Integrating The Supply Chain

Front 1

What is Procter and Gamble's supply chain strategy?

Back 1

- Produce every product that needs to be produced every day through short cycle production
- Communicate with suppliers in real time
- Draw demand data from the point nearest the end-customer
- Collaboration between all supply chain partners using a multifunctional approach

Front 2

What is internal integration? And what does it improve?

Back 2

Function-to-function. It improves external integration

Front 3

How does the JIT2 concept work?

Back 3

- A supplier employee who resides full time in the customer's purchasing office replaces the buyer and supplier
- Supplier-in-plant: material planning, part of the production planning process
- Powered by the customer's scheduling system to place orders with their own company
- Reduces the demand uncertainty experienced by the supplier organizations
- Illustrates how collaboration and integration can benefit the supply chain

Front 4

What is electronic integration?

Back 4

A cheap way to integrate information systems across the supply chain

Front 5

What is CR (continuos replenishment)?

Back 5

- CR logistics is a pioneering approach to using development in IT to supply demand from the manufacturer
- Uses the electronic point of sale data to track customer demand
- Shares data from retailer to supplier
- Goal: for the supplier to replace the goods quickly

Front 6

What is efficient consumer response?

Back 6

- Designed to integrate and rationalize product assortment, promotion and new product development and replenishment across the supply chain members
- It aims to fulfil the changing demands and requirements of the end-customer through effective col- laboration across all supply chain members, in order to enhance the effectiveness of merchandising efforts, inventory flow and supply chain administration

Front 7

Name three processes of ECR

Back 7

Category management: capture and utilization of knowledge of the drivers behind consumer attitudes and choices
Continuous replenishment: Offers both retailers and their suppliers the opportunity to manage their inventory in a more efficient manner
Enabling technologies: Such as scanning data, data warehousing and data mining

Front 8

How does CPFR work? What is it good for?

Back 8

Focuses on the process of forecasting supply and demand by bringing various plans and projections from both the supplier and the customer. Aimed at improving collaboration between buyer and supplier so that the customer service is improved while inventory management is made more efficient

Front 9

What are the benefits of electronic collaboration?

Back 9

- Improve availability of product to the customer, and hence more sales
- Total service is improved, total costs are reduced and capabilities can be reduced owing to the reductions in uncertainty
- Process that span two or more companies become far more integrates and when so, simple, standard, speedy and certain
- Information is communicated quickly through the supply chain
- An audit trail can be provided to say when information was amended
- E-mail prompts can update users of variance and progress
- Data can be used for monitoring and evaluating purposes
- The process is faster and cost less
- All trading partners become more committed

Front 10

What is VMI?

Back 10

Vendor-managed inventory. An approach to inventory and order fulfillment where the supplier is responsible for managing and replenishing inventory

Front 11

Name some of the potential problems and benefits of VMI.

Back 11

Benefits:
- The data can be used to gain better control of the supply chain
- Can be converted into a pull-system
Problems:

- Unwillingness to share data
- Seasonal products
- Investment and restructuring costs
- Retailer vulnerability
- Lack of standard procedures
- System maintenance

Front 12

What is QR?

Back 12

- Meeting customer demand by supplying the right quantity, variety and quality at the right time to the right place at the right price
- Based on taking a total supply chain view of an industry, and try to understand overall performance and the causes of poor performance. This is a way to identify opportunities for improvement
- Key measures of the process is lead times, inventory levels and work in progress

Front 13

Differences between QR and JIT.

Back 13

- Difference between QR and time-based approach:
- Emphasis on using actual customer demand to pull products through the distribution and manufacturing system
- Extensive use of information technology as the preferred way to achieve pull
- QR applies the pull principle to the front-end process of distribution management between the retailer and the supplier. JIT applies this principle throughout the supply network
- In QR, items are supplied to the retailer in response to consumer demand, deliveries are made just-in-time for them to be sold. This delivery triggers the supplier to produce another item, like a JIT manner
- Advantages with QR:
- Development lead times have been compressed
- Production lead times are shorter

Front 14

Describe the difference between bow tie and diamond relationships.

Back 14

- Bow-tie: arms-lenght
- Diamond: active relationship management and supplier development processes

Front 15

Name some of the measures of integration

Back 15

- Access to planning system
- Sharing production plans
- Joint EDI access/networks
- Knowledge of inventory mix/levels
- Packaging customization
- Delivery frequencies
- Common logistical equipment
- Common use of third-party logistics

Front 16

What is vertical integration? What is backward and forward?

Back 16

- Vertical integration is a measure of how much of the supply chain is controlled by the manufacturer
- Backward (upstream) integration: acquiring control of raw material suppliers
- Forward (downstream) integration: acquiring control of distribution channels

Front 17

What is horizontal integration?

Back 17

- Horizontal integration: the merger of companies at the same stage of production in the same or different industries

Front 18

What is the most important factor from the observable relationship style continuum?

Back 18

Trust

Front 19

Describe bottleneck, strategic, non-critical and leverage items.

Back 19

- Bottleneck items: reducing dependence on these items through diversification of suppliers and substitute products
- Strategic items: using strength carefully to draw suppliers into a relationship that ensures supply in the long term
- Non-critical items: not jointly developed, unbranded, do not affect performance and safety in particular, have required low investment in specific tools and equipment
- Leverage items: reducing prices and pushing for preferential treatment

Front 20

Name some of the characteristics of partnerships.

Back 20

- Sharing of information !!!
- Trust and openness
- Coordination and planning
- Mutual benefits and sharing of risks
- A recognition of mutual interdependence
- Shared goals
- Compatibility of corporate philosophies

Front 21

Name some economic justification for partnerships.

Back 21

- Inter-firm relation-specific assets
- Duration of safeguards
- Volume of inter-firm transactions
- Knowledge sharing routines
- Partner-specific absorptive capacity
- Incentives to encourage transparency and discourage free riding
- Complementary resources and capabilities
- Effective governance
- Employ informal governance mechanisms

Front 22

Advantages and disadvantages of partnerships.

Back 22

Advantages of partnerships
- Save cost of negotiations
- Reduce monitoring of supplier soundness
- Increase productivity

Disadvantages of partnerships
- Inability to price accurately qualitative matter such as design work
- Need for organizations to gather substantial information about potential partners on which to base decisions
- Risk of divulging sensitive information to competitors
- Potential opportunism by suppliers

Front 23

What is a supplier network?

Back 23

- A formal of informal group of companies whose common interest is that they all supply a particular customer or support an entire industry

Front 24

What are the barriers to building partnerships?

Back 24

- Power
- Self-interest
- Focus on negative implications of partnerships
- Opportunism
- Focus on price