BUILDING PARTNERSHIPS AS BUILDING PARTNERSHIPS AS FOUNDATIONS OF SUPPLY FOUNDATIONS OF SUPPLY
CHAIN MANAGEMENTCHAIN MANAGEMENT
LT GEN D V KALRA, PVSM, AVSM (RETD)LT GEN D V KALRA, PVSM, AVSM (RETD)
ERPERP• ERP ATTACKS ONLY INTERNAL
BARRIERS• ERP OPTIMISES AT ENTERPRISE LEVEL• THINKING WITHIN THE BOX• LINK LEVEL FOCUS • NEVERTHELESS ESSENTIAL TOWARDS
SUPPLY CHAIN INTEGRATION
WHAT IS SUPPLY CHAIN WHAT IS SUPPLY CHAIN MANAGEMENT?MANAGEMENT?
“TRADING PARTNERS WORKING TOGETHER
TO GROW BUSINESS AND ELIMINATE NON-VALUE ADDED ACTIVITIES FROM BOTH INTRA AND INTER COMPANIES ACROSS THE ENTIRE MATERIAL AND INFORMATION FLOW PROCESS FROM THE SUPPLIER’S SUPPLIER TO THE BUYER’S BUYER TO ENHANCE CONSUMER VALUE AND CREATE SHARED BENEFITS."
BASIS FOR BUILDING BASIS FOR BUILDING EFFECTIVE SUPPLY CHAINSEFFECTIVE SUPPLY CHAINS
• BELIEF IN THE CONCEPT• NEED TO WORK TOGETHER• MUTUALITY• TRANSPARENCY• TRUST• COMMUNICATION• COMMITMENT• SHARED VISION OF THE FUTURE
TOWARDS SUPPLY CHAIN TOWARDS SUPPLY CHAIN EXCELLENCEEXCELLENCE
• CREATE STRONG STRATEGIC RELATIONSHIPS
• MANAGE SUPPLY CHAIN AS A WHOLE• MAXIMISE CHAIN WIDE USE OF
TECHNOLOGICAL APPLICATIONS • REFINE OPERATIONAL SYSTEMS AND
TECHNIQUES
MOTORS INDUSTRY STOCK MOTORS INDUSTRY STOCK SITUATION 1990SITUATION 1990
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ComponentSupplier
Manufacturer Market Place
Days Stocks
Based on “The Three Day Car Challenge”-Matthias Holweg, Bernard Judge and Geoff Williams, Logistics and Transport Focus Volume 3 No 9- Nov 2001
EMERGING TRENDSEMERGING TRENDS
SUPPLY CHAIN ARE STRIVING TO
BECOME MORE :– RESPONSIVE– AGILE AND ADAPTIVE– LEAN– COLLABORATIVE
TYPES OF COLLABORATIONTYPES OF COLLABORATION
• INVENTORY COLLABORATION- VMI• CAPACITY COLLABORATION• FORECAST COLLABORATION
BEST PRACTICESBEST PRACTICES
STRATEGIC SOURCINGCOLLABORATIVE FORECASTINGOUTSOURCINGVENDOR MANAGED INVENTORIES
SUPPLY CHAIN BEST SUPPLY CHAIN BEST PRACTICESPRACTICES
• ALIGN SUPPLY CHAIN MANAGEMENT SYSTEMS WITH STRATEGIC INITIATIVES AND GOALS
• FORGE PARTNERSHIPS WITH SUPPLIERS • CERTIFY SUPPLIER-PARTNERS• EMPLOY TECHNOLOGY TO IMPROVE SUPPLIER
PARTNERSHIPS. • REFINE AND ENHANCE MANUFACTURING
PROCESSES • FOSTER COMMUNICATIONS BETWEEN PARTNER
ORGANIZATIONS • EMPHASIZE THE MUTUAL BENEFITS OF
PARTNERSHIP
BEST PRACTICESBEST PRACTICES• ALIGN SUPPLY CHAIN
MANAGEMENT SYSTEMS WITH STRATEGIC INITIATIVES AND GOALS. COMPANIES THAT EXCEL IN THIS AREA HAVE ENTERED INTO PARTNERSHIPS WITH THEIR SUPPLIERS AND WORK TOGETHER TO REALIZE MUTUAL GAINS AND ACHIEVE STRATEGIC GOALS.
Best Practices LLC, Benchmarking Report
BEST PRACTICESBEST PRACTICES
• FORGE PARTNERSHIPS WITH SUPPLIERS. WORLD-CLASS SUPPLY CHAIN MANAGEMENT SYSTEMS SELECT SUPPLIERS ACCORDING TO VARIOUS CRITERIA THAT GO BEYOND TRADITIONAL COST PER UNIT CONSIDERATIONS. BY WORKING TOGETHER ACROSS THE SUPPLY CHAIN, THESE COMPANIES ARE ABLE TO POOL TALENTS AND RESOURCES, YIELDING SUBSTANTIAL GAINS IN COST, QUALITY, FLEXIBILITY, SYSTEM RESPONSIVENESS AND OVERALL PERFORMANCE.
Best Practices LLC, Benchmarking Report
BEST PRACTICESBEST PRACTICES• CERTIFY SUPPLIER-PARTNERS.
