hande
This chapter discusses strategic planning for logistics and supply chain management. It covers the evolution of strategic planning from investment planning in the 1950s to a focus on competitive advantage today. The chapter also outlines different types of strategies such as time-based strategies focused on reducing cycle times, asset productivity strategies aimed at better utilizing inventory and facilities, technology-based strategies using disruptive technologies, and relationship-based strategies like collaboration and value nets. Finally, it discusses future trends in logistics including a shift to virtual integration and the importance of collaboration, technology, and a comprehensive supply chain perspective.
Holcim uses network optimization to manage supply chain risk and costs. Through regular network evaluations as part of its sales and operations planning process, Holcim analyzes scenarios to optimize sourcing from its plants and distribution centers. Using Oracle's network optimization tool, Holcim links strategic modeling to operational planning. This allows Holcim to choose optimal solutions each month to maximize revenue and minimize costs given demand, supply, transportation rates and production capabilities. Integrating network design with financial planning helps Holcim reduce costs while improving supply chain resilience.
This document discusses potential future scenarios for the logistics industry based on key areas of disruption. It identifies changing customer expectations, technological breakthroughs, new entrants, and redefined collaboration as disruptive forces shaping the industry. Four potential future scenarios are outlined: 1) "Sharing the PI(e)" where collaboration allows current leaders to retain dominance; 2) "Start-up, shake up" where new entrants fragment last-mile delivery; 3) "Complex competition" where customers/suppliers become logistics players; and 4) "Scale matters" where consolidation and acquisition drive market leadership. The scenarios help companies assess trends and develop strategies to ensure future profitability during this time of change.
Sam Wardill introduces CILT Focus to some of the opportunities, challenges and techniques that can be used to deliver more value from the Heavy Asset supply chain.
AGILE SUPPLY CHAIN CAPABILITIES EMERGING PATTERNS AS A DETERMINANT OF COMPET...Jill Brown
1) Turbulent market conditions are driving manufacturers to emphasize flexibility, agility, and responsiveness through supply chain integration.
2) The paper analyzes survey data from 600 UK companies to identify patterns of supply chain practices and their relationship to competitive objectives.
3) Three patterns were identified - traditional, lean, and agile. Lean and agile patterns that emphasized integration with suppliers and customers had a significant positive impact on competitive objectives, while the traditional pattern focused more on cost attribution and did not.
Tightening The Chain – Supply Chain Cost Cutting StrategiesZubin Poonawalla
The document discusses strategies for reducing supply chain costs, including using third-party logistics (3PL) providers, RFID outsourcing, and attribute-based demand planning. It defines these strategies and examines how each can significantly lower supply chain costs. For small-to-medium businesses especially, 3PLs and RFID outsourcing allow companies to benefit from large infrastructures without the associated costs. Attribute-based demand planning also enables inventory reductions through product differentiation.
The document provides definitions and overview of key concepts in supply chain management. It discusses strategic vs operational decisions, functions including procurement, production, distribution, inventory management. It also outlines problems in SCM like distribution network configuration, information sharing, and cash flow management. Common modeling approaches for strategic and tactical decisions are described.
This document summarizes procurement best practices for direct material sourcing in the industrial equipment industry. It discusses challenges like increasing technological complexity, strain on raw materials, and need for better risk management. It outlines differentiating sourcing strategies for high-tech vs low-tech parts, information sharing in the supply chain, efficient raw material management, and procurement risk management. Specific sourcing strategies are provided for electronics and molding categories based on their characteristics. Overall, the document advocates for optimized purchasing processes, supply base consolidation, ensuring supplier growth strategies align, active risk management, and category-specific sourcing approaches.
This document summarizes procurement best practices for direct material sourcing in the industrial equipment industry. It discusses challenges like increasing technological complexity, strain on raw materials, and need for better risk management. It outlines differentiating sourcing strategies for high-tech vs low-tech parts, information sharing in the supply chain, efficient raw material management, and procurement risk management. Specific best practices are provided for electronics and molding categories, focusing on leveraging supplier relationships, managing price fluctuations, calculating tooling costs, and understanding suppliers' constraints. The document emphasizes strategies like optimizing processes, consolidating the supply base, ensuring aligned growth strategies, collaboration, and risk management.
