SupplyChainManagementChapter2ChapterOutlineDevelopmentoftheConceptDefinitionofSupplyChainManagementStrategicRoleofSupplyChainManagementInternalSupplyChainManagementPartIRoleofSupplyChainManagementPartIIStrategiesforSupplyChainManagement

FiveSupplyChainStrategiesManySuppliersFewSuppliersVerticalIntegrationKeiretsuNetworksVirtualCompaniesPartIIISupplementaryReading

RedesignSupplyChaininVolkswagenofAmericaTheFormerDistributionSupplyChaininVolkswagenofAmericaDesignPrinciplefortheNewDistributionSystemInnovationofManufacturingSupplyChainManagementPartI

RoleofSupplyChainManagementDevelopmentoftheconceptSCMisanextensionoflogistics：Theconceptofsupplychainmanagementisrelativelynew.Itisinfactthethirdphaseofanevolutionthatstartedinthe1960swiththedevelopmentofthephysicaldistributionconcept,whichfocusedontheoutboundsideofafirm’slogisticssystem.Logisticsmanagementisbasicallyconcernedwithoptimizingflowswithintheorganization,whilesupplychainmanagementextendssuchinternalintegrationtotheoutsideoftheorganization.Theinitialfocusonphysicaldistributionoroutboundlogisticswaslogicalsincefinishedgoodswereusuallyhigherinvalue,whichmeantthattheirinventory,warehousing,materials-handling,andpackagingcostswererelativelyhigherthantheirrawmaterialsinputs.InU.S.A.,anationalorganization,theNationalCouncilofPhysicalDistributionManagement(NCPDM),wasorganizedtofosterleadership,education,research,andinterestintheareaofphysicaldistributionmanagement.Supplychainmanagementcameintovogueduringthe1990sandcontinuestobeafocalpointformakingorganizationsmorecompetitiveintheglobalmarketplace.Supplychainmanagementcanbeviewedasapipelinefortheefficientandeffectiveflowofproducts/materials,services,information,andfinancialsfromthesupplier’ssuppliersthroughthevariousintermediateorganizations/companiesouttothecustomer’scustomers(seeFig.2-1)orthesystemofconnectednetworksbetweentheoriginalsuppliersandtheultimatefinalconsumer.

Fig.2-1AnintegratedsupplychainDefinitionofSupplyChainManagement

DefinitionofSCM：

Supplychainmanagement(SCM)isviewedbysomeindividualstobenarrowlyfocusedand/orfocuseduponsuppliesandmaterials,notdemandforfinishedproducts.Broadlyandcomprehensively,SCMistheartandscienceofintegratingtheflowsofproductsandmaterials,information(asorderandschedules),andfinancials(ascreditandcash)throughtheentiresupplypipelinefromthesupplier’ssuppliertothecustomer’scustomer.Itcouldbearguedthatsupplychain,demandchain,valuenetwork,valuechains,etc.,canbeusedassynonyms.Practically,Supplychainmanagementistheintegrationoftheactivitiesthatprocurematerialsandservices,transformthemintointermediategoodsandfinalproducts,anddeliverthemtocustomers.Theseactivitiesincludepurchasingandoutsourcingactivities,plusmanyotherfunctionsthatareimportanttotherelationshipwithsuppliersanddistributors.StrategicRoleofSupplyChainManagement

RoleofSCM：Theconceptofsupplychainmanagementprovidesaperspectivetoviewthetotalsystemofinterrelatedcompaniesforincreasedefficiencyandeffectiveness.Thesupplychainarrangementlinksafirmanditsdistributiveandsuppliernetworktoendcustomers.Theintegratedvalue-creationprocessmustbemanagedfrommaterialprocurementtoend-customerproductdelivery.

Theintegratedsupplychainmanagementshiftstraditionalchannelarrangementsfromlooselylinkedgroupsofindependentbusinessesthatbuyandsellinventorytoeachothertowardacoordinatedinitiativetoincreasemarketimpact,overallefficiency,continuousimprovement,andcompetitiveness.

Competitionbetweensupplychains

Nowadays,asupplychainbecomesthebasicunitofcompetition.Theleadingcompanieshaverealizedthattherealcompetitionisnotcompanyagainstcompanybutrathersupplychain.SCMfocusonthechannelrelationshipmanagement：

Thusthefocusofsupplychainmanagementisuponthemanagementofrelationshipsinordertoachieveamoreprofitableoutcomeforallpartiesinthechain.Thisbringswithitsomedifficultiessincetheremaybeoccasionswhenthenarrowself-interestofonepartyhastobeincludedforthebenefitofthechainasawhole.

