The Triple-A Supply Chain - NCKU IMBA E-Business and Supply Chain Management (Fall 2011)
-
Upload
kelvin-lye -
Category
Documents
-
view
237 -
download
0
Transcript of The Triple-A Supply Chain - NCKU IMBA E-Business and Supply Chain Management (Fall 2011)
-
7/22/2019 The Triple-A Supply Chain - NCKU IMBA E-Business and Supply Chain Management (Fall 2011)
1/36
The Triple-A SupplyChain
Kelvin Lye Kwong Loong (RA6007578)
Martin Pech (RA6007625)
by Hau L. Lee
E-Business and Supply Chain Management 2011-11-14
-
7/22/2019 The Triple-A Supply Chain - NCKU IMBA E-Business and Supply Chain Management (Fall 2011)
2/36
Agenda
Introduction
Triple As - explanation
Class Activitysupply chainoptimization
Assignment - 7-eleven Case - Zara
E-Business and Supply Chain Management 2011-11-14
-
7/22/2019 The Triple-A Supply Chain - NCKU IMBA E-Business and Supply Chain Management (Fall 2011)
3/36
Introduction
What is the case about?
Fast and cost-effective does not
ensure sustainable advantage
2011-11-14 E-Business and Supply Chain Management 2011-11-14
-
7/22/2019 The Triple-A Supply Chain - NCKU IMBA E-Business and Supply Chain Management (Fall 2011)
4/36
Triple-A Supply Chain
Agility
Adaptability
Alignment
E-Business and Supply Chain Management 2011-11-14
-
7/22/2019 The Triple-A Supply Chain - NCKU IMBA E-Business and Supply Chain Management (Fall 2011)
5/36
Agility
Quick respond to sudden short-term
changes in supply or demand
Unexpected disruptions handled
smoothly
Prompt recovery from shocks(natural disaster, epidemics)
E-Business and Supply Chain Management 2011-11-14
-
7/22/2019 The Triple-A Supply Chain - NCKU IMBA E-Business and Supply Chain Management (Fall 2011)
6/36
Agility
Methods
Promote flow of information with suppliers and
customers
Develop collaborative relationships with
suppliers
Design for postponement
E-Business and Supply Chain Management 2011-11-14
-
7/22/2019 The Triple-A Supply Chain - NCKU IMBA E-Business and Supply Chain Management (Fall 2011)
7/36
Agility
Methods
Build inventory buffers by maintaining a
stockpile of inexpensive but key components
Have a dependable logistics system or partner
Draw up contingency plans and develop crisis
management teams
E-Business and Supply Chain Management 2011-11-14
-
7/22/2019 The Triple-A Supply Chain - NCKU IMBA E-Business and Supply Chain Management (Fall 2011)
8/36
Adaptability
Evolve over time as economic
progress, political shifts,
demographic trends, and
technological advances reshape
markets
E-Business and Supply Chain Management 2011-11-14
-
7/22/2019 The Triple-A Supply Chain - NCKU IMBA E-Business and Supply Chain Management (Fall 2011)
9/36
Adaptability
Methods
Monitor economic changes all over the world to
spot new supply bases and markets (especially
in developing countries)
Use intermediaries to develop fresh suppliersand logistics infrastructure
E-Business and Supply Chain Management 2011-11-14
-
7/22/2019 The Triple-A Supply Chain - NCKU IMBA E-Business and Supply Chain Management (Fall 2011)
10/36
Adaptability
Methods
Evaluate needs of ultimate consumersnot just
immediate customers
Create flexible product design
Determine where companies products stand in
terms of technology cycles and product life
cycles
E-Business and Supply Chain Management 2011-11-14
-
7/22/2019 The Triple-A Supply Chain - NCKU IMBA E-Business and Supply Chain Management (Fall 2011)
11/36
Alignment
E-Business and Supply Chain Management 2011-11-14
What does the word align mean?
To arrange in a line or so as to be parallel
Alignment in SC context?
