Supply Chain Coordination & Information Integration 》【本著作除另有註明外，採取創用 CC 「姓名標示 －非商業性－相同方式分享」台灣 3.0 版授權釋出】創用 CC 「姓名標示 －非商業性－相同方式分享」台灣 3.0 版 第七單元 (2) ： Supply Chain Coordination & Information Integration 郭瑞祥教授 1

Outline ►Part I: Coordination in a supply chain ►Part II: Information integration 2

Coordination in a Supply Chain - The Bullwhip Effect - IC 設備與 零件業 IC 製造業電腦周邊業電腦組裝業配銷業 長鞭效應 (Bullwhip Effect) 存貨存貨 存貨存貨 存貨存貨 存貨存貨 存貨存貨 存貨存貨 存貨存貨 存貨存貨 存貨存貨 存貨存貨 CoolCLIPS 網站 Microsoft 。 Codigofonte.net 網站 Microsoft 。 臺灣大學 郭瑞 祥老師 3

Increasing Variability of Orders Order Quantity Time Consumer Sales Order Quantity Time Retailer ‘s Orders to Manufacturer Order Quantity Time Wholesaler’s Orders to Manufacturer Order Quantity Time Manufacturer’s Orders to Supplier 4

The Main Factors of Bullwhip Effect ►Demand forecasting ►Lead time ►Batch ordering ►Price fluctuating ►Shortage gaming Microsoft 。 5

Demand Forecasting ►E►Each player in supply chain forecasts its demand by its order which is more variable than the customer demand. ►W►When placing order, inventory policies such as (S,s) or (R,Q), lead time, and safety stock policy further distort the demand information. ►C►Contributing factors –N–No visibility of end demand –M–Multiple forecasts 6

Solutions ►S►Sharing of point-of-sale data ►I►Implementing collaborative forecasting and planning ►D►Designing single stage of control of replenishment (VMI) ►L►Large retailers usually share their future order forecast by weighted binding promises, e.g., Dell shares 12-week forecast with the first 4-week forecast 100% confirm and next 8-week forecast 75% confirm. ►I►It’s more important to share future demand forecast than to share the past customer demands. ►A►Aggregate demand usually decreases the variability of the forecast. 7

Lead Time ►Lead time is used to estimate the safety stock and reorder point. So when lead time increases, the variability in order quantities increases. ►Lead time usually has a trade-off relationship with inventory. However, more accurate demand forecast and instant information sharing could simultaneously decrease both. 8

Lead Time Reduction Solutions ►O►Order lead time: the time it takes to produce and ship the item. ►I►Information lead time: the time it takes to process an order. ►O►Order lead time can be reduced through cross-docking. ►I►Information lead time can be reduced through the use of electronic data interchange (EDI), E-market, or other tools. 9

Batch Ordering ►F►For economic reason, orders are usually placed by a large quantity, called batch size, especially when (S,s) or (R,Q) policy is adopted. ►T►Transportation strategies (full truckload quantities) add up to the reasons of batch ordering. ►C►Contributing factors –H–High order cost –F–Full truck load economies 10

Solutions ►E►EDI & computer-assisted ordering (CAO) ►D►Discounted on assorted truckload, consolidated by 3rd party logistics ►R►Regular delivery appointment ►V►Volume and not lot size discounts ►Volume and not lot size discounts 11

Price Fluctuation ►D►Discount and promotion policies add up to the reasons of demand variability. ►C►Customers and retailers usually stock up when prices are ready to increase. ►C►Contributing factors –H–High-low pricing leads to forward buy –D–Delivery and purchase are not synchronized 12

Solutions ►Establishing an EDLP policy ►Use CAO (computer-assisted ordering) or CRP (continuous replenishment program) to acknowledge the company the excessive costs of forward buying ►Implement ABC (activity-base costing) system ►Adopt limited purchase quantities ►Adopt scan based promotions Reduce both the frequency and the level of wholesale price discounting 13