Thecontextofanintegratedsupplychainisthefirms’relationshipmanagementwithinaframeworkascapacitylimitations,information,corecompetencies,capital,andhumanresourceproblems.

InternalSupplyChainManagement12processesoftheinternalsupplychain：

Electro-CoatingsLtdelectroplatespartsfortheautomotiveindustry.Customerswerebecomingincreasinglydemanding,resultinginElectro-Coatings’undertakingareviewofitsinternalsupplychain.Theinitialanalysisbywalkingtheprocessidentified12keyprocesses,showninFig.2-2.Fig.2-2Walktheprocess(12steps)

Analysisthevalue-addingtimeofprocess:

Oncethisinitialmaphasbeenproduced,eachstepwasmappedindetail,andsome60stepswereidentified.Thesestepshavebeensummarizedasaflowdiagram,showingeveryprocessstep.

Aninitialanalysisofvalue-addingandnon-value-addingtimewasundertaken,summarizingthetotaltime,wastedtimeandvalue-addingtimeforeachofthe12steps.Thesedatawerethenusedtoproduceamapwiththevalue-adding(activity)timeandnon-value-adding(wasted)timeshownastheseriesof12stepsagainsttotalelapsedtimeinhours.Thetotalprocesstookapproximately70hours.

Theprojectteamheldanafternoonmeetingwiththoseinvolvedintheprocess,andtheresultsofthisbrainstormingsessionproducedacause-and-effectdiagram.Thiswasthenusedtoidentifyopportunitiesforimprovingtheprocess.Forexample,theanalysisrevealedthatjobsarrivinggoodsinwardsat9:00ammightnotbeinputintothesystemuntil5:00pmbecausetheoperatorwouldundertakethecomputerinputtingattheendoftheday.Thisresultedinmanufacturingnothavingvisibilityoftheupdatedorderbookuntil9:00amthefollowingmorning.Thiswaseasilyaddressedbycombiningthebooking-inprocesswiththegoodinwardsprocess,removingafurtherleadtime,depictsthere-engineeringprocess.Thesimpleactionsundertakenbythecompanyresultedinthetotalprocesstaking37hours.Thisledtoamoreresponsiveservicebeingofferedtoitscustomers,andincreasedbusiness.NewWordsandExpressionsfoster/?f?st?/v.vogue/v??ɡ/n.intermediate/??nt??mi?di?t/adj.procure/pr??kj??/v.prominent/?pr?m?n?nt/adj.capability/?ke?p??b?l?ti/n.ubiquitous/ju??b?kw?t?s/adj.agile/??d?a?l/adj.nimbly/?n?mb?li/adj.premium/?pri?mi?m/n.offering/??f?r??/n.培養(yǎng)，促進(jìn)時尚，流行樣式中間的，中級的取得，獲得突出的，顯著的能做某事的素質(zhì)；能力普遍存在的；無處不在的靈活的，機(jī)敏的靈活的，敏捷的保險費(fèi)，獎金提供PartIIStrategiesforSupplyChainManagementFiveSupplyChainStrategies

Forthoseitemstobepurchased,companiesmustdecideuponasupply-chainstrategy.Onesuchstrategyisthetraditionalapproachofnegotiatingwithmanysuppliersandplayingonesupplieragainstanother.Asecondstrategyistodeveloplong-term,“partnering”relationshipswithafewsuppliers.Athirdstrategyisverticalintegration,wherefirmsmaybuythesupplier.Afourthstrategyiskeiretsu,inwhichsuppliersbecomepartofacompanycoalition.Finally,afifthstrategyisvirtualcompanies.Wewilldiscusseachofthesestrategies.ManySuppliersWiththemany-supplierstrategy,thesupplierrespondstothedemandsandspecificationsofa“requestforquotation”,withtheorderusuallygoingtothelowbidder.Thisstrategyplaysonesupplieragainstanotherandplacestheburdenofmeetingthebuyer’sdemandsonthesupplier.Suppliersaggressivelycompetewithoneanother.Althoughmanyapproachestonegotiationscanbeusedwiththisstrategy,long-term“partnering”relationshipsarenotthegoal.Thisapproachholdsthesupplierresponsibleformaintainingthenecessarytechnology,expertise,andforecastingabilities,aswellascost,quality,anddeliverycompetencies.FewSuppliersAstrategyoffewsuppliersimpliesthatratherthanlookingforshort-termattributes,suchaslowcost,abuyerisbetteroffformingalong-termrelationshipwithafewdedicatedsuppliers.Long-termsuppliersaremorelikelytounderstandthebroadobjectivesoftheprocuringfirmandtheendcustomer.Usingfewsupplierscancreatevaluebyallowingsupplierstohaveeconomiesofscalethatyieldsbothlowertransactioncostsandlowerproductioncosts.Advantagesoffew-suppliersstrategy:

