Strategy Related With Supply Chain & Global Logistics Management

By Lin Chang Liang

Conduct professor：Lin Cheng Chang

e-mail：wilson-lin@bothhand.com.tw

Outline

ⅠⅠⅠⅠ. Definition & DescriptionⅠⅠⅠⅠ.1 StrategyⅠⅠⅠⅠ.2 Supply Chain & LogisticsⅠⅠⅠⅠ.3 GlobalizationⅠⅠⅠⅠ.4 Global Logistics Management

ⅡⅡⅡⅡ. Strategies in SCM & Global LogisticsⅡⅡⅡⅡ.1 SCM strategiesⅡⅡⅡⅡ.2 SCM Implementation BenefitsⅡⅡⅡⅡ.3 Global Strategy & BenefitsⅡⅡⅡⅡ.4 Globalization Challenge of TaiwanⅡⅡⅡⅡ.5 Strategic Alliance & Outsourcing

ⅢⅢⅢⅢ. Conclusion

ⅣⅣⅣⅣ.BOTHHABD company case study

ⅠⅠⅠⅠ.1 Strategy

What is strategy – Keneth R. Andrew

Corporate strategy is the pattern of decision in a company that

determines and reveals its objectives , purposes, or goals,

produces the principal policies and plans for achieving those

goals, and defines the range of business the company is not

pursue, the kind of economic and noneconomic contribution it

intends to make to its shareholders, employees, customers,

and communities.

Ⅰ.Definition & Description

Three levels of Strategy

Where to Invest?

How to Compete?

How to Implement ?

Growth Strategy�Diversification Strategy�M & A Strategy�Internationalization Strategy�Technology Strategy

Competitive Strategy�Strategic Positioning�Sources of Competitive Adv.

Marketing Strategy�Manufacturing Strategy�Financial Strategy

CorporateStrategies

BusinessStrategies

Functional Strategies

Corporate Coherence

Strategy Formulation & Implementation

FORMULATION(Deciding what to do)

IMPLEMENTATION

(Achieving results)

CORPORATE STRATEGY:

Pattern ofPurposes andPolices

Defining the Company and Its business

1. Organization structure and relationshipsDivision of workCoordination of dividedresponsibility

information system

2. Organizational processesand behaviorStandards and

measurementMotivation and incentivesystems

Control systemsRecruitment and development

of managers

3. Top leadershipStrategicOrganizationalPersonal

1. Identification ofopportunity and risk

2. Determining the company’s material, technical,financial, and human resources

3. Personal values and aspirations

4. Acknowledgement of noneconomic responsibilityto society

The pattern of interrelated decisions in strategy

What is the Supply Chain?

The supply-chain is a complex sequence of events and decisions , which connects sourcing raw materials with manufacturing and the end consumer.

Logisticsis the management of this end-to-end supply-chain.

Logistics managerial activity

Management

Planning Implementation Control

Natural resources

(land, facilities and

equipment)

Human resources

Financial Resources

Information resources

Marketing

orientation

(competitive

advantage)lime And place utility

Efficient movement to customer

Proprietary

Logistics activities

�Customer service�Demand forecasting�Distribution communications�Inventory control�Material handing�Order processing�Parts and seveice support

�Plant and warehouse site

selection

�Procurement

�Packaging

�Return goods handling

�Salvage and scrap disposal

�Traffic and transportation

�Warehouse and storage

Logistics management

Suppliers Customers

Raw

Material

s

In-

Process

inventor

y

Finishe

d

goods

The Logistics network A complex network ofFactories, Warehouses, Distribution Centers and Retail…

The Logistics network

Supply Chain Management

Supply Chain Management covers flows of goods from suppliersthrough manufacturing and distribution up to the customers

Supply Chain Management (SCM)

…..is primarily concerned with the efficientintegration of suppliers factories, warehouses and stores

so that merchandise is produced and distributed in the right quantities to the right locations at the right time in damage-free conditions

andso as to minimize the total System cost of a company subject to satisfying service requirements.

◇A Geography without Borders.

◇ It has made us all into global citizens.

◇ Effective global operations require a genuine equidistance of

perspective.

◇ Nissan’s “Lead Country” model is tailored to the dominant needs of

each market(Triad Market- Japan Asia/ North America/ European Common Market)

◇What is a Universal product?

◇ Insiderization (is deeply fusion than localization)

◇ Collaboration effectiveness(Too many entrenched systems work against collaborative efforts)

◇ Customer needs have globalized, and we must globalize to meet

them. (Synchronization of fashion & preference)

Globalization: Concept From :Kenich Ohmae: Borderless world大前研一大前研一大前研一大前研一 無國界的世界無國界的世界無國界的世界無國界的世界

Globalization drivers according to YIP (1992)

Basically, the Global Logistics Management is the key job of the enterprise’s procedure reformation and creative.