Auto Industry Leverages OAGi Integration Standards
The auto industry, with slim margins and a large value chain, envisions
moving toward a make-to-order operation.
However, customer driven manufacturing requires
high levels of integration among suppliers,
partners, customers and production applications.
Facing applications integration on a large scale,
auto manufacturers, through the AIAG, are partnering
with OAGi as an essential element of their
integration roadmap.
Integration of businesses and applications
has become necessary to achieve
customer driven manufacturing. The auto
industry is facing applications integration
on a large scale to achieve its vision, and
is partnering with OAGi as an element of
its integration standards landscape.
The tyre industry has seen steady growth over the years and is expected to produce nearly 2 billion tyres in 2015. Demand is driven by the replacement market and original equipment manufacturers. The industry is forecast to grow 4.3% annually in 2015. Manufacturers are expanding capacity to meet rising demand fueled by growth in the automotive sector and urbanization in Asia, Latin America, and Russia. Supply chain management in the tyre industry faces challenges from volatile demand and supply, cost pressure, shorter order-to-delivery cycles, and ensuring efficient distribution networks. Logistics providers need strong expertise in the tyre industry to help companies address these challenges.
The tyre industry has seen steady growth over the years and is expected to produce nearly 2 billion tyres in 2015. Demand is driven by the replacement market and original equipment manufacturers. The industry is forecast to grow 4.3% annually in 2015. Manufacturers are expanding capacity to meet rising demand fueled by growth in the automotive sector and urbanization in Asia, Latin America, and Russia. Supply chain management in the tyre industry faces challenges including reducing costs, managing inventory, and ensuring efficient distribution networks. Logistics providers need strong expertise in the tyre industry to help companies address issues and improve operational efficiency.
TNT Express Agile Supply Chain Hilti White PaperRupi Banwait
This document discusses the business case for supply chain agility. It defines agility as the ability to adapt to and normalize change. An agile supply chain is characterized by visibility, a tailored network, streamlined processes, and collaborative partnerships. The document argues that logistics is crucial to supply chain agility and the ability to respond quickly to shifts in demand. It provides examples of how companies have developed agile supply chains to improve responsiveness, reduce costs, and address strategic goals.
Reverse logistics programs are complicated but can provide opportunities. They involve managing returns, repairs, and used goods in ways that (1) generate additional revenue, differentiate companies, and support new product demand; (2) establish customer loyalty; and (3) are considered part of successful growth strategies. However, reverse logistics requires defined processes and metrics since returns are variable, and many companies currently do not handle returns well due to a lack of focus on this area.
The document discusses how procurement is transforming into a strategic function focused on collaboration across organizations and supply chains. It describes how companies have outsourced functions and rely more on external partners. New technologies and business networks now allow procurement to better connect with suppliers and partners to drive innovation, efficiency and value beyond just cost reductions. The use of business networks is poised to further change procurement by enabling greater visibility, collaboration and optimization of activities like sourcing, spend management and cash flow.
GT Nexus is a cloud-based supply chain management software provider that is ranked 9th in the industry. It relies heavily on acquisitions for growth due to a lack of resources for organic expansion. The document proposes that GT Nexus leverage its cloud technology and existing partnerships to create "Service Batteries" tailored to specific industries like manufacturing, retail, construction, and healthcare. These customized solutions would add value for existing clients while allowing for targeted partnerships for sustainable growth. A two-phase action plan is outlined involving acquiring companies in profiled industries and then retaining clients by leveraging third parties to expand service offerings.
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2. 262 P. Guan Goh
1. Introduction
The evolution in the implementation of logistics and supply chain
management has been rapid in the last few years. As companies move from
outsourcing to offshoring of business activities, the ability to coordinate
regional or global operations become ever more important, with implications
for collaboration, information sharing, planning, and responsiveness in real-
time, far-flung supply chains.
At the same time, while many companies have tried to implement some
form of collaborative networks, the results from collaboration have been
mixed or dubious up until recently. Especially in Asia, collaboration may
face even more difficulties related to poor IT and telecommunications
infrastructure, lack of trust in information sharing, and insufficient
management understanding of collaboration concepts.
