BUILDING PARTNERSHIPS AS FOUNDATIONS OF SUPPLY CHAIN MANAGEMENT LT GEN D V KALRA, PVSM, AVSM (RETD)

BUILDING PARTNERSHIPS AS BUILDING PARTNERSHIPS AS FOUNDATIONS OF SUPPLY FOUNDATIONS OF SUPPLY

CHAIN MANAGEMENTCHAIN MANAGEMENT

LT GEN D V KALRA, PVSM, AVSM (RETD)LT GEN D V KALRA, PVSM, AVSM (RETD)

ERPERP

• ERP ATTACKS ONLY INTERNAL BARRIERS

• ERP OPTIMISES AT ENTERPRISE LEVEL• THINKING WITHIN THE BOX• LINK LEVEL FOCUS • NEVERTHELESS ESSENTIAL TOWARDS

SUPPLY CHAIN INTEGRATION

WHAT IS SUPPLY CHAIN WHAT IS SUPPLY CHAIN MANAGEMENT?MANAGEMENT?

“TRADING PARTNERS WORKING

TOGETHER TO GROW BUSINESS AND ELIMINATE NON-VALUE ADDED ACTIVITIES FROM BOTH INTRA AND INTER COMPANIES ACROSS THE ENTIRE MATERIAL AND INFORMATION FLOW PROCESS FROM THE SUPPLIER’S SUPPLIER TO THE BUYER’S BUYER TO ENHANCE CONSUMER VALUE AND CREATE SHARED BENEFITS."

BASIS FOR BUILDING BASIS FOR BUILDING EFFECTIVE SUPPLY CHAINSEFFECTIVE SUPPLY CHAINS

• BELIEF IN THE CONCEPT• NEED TO WORK TOGETHER• MUTUALITY• TRANSPARENCY• TRUST• COMMUNICATION• COMMITMENT• SHARED VISION OF THE FUTURE

TOWARDS SUPPLY CHAIN TOWARDS SUPPLY CHAIN EXCELLENCEEXCELLENCE

• CREATE STRONG STRATEGIC RELATIONSHIPS

• MANAGE SUPPLY CHAIN AS A WHOLE• MAXIMISE CHAIN WIDE USE OF

TECHNOLOGICAL APPLICATIONS • REFINE OPERATIONAL SYSTEMS AND

TECHNIQUES

MOTORS INDUSTRY STOCK MOTORS INDUSTRY STOCK SITUATION 1990SITUATION 1990

0

20

40

60

80

100

120

140

ComponentSupplier

Manufacturer Market Place

Days Stocks

Based on “The Three Day Car Challenge”-Matthias Holweg, Bernard Judge and Geoff Williams, Logistics and Transport Focus Volume 3 No 9- Nov 2001

EMERGING TRENDSEMERGING TRENDS

SUPPLY CHAIN ARE STRIVING TO BECOME MORE :– RESPONSIVE– AGILE AND ADAPTIVE– LEAN– COLLABORATIVE

TYPES OF COLLABORATIONTYPES OF COLLABORATION

• INVENTORY COLLABORATION- VMI

• CAPACITY COLLABORATION

• FORECAST COLLABORATION

BEST PRACTICESBEST PRACTICES

STRATEGIC SOURCING

COLLABORATIVE FORECASTING

OUTSOURCING

VENDOR MANAGED INVENTORIES

SUPPLY CHAIN BEST SUPPLY CHAIN BEST PRACTICESPRACTICES

• ALIGN SUPPLY CHAIN MANAGEMENT SYSTEMS WITH STRATEGIC INITIATIVES AND GOALS

• FORGE PARTNERSHIPS WITH SUPPLIERS • CERTIFY SUPPLIER-PARTNERS• EMPLOY TECHNOLOGY TO IMPROVE SUPPLIER

PARTNERSHIPS. • REFINE AND ENHANCE MANUFACTURING

PROCESSES • FOSTER COMMUNICATIONS BETWEEN PARTNER

ORGANIZATIONS • EMPHASIZE THE MUTUAL BENEFITS OF

PARTNERSHIP


• ALIGN SUPPLY CHAIN MANAGEMENT SYSTEMS WITH STRATEGIC INITIATIVES AND GOALS. COMPANIES THAT EXCEL IN THIS AREA HAVE ENTERED INTO PARTNERSHIPS WITH THEIR SUPPLIERS AND WORK TOGETHER TO REALIZE MUTUAL GAINS AND ACHIEVE STRATEGIC GOALS.

Best Practices LLC, Benchmarking Report


• FORGE PARTNERSHIPS WITH SUPPLIERS. WORLD-CLASS SUPPLY CHAIN MANAGEMENT SYSTEMS SELECT SUPPLIERS ACCORDING TO VARIOUS CRITERIA THAT GO BEYOND TRADITIONAL COST PER UNIT CONSIDERATIONS. BY WORKING TOGETHER ACROSS THE SUPPLY CHAIN, THESE COMPANIES ARE ABLE TO POOL TALENTS AND RESOURCES, YIELDING SUBSTANTIAL GAINS IN COST, QUALITY, FLEXIBILITY, SYSTEM RESPONSIVENESS AND OVERALL PERFORMANCE.



