Supply Chain Integration
. SUPPLY CHAIN INTEGRATION
Supply Chain Management revolve around efficient integration between suppliers, manufacturers, warehouses, and stores. The challenge is on how to coordinate all the activities, in order to: * Improve performance * Reduce cost * Increase service level * Reduce Bullwhip effect * Better utilise resources * Respond effectively to changes in market places
Not merely coordinating production, transportation and inventory, but also integrate front end to back end of SC.
Various SC integration strategies: * Push, pull, push–pull strategy. * Matching products and industries with supply chain strategies. * Demand-driven supply chain strategies. * The impact of the Internet on supply chain integration.
Push-Based SC
* Production and distribution decisions based on long-term forecasts. * Manufacturer demand forecasts based on orders received from the retailer’s warehouses., leading to: * Longer reaction time to changing marketplace * Inability to meet changing demand patterns. * Obsolescence of supply chain inventory as demand for certain products disappears. * * Variability of orders received from retailers and suppliers are much larger than the variability in customer demand due to the bullwhip effect, this leads to: * Excessive inventories due to the need for large safety stocks * Larger and more variable production batches * Unacceptable service levels * Product obsolescence
* Bullwhip effect: occurs when the demand order variabilities in the supply chain are amplified as they moved up the supply chain , will leads to inefficient resource utilization because planning and managing are much more difficult. * Push Based SC usually results in: * Higher transportation costs * Higher inventory levels and/or higher manufacturing costs * More emergency production changeovers
Pull-
Supply Chain Management revolve around efficient integration between suppliers, manufacturers, warehouses, and stores. The challenge is on how to coordinate all the activities, in order to: * Improve performance * Reduce cost * Increase service level * Reduce Bullwhip effect * Better utilise resources * Respond effectively to changes in market places
Not merely coordinating production, transportation and inventory, but also integrate front end to back end of SC.
Various SC integration strategies: * Push, pull, push–pull strategy. * Matching products and industries with supply chain strategies. * Demand-driven supply chain strategies. * The impact of the Internet on supply chain integration.
Push-Based SC
* Production and distribution decisions based on long-term forecasts. * Manufacturer demand forecasts based on orders received from the retailer’s warehouses., leading to: * Longer reaction time to changing marketplace * Inability to meet changing demand patterns. * Obsolescence of supply chain inventory as demand for certain products disappears. * * Variability of orders received from retailers and suppliers are much larger than the variability in customer demand due to the bullwhip effect, this leads to: * Excessive inventories due to the need for large safety stocks * Larger and more variable production batches * Unacceptable service levels * Product obsolescence
* Bullwhip effect: occurs when the demand order variabilities in the supply chain are amplified as they moved up the supply chain , will leads to inefficient resource utilization because planning and managing are much more difficult. * Push Based SC usually results in: * Higher transportation costs * Higher inventory levels and/or higher manufacturing costs * More emergency production changeovers
Pull-