Orchestrating Your Supply Chain

8/13/2019 Orchestrating Your Supply Chain

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THE “DRAGON BOAT”SYSTEM

(ORCHESTRATING YOUR SUPPLY CHAIN)

Mr. Julius S. Kabiling

Course Instructor



THE NEED FOR ORCHESTRATING SUPPLY

CHAIN

Some parts of the chain is somewhatdisconnected Each stage tends to optimize their own performance

This may result to inventory and, longer leadtimes, ineffectiveness, and higher cost

Chain need to act like a train

Sharing of information

Demands, forecasts, production schedules, newproduct launch, and other necessary changes in thesystem

High process of alignment of EVERYONE



KEY PROCESSES THAT NEED TO BE LINKED

1. Planning and Scheduling

2. Design

3. Launching of New Product4. Management of Product Contents

5. Order Management

6. Sourcing and Procurement



THE SYNCHRONIZED CHAIN

Stage 7

(Manufacturer)

Customer

Stage 4

Customer

Stage 3

Stage 2 Stage 5

Stage 1 Stage 6



THE EXTENDED ENTERPRISE MENTALITY

Business knows no boundaries

Extending the Enterprise is to change theway the business compete

Main foundation of an Extended Enterprise isto have a common information highway

Information sharing among partners in the

system Virtual enterprise or supply chain is a series

of relationship between partners based uponthe “Value-added Exchange of Information”



Partnership vs. adversarial relationship within

the pipeline

Supply chains is a confederation of

organizations that agree to a common goal

Bring about overall value creation and value

delivery system



THE INTERNET…

Changed the way supply chain members canconnect with each other

Provided perfect vehicle for the establishment of

a virtual supply chain Enables easy access to global markets at less

cost

Customers have easier way to search forsuppliers at less cost

Exchanges of information among partners in thesupply chain made easy



THE EXTRANET…

Can be used to access data from customers

on sales or product usage

Organizations use these data to management

replenishments and possible demands

Some companies use extranets to link with

its suppliers to share point-of-sale data



THE INTRANETS…

Enables information to be shared between

stores

Facilitates faster and more efficient

communication across the business



SOME BUSINESS SECRETS REVEALED…

Efficient information gathering, processing, andusage Successful companies share the same methodology

Improved customer response

Because of technology, Information provides thedriving force for competitive logistics strategy

Information reshaped the way logistics is donetoday

Efficient use of information systems will help thebusiness anticipate the demand more effectivelyand respond on a timely basis



THE DILEMMA FOR LOGISTICS

Some approach runs counter to therequirements of a synchronized supply chain Customers were forced to order in large quantities

thru price penalties

Trying to optimize efficiency of routes

Under the philosophy of synchronization, smallshipments are to be made more frequently

How to improve total supply chain costeffectiveness without uneconomically escalatingthe cost?



Early identification of shipping andreplenishment requirements

Planning

Contracting a number of suppliers delivering

small quantities of suppliesUse of third-party distribution and logistics

companies specializing in in-bound

consolidation serviceCross-dock facility (Stockless distribution

centers)



THE “QUICK RESPONSE” LOGISTICS

To take advantage of the time-basedcompetition, develop systems that areresponsive and fast

Information Systems (+) Logistics Systems (=)providing the right product in the right place atthe right time

Emergence of IT-based systems helped a lot in

achieving this goal: Bar coding, Electronic Point of Sale (EPOS) system,

internet, etc.

Capturing data ASAP



STRATEGIES FOR A QUICK RESPONSE LOGISTICS

Quick response (=) shorter time-frame for the varietyof a certain product

To achieve this, the system has to be FLEXIBLE

[Flexible Manufacturing System (FMS)] The lesser the “set-up time”, the quicker the response

to customer requirements

Japanese technique “Single Minute Exchange of Die

(SMED), focusing on finding ways to reduce set-uptime

Technology may be involved

Process reengineering.



ECONOMIES OF SCALE VS. ECONOMIES OF SCOPE

Economies of Scale: Volume-based, long production run with few change-

overs

Economies of Scope: Production of small quantities of a wider range,

requiring more change-overs

Today, the marketplace is more “individualists”,

seeking higher customization Competitive advantage can be gained by linking

production flexibility to the need for variety



STRATEGIZING FOR “MASS CUSTOMIZATION”…

Tailoring solution for specific requirements

Old-style logistics would require increased

finished goods inventory, higher cost of

production associated with made-to-orders

How to achieve?

POSTPONEMENT

Computer-aided design/manufacturing



LOGISTICS SYSTEM DYNAMICS

Logistics systems are prone to “Bullwhip” or“Forrester Effect” Study of information feedback characteristics of

industrial activity showing how organizationalstructure, amplification (in policies) and time delays(in decisions and returns) interact to influence thesuccess of the enterprise

Provides a single framework for integrating the

functional areas of management (marketing,production, accounting, research, and developmentand capital investment)



Involves 3 levels in the distribution channel:

1. Retailer’s Inventory 2. Distributor’s Inventory

3. Factory Inventory

Each level was interconnected through information flowsand flows of goods

Used real-time information and included severalparameters (transmission time, order processing time,factory lead time, shipment delivery time)

The model shows that small disturbances in one part canbe very quickly become magnified as the effect spreadsthrough the pipeline

The “Acceleration Effect” can cause self -generatedfluctuations in the operating characteristics of a system



THE CCC APPROACH IN THE SUPPLY CHAIN

Coordination, Collaboration, Communication

CCC approach in the system is vital to

success

Without these, the system (or part of it) will

be out of tune

The benefits of CCC can be illustrated by the

“prisoner’s dilemma”

“Baka ibenta ako ni criminal A, unahan ko na”

The best strategy is one based on trust



CONCEPT OF CO-MAKERSHIP

Also known as “partnership sourcing”

Developing long-term relationship with limitednumber of suppliers on the basis of mutual

confidence Developing strategies together to achieve a win-

win outcome

The new competitive paradigm:

Supply chain competes with supply chain and thesuccess of one part of the system will depend uponhow well it manages its supply chain relationship



VENDOR MANAGED INVENTORY

AKA Co-Managed Inventory (CMI)

Instead of customers placing orders on thesuppliers, they SHARE information with the

vendor Information such as actual usage or sales,

current on-hand inventory, other marketing

activitiesNo order was received, but a forecast is

provided by the customer



Customer will have reduced inventory level

and reduced risk of stock-outs

Supplier will have direct access to

information on REAL DEMAND, transmitted

through Electronic Data Interchange (EDI)

Improved planning and scheduling of production

and distribution

Improved capacity utilizationReduced safety stock



REMEMBER…

Synchronization of the whole system is a key

to a more responsive supply chain

Collaboration among stages of the supply

chain help achieve better visibility both

upstream and downstream, leading to better

forecasting and planning

Orchestrating Your Supply Chain

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