Shortage Gaming ►W►When retailers and distributors suspect that a product will be in short supply, and therefore anticipate receiving supply proportional to the amount ordered, inflated orders will occur. ►W►When the period of shortage is over, the orders goes back to their regular level. ►C►Contributing factors –P–Proportional rationing scheme –I–Ignorance of supply conditions –U–Unrestricted orders & free return policy 14

Solutions ►Share capacity and inventory information ►Work with customers to place orders well in advance of the sales season ►Charge penalty for exaggerated gaming ►Allocate based on past sales. ►Build trust and partnership To prevent shortage situations, a supplier can 15

A Framework for Supply Chain Coordination Causes of Bullwhip Information SharingChannel Alignment Operational Efficiency Demand Forecast Update 》 Understanding system dynamics 》 Use point-of-sale (POS) data 》 Electronic data interchange (EDI) 》 Internet 》 Computer-assisted ordering (CAO) 》 Vendor-managed inventory (VMI) 》 Discount for information sharing 》 Consumer direct 》 Lead-time reduction 》 Echelon-based inventory control Order Batching 》 EDI 》 Internet ordering 》 Discount for truckload assortment 》 Delivery appointments 》 Consolidation 》 Logistics Outsourcing 》 Reduction in fixed cost of ordering by EDI or electronic commerce 》 CAO Price Fluctuations 》 Continuous replenishment program (CRP) 》 Everyday low cost (EDLC) 》 Everyday low price (EDLP) 》 Activity-based costing (ABC) Shortage Gaming 》 sharing sales, capacity, and inventory data 》 Allocation based on past sales 16

Designing a Relationship with Trust ►Assess the value of the relationship ►Identify operational roles and decision rights for each party ►Create effective contracts ►Design effective conflict resolution mechanisms 17

Outline ►Part I: Coordination in a supply chain ►Part II: Information integration 18

Information Driver ►R►Role in supply chain: ►R►Role in competitive strategy: ►C►Characteristics of information required: 》 Connect various stages in SC 》 Crucial to daily operations in each stage 》 For growth need 》 For cost reduction 》 Accurate 》 Accessible timely 》 Right kind 19

Basic Components of Information ►S►Supplier information ►M►Manufacturing information ►D►Distribution and retailing information ►D►Demand information 》 Products, price, lead time, location, order status, modification, payment 》 Products, quantity, location, lead time, trade- offs, cost, batch size 》 Customers, price, location, quantity, forecast 》 Products, location, quantity, mode, price, stored quantity, lead time 20

What is e-Business? ►B►Business transacted over the Internet –I–Is product information displayed on the Internet? –I–Is negotiation over the Internet? –I–Is the order placed over the Internet? –I–Is the order tracked over the Internet? –I–Is the order fulfilled over the Internet? –I–Is payment transacted over the Internet? 21

►“The business-wide integration of processes, applications and organizational structure to create a high- performance business model in the internet economy” -- R. Kalakota & M. Robinson ►“e-Business is about transforming key business processes with networking technology” -- K&M and IBM ►“An e-Business is an organization that connects critical business systems directly to their critical constituencies via intranets, extranets and internet” -- IBM’s definition What is e-Business? Wikipedia 22 IBM e-business in the City (no longer available) 本作品轉載自 ( City.jpg ) ，瀏覽日期 2012/05/18 ，依據著作權法第 46 、 52 、 65 條合理使用。 City.jpg

Business to Business ►Supply Chain ►Time to Market ►Communication Business to Consumer ►Building Brands ►e-commerce ►Customer Service ►Relationship Marketing The e-Business Environment e-business INTRAnet The INTERnet EXTRAnet The Application of Web Technology In Three Areas : Intranet, Intranets & Extranet Business Efficiency ►Communication ►Process Automation ►Knowledge Management 23

Evolution of e-Business GL Payroll MRP AP AR EIS EDI HR MRP II Distribution Planning Scheduling FMIS 1990s2000s1970s Source: Business Online 1980s 24

