Bài giảng môn Quản trị kinh doanh - Chapter 9: Supply chain management: managing business to business interactions

Chapter 9Supply Chain Management: Managing Business to Business Interactions1Learning ObjectivesExplain the motivating forces behind the adoption of supply chain management (SCM).List examples of how customer actions affect suppliers and how supplier actions affect customers.Explain the seven critical decision areas of SCM.Describe the decisions that constitute the logistics network configuration.Describe an example of a supply chain and identify points of interaction between buyers and suppliers.Explain the pros and cons of outsourcing supply chain services.Explain the bullwhip effect and its possible causes.Describe risk pooling and the implications it has for distribution networks.Explain the current trend affecting supply chain management.2Generic Supply ChainSupply Chain – Encompasses all activities associated with the flow and transformation of goods from the raw material stage (extraction) through to the end user, as well as the associated information flows. Material and information flow both up and down the supply chain.3Increasing competition to meet customer expectations for valueRecognition that customer decisions and actions often dictate costs and limitations for suppliers.Recognition that supplier decisions and actions often dictate costs and limitations for customers.Increased potential for timely communication and feedback brought about by technological advances.The Motivating Forces4U.S. businesses spend 20-30% of revenue acquiring goods from outside suppliers Purchase cost savings have strong impact on bottom line.In this example, if the business saves just 6% in supply costs ($432,000), profit will increase by 45%.Motivating Forces: Supply Savings Example5Increased global competition forces companies to stretch and add value. Businesses, focused on core competencies and outsourcing, need closer relationships with firms they outsource to.Adding value by:Reducing inventory throughout supply chain.Improving timeliness and reliability of deliveries.Working with suppliers to improve their product and service quality.Communicating and cooperating in general.Motivating Forces: Increased Competition6Customers and suppliers have traditionally been adversarial - “Us-against-them” attitude.Bullwhip effect – The increasing variability of demand as one moves upstream in supply chain.Variability of demand increases costs. Hard to plan, hard to produce efficiently, need for larger inventories.Motivating Forces:The Impact of Customers on Suppliers7Many possible events can have negative impact on customers (missed delivery due dates, defective products...)Customers increase inventory to protect against supplier unreliability. Correct placement of inventory in a supply chain improves performance, reduces cost, and reduces impact of disruptions.Motivating Forces:The Impact of Suppliers on Customers8The Internet provides a means of having immediate access to information, enabling integrated decision making.Rather than attempt to forecast demand, a supplier can view customers’ production schedules and eliminate forecasting.Motivating Forces:Technological Advances9Supply Chain Management DecisionsStrategic AlliancesInventory ManagementCooperative product designInformation managementStandardizationElectronic commerce10Supply Chain Management Components: Strategic AlliancesA balance between commitment to low prices and commitment to the relationship is neededExhibit 10.4 Supplier Relationship Matrix11Supply Chain Management Components: Strategic AlliancesDevelop alliances rather than just hiring suppliers.Relationships create opportunity for communicationCommunication enhances productivity improvement There are significant costs to switching suppliers12Supply Chain Management Decisions: Inventory ManagementInformation is used to help make decisions at all supply chain levels.How many to order? When? What are the risks? How much safety stock? Where should inventory be held?There are two fundamental questions: When shouuld we reorder? and How many?Increasing use of retail-supplier partnershipsVendor managed inventory (VMI)13Supply Chain Management Components: Cooperative Product DesignMake sure components from multiple suppliers can be assembled.Gain insight from your suppliersImprove productsReduce costsReduce time14Supply Chain Management Components: Information ManagementThree information management decisions related to supply chain managementWhat data should be collected?How should it be stored?With whom should it be shared?15Supply Chain Management Components: Information ManagementTraditional supply chain: Forecasts based on different data. Contributes to the bullwhip effect, excess inventory, and stockouts.16Improved approaches enabled by technology to collect, store and communicate dataCollaborative planning, forecasting, and replenishment (CPFR) – Approach to demand planning in which partners negotiate and agree on a plan for meeting demandSupply Chain Management Components: Information Management17Supply Chain Management Components: StandardizationLong-term relationships drive businesses to make their processes compatibleStandardizing processes makes for higher levels of productivity18Supply Chain Management Components: Electronic CommerceElectronic commerce contributes to time reductionElectronic cash transfers speed up the cash-to-cash cycleElectronic order processing makes continuous replenishment much more economicalOnline auctions/reverse auctions19A Typical Example of Supply Chain Management: PacersPacers shoes sold through national chains of athletic shoe stores.Fabrication and assembly are done at the same plant.They purchase raw materials (leather, foam, laces, etc.) from