Slide 1Info Extends the Supply ChainInformation facilitates responsivenessInformation enables consolidationSupply Chain Information FlowsBenefit of SCM IT SystemsSynchronized Planning through Shared InformationSupply Chain IT InfrastructureSynchronized Supply Chain ITHorizontal Process IntegrationA Continuum of Supply Chain RelationshipsThe “Beauty” of CooperationThe “Beauty” of CooperationRelationshipsPutting it all togetherBA331-Supply Chain ManagementChapter 7Shay Scott, Ph.D.Department of Marketing and SCMManaging Director, Global Supply Chain InstituteUniversity of [email protected] Chain ManagementInfo Extends the Supply Chain2Information facilitates responsiveness3Information enables consolidation4CoordinationFlowsOperating FlowsStrategic PlanProcurementPlan/BOMLogisticsPlanOperations and Scheduling•hours or days in advance•individual jobs and tasks, specific tools and capabilities•assigns specific tasks to specific tools at specific timesSupply Chain Information FlowsCoordination and Planning•weeks or months in advance•aggregate data of demand and capacity•balances the load and capacities of different resources over timeCapacity PlanProductionPlanForecastInventory Management & DeploymentOrderMgmtOrderProcessingLISOperationsWarehousingTransportationBenefit of SCM IT Systems©2013 Shay Scott, Ph.D.6Synchronized Planning through Shared InformationTier 3Tier 3Company ATier 3Tier 2Tier 4Tier 1Tier 1Tier 4Tier 2Tier 2Tier 1Existing ProcessCollaborative ProcessData is truncated as it propagates down the chain52 weeks down to 8-9 weeksRelease DataASupply Network Collaboration can reduce the information lag from 14 days to 1 day and increased the available planning horizon.The time it takes to communicate information to Tier 4 can be as much as 14 daysERPEnterprise Resource Planning APSAdvanced Planning & Scheduling SCESupply Chain Execution SoftwareInformation FlowSupply Chain IT InfrastructureSynchronized Supply Chain ITT r a n s p o r t a t i o nM a n u f a c t u r i n g t o W a r e h o u s eM a n u f a c t u r i n g P l a n tT r a n s p o r t a t i o nW a r e h o u s e t o C u s t o m e rS a l e s I n f oF o r e c a s t i n gS y s t e m sH o s t / E R PO M ST M SA d v a n c e dP l a n n i n gS y s t e mM a n u f a c t u r i n gE x e c u t i o nS y s t e mE D II n t e r n e tE D II n t e r n e tR F D C o r B a r c o d eS c a n n e r o r P a g e rW a r e h o u s e( W M S )W a r e h o u s e( W M S )E D II n t e r n e tR F D CR F D C R F D CE D II n t e r n e to r R F D CE D II n t e r n e to r R F D CR F D C o r P a g e rS u p p l y C h a i nV e n d o r sH o s t / E R PE D II n t e r n e tE D II n t e r n e tH e a d q u a r t e r sS c a n n e r sR e t a i l C u s t o m e r sW i t h P O S S c a n n e r sE x c h a n g eP o r t a lP O SS c a n n e r D a t aY M SY M SHorizontal Process Integration10TestingWarehousing/Kitting Supply Base ManagementInbound LogisticsOutbound LogisticsDistribution / Product SupportManage key processes “horizontally” across the supply chain to optimize effectiveness and efficiency Raw MaterialsEnd CustomerRelationship ManagementInformation Technology• Increasing Formality• Increasing Effort• Increasing ImpactTransactional Structures–High number of relationships–Price dominated–Little interaction, short duration –Motivate desired behavior through reward & punishmentContracting/Outsourcing–Low number of relationships–Joint problem solving–Aligned objectives–Motivate desired behavior through info sharingStrategic Partnerships–Exclusive partner base–Mutual dependency –Shared goals/objectives–Close interaction over long termA Continuum of Supply Chain RelationshipsThe “Beauty” of Cooperation•Prisoner’s Dilemma–Option 1: •Strategy: You confess but your partner doesn’t.•Outcome: You get 1 year, your partner gets 5 years.–Option 2:•Strategy: You don’t confess but your partner does.•Outcome: You get 5 years, your partner gets 1 year.–Option 3:•Strategy: Both of you confess.•Outcome: You get two years each.–Option 4:•Strategy: Neither of you confess.•Outcome: You both go free.Shay Scott12The “Beauty” of Cooperation•Prisoner’s Dilemma–Option 1: •Strategy: You confess but your partner doesn’t.•Outcome: You get 1 year, your partner gets 5 years.–Option 2:•Strategy: You don’t confess but your partner does.•Outcome: You get 5 years, your partner gets 1 year.–Option 3:•Strategy: Both of you confess.•Outcome: You get two years each.–Option 4:•Strategy: Neither of you confess.•Outcome: You both go free.Shay Scott13RelationshipsShay Scott14Relationships should be designed with their purpose in mind…Increase with Relationship TypeTop Mgmt InvolvementStrategic ImpactTime RequiredValue PotentialOwnershipJoint VentureOutsourcingContractingChannel (Arm’s Length)•Combining IT systems capability and appropriate relationships to reduce order cycle times for delivery of the right product to satisfy demand •Substitute information for inventory•Companies have developed systems that employ these principles under the banner of Quick ResponsePutting it all
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