Evolution of e-Business EIS EDI HR MRP II Distribution Planning Scheduling FMIS GL Payroll MRP AP AR 1970s1980s Source: Business Online ERP CRM e-Business 1990s2000s APS/SCM BI e-Commerce 25

e-Business Architecture Knowledge Management Business Intelligent e-Commerce e-Business Enabling Business Strategy Web+IT Integration Business Value Technology Value C U S T O M E R S S U P P L I E R S Source: IBM Customer Relationship Management Enterprise Resource Planning Supply Chain Management 26

Basic Evaluation Framework ►How does business on-line impact revenues? ►How does business on-line impact costs? –Facility (site + personnel) –Inventory –Transportation –Information ►Should the e-commerce channel position itself for efficiency or responsiveness? ►Who in the supply chain can extract most value? ►Is the value to existing players or new entrants? 27

The Computer Industry: Dell On-line Procurement cycles Customer Order and Manufacturing Cycle Customer Order Arrives PUSH PROCESSESPULL PROCESSES 28

Potential Opportunities Exploited by Dell ►R►Revenue opportunities –2–24 hour access for order placement –D–Direct sales –P–Providing customization and large selection information –F–Flexibility on pricing and promotion –F–Faster time to market –E–Efficient funds transfer - reduce working capital ►R►Revenue negatives –L–Longer response time than store and no help with selection Wikimedia Commons 29

Potential Opportunities Exploited by Dell ►Cost opportunities –Direct sales eliminating intermediary –Customer participation: Call center & catalog costs –Information sharing in supply chain –Reduce facility costs –Geographical centralization and reduced inventories –Postpone product differentiation to after order is placed using product platforms and common components ►Outbound transportation costs increase Wikimedia Commons 30

Opportunities ►S►Significant, but must be combined with component commonality, and build to order. Must move product customization to pull phase of supply chain and hold inventories as common components during the push phase ►O►Opportunity most significant for new, hard to forecast products ►C►Complements strength of existing retail channels 31

頁碼作品授權條件作者 / 來源 3 本作品轉載自 CoolCLIPS 網站 ( aking_Hands/business_women_shaking_hands_peop4003.html) ，瀏覽日期 2012/2/17 。依據著作權法第 46 、 52 、 65 條合理使用。 aking_Hands/business_women_shaking_hands_peop4003.html 3 本作品轉載自 Microsoft Office 2007 多媒體藝廊，依據 Microsoft 服務合約及著 作權法第 46 、 52 、 65 條合理使用。 Microsoft 服務合約 3 本作品轉載自 Codigofonte.net 網站 ( imagens/cliparts/visualizar/FABRICA1.gif) ，瀏覽日期 2012/2/18 。依據著作權法 第 46 、 52 、 65 條合理使用。 imagens/cliparts/visualizar/FABRICA1.gif 3 本作品轉載自 Codigofonte.net 網站 ( imagens/cliparts/visualizar/PREDIO2.jpg) ，瀏覽日期 2012/2/18 。依據著作權法第 46 、 52 、 65 條合理使用。 imagens/cliparts/visualizar/PREDIO2.jpg 3 本作品轉載自 Microsoft Office 2007 多媒體藝廊，依據 Microsoft 服務合約及著 作權法第 46 、 52 、 65 條合理使用。 Microsoft 服務合約 3 臺灣大學 郭瑞祥老師 5 本作品轉載自 Microsoft Office 2007 多媒體藝廊，依據 Microsoft 服務合約及著 作權法第 46 、 52 、 65 條合理使用。 Microsoft 服務合約 版權聲明 32

頁碼作品授權條件作者 / 來源 22 Wikipedia 本作品轉載自 ，瀏覽日 期 2011/12/28 。 22 IBM e-business in the City (no longer available) 本作品轉載自 ( ) ， 瀏覽日期 2012/05/18 ，依據著作權法第 46 、 52 、 65 條合理使用。 29, 30 Wikimedia Commons 本作品轉載自 ，瀏覽日期 2011/12/28 。 版權聲明 33