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Introduction
In todays world of international trade and global competition, where increasingly supply chains compete more so than individual firms and products, integration and collaboration have become key differentiators of high performing supply chains.
Core sections
Supply chain integration Supply chain collaboration principles Supply chain collaboration methods Collaborative planning, forecasting and replenishment (CPFR) Vendor managed inventory (VMI)
Learning objectives
Define the terms integration and collaboration in the global SCM context Explain how internal and external integration can be achieved to benefit supply chain performance Discuss collaborative working and partnerships Elaborate on specific methods used to enable collaboration Offer a holistic perspective of SCM to provide an understanding of how supply chains can gain greater integration and collaboration in the future
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Integration with selected first tier, and increasingly second tier suppliers
Internal integration
To integrate communications and information systems so as to optimise their effectiveness and efficiency Can be achieved by structuring the organisation and the design and implementation of information systems
Non-value adding activity is minimised Costs, lead-times, and functional silos are reduced Service quality is improved BPR and STS method are commonly used to analyse existing organizational structures, eliminate non-value adding activities, and implement new work structures let organization be optimally
aligned ERP is key enabler of internal integration, often expose any remaining non-value adding activities in the organization
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External integration
EDI is a key enabler of supply chain integration
It streamlines information sharing and processing between supply chain partners Effective and efficient organisational design is a prerequisite Keiretsu supply chain structure: OEM work closely with their first tier suppliers to integrate manufacturing, logistics and information processes; which is passed upstream
This enables just-in-time line-side delivery at their assembly plants A seamless lean supply chain is created The supply chain is viewed as one extended operation It was pioneered in Japanese banking
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takes time
Trust needs to be built up step-by-step, the journey towards a collaborative supply chain can be long and arduous
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Adopting collaborative methods such as joint planning and technology sharing can improve lead time performance
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Aggregated procurement:
Rather than individual suppliers tendering for particular orders, specific suppliers are selected by a supplier selection software package based on their capabilities Each supplier gains a share of the total orders based on their ability to deliver the order on time and to specification Consequently, the overall supply base incrementally improves, reducing the likelihood of future rationalization.
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Figure 13.11 A simplifi ed VMI scenario (adapted from Matthias et al., 2005)
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As with CPFR, significant investment in developing an appropriate collaborative relationship is a prerequisite to operating VMI
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Type I and II have been Traditional supply chain implemented in supply Type various sectors chains inIII and IV are more Replenishment only advanced and require Replenishment and forecasting further research and development
Replenishment, forecasting and customer inventory management Replenishment, forecasting, customer inventory management and distribution planning
Type IV
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