As companies continue to push process transformation and system
integration inherent in collaborative processes, improvements in shared
processes have begun to show. While these efforts may be piecemeal on a
project basis, the scope of such smaller-scale projects is clearly more
acceptable and more easily implementable in companies than big-bang
transformations.
As the integration of processes and information between companies
continue to improve, companies improve on their ability to collaborate and
work on joint company processes in an extended value chain. With this
increasingly close integration, planning and execution functions are no
longer separate, but become more coordinated. The ability to integrate the
planning and execution functions, close to real-time basis, becomes even
more critical.
In addition, it has become increasingly important that both the demand
chain and supply chain perspectives are taken into account in this overall
process integration. The challenges for companies in balancing the supply
and demand chain perspectives could be many. As companies become more
far-flung in their global procurement, manufacturing, and sales operations,
the ability to coordinate smoothly the entire value chain by matching
disparate customer and supplier bases becomes more challenging, and a
source of competitor advantage for companies which can execute well. This
paper examines different methods for how multinational companies have
implemented their inventory management strategies in the Asian context.
3. Integrating Demand and Supply Chains 263
2. Challenges in Asia
Within the Asian context, such integration poses particular challenges in
the operating environment. The rise of Asia, particularly China in recent
years, in low-cost manufacturing has enabled the global footprint of
multinationals to spread farther and wider in taking advantage of cost
efficiencies. However, the growth and improvement of manufacturing
capabilities has not been accompanied by a corresponding improvement in
supply chain.
Traditionally, logistics has seen as a backend function, and primarily
from the view of asset utilization, with warehousing as a means for storage,
and transportation by as trucks operated by small companies (often
individual owners) with varying levels of capabilities and number of trucks.
Often, this is further hampered by the lack of logistics infrastructure such as
roads, ports and airports, skilled workforce, and logistics information
technology as well as IT infrastructure nationwide. The relative lack of
experience and sophistication in Asian logistics, especially in supply chain,
has meant that the emphasis is placed primarily on transactional, perhaps
even opportunistic, execution, rather than on planning and coordination over
the medium and long-term.
Political and geographical factors also play a part. Asia comprises a
number of countries with their own language, cultural, taxation, and
historical barriers, and also varying levels of economic development. This
makes cross-border coordination more difficult than in the case of large
countries such as the United States or economically and legally integrated
entities such as the European Union.
Taken together, all these factors have made global coordination difficult
to implement seamlessly. Such disparity between Asian operations and the
operations in developed countries occurs in ways such as:
• Customers are often based in Europe, concentrating on R&D and US and
marketing, while manufacturing sites, or outsourced production, are often
based in low cost manufacturing locations in Asia. The ultimate
customers of the finished products could be all over the world. This
creates challenges in coordination for shipping and logistics, and project
management across different geography and time zones.
• Customers are global or regional players with sophisticated management
and IT systems while suppliers are small players with low capabilities and
resources. Suppliers are less capable of planning optimal inventory and
supply chain strategies, or having the resources to support vendor
management inventory and collaboration programs.
4. 264 P. Guan Goh
• Competition is mainly on price due to the pressures of low-cost competition
in Asia. As a result, suppliers tend to give lower priority to service levels or
quality. At the same time, customers are demanding on service levels (as
well as pricing). Service levels for product availability through better
inventory, give way to immediate transactional requirements such as price
variances between suppliers, creating insufficient focus on joint long-term
goals.
• In typical manufacturing environments for end products, the number of
input SKUs (Stock Keeping Units) and suppliers are much larger than the
number of output SKUs and customers, making inbound logistics into the
factory (more probably in Asia) more difficult to coordinate compared to
outbound logistics to the end customer.
3. Supply Chain Strategies
While the challenges are many, the problems are not insurmountable.
In order to cope with such disparities between the supply chains and the
demand chains, companies must have clear strategies for demand-supply
integration and synchronization.
We shall now look at three different strategies that companies in Asia have
embarked upon. From there, it may be possible to see different levels of
integration, depending on the business needs of the companies, and a logical
progression of the extent of integration. The extent of integration would
depend on the strategic objectives of the company for supply chain and
inventory management, the level of involvement with the supplier base, as
well as the level of involvement with the customer base. Especially
considering the Asian context that infrastructure and supply chain knowledge
and practices could be lacking, it is more important to focus efforts on areas
where the payoffs for investments into capabilities, and for transferring
knowledge, might be the greatest.
