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Some facts
Old practice is to accumulate inventory to face
lengthy and unpredictable time to market The industrialized world no more suffer from scarcity. Consumer affluence and desire for wide choice products and services continue to grow. Information technology
involved firms. Supply chain strategy is a channel arrangement based on acknowledged dependency and collaboration. Managerial process of supply chain operations encompasses individual firms, trading partners, and customers.
Logistic is the work required to move and position
value by timing and positioning inventory. Integrated logistics service includes order management, inventory, transportation, warehousing, material handling, and packaging. Integrated logistics serves to link and synchronize the overall supply chain as a continuous process and is essential for effective supply chain connectivity.
within a framework of key resource flows and constraints. Supply chain structure and strategy results from efforts to operationally align an enterprise with customers as well as the supporting distributive and supplier networks to gain competitive advantage. Business operations are integrated from initial material purchase to delivery of products and services to customers. Value results from the synergy among firms composing the supply chain with respect to five critical flows information, product, service, financial, and knowledge Logistics is the primary conduit of product and services floe within the supply chain arrangement.
channel arrangements from loosely linked groups of independent business that buy and sell inventory to each other toward a managerially coordinated initiative to increase market impact, overall efficiency, continuous improvement, and competitiveness. Integrated supply chain has to absorb high degree of mobility and changes in typical arrangements as firms enter and exist the supply chain The overarching enabler of supply chain management is information technology. The rapid emergence of supply chain is being driven by five related forces.
1. 2. 3. 4. 5.
Integrative Management
Change from emphasis on functional specialization to
focus on process achievement Seeks to identify and achieve lowest cost by capturing trade-offs that exist between functions. The focus of integrates management is lowest total process cost, which is not necessarily the achievement of the lowest cost for each function included in the process. Three important facets of supply chain logic resulted from increased attention to integrated management
1. 2. 3.
Collaboration
Competition is dominant business model but firms
may benefit through collaborations The increasing importance of collaboration has positioned supply chain as a primary unit of competition. In global economy, supply chain arrangements compete with each other for customer loyalty.
Enterprise Extension
Central thrust of enterprise extension expanded
managerial influence and control beyond the ownership boundaries of a single enterprise to facilitate joint planning and operations with customers and suppliers
The information sharing paradigm: voluntary share of information and jointly plan strategies 2. The Process Specialization Paradigm: commitment to focusing collaborative arrangements on planning joint operations with a goal of eliminating nonproductive or non-value adding redundancy by firms in supply chain
1.
Responsiveness
Using the information technology, supply chain is
joint planning and rapid exchange of information between supply chain participants Similar to build-to-order model but difference in
Time to execute
Postponement
Postponement strategies and practices serve to
reduce the anticipatory risk of supply chain performance. Manufacturing of Form Postponement
Flexibility
Geographic Postponement
Finished product/parts in warehouse and supply
when demanded
Financial Sophistication
Supply chain ability to manage in a more timely
Globalization
About 90 percent global demand is not fully
satisfied by local supply Product Marketing: Consumers in developing nations are more interested in quality of basic life while developed nations interested in upscale consumer products. Operating Efficiency: sourcing raw materials and components; labor cost advantage; favorable tax laws Internationalization:
Export-import Local presence in foreign nations Full fledged conduct of business operations
Internalization Issues
Distance: order to delivery is significantly longer
overall operation to assure that the benefits of modern information technology are being fully deployed. The 6 of Going Digital
1. 2. 3. 4. 5.
Fact based management Flexible Focus on cash Fast return on investment (ROI) Fungible
Business processes are modular with maximum interchangeability.
6.
Frugal
Capital investment, cash velocity, and a flat organization structure with focused human resources
effort to achieve customer satisfaction at the lowest total cost. Logistics performed in this manner creates value. Service benefits
Availability
Operational Performance: speed, consistency, flexibility, malfunction, recovery time Service reliability: Quality attributes of logistics
Cost Minimization
Core customer segmentation Product profitability Transportation integration Time-based performance Competitive performance Cost Speed Consistency
Transportation
Logistical Operations
Inventory Flow
Customer
Flow
Integrates
operating areas
impact customer is directly related to operating system design. Must offer a balance of performance, cost, and flexibility Global logistical system is lack similarity in structure Two characteristics
Designed to manage inventory
Logistics alternatives is limited by available
technology
Structures
Echelon: the flow of products typically proceeds through common arrangement of firms and facilities as it moves from origin to final destination 2. Direct: direct to customer 3. Combined : combination the two
1.
Echelon Structure
Combined Structure
Flexible Structure
Customer specified delivery facility
Flexible Structure
chain is referred to as supply chain synchronization. Coordinates the flow of materials, products and information between supply chain partners to reduce duplications and unwanted redundancy. Performance Cycle Structure:
Represents the elements of work necessary to