Supply Chain Coordination & Information Integration

Supply Chain Coordination & Information Integration

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第七單元 (2) ： Supply Chain Coordination & Information Integration

郭瑞祥教授

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Outline

►Part I: Coordination in a supply chain

►Part II: Information integration

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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)

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CoolCLIPS 網站

Microsoft 。 Microsoft 。Microsoft 。Microsoft 。Microsoft 。

Codigofonte.net 網站 Codigofonte.net 網站 Microsoft 。

臺灣大學 郭瑞祥老師

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Increasing Variability of Orders

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Order Quantity

Time

Consumer Sales20

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Order Quantity

Time

Retailer ‘s Orders to Manufacturer

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15

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Order Quantity

Time

Wholesaler’s Orders to Manufacturer20

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Order Quantity

Time

Manufacturer’s Orders to Supplier

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The Main Factors of Bullwhip Effect

►Demand forecasting

► Lead time

►Batch ordering

►Price fluctuating

►Shortage gaming

Microsoft 。

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Demand Forecasting

► Each player in supply chain forecasts its demand by its order which is more variable than the customer demand.

► When placing order, inventory policies such as (S,s) or (R,Q), lead time, and safety stock policy further distort the demand information.

► Contributing factors– No visibility of end demand– Multiple forecasts

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Solutions

► Sharing of point-of-sale data

► Implementing collaborative forecasting and planning

► Designing single stage of control of replenishment (VMI)

► 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.

► It’s more important to share future demand forecast than to share the past customer demands.

► Aggregate demand usually decreases the variability of the forecast.

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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.

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Lead Time Reduction Solutions

► Order lead time: the time it takes to produce and ship the item.

► Information lead time: the time it takes to process an order.

► Order lead time can be reduced through cross-docking.

► Information lead time can be reduced through the use of electronic data interchange (EDI), E-market, or other tools.

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Batch Ordering

► For economic reason, orders are usually placed by a large quantity, called batch size, especially when (S,s) or (R,Q) policy is adopted.

► Transportation strategies (full truckload quantities) add up to the reasons of batch ordering.

► Contributing factors– High order cost– Full truck load economies

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Solutions

► EDI & computer-assisted ordering (CAO)

► Discounted on assorted truckload, consolidated by 3rd party logistics

► Regular delivery appointment

► Volume and not lot size discounts► Volume and not lot size discounts

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Price Fluctuation

► Discount and promotion policies add up to the reasons of demand variability.

► Customers and retailers usually stock up when prices are ready to increase.

► Contributing factors– High-low pricing leads to forward buy– Delivery and purchase are not synchronized

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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

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Shortage Gaming

► 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.

► When the period of shortage is over, the orders goes back to their regular level.

► Contributing factors– Proportional rationing scheme– Ignorance of supply conditions– Unrestricted orders & free return policy

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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

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A Framework for Supply Chain Coordination

Causes of Bullwhip

Information Sharing Channel AlignmentOperational 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

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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

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Outline

►Part I: Coordination in a supply chain

►Part II: Information integration

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Information Driver

► Role in supply chain:

► Role in competitive strategy:

► 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

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Basic Components of Information

► Supplier information

► Manufacturing information

► Distribution and retailing information

► 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

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What is e-Business?

► Business transacted over the Internet– Is product information displayed on the

Internet?– Is negotiation over the Internet?– Is the order placed over the Internet?– Is the order tracked over the Internet?– Is the order fulfilled over the Internet?– Is payment transacted over the Internet?

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► “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?

Wikipedia22

IBM e-business in the City (no longer available)本作品轉載自 (http://www.cleverstuff.net/images/IBM-e-business-in-the-City.jpg ) ，瀏覽日期 2012/05/18 ，依據著作權法第 46 、 52 、 65 條合理使用。

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

INTRAnetThe INTERnet

EXTRAnet

The Application of Web TechnologyIn Three Areas : Intranet, Intranets& Extranet

Business Efficiency►Communication►Process Automation►Knowledge Management

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Evolution of e-Business

GL

Payroll

MRP

AP

AR

EIS

EDI

HR

MRP II

Distribution

Planning

Scheduling

FMIS

1990s 2000s1970s

Source: Business Online

1980s

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Evolution of e-Business

EIS

EDI

HR

MRP II

Distribution

Planning

Scheduling

FMIS

GL

Payroll

MRP

AP

AR

1970s 1980s

Source: Business Online

ERP

CRM

e-Business

1990s 2000s

APS/SCM

BI

e-Commerce

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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

CustomerRelationshipManagement

EnterpriseResourcePlanning

SupplyChain

Management

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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?

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The Computer Industry: Dell On-line

Procurementcycles

Customer Order andManufacturing Cycle

CustomerOrder Arrives

PUSH PROCESSES PULL PROCESSES

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Potential Opportunities Exploited by Dell

►Revenue opportunities– 24 hour access for order placement– Direct sales– Providing customization and large selection information– Flexibility on pricing and promotion– Faster time to market– Efficient funds transfer - reduce working capital

►Revenue negatives– Longer response time than store and no help with selection

Wikimedia Commons29

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 Commons30

Opportunities

►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

►Opportunity most significant for new, hard to forecast products

►Complements strength of existing retail channels

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頁碼 作品 授權條件 作者 /來源

3本作品轉載自 CoolCLIPS 網站 (http://dir.coolclips.com/Business/Metaphors_A_to_D/Agreement_and_Greeting/Shaking_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。

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。

3本作品轉載自 Codigofonte.net 網站 (http://www.codigofonte.net/galeria-de-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。

3本作品轉載自 Codigofonte.net 網站 (http://www.codigofonte.net/galeria-de-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。

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。

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。

版權聲明

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頁碼 作品 授權條件 作者 /來源

22Wikipedia本作品轉載自 http://en.wikipedia.org/wiki/File:Original_IBM_Logo.png ，瀏覽日期 2011/12/28 。

22IBM e-business in the City (no longer available)本作品轉載自 (http://www.cleverstuff.net/images/IBM-e-business-in-the-City.jpg ) ，瀏覽日期 2012/05/18 ，依據著作權法第 46 、 52 、 65 條合理使用。

29, 30Wikimedia Commons本作品轉載自 http://commons.wikimedia.org/wiki/File:Dell_Logo.png ，瀏覽日期2011/12/28 。

版權聲明

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