Furthermore, the use of information technology and other logistics-related
technologies is often a key cornerstone of such integration initiatives. Only
with information sharing, companies can start to build on the information for
planning and coordination, and this is critical to the successful implementation
of these strategies.
5. Integrating Demand and Supply Chains 265
4. Segmentation of Supplier Base for Different Extent
of Integration
Not all suppliers are equally important to the operations of the company.
The supplier integration effort may be consuming on both time and
resources, and analyzing the differences in supplier importance and supplier
capabilities enables companies to focus their efforts on the appropriate levels
of integration effort for different segments. How might such segmentation
strategies be implemented?
In the case of a major semiconductor manufacturer (MSM),40 segregation
of its supplier base is key to effective inventory management. The company
is a provider of advanced semiconductor solutions. Its DRAM (Dynamic
Random Access Memory) and Flash components are used in advanced
computing, networking, and communications products.
The PCBA (Printed Circuit Board Assembly) Operations Division of
MSM in Singapore deals with the assembly of RAM chips using TSOP
(Thin Small Outline Package), DRAMs, PCBs (Printed Circuit Board) and
other discrete components. A typical module consists of a number of
memory components that are attached to a printed circuit board. The gold or
tin pins on the bottom of the module provide a connection between the
module and a socket on another larger PCB. There are also some capacitors
and resistors soldered onto the PCB.
Raw materials supplies come from external sources and a single internal
source for TSOP. The materials from external sources are broadly classified
into two types: generic and customized parts.
Generic parts such as capacitors, resistors, and other discrete components
are purchased as consignment goods and there are two main vendors for
them. These two suppliers both manufacture and function as trading houses
that purchase commodities from other suppliers and manufacturers. Thus,
even if they themselves lose production capacity, they can still purchase
from other manufacturers to fill in the order, ensuring that supply is stable.
For these goods, auto-replenishment is conducted through supply chain
initiatives like negative inventory and VMI (vendor managed inventory).
This relieves MSM from the burden of taking care of inventory for
consigned goods, leading to large amounts of cost savings. Material
availability for these suppliers can be easily seen as they are stored in the
same system as MSM. This allows downstream components to view this
inventory and plan for output. Monthly conferences are setup between the
corporate planning and local planning teams to ensure that suppliers are
given the demand forecast.
40
Name has been disguised by request of management.
6. 266 P. Guan Goh
For specially designed parts, there are five different sources to support
global operations, giving a stable supply base for unexpected contingencies.
For order processing, the purchase order has to be firstly issued to suppliers.
Subsequently, another delivery signal is sent through real-time electronic
means, which ensures that deliveries are well-planned and coordinated
between supplier and buyer. Its close integration with MSM’s internal
procurement system helps to facilitate timely information flow and improve
the overall performance.
In other words, integration and collaboration is concentrated on the
specially designed parts, while responsibility for commodity parts is shifted
as far back the supply chain as possible to the suppliers. In that way,
inventory costs and administrative costs (and also MSM’s control over the
process) are reduced for generic products, while ensuring that specialized
products receive more attention and process control commensurate to their
importance in the production.
5. Supplier Aggregation
Companies can go a step further in integrating their key suppliers. At
some point in time, global sourcing and key supplier initiatives will reach a
limit in streamlining the pool of suppliers. In such cases, grouping of
components into modules to facilitate modular manufacturing can further
help to reduce the complexity of work at the final assembly line. Such
modularization of components has been a key aspect of industries that use
many small and complex parts, such as the electronics and automotive
industry. Ironically, this will create intermediate steps or specialized
intermediate players whose job it is to produce these specialized component
modules.
Hyundai Mobis, a subsidiary company of Hyundai Motors, provides
high-end automotive systems and parts ranging from modules to airbags and
driver information systems. Starting in 1999, as a result of the restructuring
imperatives from the fallout effects of the Asian financial crisis in 1997 on
Korean business conglomerates, Hyundai Mobis began to restructure its
business into the core business of automotive parts.