a variety of suppliers.20A Typical Example of Supply Chain Management: PacersWhat are the implications of a customer’s decision to have a promotion four months in the future?Pacers must revise the demand forecastEffect of promotions harder to forecastMust account for “post-promotion lag” in demandNeed to know when retailer needs the inventory, not date when promotion starts.Which distribution center should Pacers ship to?21A Typical Example of Supply Chain Management: PacersWhat are the implications?When we’ve picked a distribution center, we need to pick a manufacturing facility.Is there enough capacity at that facility, or will we be forced to produce elsewhere?Will the promotion disrupt the production pattern?When should we fulfilling the order? The sooner we start the less capacity will be a problem, but the longer inventory will have to be heldResults of all these decisions are largely dictated by the distribution network configuration, inventory management, and distribution strategy.22A Typical Example of Supply Chain Management: PacersMoving further up the chain:Do we have enough raw material transportation and storage capacity at the chosen manufacturing facility?Will we have to use multiple transportation channels?How would that impact our manufacturing schedules?Can our suppliers handle these additional orders?Can our suppliers’ suppliers handle it? Will our suppliers run short on raw materials?If something goes wrong at any point, the order is at risk of being late. Standardization, information management, and electronic commerce determine the efficiency of these interactions.23The Supply FunctionSupply ActivitiesRecognition of a needDescription of the needIdentification and analysis of possible sourcesSupplier selection and determination of termsPreparation and placement of a purchase orderFollow-up or expediting of the order24Sourcing Decisions: Channel SelectionMake versus buy, and how to buy.The more strategically important the item, the more it makes sense to ally with a supplier for it.Low priority items should be purchased independently.Exchanges are another possible channel. Pooled purchases on an exchange can result in cost savings.Give sellers access to more buyers25Sourcing Decisions:Outsourcing Supply Chain ActivitiesSupply chain activities, especially warehousing and transportation, are complexMany businesses choose to outsource these functions.Third party logistics provider (3PL)A provider of logistics services such as warehousing or transportation logistics.Outsourcing to a 3PL is primarily done to improve quality, because many companies cannot afford to invest in the expertise and technology required to do so.Drawback is loss of control.26Extending the customer endPotential to increase size of marketsDistribution network often forced to be differentLack of technology infrastructure could inhibit utilization of information and communication capabilitiesExtending the supplier endTechnology infrastructure problemsCooperation and formation of strategic partnerships hampered by distance and cultural differencesDifficulties in policy, procedure, and product standardizationSupply Chain Management Components: Information Management27A Closer Look at the Bullwhip EffectAs you go up a supply chain, demand increases in variability.28A Closer Look at the Bullwhip Effect: CausesDemand forecast updatingOrders from suppliers must meet demand and fill safety stocks. The longer the lead times, the more uncertain demand is and the more safety stock is heldOrder batchingBecause of high transaction costs, orders are batched together, causing “lumpy” demand. Suppliers similarly allow demand to accumulate before releasing ordersPrice fluctuationBusinesses often buy before they need to, and in larger amounts, because suppliers offer pricing advantagesRationing and shortage gamingFear of supply shortages drives businesses to order in larger quantities than they need29A Closer Look at the Bullwhip Effect: ImpactImpact on cost, quality, and timelinessSpiking demand patterns puts businesses in ‘feast-or-famine’ mode. Not good for productivityHigh inventory costsHigh inventory increases time for an innovation to get to marketMismatch between demand and design capacity results in increased cost per unit, whether demand is higher or lower than capacityMay cause low demand period layoffs, decreasing the quality of the workforce as employees leave for more stable jobsLong cash-to-cash cycles and diminishing financial returns30A Closer Look at the Bullwhip Effect: SolutionsIncrease information supplied by businesses to their suppliers—link to point of sale (POS)Eliminate price discounts (everyday low pricing)Reduce order transaction costsVery frequent deliveries of small quantities (continuous replenishment)31A Closer Look at Risk PoolingUncertainty associated with customer demand must be accommodated through inventory safety stocks.If retailers are supplied from a central warehouse rather than hold their own inventory, safety stocks would be less because aggregated variability would be less. High demand at one place would cancel out low demand at another place.The savings from this must be compared to the costs of facility modification and changes in transportation.32Supply Chain PerformanceThere are tradeoffs that may bring performance measurements into conflictBatch size/inventory cost tradeoffTransportation costs/inventory cost tradeoffCustomer service/inventory cost tradeoffLead time/warehousing cost tradeoffThe perfect order is one that arrives on time as promised, is of the correct quantity, is not damaged, and also includes all of the agreed-upon services.33Trends in Supply Chain ManagementTrading CommunitiesOptimization ModelingRadio-Frequency Identification (RFID)Supply Chain Security34