Objective: Create incentives for betterperformances
-
7/22/2019 The Triple-A Supply Chain - NCKU IMBA E-Business and Supply Chain Management (Fall 2011)
12/36
Alignment
E-Business and Supply Chain Management 2011-11-14
Quotes by Prof. Lee:
Not sufficient to say Youre the best company in
the supply chain.
Instead of company to company competition, we
are now in an era of supply chain to supply chain
competition
Win-win relationship is the cornerstone of supplychain success
-
7/22/2019 The Triple-A Supply Chain - NCKU IMBA E-Business and Supply Chain Management (Fall 2011)
13/36
Alignment
E-Business and Supply Chain Management 2011-11-14
Common Scenarios without Alignment
Scenario 1
Each party maximize only its own interests
Overstocking, wastage, overspending
E.g.: HPs IC Division vs Ink-jet Printer Division
IC DivisionCarry as little inventory as possible
Printer DivisionForced to keep large inventory due to
low inventory of ICs.
Implication: Increases costs
-
7/22/2019 The Triple-A Supply Chain - NCKU IMBA E-Business and Supply Chain Management (Fall 2011)
14/36
Alignment
E-Business and Supply Chain Management 2011-11-14
Common Scenarios without Alignment
Scenario 2
Suppliers forced to bear huge costs of inventories Suppliers/vendors hubowned by vendors
Vendors role - maintain enough stock & replenish
them on time using VMI
Manufacturers shift inventory costs to vendors in
order to reduce its own cost
Vendors borrow money at higher interest rates to
finance inventory costs.
Implication: Costs in SC not reduced
-
7/22/2019 The Triple-A Supply Chain - NCKU IMBA E-Business and Supply Chain Management (Fall 2011)
15/36
Alignment
E-Business and Supply Chain Management 2011-11-14
Common Scenarios without Alignment
Scenario 2
-
7/22/2019 The Triple-A Supply Chain - NCKU IMBA E-Business and Supply Chain Management (Fall 2011)
16/36
Alignment
E-Business and Supply Chain Management 2011-11-14
Why is alignment needed for
supply chain?
To maximize a supply chains
performance
-
7/22/2019 The Triple-A Supply Chain - NCKU IMBA E-Business and Supply Chain Management (Fall 2011)
17/36
Alignment
E-Business and Supply Chain Management 2011-11-14
What can be aligned amongthe parties involved in SC?
Ways What it means1. Align
informationCompanies have equal access to forecasts, sales
data and plans2. Align
identitiesManufacturer must define the roles and
responsibilities of each partner so that there is no
scope for conflict.3. Align
incentivesWhen companies try to maximize returns, they
also maximize the supply chainsperformance.
Companies must try to predict the possible
behaviour of supply chain partners in the light of
their current incentives4. Redesign
incentives
Partners act in ways that are closer to whatsbest
for the entire supply chain.
-
7/22/2019 The Triple-A Supply Chain - NCKU IMBA E-Business and Supply Chain Management (Fall 2011)
18/36
Alignment
E-Business and Supply Chain Management 2011-11-14
How is alignment done in thereal world?
Redefine the terms of their relationships so that firms
share risks, costs, and rewards equitably
Example: RR Donnelley (magazine printing for HBR)
Quality and reliability of supplies improve
Firm can reduce waste and make delivery to customers
on time. Firm encourages suppliers to suggest ways to improve
processes and products
How? Split any savings with suppliers.
-
7/22/2019 The Triple-A Supply Chain - NCKU IMBA E-Business and Supply Chain Management (Fall 2011)
19/36
Alignment
E-Business and Supply Chain Management 2011-11-14
How is alignment done in the realworld?Use intermediaries (Finance re-engineering)
Who? Financial institutions such as banks
Why them?
Can borrow money at a much lower interest rate and
finance the purchase of the inventories.
When manufacturers need them, banks can sell these
inventories to the manufacturers.
Outcome?
Vendors/suppliers can reduce its costs and
manufacturers can get the inventory they need.
