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L8: COORDINATION IN SUPPLY CHAIN - Coggle Diagram
L8: COORDINATION IN SUPPLY CHAIN
Lack of Supply Chain Coordination and the Bullwhip Effect
caused by
Objectives of different stages conflict
Information moving between stages is distorted
Effect on Performance of Lack of Coordination
Increase
Manufacturing cost
Inventory cost
Replenishment lead time
Transportation cost
Labor cost for shipping and receiving
Decrease
Level of product availability
Profitability
The quality of relationships across the supply chain
Bullwhip effect
reduces supply chain profitability by making it more expensive to provide a given level of product availability
Obstacles to Coordination in a Supply Chain
Incentive Obstacles
Information Processing Obstacles
Operational Obstacles
Pricing Obstacles
Behavioral Obstacles
Managerial Levers to Achieve Coordination
Aligning Goals and Incentives
Improving Information Accuracy
Improving Operational Performance
Designing Pricing Strategies to Stabilize Orders
Building Strategic Partnerships and Trust
Building Strategic Partnerships and Trust Within a Supply Chain
Continuous Replenishment and Vendor-Managed Inventories
Continuous Replenishment (CRP)
wholesaler or manufacturer replenishes based on POS data
Vendor-Managed Inventories (VMI)
manufacturer or supplier is responsible for all decisions regarding inventory
Collaborative Planning, Forecasting, and Replenishment (CPFR)
Strategy and planning
Demand and supply management
Execution
Analysis
Organizational and Technology requirements
Risks and Hurdles for a CPFR implementation
THE ROLE OF IT IN COORDINATION
Enablement of coordination the ultimate goal
Information availability
Use of information available to make decisions
ERP and best-of-breed vendors
ACHIEVING COORDINATION IN PRACTICE
Quantify the bullwhip effect
Get top management commitment for coordination
Devote resources to coordination
Focus on communication with other stages
Try to achieve coordination in the entire supply chain network
Use technology to improve connectivity in the supply chain
Share the benefits of coordination equitably