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T4: Supply Chain Management (Ch7) (Supply side (p.236) (Rate alternative…
T4: Supply Chain Management (Ch7)
Define
: The management of the relationships and flows between the string of operations and processes that connect suppliers and customers
Three issues to consider
Communication and cooperation in order to reduce cost and improve effectiveness
How the chain can operate as a cohesive single entity rather than a loose connection of parts
The relationships between chain members
Supply Chain v Supply Network
Supply Network
- all the operations that link to provide goods and services
Supply Chain
- a string within a supply network that passes through a single operation
Both need to consider both the traditional downstream and also the upstream movements through the chain/network
Application of the supply chain concepts can be applied to both external and internal customers and suppliers
Example
- Supply Chain at CGC for a wedding customer
Relationship
Some are close and ongoing, i.e. preferred suppliers, some wedding planners
Some are impersonal and ongoing, i.e. food and bev suppliers
Some are impersonal initially at least, i.e. customers selected suppliers
Some are close but temporary, i.e. customer
Improvements
CGC could definitely benefit from having closer reciprocal relationships with some suppliers
CGC could offer an almost one stop shop approach to weddings, allowing them to control the supply chain as the role of the dominant component in the chain, i.e. customers tend to base a lot of their decisions around the venue
Chain members
Wedding planner
Food and beverage suppliers
CGC venue
Equipment 'preferred' suppliers - décor, furniture
Customer selected suppliers - entertainment, celebrant
Customer and their guests
Supply chain objectives (p.229)
Translate these to supply chain ops objectives:
Speed
The speed in serving the customer
The speed of movement through the supply chain
Although not incompatible, these need to be balanced in order to control inventory costs while still being responsive to customers - is reflected in the competitive strategies of an org
Dependability
'On time'
'In full'
Quality
Each step in the chain needs to manage its own quality AND the quality of the preceding step / supplier
Flexibility
Ability to cope with change and disturbances in the chain
Often referred to as 'supply chain agility'
#
Cost
Costs of actually transforming the units
Costs of the supply chain itself, e.g. transport / inventory / admin
Lean or Agile (p.231)
Lean Supply Chain - focuses on cost and efficiencies
Agile Supply Chain - focuses on responsiveness and flexibility
Dependent on how and org is approaching competitive advantage
Can also be dependant on type of product within an org, i.e. long standing reliable product or short-term 'special' product
Meeting customers needs, e.g.
Regulartiy
Reliability
Convenience
Cost
Timeliness
SCOR Model
(p.232)
Comprises of three techniques
Benchmarking performance - uses 3 levels based around KPIs
Best-practise analysis
Current
Structured
Proven
Repeatable
Unambiguous method
Positive impact on results
Business process modelling
'Supplier-customer' relationships
'source'
'make'
'deliver'
'plan'
'return'
S
upply
C
hain
O
perations
R
eference (SCOR)
Developed by the Supply Chain Council (SCC) - a global non-profit consortium
Provides a common language to communicate and assess a supply chain
Supply side (p.236)
Capabilities to consider regarding 'trade-offs'
Operational
Financial
Technical
Managerial
Other considerations
Single- or multi- sourcing considerations
E-commerce and the internet
Ongoing supply communication and relationship management - upkeep
Service-level agreements (SLAs) - should be a working document, updated to improve supply - not just used for disputes
Purchasing and procurement
Rate alternative suppliers on:
Responsiveness
Dependability of supply
Quality of products/services
Delivery and volume flexibility
Range of products/services
Total cost of being supplied
Ability to supply in required quantity
Additional long-term factors
Willingness to share risk
Long-term commitment to supply
Ease of doing business
Ability and willingness to share knowledge as well as products/services
Potential for innovation
Services gaps (p.240)
'
Fulfilment perception gap'
- ee how the supplier
thinks
it is performing and how you
think
it is performing
'
Supplier performance gap
' - ee what the supplier thinks you want v how it believes it is performing - i.e. what it needs to improve on
'
Requirements perception gap'
- ee what the supplier
thinks
you want v what you
actually
want
'Supplier improvement gap
' - ee what you want v how you think the supplier is performing, i.e. what you need to do to help the supplier improve
Relationship management (p.234)
Contract-based 'transactional' relationships
Cons
Risk of supply issues
Time consuming to manage different and changing suppliers
Reduced loyalty
Pros
Flexibility and reduced risk from demand drops
Specialists can be innovative
Supplier competition
Good for smaller companies who do not have huge demand to warrant partnerships or in-house units
Long-term 'partnership' relationships
Closeness is influenced by a number of factors
Long-term expectations - long but not entirely permanent
Multiple points of contact - many layers of the orgs interacting
Joint learning - sharing experience
Few relationships - some influence on who each other is otherwise involved with, some exclusivity
Sharing success - rather than angling for individual benefits
Joint coordination of activities - flow of materials / services / payments / etc
Information transparency - open book policies (within reason)
Trust - key element and most difficult to develop
Characteristics
A step before 'vertical integration' where firms actually own or part-own up and down the supply chain
Define: "Relatively enduring inter-firm cooperative agreements, involving flows and linkages that use resources and/or governance structures from autonomous organisations, for the joint accomplishment of individual goals linked to the corporate mission of each sponsoring firm" (p.235)
Means mutual benefit but ALSO mutual sacrifice in order to benefit over the long-term
Which one?
Orgs will often have a range of both, depending on their needs and their competitive advantage, market conditions, etc
Are short- or long-term benefits more important to the org?
Demand side (p.241)
Considerations
Is demand 'dependent' (predictable) or 'independent' (unpredictable)
The same 'services gaps' relate from this side of the equation also
#
Logistics - delivery and distribution
Classifications (p.242)
3PL - Third-party logistics - Enlisting a logistics company to manage your logistics require and any other party they may need to use to serve your needs
4PL - Fourth-party logistics - A full service supply chain solution company, covering all aspects of logistics and resources, technology, capabilities
2PL - Second-party logistics - Using a independent org but only for a specific route
1PL - First-party logistics - entirely internal process
5PL - Is a new take, incorporating e-commerce in the mix, likely to grow
Internet
It increases the potential for finding backloads, which can significant impact the bottom line (flour for MF)
'Track and trace' is becoming increasingly common and will soon be a must have instead of a nice-to-have
The impact of the internet is significant on logistics companies
The development of Radio Frequency ID (RFID) is making tracking items even more specific
Supply chain dynamics - the 'Bullwhip Effect' (p.244)
Demand changes nearer the end of the supply chain will have ripple and exponential effects up the supply chain
Solutions
Share info throughout the supply chain
Align all the channels of info and supply
Increase operational efficiency throughout the chain
Improve forecasts