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Integration in the supply chainTHE CONCERN IS
How can we integrate supplychain : internally, externally
and if possible electronically?
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Thedegreetowhichthefirmcanstrategicallycollaboratewiththeirsupplychainpartnersandcollaborativelymanagetheintra-andinter-organizationprocessesto
achievetheeffectiveandefficientflowsof Productandservices Information Money FeedBack
Withtheobjectiveofprovidingthemaximumvaluetothecustomeratlowcostandhighspeed
Integration in the supply chain
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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
Integration in the supply chain
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Internal integration: function to function
Integration in the supply chain
Purchasing Production Distribution
Low price
Unreliable deliveryand low quality
High productivity ofmachine and labor
High batch size
Poor available
distribution
Keep warehousingoperation smooth
Post-manufacturingoperation being resisted
Additional complexity of
customizing products
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Inter- Intra Company collaboration
Information & Decision Flow
RAWMATERIALS
EN
DCUSTOMERS
Information & Knowledge Flow
Products & Services Flow
Financial Flow
Material and Money Flow
Enterprise
A
Enterprise
BInformation & Knowledge Flow
Products & Services Flow
Financial Flow
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Integration in the supply chain Electronic collaboration
TransactionalThe electronic execution oftransaction
Information sharingThe electronic sharing orexchange of information
Collaboration planningStrategic, tactical andoperational exchange
Electronic
collaboration
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Integration in the supply chain
Informationflow in apparel
supply chain
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Efficient consumer responseKey issue
1How can collaboration be extendedacross the supply chain to focuson meeting consumer demand?
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Efficient consumer response Category management
Establishinfrastructure
Optimizeintroductions
Optimizeassortments
Optimizepromotions
Integratedsuppliers
Synchronizedproduction
Continuousreplenishment
Automatedstore ordering
Categorymanagement
Productreplenishment
Reliableoperations
Cross-docking
EDI EFT
Item coding
and databasemaintenance ABC
Enabling
technologies
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Efficient consumer response 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
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Efficient consumer responseCategory
managementContinuous
replenishmentEnabling
technologies
Required
capability
Accountmanagement
Demandmanagement
Multifunctionalselling teams
Price listrestructuring
Effective andcustomizedpromotions
Joint inventorymanagement
Cross-dockoperations
Continuousreplenishment
Effectivelogistics andproduct flows
Quick response
Effectiveinformationsharing
Automatedordergeneration
Bar-codingand the use ofother scanningtechnology
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Collaborative planning, forecasting and
replenishmentKey issue
1How can collaboration be extendedto strategic as to well asoperational levels?
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Collaborative planning, forecasting and
replenishment CPFR Model1. Develop front-end agreement
2. Create joint business plans
3. Create individual sales forecasts4. Identify exceptions to sales forecasts
5. Resolve / collaborate on exception items
6. Create order forecast
7. Identify exceptions to order forecast8. Resolve / collaborate on exception items
9. Generate orders
Planning
Forecasting
replenishment
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Seller
Goal : Link buyer and SellerElectronically
Wal-marts CPFR Process
GENERATE ORDER
FRONT END AGREEMENT
JOINT BUSINESS PLAN
Collaborative
Planning
CREATE SALES FORECAST
IDENTIFY EXCEPTIONS
RESOLVE EXCEPTIONS
Collaborative
Forecasting
CREATE ORDER FORECAST
IDENTIFY EXCEPTIONS
RESOLVE EXCEPTIONS
CollaborativeReplenishment
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Wal-Marts CPFR Program 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, becauseWal-Marts 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 themtheir own model.
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Managing supply chain relationshipsKey issue
1How can broader-basedrelationships be formed betweentrading partners in the supply chain?
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Managing supply chain relationships Creating closer relationships
Bow tie
R&D
Logistics
Informationsystem
Marketing
Operations
Arm
s length transaction
Informationsystem
Marketing
Operations
Informationsystem
Partnership
Informationsystem
R&D
Logistics
Diamond
supplier customer supplier customer
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Managing supply chain relationships 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
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A framework for managing the
supply chainKey issue
1What are the managementimplications of integrating thesupply chain?
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A framework for managing the
supply chain
1Develop a supply
chain strategy
2Gather supply chain
information
3Develop effectivepartnerships and
alliances
4Pilot new supplychain solutions
5Organize for supplychain performance
6Develop measurementsystem for supply chain
performance
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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
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A framework for managing the
supply chain Pilot new supply chain solutions
Successful supply chain improvement including
Involvement of key stakeholders, suppliers, customers andemployees
Selection of scope and environment, focusing on avoiding risk
Identification of the key questions that the pilot must answer
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A framework for managing the
supply chain
Develop measurement systems for supply chainperformance 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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