Fewsuppliers,eachwithalargecommitmenttothebuyer,mayalsobemorewillingtoparticipateinJITsystems,aswellasprovideinnovationsandtechnologicalexpertise.However,themostimportantfactormaybethetrustthatcomeswithcompatibleorganizationcultures.Achampionwithinoneofthefirmsoftenpromotesapositiverelationshipbetweenpurchaseandsupplierorganizationsbycommittingresourcestowardadvancingtherelationship,furtherstrengthenthepartnership.Australia,Austria,Belgium,Canada,Chile,CzechRepublic,DaimlerChrysler’sfew-suppliersstrategy:Manyfirmshavemovedaggressivelytoincorporatesuppliersintotheirsupplysystem.DaimlerChrysler,forone,nowseekstochoosesuppliersevenbeforepartsaredesigned.Motorolaalsoevaluatessuppliersonrigorouscriteria,butinmanyinstanceshaseliminatedtraditionalsupplierbidding,placingaddedemphasisonqualityandreliability.Downsidesoffew-suppliersstrategy:

Likeallstrategies,adownsideexists.Withfewsuppliers,thecostofchangingpartnersishuge,sobothbuyerandsupplierruntheriskofbecomingcaptivesoftheother.Poorsupplierperformanceisonlyoneriskthepurchaserfaces.Thepurchasermustalsobeconcernedabouttradesecretsandsuppliersthatmakeotheralliancesorventureoutontheirown.VerticalIntegrationPurchasingcantaketheformofverticalintegration.Byverticalintegration,wemeandevelopingtheabilitytoproducegoodsorservicespreviouslypurchasedoractuallybuyingasupplieroradistributor.AsshowninFig.2-3,verticalintegrationcantaketheformofforwardrobackwardintegration.Fig.2-3VerticalIntegrationCanBeForwardorBackward

Backwardintegration:

Backwardintegrationsuggestsafirmpurchaseitssuppliers,asinthecaseofFordMotorCompanydecidingtomanufactureitsowncarradios.

Forwardintegration:

Forwardintegration,ontheotherhand,suggeststhatamanufacturerofcomponentsmakethefinishedproduct.AnexampleisTexasInstruments,amanufacturerofintegratedcircuitsthatalsomakescalculatorsandcomputerscontainingintegratedcircuits.Advantageofverticalintegration:

Verticalintegrationcanofferastrategicopportunityfortheoperationsmanager.Forfirmswiththenecessarycapital,managerialtalent,andrequireddemand,verticalintegrationmayprovidesubstantialopportunitiesforcostreduction.Otheradvantagesininventoryreductionandschedulingcanaccruetothecompanythateffectivelymanagesverticalintegrationorclose,mutuallybeneficialrelationshipswithsuppliers.Manyorganizationsfindinterestinverticalintegrationnowadays.Verticalintegrationcanyieldcostreduction,qualityadherence,andtimelydelivery.Verticalintegrationappearstoworkbestwhentheorganizationhaslargemarketshareorthemanagementtalenttooperateanacquiredvendorsuccessfully.However,backwardintegrationmaybeparticularlydangerousforfirmsinindustriesundergoingtechnologicalchangeifmanagementcannotkeepabreastofthosechangesorinvestthefinancialresourcesnecessaryforthenextwaveoftechnology.KeiretsuNetworksKeiretsuisJapanesetermtodescribesupplierswhobecomepartofacompanycoalition:ManylargeJapanesemanufacturershavefoundamiddlegroundbetweenpurchasingfromfewsuppliersandverticalintegration.Thesemanufacturersareoftenfinancialsupportersofsuppliersthroughownershiporloans.Thesupplierthenbecomespartofacompanycoalitionknownasakeiretsu.Membersofthekeiretsuareassuredlong-termrelationshipsandarethereforeexpectedtofunctionaspartners,providingtechnicalexpertiseandstablequalityproductiontothemanufacturer.Membersofthekeiretsucanalsohavesuppliersfurtherdownthechain,makingsecond-andeventhird-tiersupplierspartofthecoalition.VirtualCompanies

