CHAPTER 4: SUPPLY MANAGEMENT INTEGRATION FOR COMPETITIVE ADVANTAGE
Integration: What Is It?
Internal Integration
External Integration
The Critical Role of Cross-Functional Sourcing Teams
Integrating Supply Management, Engineering, and Suppliers to Develop New Products and Services
the process of incorporating or bring- ing together different groups, functions, or organizations, either formally or infoRmally, physically or by information technology, to work jointly and often con- currently on a common business-related assignment or purpose.
Methods applying intergration
Forms of intergration
Knowledge and expertise
Business advantages
Information
Different perspective on an issue, which may drive a team to look at the problem from a new perspective that they hadn’t thought of before
About their markets
About their own plans and requirements
Product and service knowledge and technology
Process knowledge and understanding of how to make it work
Favorable cost structures that can benefit customers
Economies of scale, which can also help reduce costs
Information systems such as videoconferencing and webmail
Integrated performance objectives and measures that drive a common goal
Cross-functional or cross-organizational committees and teams
Process-focused organizations that are dedicated to certain processes
Co-location of suppliers and customers
Buyer or supplier councils that provide input and guidance to a steering committee
Supply Management’s Internal Linkages
Quality Assurance
Engineering
Operations
Accounting and Finance
Marketing/Sales
Legal
Environmental Management, Health, and Safety
Supply Management’s External Linkages
Government
Local Communities
Suppliers
Collaborative Buyer-Seller Relationships
Obstacles to Closer Buyer-Seller Relationships
Advantages of Closer Buyer-Seller Relationships
Critical Elements for Supplier Relationship Management
Development of global operations strategy
Sales and operations plan (S&OP)
Traditional close relationship through direct support
Often colocated
Growing % of outsourced requirements
Supplier quality training and development
Supplier process capability studies
Joint corrective action planning
Increasing in importance
New product ideas
Sales forecasts, production plans
Voice of the customer
Trust
Long-term contracts
Confidentiality
Limited interest by suppliers
Legal barriers
Resistance to change
Specific tasks
General tasks
Consist of various internal functional areas and, increasingly, suppliers
Supplier selection
Product design
Reducing purchased item costs
Improving quality
Benefits Sought from the Cross-Functional Team Approach
When to Form a Cross-Functional Team
Improving Sourcing Team Effectiveness: to answer these questions
Potential Drawbacks to the Cross-Functional Team Approach
Increased innovation
Joint ownership of decisions
Reduced time to complete tasks
Enhanced communication among functions or organizations
Realizing synergies by combining individuals and functions
Better identification and resolution of problems
Need to build internal relationships
Team process loss
Negative effects on individual members
Use does not guarantee success
Poor team decisions
Facing a complex or large-scale business decision
CFT is likely to make better quality decision
Assignment directly affects firm's competitive position
No single function has sufficient
resources to solve problem
- Does our organization consider CFT planning issues when establishing sourcing teams?
- Does executive management practice subtle control over sourcing teams?
- Does our organization recognize and reward team member participation and team performance?
- Do we have right person selected as sourcing team leader?
- Do our sourcing teams effectively establish performance goals?
- Are key suppliers part of sourcing team process?
Supplier Suggestion Programs
Buyer-Seller Improvement Teams
On-Site Supplier Representative
Common Themes of Successful Supplier Integration Efforts
Potential Benefits of On-Site Supplier Representatives
Supplier Integration into Customer Order Fulfillment
- Joint Education and Training Efforts
- Sharing of Technology between Buyer and Supplier Companies
- Formal Business Unit Trust Development Efforts
- Co-Location of Buyer and Supplier Personnel
- Direct Cross-Functional Intercompany Communication during the Project
- Supplier Membership and Participation on the Team
- Early Supplier Selection for Design and Volume Work
- Use of Cross-Functional Team for Supplier Evaluation and Selection
- Formalized Process for Selecting Items for Supplier Integration
Buyer-supplier improvement teams
On-site supplier representative
Supplier suggestion programs
Feasibility
Resources required
Potential savings
Go/no-go decision
Feedback to supplier
Providing cost reduction ideas
Providing quality improvement ideas
Supporting actions to improve material delivery
Offering process technology suggestions
Supporting material-ordering cycle time reductions
Supply Management
Sales
Engineering
Transportation
Daily interface with customer
Increased supplier production efficiency
Increased supplier insight to customer needs and access to new designs
Fewer schedule changes and surprises
Supplier performs some buying and planning activities
Reduced transaction costs
Supply management staff increased
Supplier personnel work on-site
On-site material plan development in real-time
Increased buyer-supplier coordination and integration
Reduced inventory