1. Chapter 8 Integrating the supply chain

2. Content Integration in the supply chain Efficient consumer response
Collaborative planning, forecasting and replenishment
Managing supply chain relationships
A framework for managing the supply chain

3. Integration in the supply chain
Key issue 1
How can we integrate internally, externally and electronically?

4. Integration in the supply chain
What is Supply Chain Integration
the degree to which the firm can strategically collaborate with their supply chain partners and collaboratively manage the intra- and inter-organization processes to achieve the effective and efficient flows of
Product and services
Information
Money
Decisions
With the objective of providing the maximum value to the customer at low cost and high speed

5. Integration in the supply chain
Measures of integration
Access to planning system
Sharing production plans
Joint EDI access / networks
Knowledge of inventory mix / levels
Packaging customization
Delivery frequencies
Common logistical equipment / containers
Common use of third-party logistics

6. Integration in the supply chain
Internal integration: function to function
Purchasing
Production
Distribution
Low price
Unreliable delivery and low quality
High productivity of machine and labor
High batch size
Poor available distribution
Keep warehousing operation smooth
Post-manufacturing operation being resisted
Additional complexity of customizing products

7. Strategic Collaboration
Integration in the supply chain
Inter-company collaboration: a manual approach
Strategic Collaboration
Decision Flow
RAW MATERIALS
END CUSTOMERS
Information & Knowledge Flow
Products & Services Flow
Financial Flow
Enterprise A B

8. Integration in the supply chain
Electronic collaboration
Transactional
The electronic execution of transaction
Electronic collaboration
Information sharing
The electronic sharing or exchange of information
Collaboration planning
Strategic, tactical and operational exchange

9. Integration in the supply chain
Information flow in apparel supply chain

10. Content Integration in the supply chain Efficient consumer response
Collaborative planning, forecasting and replenishment
Managing supply chain relationships
A framework for managing the supply chain

11. Efficient consumer response
Key issue 1
How can collaboration be extended across the supply chain to focus on meeting consumer demand?

12. Efficient consumer response
Category management
Establish infrastructure
Optimize introductions
Optimize assortments
Optimize promotions
Integrated suppliers
Synchronized production
Continuous replenishment
Automated store ordering
Category management
Product replenishment
Reliable operations
Cross-docking
EDI
EFT
Item coding and database maintenance
ABC
Enabling technologies

13. Continuous replenishment

14. Efficient consumer response
Enabling technologies
Scanning data
Data warehousing
Data mining
The data include
Demand / consumption / sales information
Cash flow
Stocks of finished goods / work in progress
Delivery and output status

15. Efficient consumer response
Category management
Continuous replenishment
Enabling technologies
Required capability
Account management
Demand management
Multifunctional selling teams
Price list restructuring
Effective and customized promotions
Joint inventory management
Cross-dock operations
Effective logistics and product flows
Quick response
Effective information sharing
Automated order generation
Bar-coding and the use of other scanning technology

16. Content Integration in the supply chain Efficient consumer response
Collaborative planning, forecasting and replenishment
Managing supply chain relationships
A framework for managing the supply chain

17. Collaborative planning, forecasting and replenishment
Key issue 1
How can collaboration be extended to strategic as to well as operational levels?

18. Collaborative planning, forecasting and replenishment
CPFR Model
Develop front-end agreement
Create joint business plans
Create individual sales forecasts
Identify exceptions to sales forecasts
Resolve / collaborate on exception items
Create order forecast
Identify exceptions to order forecast
Generate orders
Planning
Forecasting
replenishment

20. Wal-mart’s CPFR Process
Buyer
Seller
FRONT END AGREEMENT
JOINT BUSINESS PLAN
Once
Qtr.
Collaborative Planning
CREATE SALES FORECAST
IDENTIFY EXCEPTIONS
RESOLVE EXCEPTIONS
Wk, Mo
Collaborative Forecasting
Goal : Link buyer and Seller Electronically
CREATE ORDER FORECAST
IDENTIFY EXCEPTIONS
RESOLVE EXCEPTIONS
Wk, Mo
Collaborative Replenishment
GENERATE ORDER

21. Wal-Mart’s CPFR Program
CPFR has “blurred the lines between supplier and customer”
Suppliers buy into their program because they have to to work with Wal-Mart, but more importantly, because Wal-Mart’s Systems provide increased profits for Wal-Mart and their suppliers
Wal-Mart “teaches” their suppliers how to minimize shipping, inventory and other costs by showing them their own model.

22. Content Integration in the supply chain Efficient consumer response
Collaborative planning, forecasting and replenishment
Managing supply chain relationships
A framework for managing the supply chain

23. Managing supply chain relationships
Key issue 1
How can broader-based relationships be formed between trading partners in the supply chain?

24. Managing supply chain relationships
Creating closer relationships
Partnership
Arm’s length transaction
R&D
Marketing
R&D
Marketing
Logistics
Operations
Logistics
Operations
Information system
Information system
Information system
Information system
supplier
customer
supplier
customer
Bow tie
Diamond

25. Managing supply chain relationships
Factors in forming supply chain relationships
The order winner
The method making sourcing decisions
The nature of electronic collaboration
The attitude to capacity planning
Call-off requirements
Price negotiations
Managing product quality
Managing research and development
The level of pressure

26. Content Integration in the supply chain Efficient consumer response
Collaborative planning, forecasting and replenishment
Managing supply chain relationships
A framework for managing the supply chain

27. A framework for managing the supply chain
Key issue 1
What are the management implications of integrating the supply chain?

28. A framework for managing the supply chain6
Develop measurement system for supply chain performance 4
Pilot new supply chain solutions 5
Organize for supply chain performance 1
Develop a supply chain strategy 2
Gather supply chain information 3
Develop effective partnerships and alliances

29. A framework for managing the supply chain
Develop a supply chain strategy
Customer service requirements
Plant and distribution center network design
Inventory management
Outsourcing and third-party logistics relationships
Business processes
Organizational design and training requirements
Performance metrics and goals

30. A framework for managing the supply chain
Pilot new supply chain solutions
Successful supply chain improvement including
Involvement of key stakeholders, suppliers, customers and employees
Selection of scope and environment, focusing on avoiding risk
Identification of the key questions that the pilot must answer

31. A framework for managing the supply chain
Develop measurement systems for supply chain performance
On time in full, outbound
On time in full, inbound
Internal defect rates
New product introduction rate
Cost reduction
Stock turns
Order to delivery lead time
Fiscal flexibility