Virtualcompaniesrelyonavarietyofsupplierrelationshipstoprovideservicesondemand:Virtualcompaniesrelyonavarietyofsupplierrelationshipstoprovideservicesondemand.Suppliersmayprovideavarietyofservicesthatincludedoingthepayroll,hiringpersonnel,designingproducts,providingconsultingservices,manufacturingcomponents,conductingtest,ordistributingproducts.Therelationshipsmaybeshort-termorlong-termandmayincludetruepartners,orsimplyablesuppliers.Whatevertheformalrelationship,theresultcanbeexceptionallyleanperformance.Theadvantagesofvirtualcompaniesincludespecializedmanagementexpertise,lowcapitalinvestment,flexibility,andspeed.Theresultisefficiency.Theapparelbusinessprovidesatraditionalexampleofvirtualorganizations.Thedesignersofclothesseldommanufacturetheirdesigns;rather,theylicensethemanufacture.Themanufacturermaythenrentrooms,leasesewingmachines,andcontractforlabor.Theresultisanorganizationremainsflexible,andcanrespondrapidlytothemarket.NewWordsandPhrases

vertical/?v??t?k?l/adj.integration/??nt??ɡre???n/

n.backward/?b?kw?d/adj.coalition/?k????l???n/n.virtual/?v??t?u?l/adj.quotation/kw???te???n/n.bidder/?b?d?/n.aggressive/??ɡres?v/adj.attribute/??tr?bju?t/n.economyofscale/ske?l/foster/?f?st?/v.alignment/??la?nm?nt/n.incorporate/?n?k??p?re?t/v.rigorous/?r?ɡ?r?s/adj.downside/?da?nsa?d/n.alliance/??la??ns/n.forward/?f??w?d/adv.adj.integratedcircuit/??nt?ɡre?t?d?s??k?t/substantial/s?b?st?n??l/adj.undergo/??nd??ɡ??/v.keepabreast/??brest/offluid/?flu??d/adj.payroll/?pe?r??l/n.lean/li?n/adj.apparel/??p?r?l/n.垂直的，縱向的集成，整合后向的，倒向的聯(lián)盟，聯(lián)合虛擬的報價，行情投標(biāo)者激進(jìn)地特性，屬性規(guī)模經(jīng)濟(jì)培養(yǎng)結(jié)盟把……合并嚴(yán)密的，嚴(yán)格的缺陷聯(lián)盟，同盟向前地；向前的，早的，迅速的集成電路大量的，可觀的經(jīng)歷，遭受與……并進(jìn)，跟上，不落后不固定的，易變的工資單精益的，精細(xì)的服裝

PartIIISupplementaryReadingRedesignSupplyChaininVolkswagenofAmericaTheFormerDistributionSupplyChaininVolkswagenofAmericaVolkswagenofAmerica(VoA),awhollyownedsubsidiaryofVolkswagenAG