-
7/22/2019 The Triple-A Supply Chain - NCKU IMBA E-Business and Supply Chain Management (Fall 2011)
20/36
Alignment
E-Business and Supply Chain Management 2011-11-14
Real Life Case
Toyota Prius case(explained by Prof Lee in his
lecture at Stanford GSB)
Youtube clip (34:4739:09)
-
7/22/2019 The Triple-A Supply Chain - NCKU IMBA E-Business and Supply Chain Management (Fall 2011)
21/36
Alignment
E-Business and Supply Chain Management 2011-11-14
Methods
Exchange information and knowledge freely with
vendors and customers
Lay down roles, tasks and responsibilities
clearly for suppliers and customers
Equitably share risks, costs and gains of
improvement initiatives
-
7/22/2019 The Triple-A Supply Chain - NCKU IMBA E-Business and Supply Chain Management (Fall 2011)
22/36
Class Activity
Efficient SC dont adapt to changesin the structure of markets
Build efficient SC
2011-11-14E-Business and Supply Chain Management
Vendor
Procurement
Retail
Testing
Assembly
Order Fulfillment
Centralized with HQ:
-
7/22/2019 The Triple-A Supply Chain - NCKU IMBA E-Business and Supply Chain Management (Fall 2011)
23/36
Class Activity
2011-11-14E-Business and Supply Chain Management
Demonstrate change in market
Adapt, optimize!
-
7/22/2019 The Triple-A Supply Chain - NCKU IMBA E-Business and Supply Chain Management (Fall 2011)
24/36
The Triple-A Supply
Chain
Kelvin Lye Kwong Loong (RA6007578)
Martin Pech (RA6007625)
by Hau L. Lee
E-Business and Supply Chain Management 2011-11-14
Break
-
7/22/2019 The Triple-A Supply Chain - NCKU IMBA E-Business and Supply Chain Management (Fall 2011)
25/36
External Case: ZARA
E-Business and Supply Chain Management 2011-11-14
Taken from
Rapid-Fire Fulfillment
By Kasra Ferdows, Michael A. Lewis and Jose A.D.Machuca
-
7/22/2019 The Triple-A Supply Chain - NCKU IMBA E-Business and Supply Chain Management (Fall 2011)
26/36
External Case: ZARA
E-Business and Supply Chain Management 2011-11-14
Background of Zara
Spanish clothing and accessories retailer
Based in Arteixo, Galicia
Founded in 1975 by Amancio Ortega and Rosalia Mera
Flagship chain store of the Inditex group
Brands like Massimo Dutti, Pull and Bear, Oysho,
Uterque, Stradivarius and Bershka
Revenue: 7.071 billion euros in 2009Present in 73 countries, more than 650 Zara stores
worldwide
-
7/22/2019 The Triple-A Supply Chain - NCKU IMBA E-Business and Supply Chain Management (Fall 2011)
27/36
External Case: ZARA
E-Business and Supply Chain Management 2011-11-14
Story Behind ZaraA huge order by a German wholesaler was cancelled in
1975
All Ortegas order is tied up in this order and there was
no buyers
No option but to sell the stuff on his ownHe opened a shop named Zara near his factory in La
Coruna in Spain
Lesson for OrtegaTo be successful, You need to have five fingerstouching the factory and five touching the customer.
Meaning: Control what happens to your product until the
customer buys it
-
7/22/2019 The Triple-A Supply Chain - NCKU IMBA E-Business and Supply Chain Management (Fall 2011)
28/36
External Case: ZARA
E-Business and Supply Chain Management 2011-11-14
Zaras Philosophy
Superresponsive supply chainDesign, prodice and deliver a new garment
and put it on display in its stores worldwide in a
mere 15 days
Offer a large variety of the latest designsquickly and in limited quantities
-
7/22/2019 The Triple-A Supply Chain - NCKU IMBA E-Business and Supply Chain Management (Fall 2011)
29/36
External Case: ZARA
E-Business and Supply Chain Management 2011-11-14
Zaras PhilosophyDefies most of the current conventional practices in Supply
Chain.
a) Keep almost half of its production inhouse
b) intentionally leaves extra capacityc) Manufactures and distributes products in small batches
d) Manages all design, warehousing, distribution and logistic
functions itself (instead of relying outside partners)
e) Hold its retail stores to a rigid timetable for placing orders and
receiving stock
f) Put price tags of items before theyre shipped
g) Leaves large areas empty in its expensive retail shops
h) Tolerates, even encourages ocassional stockouts.
