Post on 04-Nov-2015
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Introduction to Global Supply Chain Networks-Part1
N. Viswanadham Indian Institute of Science
Bangalore -560 012 n.viswanadham@gmail.com
Learn the Future by living in the Present
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Contents
l Introduction to Supply Chain Networks l Some examples l Integrated Supply Chain Networks l Best practices In supply Chain Networks
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Introduction to Supply Chain Networks
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What are Supply Chain Networks? l Behind Every Product there is a Supply Chain l Earlier, the network is fully owned by one
company (Ford) l Currently, it is a network of companies, located
in different countries, involved in product design, manufacture & delivery to customers. E.g. Auto, Pharma, aerospace, electronics,
computer, food, apparel ,etc. l Components may be sourced from several
countries, assembled in another country, and distributed to the customers all over the world.
l Network coordination is important .
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Integrated Manufacturing & Service Network
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Some Examples
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Website
Assembler
Estimated Time of Delivery
Order Processing
System
Customer Configured
Order
Suppliers
Logistics Service Providers
Warehouse
Global Transportation & Logistics
Industry Supply Chain
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The Plough-Plate Food Supply Chain
Currently no one orchestrate the relationship among the supply chain actors.
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Global Supply Chain Network
USA
Distribution
Inventory hub
Europe
Retail
USA
Europe
Demand
China
India
Suppliers
InBound Logistics
Assembly
China
Korea
Manufacturing hub
Outbound Logistics
Eastern Europe
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Horizontal & Vertical Globalization
l In Horizontal FDI, MNCs duplicate the same activities in multiple countries.
l In vertical FDI, firms locate different stages of production in different countries.
l The basic difference between the two is Horizontal integration always occurs at the
same stage on the supply chain Vertical integration always occurs at different
stages of the supply chain.
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Disintegration of
Production : Barbie doll
l The plastic and hair sourced from Taiwan & Japan. l The molds & paints for decorating the dolls are from US. l Assembly in low-cost locations Indonesia, Malaysia & China. l China supplies only cotton cloth for dresses and the labor. l The export value of the dolls at Hong Kong is $2 . 35 cents of
Chinese labor, 65 cents of materials & rest for transport, overheads & profits.
l The doll sells for $10 in the US: 1$ for Mattel & the rest covers transport, marketing, wholesale and retailing in U.S.
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Multi Tier Supply Chain Network
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Source: National Research Council Staff (2000). Surviving supply chain integration: strategies for small manufacturers. Washington, DC: National Academies Press. Adapted from Lambert et al., 1998.
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Integrated Supply Chain Networks
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Integrated Supply Chain Networks
Supplier Distributor
Supplier Retailer
Manufacturer
Service Provider
Information Network
Enterprise System or Web-site
Logistics Network
Logistics Hub
Financial Network
Banks
Supply Network
Service Network
Demand Network
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Three (Material ,Information &
Financial) Flows
l Logistics network provides a streamlined material flow between all partners, reducing lead time and cost.
l Communications network provides information integration between companies of supply chain network
l Financial network connects all institutions providing Funds, letters of credit and Insurance.
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Three Sub Networks
Demand sub-network: consists of manufacturing, distribution, retailing , logistics and finance. Perfect delivery is important .
l Supply sub-network : B2B network consisting of suppliers, manufacturers, inbound logistics, Financial Institutions and Freight forwarders.
l Service sub-network: connects consumer with suppliers & manufacturers after sales service centers.
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The Three Business Processes l Procurement: Sourcing raw materials and components from the suppliers : Vendor &
logistics provider selection, Delivery scheduling & Inventory management.
l Manufacturing: Could be in a single location or geographically distributed.
l Distribution & Retail: consists of packaging, transportation and warehousing. Options include direct shipping or outsourcing to third parties.
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The Financial Supply Chain
Supplier Manufacturer
Retailer / Distributor Customer
Financial Supply Chain
Just-in-time-cash Cash Flow Forecasting
Movement of Documents & Money
Goods Supply Chain
Just-in-time-manufacturing Demand Forecasting
Movement of Documents & Goods
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The Six Dominant Players
l Suppliers l Logistics Players: B2B and B2C l Contract manufacturers l Original Equipment Manufacturers l Distributors l Retailers They are independent companies globally
distributed & highly connected
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Life-cycle-based Logistics l Logistics depends on the product life cycle
Movement of Semi finished items from one machine shop to another (Manufacturing logistics)
Movement of Finished products from end of the production line to the consumer (Outbound logistics)
Movement of Raw materials from source of supply to the beginning of the production line. (Inbound logistics)
Movement of Spare parts from manufacturers to the customers via dealers (Spare part logistics)
Movement of Used goods from consumer to the manufacturers (Reverse logistics)
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1PL, 2 PL and 3 PLs l Most manufacturers handle all logistics functions
including trucking and warehousing (1PL). l 2PLs are basic transportation and storage
providers such as truckers, warehouses and container lines and have high levels of asset intensity but low barriers to entry. Airports and Seaports as capacity providers are also
categorized as 2PLs l 3PLs provide total value added logistic solutions
Own some assets such as distribution centers and rent assets available 2PLs.
Freight management &Contract logistics
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Best Practices in SCN
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Best Practices in SCN-1
l Supply hubs: Third Party maintains inventory for the suppliers at the manufacturer site.
l Modularization: Design of component modules that can be used in multiple products
l Standardization: specifying common parts for use in multiple products and models.
l Cross docks: Transshipment facilities where goods are sorted, consolidated and loaded onto outbound trucks
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Best Practices in SCN-2
l Postponement: Final assembly done adding customer specific features such as labeling garments, packaging with customized manuals based on the customer order
l Merge-in-transit: Components shipped from different production units & warehouses are assembled during transit
l Collaborative Planning, Forecasting & Replenishment combines the collaborative intelligence of multiple trading partners in planning and fulfillment of customer demand