User talk:Chihui.chiu

1. e-Supply Chains
The success of an e-supply chain depends on:


 * The ability of all supply chain partners to view partner collaboration as a strategic asset
 * Information visibility along the entire supply chain
 * Speed, cost, quality, and customer service
 * Integrating the supply chain segments more tightly

E-supply chain consists of six processes:


 * 1) Supply chain replenishment
 * 2) E-procurement
 * 3) Collaborative planning
 * 4) Collaborative design and product development
 * 5) E-logistics
 * 6) Use of B2B exchanges and supply webs

Major infrastructure elements and tools of e-supply chains are:


 * Extranets
 * Intranets
 * Corporate portals
 * Workflow systems and tools
 * Groupware and other collaborative tools
 * EDI and EDI/Internet

2. Approach to e-Business Strategy
4 stepts:



Objective:

Step 1. Executive Education: Build executive awareness and understanding of e-Business issues and opportunities.  Step 2. Strategic Visioning: Create a clear and compelling vision of the e-Business capabilities needed for strategic success.  Step 3. Readiness Assessment: Assess current readiness to conduct e-Business as defined in the vision.  Step 4. Action Planning: Create a “road map” for achieving the e-Business vision and establish the business case. 

3. CPFR
Collaborative planning, forecasting, and replenishment (CPFR)


 * Pilot by Wal-Mart & Warner Lambert led to industry consortium launched in 1997

Definition

A collaborative technique to standardise the processes between two trading partners used to agree upon a joint plan and forecast, monitor success through replenishment, and recognise and respond to any exceptions.

Project in which suppliers and retailers collaborate in their planning and demand forecasting to optimize flow of materials along the supply chain.

9 Steps:


 * 1) Develop collaborative arrangement
 * 2) *Guidelines, expectations, actions, performance measures, and required resources (yearly)
 * 3) Create joint business plan
 * 4) *Exchange of corporate strategies and creation of joint strategy (quarterly)
 * 5) Create sales forecast
 * 6) *Developed by retailer, supplier or both (monthly or weekly)
 * 7) Identify exceptions for sales forecast
 * 8) *Identify items that fall outside sales forecast constraints set jointly by retailer and supplier (monthly or weekly)
 * 9) Resolve/collaborate on exceptions
 * 10) *Process of investigating exceptions through shared data and communications (monthly or weekly)
 * 11) Create order forecast
 * 12) *Generate specific order forecast that supports the shared sales forecast and joint business plan (monthly or weekly)
 * 13) Identify exceptions for order forecast
 * 14) *Determine which items fall outside the order forecast constraints (monthly or weekly)
 * 15) Resolve/collaborate on exception items
 * 16) *Monthly or weekly basis
 * 17) Generate order
 * 18) *Retailer or supplier generates the order (daily or weekly)

How CPFR Impacts Sales and SC Costs?

Promotional Planning: better estimates of demand response to promotions, and better timing of replenishment with advertising  Service Levels: fewer stock-outs, higher percentage of orders delivered on time due to advanced forecasting and planning prior to order  Inventories: reduced safety stocks because of greater confidence in forecasting and planning process  Production smoothing: removal of promotional spikes (est. that 40% of inventory is ordered in last week of quarter – why?) that result in ramping up costs followed by underutilisation 

Others:


 * Don’t have to follow all 9 steps
 * CPFR is only a supply chain activity. It’s actually an overall business approach.

Evidence: Wal-Mart


 * Wal-Mart has CPFR with approximately 600 trading partners
 * Key contributor to Wal-Mart’s quick emergence as largest and one of most successful grocery chains in U.S.
 * Wal-Mart has lowest operating expense and fastest sales growth in grocery industry

The starting point was a relentless focus on satisfying customer needs; Wal-Mart goal was simply to provide customers access to goods when and where they want them and to develop cost structures that enable competitive pricing. 

The key to achieving this goal was to make the way the company replenished inventory the centerpiece of its strategy.

This was obtained by using a logistics technique known as cross-docking. Here goods are continuously delivered to Wal-Mart’s warehouses where they are dispatched to stores without ever sitting in inventory.

This strategy reduced Wal-Mart’s cost of sales significantly and made it possible to offer everyday low prices to their customers.

4. Collaborative Commerce
Def:

(c-commerce)The use of digital technologies that enable companies to collaboratively plan, design, develop, manage, and research products, services, and innovative EC applications.