-
7/22/2019 The Triple-A Supply Chain - NCKU IMBA E-Business and Supply Chain Management (Fall 2011)
30/36
External Case: ZARA
E-Business and Supply Chain Management 2011-11-14
Zaras Self-Reinforcing System
Part 1: Close the communication loop
Transfer both hard data and anecdotal information quickly and
easily from shoppers to designers and production staff
Example: Fast fashion system
Track materials and products in real time every step of the
way, including inventory on display in the stores
Goal: close the information loop between the end users and
the upstream operations of design, procurement, production
and distribution as quickly and directly as possible
-
7/22/2019 The Triple-A Supply Chain - NCKU IMBA E-Business and Supply Chain Management (Fall 2011)
31/36
External Case: ZARA
E-Business and Supply Chain Management 2011-11-14
Zaras Self-Reinforcing System
Part 2: Stick to a rhythm across the entire SC
Spends money on anything that helps to increase and
enforce the speed and responsiveness of the chain as a whole
Part 3: Leverage your capital assets to
increase SC flexibility
Make major capital investments in production and distribution
facilities
Uses these facilities to increase the supply chainsresponsiveness to new and fluctuating demands
Produces complicated products in-house and outsources the
simple ones.
-
7/22/2019 The Triple-A Supply Chain - NCKU IMBA E-Business and Supply Chain Management (Fall 2011)
32/36
Class Activity
Efficient SC dont adapt to
changes in the structure of
markets
Build efficient SC
Demonstrate change in market
Adapt, optimize!
2011-11-14E-Business and Supply Chain Management
-
7/22/2019 The Triple-A Supply Chain - NCKU IMBA E-Business and Supply Chain Management (Fall 2011)
33/36
Conclusion
E-Business and Supply Chain Management 2011-11-14
Managers are the key person in making
triple-A supply chain successful
Whats needed? - a fresh attitude and a
new culture to achieve triple-A supply
chain performance
-
7/22/2019 The Triple-A Supply Chain - NCKU IMBA E-Business and Supply Chain Management (Fall 2011)
34/36
Conclusion
E-Business and Supply Chain Management 2011-11-14
Suggestions to firm that wants toachieve triple-A performance
1. Give up the counterproductive
efficiency mind-set (Agility)
2. Be prepared to keep changing
networks (Adaptability)
3. Look out and take responsibility for
the entire chain instead of looking outfor personal interests only (Alignment)
-
7/22/2019 The Triple-A Supply Chain - NCKU IMBA E-Business and Supply Chain Management (Fall 2011)
35/36
Conclusion
2011-11-14
Market conditions
and
Business Cycles
Demand
and
Supply Uncertainties
Technology
and
Product Life Cycle
Supply Chain
Strategies
E-Business and Supply Chain Management
Adaptive Supply Chain
-
7/22/2019 The Triple-A Supply Chain - NCKU IMBA E-Business and Supply Chain Management (Fall 2011)
36/36
Conclusion
Ways What it means1. Align
informationCompanies have equal access to forecasts, sales
data and plans2. Align
identitiesManufacturer must define the roles and
responsibilities of each partner so that there is noscope for conflict.
3. Align
incentivesWhen companies try to maximize returns, they
also maximize the supply chainsperformance.
Companies must try to predict the possible
behaviour of supply chain partners in the light of
their current incentives4. Redesign
incentives
Partners act in ways that are closer to whatsbest
for the entire supply chain.
Supply Chain Alignment