Supply CHain Management 27

8/8/2019 Supply CHain Management 27

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SUPPLY CHAINMANAGEMENT


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Lea der com pa ny in S upply Cha in

WHO will be the LEADER in the Supply

CH AIN?

One that has the largest financial power or

superior technological knowledge or is the

greatest share of values among all the

organizations that are in the supply chain


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BINDING FACTOR- SCM?

G ains in belonging to SCM are

Commitment, trust, reliability & security

Financial & Technical support tangible

gains


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MINDSET

The participating companies are to be chosen

The strategies & policies of the participating

companies have to be aligned

A culture of trust & cooperation has to be

initiated & sustained


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COORDINATION

flow of materials, information & finance

O bjective is to satisfy the ultimate customer

with efficiency.

This deals more with physical or tangible

aspects.


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SHARING OF INFORMATION

Information Technology plays an important roleSuccess of supply chain depends significantly onthe necessary communication & sharing the same.

Information includes:Short range requirements of material or services &production schedules;Unanticipated problems at any point in the supply chain;Long range production plans, changes in the design of the products in the supply chain, changes in product mix& demand of the product.


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SHARING OF RISKS & REWARDS

Supply chain should not have even a single

dissatisfied partner

Rewards should be shared equally among

the partners

Transparency makes them vulnerable;


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J OINT PRO BLEM SOLVING

All the relevant partners in the supply chain

participate jointly on issues like the final

product, the product design, the parts

design


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POM & SUPPLY CHAIN

Service O rientation

SystemO

rientation synergy is the maingain of Supply chain

Competitiveness & Efficiency


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O RIENTATI O N & IMPLEMENTATI O NO F SUPPLY C H AIN INTRA C O MPANY

Similar to inter-organizational principles

The coming together of constituent organizations does not

eliminate the traditional functions with in those

organizations.

the functions remain, the analytical considerations remain,

what would change radically would be the channel

relationship, the way the interfacing functions between

organizations on the Supply Chain would relate to each

other.


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ServicesTo theCustomer

Competitiveness &Efficiency

Alignmentb/w Partner

organizations

Coordinationb/w Partner

organizationsB ringing the partner

organizations to betogether & to worktogether

ProcessO rientation

Aligning theirstrategies & Policies

Sharing of Information,risks & rewards

O rienting their organizationcultures & values

Provide leadership ensuringcooperation, alignment & trust Joint Problem solving

With in Each Partner Organization:Orienting the functional areas towards the supply chain objectives

customer service, system rethinking, competitiveness & efficiencyThe functional Areas have immediate effect are:

Production, Material including purchasing, Inventory Control, Stores, Logistics,Marketing, H uman Resources, Finance.


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P u rchas ing F un ct io n & SCM

W indow to the external market

The strength of a Supply Chain depends onthe interfacing relationships


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Tra ditio na l Ro le of P u rchas ing

Locate & select the right suppliers

Communicate to the suppliers the requirements as sent by

the manufacturers

Negotiate the right price - based upon costs, analysis of the

supply market environment, price forecasting, future needs of the

buying company

Prepare contracts

Control the suppliers performance


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Ro le of P u rchas ing o n a S upply Cha in

A company belonging to a supply chain includes all the

traditional roles. H owever, there is a change on the following

parameters:a) inter-organizational relationships with other members of

the supply chain;

b) Intra organizational relationships & communications.


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C u stomer S uppli er Re lat io n sh ip

Relationships between buyers and supplyingcompanies need a radical transformation

Trust is an important factor

Traditional Organizations Partnership Organizations

P urchase Criteria Lowest Price Competency

D uration Short-Term as needed by the

customer

Long Term

Number of Suppliers

Several for each item Mostly one or few for any item ornumber of groups

Volume of Business for the supplier

Limited as several suppliersshare the business

Large; one supplier gets all the business

Type of Agreement Contractual W orking Relationship is the main formof agreement in addition to the contract

Type of Interaction Formal Less of formal + more of Informal

Quality Variable. Customer relies oninspection

Right Quality, cost of quality is low.

Cost/ P rice Price appears low initially,but high actually

Effectively low. Cost savings fromsupplier improvements shared with cust.

D elivery In large consignments,infrequent-> largeinventories

Small lot, point of use & frequent->savings in inventory cost for thecustomer.


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Co n tinu e d.. ROLE OF PURCHASING IN A

SUPPLY CHAIN

Purchase Manager:Effective Communication with in the

organization


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SINGLE SOURCE vs MULTIPLE

SOURCE


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MUL TISO UR CING SING L E SO UR CE

B asis Customer lacks trust Full Trust in the supplier

Volume of the B usinesssupplier

Intentionally kept low inorder to engendercompetition

Large volume

Economies of scale May not be realized, unless

several firms order the sameitem. Supplying companiesmay delay the deliveries insome cases.

Present

Special Attention Lacks focus, too manycustomers to attend to.

Can provide special attentionto the customer.

Quality Can not be expected toprovide improved quality onhis own initiative. Also,difficult to pinpoint thesource of defect when there

are multiple suppliers.

Supplier would be willing t oprovide specialized quality,


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Co n tinu e d

MUL TISO UR CING SING L E SO UR CE

Variability Variability increases withmultisourcing. It is additivein nature.

Variability is due to onesingle supplier. So, it could below & easier to control.

Control over the Supplier(s) Difficult Easier


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Tack ling p rob lems - s ingl e s uppli er

Since the buyer knows the supplier very well, they would

have anticipation of the strike.

Instead of one supplier, have two.

W hen a company has multiple plants making the same

product, each plant may have a single source for an item but

each plant could have a different supplier. W hen the supply

to one of the plants is suddenly cut off due to strike in its

suppliers plant, a suppler for another plant could fill in.


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Whe n Buy er Com pa ny is Sma ll &S uppli er is BIG

The ideal supply chain thinking would not entertain such

distinctions

Traditionalists worry about it

R emedy

1 . Choose a supplier who himself follows TQM or JIT in

production or is ISO

9000 certified.2. The small buyer company may cultivate a good

relationship with large suppliers.


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S upply Cha in In Serv ices

Documents

Supply CHain Management 27