Global Logistics Management- Foreword

The definitionGlobal Logistics Management means to carry out the enterprise Logistics Management activity with multinational programming.

About the enterprise management activity Through the commutation process to raise the customer satisfaction degree and service level and also reduce the cost, to increase the market competition ability, then reach the profit target of the enterprise.

About the enterprise management activityBut in regard to the enterprise management activity, logistics activity covers about the raw materials、the equipment and the transport of ware relevant to all economic activities in theprocess of production and sell, include the order handling、the material、the management of stock、the packing、the allotment sell、the customer service、warehousing and conveyance etc.

The relation of production, sell and logistics management

Marketing management system Logistics management system Produce management system

Activates in factory

and conveyance of

material

Assign work and

hurry check

Quality control

Maintenance and

repair of equipment

Study of sales

Sales

promotion

Price policy

Products

policy

Sales policy

Customer service

level

Order procedures

Packing design

Region of retail store

Region of finished

products

Allotment and sales

warehouseConveyance system

Stocks control

Information system

Region of

factory

Produce

schedule plan

Purchase

Conveyance of

material

Packing task

Factory

warehouse

The meaning

The global logistics management means the logistics

management activity follow the extension of enterprise

management coverage, extend from national scale to specific

country market scale of crossing over the national boundary,

then develop to international scale (the base is in the mother country,

operate in three countries above ) or MNC (there are management of base

in above three countries region), last cooperate the management of

globalization, and work on global logistics management.

Supply Chain Management Strategies

ⅡⅡⅡⅡ. Strategies in SCM & Global Logistics

What SCM is looking for is to developproduction & delivery mechanisms and processesthat can produce goodsto the actual end-user rate of demandfor the smallest time-period manageable.

Ensure that the variety of productsreaching the market placematches what customers want to buy.

Made-to-stock environment

Supply-Chain strategies

New Supply-Chain strategies

Made-to-order environment

What Strategy for your products?

Is your product functional or innovative?

Should your SC be physically efficient or responsive to themarket?

Where in the SC to position inventory and availableproduction capacity in order to hedge against uncertaindemand?

Supply predictableDemand efficiently at thelowest possible cost

Maintain high averageutilization rate

Generate high returns &minimize inventorythroughout the SC

Shorten lead times as longas it does not increase cost

Select primarily for cost &quality

Respond quickly to unpredictabledemand to minimize forcedmarkdowns, obsolete inventories

Deploy excess buffer capacity

Deploy significant bufferstocks of parts or finishedgoods

Invest aggressively in ways toreduce lead times

Use modular design to postponeproduct differentiation as long aspossible

Select primarily for speed,flexibility and quality

Primary purpose

Manufacturing focus

Approach to choosingSuppliers

Inventory strategy

Lead-time focus

Product design strategy

Physically Efficient

process

Market-Response

Process

Physically Efficient vs. Market-Responsive SC

Matching SC with products

Definition Functional and InnovativeEx: iPod Wii Refrigerator TV

The Push - Pull Strategy

What Efficient SC?What Responsive SC ??

What is the appropriate strategy for a company?

(*Transport costs as a percentage of a unit cost)

< 5% � Pull base5%~10% � Pull or push base elepend on market situation>10% � Push base

The benefits gained through SCM solutions

Increased visibilityProvide with some ways to see an aggregated view across theconstituents of the Supply Chain. Companies have greatervisibility into inventories (including suppliers inventories).Visibility combined with coordination and synchronization is thebasic enabler to supply chain implementation.

Increased reliabilityCompanies can make accurate promises of availability to theircustomers. They can fulfill on those promises to get the goodsinto customer’s hands fast and at the lowest cost.

The benefits gained throughthe implementation of Supply Chain solutions.

Global logistics Strotegy

Logistics Strategies for Global Products

Benefits of a Global Strategy (George. S.Yip)

�Cost reductions�Improved quality of products and programs�Enhanced customer preference�Increased competitive leverage

Cost reductions

�Economic scale: pooling production�Exploiting lower factor costs�Exploiting flexibility�Enhancing bargaining power

Improved quality of products and programs

Because the focus and concentration in Global capability.It is easy to improve the quality of products and programs, even is customer service.

Enhanced customer preference

Global availability, serviceability, and recognition can enhance customer preference through reinforcement

Increased Competitive Leverage

A global strategy provides more points from which to attack and counterattack competitors.

Because the NT$ appreciation, land and the labor cost go up etc.,

domestic management environment changes, the labor-intensive

moves quickly and outside, and in recent years oversea investment or

leave for the investment enterprise in the mainland toward the

technique concentrate and the advanced technique industry

development, even make the Taiwanese enterprise had the type of the

global strategy activity.

Taiwanese challenge faced

More and more international manufacturers through the Internet create

the supplier network( the Supplier Network), link supplier together to

carry on the purchase, quality management, produce, develop, promote,

the customer service cooperation of etc..

