29423764 Integrated Supply Chain

7/30/2019 29423764 Integrated Supply Chain

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Definition

An Integrated Supply Chain (ISC) is one that has full

responsibility across the corporation (including

different divisions, business units and geographies) for

the planning and management of all activities involvedin end-to-end supply chain processes, including direct

sourcing and procurement, conversion/manufacturing,

and all logistics management activities.

(Source : Supply Chain Digest, The Logistics Institute Georgia Tech)


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Reasons for ISC

Manufacturers Goals Reduce costs

Reduce duplication of effort

Improve quality

Reduce lead time

Implement cost reductionprogram

Involve suppliers early

Reduce time to market

Suppliers Goals Increase sales volume

Increase customer loyalty

Reduce cost

Improve demand data

Improve profitability


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The 3 Vs are the essence to good supply-

chain management

Improving visibility is the first step to better supply-chain management.

Velocity

Better management of

variability results in an

improved, more efficient and

faster supply-chain

Visibility of these flows

enhances the organizationsability to manage, control,

and affect change proactively

Variability

You cant manage what you

dont see: Up- and down-

stream visibility into product,

information and money flows

Visibility


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Steps In Integrated Supply

ChainIntegrated SCM usually begins with the

manufacturer integrating internal processes first.

The company tries to integrate the externalsuppliers.

The last step is integrating the externaldistributors.


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Raw material(suppliers)

Iron ore Silicon Beverage

Backward

integration

Steel

Currenttransformation

AutomobilesIntegrated

circuitssqueezing

Forward integration

Distribution

systems Circuit boards

Finished goods(customers) Dealers

ComputersWatches

CalculatorsLabelling

Vertical Integration

Vertical Integration Examples of Vertical Integration


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Japanese word for affiliated chain.

System of mutual alliances and cross-ownership

Company stock is held by allied firms

Lowers need for short-term profits

Links manufacturers, suppliers, distributors & lenders

Partnerships extend across entire supply chain

Keiretsu Network Strategy


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Issues in an Integrated Supply

Chain

Local optimization - focusing on local profit or cost

minimization based on limited knowledge

Incentives (sales incentives, quantity discounts,

quotas, and promotions) - push merchandise prior

to sale

Large lots - low unit cost but do not reflect sales

Bullwhip effect - stable demand becomes lumpy

orders through the supply chain


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Opportunities in an Integrated

Supply Chain

Accurate pull data

Lot size reduction

Single stage control of replenishment

Vendor managed inventory

Postponement


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Channel assembly

Drop shipping and special packaging

Blanket orders

Standardization

Electronic ordering and funds transfer

Opportunities in an Integrated

Supply Chain


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Access to planning system

Sharing production plans

Joint EDI access / networks Knowledge of inventory levels

Packaging customization

Delivery frequencies

Common logistical equipment / containers

Common use of third-party logistics

Measures of integration


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Managing supply chain relationships

How can broader-based relationships be formed

between trading partners in the supply chain?


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Creating closer relationships

Managing supply chain relationships

R&D

Logistics

Informationsystem

Marketing

Operations

Arms length transaction

Informationsystem

Marketing

OperationsInformation

system

Partnership

Informationsystem

R&D

Logistics

supplier customer supplier customer


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The order winner

The method making sourcing decisions

The nature of electronic collaboration

The attitude to capacity planning

Price negotiations

Managing product quality

Managing research and development

The level of pressure

Factors in forming supply chainrelationships


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Efficient consumer response

How can collaboration be extended across the

supply chain to focus on meeting consumer

demand?


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Establish

infrastructure

Optimize

introductions

Optimize

assortments

Optimize

promotions

Integratedsuppliers

Synchronizedproduction

Continuousreplenishment

Automatedstore ordering

Category

management

Productreplenishment

Reliable

operationsCross-docking

EDI EFTItem coding

and databasemaintenance

ABCEnabling

technologies


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Enabling technologies

Scanning data

Data warehousing Data mining

The data should include

Demand / consumption / sales information

Cash flow

Stocks of finished goods / work in progress

Delivery and output status



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Categorymanagement


Enablingtechnologies

Required

capability

Accountmanagement

Demandmanagement

Multifunctionalselling teams

Price listrestructuring

Effective andcustomizedpromotions

Joint inventorymanagement

Cross-dockoperations


Effectivelogistics andproduct flows

Quick response

Effectiveinformationsharing

Automatedordergeneration

Bar-codingand the use ofother scanningtechnology


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References

White Paper on the Integrated Supply Chain Aerospace

Industries Association

Operations Management by R. Dan Reid & Nada R. Sanders

Principles of Operations Management, 5e, and OperationsManagement, 7e

Heizer /Render, Prentice Hall

http://www.cessna.com/index.html

http://www.ceeandgee.com/index.php - C & G International,Inc.

http://www.transportgistics.com/index.htm


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Documents

29423764 Integrated Supply Chain