5 steps:



Level 2 – Internal excellence – pretend to like customers, seek process improvement, pay for productivity  Level 3 – Network formation – Start with a few strategic accounts; begin sharing practices; study data-based initiatives; introduce customer metrics  Level 4 – Value Chain Constellation – Collaborate with strategic accounts and suppliers; develop new business model; target new revenues  Level 5 – Full Network Connectivity – Use technology to enhance the network; build a consumer response system across the value chain 

Example: Boeing


 * Model 777 designed in “virtual cyber space”
 * Electronic sharing of design tools and processing techniques with engineers, customers, maintenance personnel, project managers, and key suppliers of components and sub-assemblies
 * No paper blueprints
 * Work done interactively over the Web – Boeing’s extranet
 * 3-year delivery cut to 8 to 12 months
 * Capacity increases to 2x airplanes each year

Example: Retailer–supplier collaboration: Target Corporation


 * Conducts EC activities with 20,000 trading partners
 * Extranet enables Target to reach many more partners, and to use applications not available on the traditional EDI
 * Business customers create personalized Web pages

5. Variables that effect e-business value
As a company works to intergate its business operations with those of its supply chain and demand chain partners, a lot of effects occur.

Intensity of effects across five business variable: (from Martin V. Deise)

6. E-Business
E-Business Def:

E-business is a collection of business models and processes motivated by Internet technology, and focusing on improving the extended enterprise performance

E-Commerce Def:

E-commerce is the ability to perform major commerce transactions electronically


 * e-Commerce is part of e-Business
 * Internet technology is the driver of the business change
 * The focus is on the extended enterprise

7 e-logistics procress:


 * 1) e-Procurement
 * 2) Collaborative business
 * 3) Virtual Inventory
 * 4) Frictionless Business
 * 5) Just in time
 * 6) Proactive fulfillment
 * 7) End-to-end integration

Result:


 * Responsiveness
 * Accuracy
 * Efficiency
 * Profitability

8. Push-Pull
3 principles of all forecasting techniques:


 * Forecasts are always wrong
 * The longer the forecast horizon the worst is the forecast
 * Aggregate forecasts are more accurate (The Risk Pooling Concept)

Example: Dell

Dell sells all its products using a direct-sales model via the Internet and the telephone network. Dell has assembly plants in Austin, Winston-Salem for the North American desktop computers market. However, Dell’s large assembly plant is in Penang, Malaysia, that assembles 95% of Dell laptops. (Wikipedia)

The integration of push and pull strategies using risk pooling concept is the reason that Dell built assembly plants. Dell orders computer components in economic scale to save cost, and then keeps the inventory, and assembles only when there is an actual order. (Simchi-Levi & Simchi-Levi) Most important components of computer and laptop are standardized so it is much easier for Dell to forecast specific component group than individual component. From risk-pooling concept, furthermore, the safety stock level of a component group is lower than the amount of individual stock levels of these components. (Simchi-Levi, Kaminsky, & Simchi-Levi, 2003)

9. Bullwhip Effect in SCM
Uncertainty Builds Inventory...



Causes of "Bullwhip" Effect


 * Demand Forecast Updating
 * Orders as signals of product demand
 * Forecasting techniques that rely heavily on recent demand observations
 * Safety Stocks that depend on erratic variance of demand and long lead times
 * Long lead times and forecasting difficulties
 * Fighting - Avoid Multiple Demand Forecast Updates


 * Order Batching
 * Economies of scale in ordering costs and manufacturing setups lead to batching
 * Periodic planning and ordering as part of MRP and periodic review systems
 * Economies of scale in transportation (full truckload rates)
 * “Push” ordering motivated by short term financial performance measures
 * Fighting - Break Order Batches


 * Price Fluctuation
 * Quantity discounts and advance purchases
 * Variance of buying quantities bigger than variances in consumption rate
 * Wide swings result in capacity adjustment costs, high inventory costs, transport diseconomies
 * Fighting - Stabilise Prices


 * Rationing and Shortage Gaming
 * When demand exceeds manufacturing capacity, rationing or orders
 * Customers exaggerate their real needs ("gaming")(Example, 1980’s DRAM chips)
 * When capacity constraints are removed, orders suddenly drop (Example, Motorola 1992, 1993 mobile phones)
 * Fighting - Eliminate Gaming in Shortage Situations