Taiwanese challenge faced

The isoelectronic business market becomes the main current of the B2B E-Commerce.

In addition to trading function, isoelectronic business market also have the function of the information sharing and the market information transparency.

That type of market will force Taiwan industry to cooperate in order to join the market, because the market controlled by international big factory or main promotion.

This trend will result in negative impact to the manufacturer who didn't computerize or make use of the E-Commerce.

The price of product decreases will bring the challenge for logistics management of domestic manufacturer.

The fast digital economic times make the enterprises have to make the greater change on the technique and the management.

◆ Even if a firm has the available resources to perform a particular task, another firm in the SC may sometimes be better suited to perform that task simply because its relative location (resources or expertise) in the supply chain better positions if to do so.

◆ Four basic ways to ensure a logistics-related business function is completed:

---Internal activities. The activity is one of the core strength of the firm.

---Acquisitions are difficult and expensive. Get full control over the way the particular business function is performed. Culture difference and assimilation processed can also be problems.

---Arm’s-length transactions. Short-term arrangement fulfilling a particular business need, such as the delivery of a load of items. Does not lead to long-term strategic advantages.

---Strategic alliances. Multifaceted, goal-oriented, long-term partnership between to companies in which both risks and rewards are shared.Leading to long-term strategic benefits for both.

Strategic Alliances & outsourcing

Whether a particular strategic alliance is appropriate for you firm?

�Adding value to products :Improving time to market, repair times, or distribution times help to increase the perceived value of a particular firm; or with complementary product lines.

�Improving market access :Leading to better advertising or increased access to new market channels.(complementary)

�Strengthening operations:Lowering system costs and cycle times with efficient and effective use of facilities and resources.

�Adding technological strength:Help add to the skills base.

�Enhancing strategic growth:Pooling expertise and resources to overcome the barriers and explore new opportunities.

�Enhancing organizational skills :

Organizational learning.

�Building financial strength :Increased income, sharing administrative costs and sharing risk of investment.

A Framework for Strategic Alliances

�The core strengths or competencies of the company must not be weakened by the alliance, which may happen if resources are diverted from these strengths or if technological or strategic strengths are compromised to mark the partnership successful.

�Key differences with competitors must not be diminished.

�Core strengths don’t necessarily correspond to a large investment of resources, and they may be intangible items such as management skills or brand image.

�To determine a firm’s core strengths, consider how the firm’s internal capabilities contribute to differentiating it from its competition in each of the seven key items.

�Consider how IBM, Intel and Microsoft benefited and were hurt bystrategic alliances.

Advantages and disadvantages

�Three types of strategic alliances are particularly significant in supply chain management:---Third-party logistics(3PL)---Retailer-supplier partnerships (RSP)---Distributor integration (DI)

�The types of retailer-supplier partnerships include---Quick response (QR) strategy---Continuous replenishment strategy or rapid replenishment---Vendor-managed inventory(VMI)system

�Originally, ownership of goods transferred to the retailer when goods were received. Now, some VMI partnerships are moving to a consignment relationship in which the supplier owns the goods until they are sold. (War-Mart).

Strategic Alliances

Some of the motivations and risks for outsourcing are:◆Economies of scale： Aggregation of orders from different buyers.

◆Risk pooling：Transfer demand uncertainty to the contract equipment manufacture (CEM). EMS

◆ Reduce capital investment：Transfer to the CEM.

◆ Focus on core competency：That differentiates the company from its competitors.

◆ Increased flexibility：Better react to changes in customer demand, use the supplier’s technical knowledge to accelerate product development cycle time. And to gain access to new technologies.

◆ Loss of competitive knowledge：May open up opportunities for competitor, prevent the development of new insights.

◆ Conflicting objectives：Suppliers and buyers typically have different and conflicting objectives, e.g., on flexibility.

Outsourcing Benefits and Risks

Ⅲ. Conclusion

�The mass customization requires manufactures to respond to small lot sizes and individualized customer requirements.

�Lead logistical providers are not contractors but supply chain partners with expertise and skills.

�Rich real time information coupling with dynamic control may result in an innovative way of control supply chains.

�Lead logistical providers shall quickly respond to the fluctuated marker demand to meet the highest possible fill rates, on-time delivery excellence, minimal inventory and zero obsolescencewith revenue growth and optimum asset utilization.

�The global logistics management is in the globalization, digitization, and the time turning quickly

�It should create more supply chain layout management (the Supply Chain Planning) and fast response(QR-Quick Response/ ECR-Efficiency Consumer Response)

�It will make the efficiency of procurement, decrease the purchasing cost and the purchasing negotiation, and work on the E-Workflow to provide the distributor, closed path the management system of the partners of enterprise a customer, to enhance with the relation between partners and customers

Ⅲ. Conclusion

ⅣⅣⅣⅣ. BOTHHABD company case study