• CERTIFY SUPPLIER-PARTNERS. CERTIFICATION ESTABLISHES A COMMON LANGUAGE FOR COMMUNICATION. THIS IN TURN FOSTERS AN INCREASED LEVEL OF TRUST AND UNDERSTANDING BETWEEN PARTNERS. EXCELLENT COMPANIES OFTEN CERTIFY SUPPLIERS AT DIFFERENT LEVELS, REFLECTING THE STRENGTH, DEPTH AND MATURITY OF THE RELATIONSHIP.



• EMPLOY TECHNOLOGY TO IMPROVE SUPPLIER PARTNERSHIPS.



• EMPHASIZE THE MUTUAL BENEFITS OF PARTNERSHIP. THE BENEFITS GAINED THROUGH THE ENHANCED TRUST AND COMMUNICATION OF A PARTNERSHIP EXCEED THOSE OF A TYPICAL COST-FOCUSED RELATIONSHIP



• REFINE AND ENHANCE MANUFACTURING PROCESSES. IN PARTICULAR, PARTNERS ARE ABLE TO IDENTIFY WHICH ORGANIZATION IN THE SUPPLY CHAIN CAN PERFORM A SPECIFIC PROCESS AT THE HIGHEST QUALITY AND LOWEST COST.



• FOSTER COMMUNICATIONS BETWEEN PARTNER ORGANIZATIONS. RATHER THAN CHOOSING ONE OR TWO WAYS OF WORKING WITH THEIR VENDORS, WORLD-CLASS COMPANIES EMPLOY A PLETHORA OF COMMUNICATION TOOLS.


SUPPLY CHAIN SUPPLY CHAIN ““GURU MANTRA”GURU MANTRA”

• “SYNERGY OF CO-OPERATIVE EFFORT INVOLVING COMPLIMENTING STRENGTHS OF PARTNERS IN A SUPPLY CHAIN, SKILLFULLY HARNESSED AND INNOVATIVELY APPLIED WITH CUSTOMER IN VIEW, CANNOT BUT PRODUCE CUSTOMER DELIGHT. STRATEGIC PARTNERSHIP IS THE SELF EVIDENT “GURU MANTRA” FOR BUSINESSES OF THE FUTURE”.

THIRD PARTY LOGISTICSTHIRD PARTY LOGISTICS

• What is 3PL?

• 3PL is outsourcing

• Opportunities

• Advantages

• Disadvantages

• Automotive Industry Peculiarities

• Practices

What is 3PL?What is 3PL?

First PL is the company itself,Second PL is the customer, and Third PL is an independent party which is

willing to provide support activities that are complimentary to the company’s operations.


In our context, 3PL refers to all those transporters or warehouse-owners who provide the consolidation and

bulk breaking or event-order-picking till delivery to the

customer.


Thus, 3PL providers become a useful and cost-effective link in the chain connecting

the supplier (first party) and customer (second party).

3PL is outsourcing3PL is outsourcing

In strict materials management terms, 3PL can be equated to the outsourcing concept

used in processing.

Hence, 3PL is an outsourced SERVICE.

OpportunitiesOpportunities

The complex relationships between suppliers and customers extending from the immediate channel partners to the extended supply-chain links provide

umpteen opportunities to the companies for identifying links which can be profitably

outsourced.


Each link in the supply-chain provides the organization with an opportunity to

evaluate the possibility of being outsourced subject to it not being technologically or economically

unfeasible .


These opportunities exists wherever the activity is not an organizational core

strength

or

would not adversely affect the market standing or security of proprietary

information.

AdvantagesAdvantages

Company can concentrate on its strength areas

Funds and manpower not bogged down with non-priority activities

Opportunity cost of freed resourcesBenefit from the core strengths of the

3PL provider

DisadvantagesDisadvantages

Control over the complete chain is weakened

Possibility of organization’s trade secrets getting leaked

If partner not properly selected, could lead to complete chain break-down

Need for excellent MIS

Automotive Industry PeculiaritiesAutomotive Industry Peculiarities

In India (unlike Japan), suppliers are spread over 1000’s of kilometers and the poor

infrastructure further adds to transportation delays and transit losses.

3PL suppliers can only bridge this time, space, place and quantity gaps.

PracticesPractices

In India, 3PL suppliers are usually transporters who have modified their traditional godowns to bridge the gap

between suppliers and customers.

These enlightened transporters have understood the opportunity and have

created hubs near major auto makers.

PracticesPractices

In these hubs, the service providers maintains necessary inventory which he also transports from the manufacturing

unit to the hub.

He also maintains liaison with the customer and provides him with the exact materials

on time.

FutureFuture

The 3PL service providers role is bound to become more and more critical and vital

for the success of any automotive supply-chain.

It is bound to become an essential feature of any automotive supply chain from a mere

cycle to the huge trucks.

BUILDING PARTNERSHIPS AS FOUNDATIONS OF SUPPLY CHAIN MANAGEMENT LT GEN D V KALRA, PVSM, AVSM (RETD)

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