CERTIFICATION ESTABLISHES A COMMON LANGUAGE FOR COMMUNICATION. THIS IN TURN FOSTERS AN INCREASED LEVEL OF TRUST AND UNDERSTANDING BETWEEN PARTNERS. EXCELLENT COMPANIES OFTEN CERTIFY SUPPLIERS AT DIFFERENT LEVELS, REFLECTING THE STRENGTH, DEPTH AND MATURITY OF THE RELATIONSHIP.
Best Practices LLC, Benchmarking Report
BEST PRACTICESBEST PRACTICES
• EMPLOY TECHNOLOGY TO IMPROVE SUPPLIER PARTNERSHIPS.
Best Practices LLC, Benchmarking Report
BEST PRACTICESBEST PRACTICES
• EMPHASIZE THE MUTUAL BENEFITS OF PARTNERSHIP. THE BENEFITS GAINED THROUGH THE ENHANCED TRUST AND COMMUNICATION OF A PARTNERSHIP EXCEED THOSE OF A TYPICAL COST-FOCUSED RELATIONSHIP
Best Practices LLC, Benchmarking Report
BEST PRACTICESBEST PRACTICES
• REFINE AND ENHANCE MANUFACTURING PROCESSES. IN PARTICULAR, PARTNERS ARE ABLE TO IDENTIFY WHICH ORGANIZATION IN THE SUPPLY CHAIN CAN PERFORM A SPECIFIC PROCESS AT THE HIGHEST QUALITY AND LOWEST COST.
Best Practices LLC, Benchmarking Report
BEST PRACTICESBEST PRACTICES
• FOSTER COMMUNICATIONS BETWEEN PARTNER ORGANIZATIONS. RATHER THAN CHOOSING ONE OR TWO WAYS OF WORKING WITH THEIR VENDORS, WORLD-CLASS COMPANIES EMPLOY A PLETHORA OF COMMUNICATION TOOLS.
Best Practices LLC, Benchmarking Report
SUPPLY CHAIN SUPPLY CHAIN ““GURU MANTRA”GURU MANTRA”
• “SYNERGY OF CO-OPERATIVE EFFORT INVOLVING COMPLIMENTING STRENGTHS OF PARTNERS IN A SUPPLY CHAIN, SKILLFULLY HARNESSED AND INNOVATIVELY APPLIED WITH CUSTOMER IN VIEW, CANNOT BUT PRODUCE CUSTOMER DELIGHT. STRATEGIC PARTNERSHIP IS THE SELF EVIDENT “GURU MANTRA” FOR BUSINESSES OF THE FUTURE”.
THIRD PARTY LOGISTICSTHIRD PARTY LOGISTICS
• What is 3PL?• 3PL is outsourcing• Opportunities• Advantages• Disadvantages• Automotive Industry Peculiarities• Practices
What is 3PL?What is 3PL?
First PL is the company itself,Second PL is the customer, and Third PL is an independent party which is
willing to provide support activities that are complimentary to the company’s operations.
What is 3PL?What is 3PL?
In our context, 3PL refers to all those transporters or warehouse-owners who provide the consolidation and
bulk breaking or event-order-picking till delivery to the
customer.
What is 3PL?What is 3PL?
Thus, 3PL providers become a useful and cost-effective link in the chain connecting
the supplier (first party) and customer (second party).
3PL is outsourcing3PL is outsourcing
In strict materials management terms, 3PL can be equated to the outsourcing concept
used in processing.
Hence, 3PL is an outsourced SERVICE.
OpportunitiesOpportunities
The complex relationships between suppliers and customers extending from the immediate channel partners to the extended supply-chain links provide
umpteen opportunities to the companies for identifying links which can be profitably
outsourced.
OpportunitiesOpportunities
Each link in the supply-chain provides the organization with an opportunity to
evaluate the possibility of being outsourced subject to it not being technologically or economically
unfeasible .
OpportunitiesOpportunities
These opportunities exists wherever the activity is not an organizational core
strength or
would not adversely affect the market standing or security of proprietary
information.
AdvantagesAdvantages
Company can concentrate on its strength areas
Funds and manpower not bogged down with non-priority activities
Opportunity cost of freed resourcesBenefit from the core strengths of the
3PL provider
DisadvantagesDisadvantages
Control over the complete chain is weakened
Possibility of organization’s trade secrets getting leaked
If partner not properly selected, could lead to complete chain break-down
Need for excellent MIS
Automotive Industry PeculiaritiesAutomotive Industry Peculiarities
In India (unlike Japan), suppliers are spread over 1000’s of kilometers and the poor
infrastructure further adds to transportation delays and transit losses.
3PL suppliers can only bridge this time, space, place and quantity gaps.
PracticesPractices
In India, 3PL suppliers are usually transporters who have modified their traditional godowns to bridge the gap
between suppliers and customers.
These enlightened transporters have understood the opportunity and have
created hubs near major auto makers.
PracticesPractices
In these hubs, the service providers maintains necessary inventory which he also transports from the manufacturing
unit to the hub.
He also maintains liaison with the customer and provides him with the exact materials
on time.
FutureFuture
The 3PL service providers role is bound to become more and more critical and vital
for the success of any automotive supply-chain.
It is bound to become an essential feature of any automotive supply chain from a mere
cycle to the huge trucks.
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