It divested of its rail cars division, heavy machinery business, and auto-
mobile division. Hyundai Mobis then focused on pursuing the integration of
systems and took on the charge of design, development manufacturing and
assembling of all chassis and cockpit modules. In so doing, by focusing on
convenience and cost reduction, it has also achieved reduction in weight and
7. Integrating Demand and Supply Chains 267
number of parts, promptness of assembly, effective inventory management
and cost savings.41
As a result, Hyundai Mobis has achieved much success in the last 2 years
in the automotive parts market, beyond its initial role as a key supplier to
Hyundai Motors. In 2004, the company signed a KRW180 billion contract
with Daimler Chrysler to provide it with complete chassis modules, while
also building a new plant in Alabama for supplying to Daimler Chrysler and
other customers in the United States.42
When customers order a new Hyundai car, they can choose from
different options, such as the cockpit material and the number of air bags.
When the choices are made, a list of code numbers for the necessary parts is
sent to the Hyundai Mobis module plant for assembly into the appropriate
module.43
In the era of mass customization, the proliferation of options gives rise to
more SKUs, more parts to manage, and more manufacturing line changeovers.
While catering to the needs of customers for more options to customize the
type of vehicle that they want, Hyundai Motors is able to control its own
corresponding increase in the complexity of parts and production management
through the effective use of an intermediate supplier. By using modules, it can
avoid defects resulting from assembling thousands of small parts. The module
provider guarantees the quality of all parts used in the module, reducing the
quality assurance and compliance requirements for car assemblers, and thus
helping to streamline quality control and manufacturing processes.
In July 2005, it was announced that Hyundai Mobis had embarked on an
initiative to track its car components for export using RFID. In a simulated
project, car components were tagged with RFID, and tracked from its Ansan
factory, export via Busan port, to its final destination in Dubai. This is to
enable real-time track and trace of their products, and is expected to be more
efficient and cost-effective compared to the use of traditional bar-coding
systems.44
41
Extracted from Hyundai Mobis corporate website, http://www.mobis.co.kr/eng/
42
“Mobis Aims to Control Chinese Market”, Na, Jeong-ju, Korea Herald, 1st May 2005,
http://times.hankooki.com/lpage/biz/200505/kt2005050117300511910.htm
43
“Hyundai Mobis leads auto-technology market”, Kim, So-hyun, Apr 2, 2005, Korea Now,
http://koreanow.koreaherald.co.kr/SITE/data/html_dir/2005/04/02/200504020017.asp
44
“Launch of RFID in Logistics”, So, Seong-Hun, Jul 1 2005, ZD Net, translated from
Korean, http://www.zdnet.co.kr/news/network/rfid/0,39031109,39137633,00.htm
8. 268 P. Guan Goh
6. Active Synchronization of Supply to Demand
The final strategy might involve synchronizing the demand and supply
parts of the value chain. This ability to control both the demand and supply
parts of the value chain can lead to significant cost savings and value-added
capabilities to customers.
Bossard is a global distributor of fasteners and other small component
parts (such as screws, bolts, nuts, and rivets), that provides comprehensive
engineering and inventory management solutions to equipment manufacturers
worldwide. Some of its major customers include ABB, Siemens, John Deere,
IBM, Adaptec, Bang & Olufsen, Bosch, Nokia, Celestica, and Flextronics.
In order to serve its customers in their manufacturing expansion in Asia,
especially China, Bossard has set up its operations in these countries as well.
To meet the customer cost requirements for low cost manufacturing, Bossard
had localized its supplier base, many of which are typical small, family-run
companies.
Bossard sees its ideal customers as those which see fastener products as
either “Uncritical,” or “Bottleneck,” according to the Kraljic purchasing
model.45 Such customers are more willing to purchase from an aggregator
such as Bossard, which simplifies and streamlines the entire process for
them. Most of their big customers have short lead time requirements, such as
1 week, while their suppliers may have longer lead time requirements, such
as 6 weeks, due to their limited capabilities. The onus has thus fallen on
Bossard to hold inventory and assume the risk, in order to serve its
customers.46
Country business units, with accountability for P&L, mainly do their own
planning and procurement individually. As the number of customers, and the
number of SKUs handled grew rapidly in its business expansion in the last
5 years, the business units found the lack of visibility with overall demand
a potential liability in their inventory management. Due to the lack of
visibility between sales, planning and purchasing, purchasing personnel may
place orders for large quantities in order to enjoy volume discounts, while
sales personnel may quote volume discount prices while ultimately selling only
smaller quantities. As a result, Bossard faces the risk of inventory obsolescence
and excessive inventory provisioning in order for its sales people in local
business units to cater to the needs of customers.