,imports,marketsanddistributesVolkswagenandAudivehiclesintheUnitedStates.ThevehiclesareassembledinMexicoorGermanyanddistributedtoanetworkofapproximately750dealersitesacrosstheUnitedStates.Atthebeginningofthe21stcentury,VoAmanagementappointedaprojectteamtoreviewvehicledistributionprocessanddevelopnewconceptsorsupplychainmanagement.Theexistingvehicledistributionsystemhadservedtheorganizationoveranumberofyears,andwasdevelopedaroundtwoimplicitassumptions.Thefirstisthatthedealer(retailoperator)isthe“customer”oftheVoAdistributionprocess,nottheenduser.ThelogicwasthatVolkswagenofAmericadistributestothedealerandthedealerdistributestotheenduser.Thesecondassumptionwasthat,significantvehicleinventory(60-90daysofsales)carriedbythedealeroperatorcreatesanincentive(financingcostavoidance)toincreasetherateofsales.Thusthedistributionsystemoperatedasa“push”system.Efficiencywasthekeyperformancecriteria.Theseassumptions,infact,reflectthedominantlogicofvehicledistributiontheU.S.autoindustry.Thepushsystemdoeshavesignificantlimitations.Oneisthatnotallcustomersareabletopurchasetheirfirstchoiceconfigurationofvehiclecolorandoptionalequipment.Manymanufacturersoffermanymorevehicleconfigurationsthanindividualdealersareabletoinventory(evencarrying60-90daysofsales).Dealers,whoareinterestedincompletingsalestransactionsasquicklyaspossiblegenerallyoffercustomerstheselectionvehiclesfromtheircurrentinventory.Ifthecurrentinventorydoesnotcontainthecustomer’sfirstchoiceconfiguration,thedealermayofferapricediscountasincentiveforthecustomertoacceptanonfirstchoicevehicle.Althoughthisprocessoftendoesresultinaconsumerpurchasingavehicle,thetransactionisinefficient.Bothpartieshavecompromisedtoacommondateofaninventoryshortfall.Theenduserhasnotreceivedhischoiceofvehicleandthedealerhasunnecessarilydiscountedtheprice.Asecondlimitationofthepushsystemisthehighsystem(importer+dealer)costsoftransportation,financingandstorage.Vehiclesareinventoriedatpointofsale,themostexpensivelocationintheentiredistributionchain.Inshort,thepushsystemisonlycoincidentallyresponsivetocustomerchoicesanditmaintainslargeinventoriesatpointofsale.DesignPrinciplefortheNewDistributionSystem

TheprojectteamatVoAwassearchingforameanstodealwiththelimitationsofcurrentpushsystem.Asadesignprincipleforthenewdistributionsystem,theprojectteamhadrejectedbothoftheabovementionedassumptions.Thenewsystemhadtoservetheenduser’srequirementsasitskeyperformancemeasure.Thenewsystemwouldhavetobe,firstandforemost,responsivetoenduserchoicesandsimultaneouslymoreefficientthanthecurrentsystem.Fromthesenewprinciplesthefollowingperformancecriteriawereestablishedthatthereengineeredprocesswouldhavetomeet:1．Maximizethepercentageofcustomerswhoreceivedtheirfirstchoiceofvehicles.

2．Ifacustomer’sfirstchoicewasnotinadealer’sinventory,afirstchoicevehiclewouldbedeliveredtothedealerfromVoAinventorywithin48hours.

3．Significantlyreducethetotalsystem(dealersandVoA)costsassociatedwithtransportation,financingandstorageprimarilythroughinventoryreduction.

Theprojectteamdevelopedanumberoflogisticsconceptsthatalternativelymanagedwhereinventorymightbeaggregatedandhowitmightbetransported.However,theydidnothaveaneffectivemeansoftestingtheconcepts.Thecomplexityandscopeofthesystemmadestaticanalysisoflimitedvalue.Simulationwasidentifiedasapotentiallyeffectivemeansoftestingtheconceptandvariousscenariosofimplementation.InnovationofManufacturingSupplyChainManagementInitsnewBrazilianplant100milesnorthwestofRiodeJaneiro,Volkswagenisalteringitssupplychain.Withthisexperimentaltruckfactory,Volkswagenissurethatithasfoundasystemthatwillreducethenumberofdefectiveparts,cutlaborcosts,andimproveefficiency.BecauseVW’spotentialmarketissmall,thisisarelativelysmallplant,withscheduledproductionofonly100trucksperdaywithonly1,000workers.WorkersinaVW’splantconsistofemployeesofitsownanditssuppliersHowever,only200ofthe1,000workforVolkswagen.TheVWemployeesareresponsibleforoverquality,marketing,research,anddesign.Theother800,whoworkforsupplierssuchasRockwellInternational,CumminsEngines,DelgaAutomotiva,Remon,andVDO,dotheassemblywork.Volkswagen’sinnovativesupplychainwill,ithopes,improvequalityanddrivedowncosts,aseachsubcontractoracceptsresponsibilityforitsunitsandworkercompensation.Withthisstrategy,Volkswagensubcontractorsacceptmoreofthedirectcostsandrisks.TheobjectiveofthenewsupplychainAstheschematicshows,atthefirststopintheassemblyprocess,workersfromLochpe-Maxionmountthegastank,transmissionlines,andsteeringblocks.Asthechassismovesdowntheline,employeesfromRockwellmountaxlesandbrakes.ThenworkersfromRemonputonwheelsandadjust