45
“Purchasing Must Become Supply Management”, Kraljic, Peter, Harvard Business Review,
September–October 1983, pp. 109–111.
46
“Supply Chain Management: A Concise Guide”, Goh, Puay Guan, Pearson Prentice Hall
2005.
9. Integrating Demand and Supply Chains 269
In order to reduce its inventory risk, Bossard has embarked on a planning
and collaboration platform. Known as Advanced Planning System Plus
(APS+), the APS+ system would act as a cost-based and lead time-based
decision support system to determine the impact of purchase decisions on
inventory liabilities, costs, and customer fulfillment capabilities. Over a period
of 2 years, including planning, system scoping, user feedback, prototyping,
testing, and phased rollout through various business units, the system is being
implemented and further refined with new user feedback and learning
experiences.
Customer sales orders for products are tracked against corresponding
purchase orders made to suppliers as well as existing inventory holdings,
while optimal inventory holding calculations are made through a combination
of sales forecast, lead time, and economic replacement quantities (ERQ). In
Bossard’s case, ERQ is based on similar calculation to economic order
quantity, but with an adjustment for real-world constraints in batch order
quantities.
Through real-time visibility, purchase orders are tracked for their potential
inventory liability if not delivered to customer, and excess inventory is flagged
in management reports for follow-up action. Too many change orders logged
by the salespeople, as well as excessive discrepancy between purchase
quantity and sales quantity can be highlighted by the system. In addition, any
purchases that will lead to excess inventory against forecasted demand and
ERQs for customers, will also be highlighted during the placement of the
purchase order. In certain cases where inventory rules are violated,
management approval is required before the order can proceed. This is a
seamless process that automates handovers between departments, and shortens
the time and effort for verification of sales and purchase orders prior to
approval.
During the implementation period, part numbers are also being standar-
dized so that common parts can be more easily identified and made available
for order fulfillment. This would eventually allow for order aggregation and
group-based purchasing and order fulfillment for commodity or strategic
products.
The APS+ system is shared across its Asia and US operations under its
TransPacific division, enabling better global visibility and coordination
between sales, customer service, and procurement functions. This ensures
that orders are made at the right levels and safety-stock levels are set more
accurately, as well as to allow for the transfer of stock holdings allocated to
one customer to be used for another customer as the demand situation
changes. Through this initiative, it is anticipated that there would be a
reduction of Cost of Goods Sold, reduction in inventory obsolescence, and
the ability to respond quickly on pricing and availability to customer queries
10. 270 P. Guan Goh
and change orders. It would also lead to reductions in net working capital,
with corresponding improvements in balance sheet and value-based financial
measures.
7. Conclusion
It is imperative to remember that supply and demand are dynamic and
ever-changing. Therefore, synchronizing the two are always challenging,
and require constant vigilant monitoring and adjustment to match supply to
demand as far as possible. Within the context of Asia, this is made even
more difficult by environmental and business factors.
As such, while collaboration and integration between a company and all
its suppliers and customers would be ideal, the reality of the ground situation
might give rise to targeted collaborations with a limited number of entities or
in environments that are more operationally ready, scaling incrementally
with experience. Such targeted collaborations make do with the existing
limitations, seek to optimize the situation within the current constraints, and
yet can be re-visited when old assumptions and constraints change. At the
same time, they also recognize the fundamental reality that not all customers
and suppliers are equally important to a company.
In this aspect, companies can adopt a number of different strategies for
smoothing over mismatches and variations in demand and supply, especially
for their key customers, key product segments, or strategic products. No
matter which approach is more preferred or more cost-effective, the ability
to create a rapid response to changes in the environment is a critical success
factor. It is impossible to expect that a steady-state can exist for long, and
companies do well by continually analyzing, adapting, and refining their
supply chain strategies based on changes and new information.