CEMS – Universität zu Köln - GLOBAL SUPPLY NETWORKS CONFIGURATION AND COORDINATION OF Sommersemester 2003 Seminar für Allgemeine Betriebswirtschaftslehre, Betriebswirtschaftliche Planung und Logistik Direktor: Prof. Dr. Werner Delfmann CONFIGURATION AND COORDINATION OF GLOBAL SUPPLY NETWORKS ANNA KUBASIEWICZ, MICHAEL BUSIA, MARTIN STEFAN, MARTIN FEIX, GABRIEL RÜECK 1
CONFIGURATION AND COORDINATION OF GLOBAL SUPPLY NETWORKS 1. GLOBALISATION + SUPPLY CHAIN CONFIGURATION 2. GLOBAL SUPPLY CHAIN MANAGEMENT COORDINATION 3. SPECULATION AND POSTPONEMENT 4. REAL EXAMPLES OF S/P-STRATEGIES 5. OUTLOOK 2
CONFIGURATION AND COORDINATION OF GLOBAL SUPPLY NETWORKS GLOBAL SUPPLY CHAIN set of three or more entities directly involved in the upstream and downstream flows of products, services, finances and/or information from a source to a customer INTRODUCTION CONFIGURATION COORDINATION MICRO LEVEL MACRO LEVEL internal flow of the processes of product design, procurement, production, demand management and distribution network of organizations, partners, customers and suppliers P/S-STRATEGIES EXAMPLES OUTLOOK AIMS OF ESTABLISHMENT AND MANAGEMENT: Cost reduction Increased customer value 3
CONFIGURATION AND COORDINATION OF GLOBAL SUPPLY NETWORKS DRIVERS OF SUPPLY CHAIN GLOBALISATION GOVERNMENT REGULATIONS INTRODUCTION CONFIGURATION COORDINATION economies of scale and scope liberalization of international trade setting up common technical standards P/S-STRATEGIES EXAMPLES OUTLOOK COST DRIVERS COMPETITION differences in country costs and global sourcing opportunities DRIVERS OF SUPPLY CHAIN GLOBALISATION grow in exports and imports timely logistics as main competitive advantage interdependencies of country activities decline in transport and communication costs MARKET FORCES homogenization of customer needs internationalisation of distribution channels globally transferable marketing 4
CONFIGURATION AND COORDINATION OF GLOBAL SUPPLY NETWORKS GLOBAL SUPPLY CHAIN MANAGEMENT AS. . . COMPLEXITY MANAGEMENT market complexities INTRODUCTION CONFIGURATION COORDINATION P/S-STRATEGIES EXAMPLES OUTLOOK production complexities logistics complexities Presence of local partners Infrastructure Time and distance advantages Structure of the distribution channels in the market 5
CONFIGURATION AND COORDINATION OF GLOBAL SUPPLY NETWORKS GLOBAL SUPPLY CHAIN MANAGEMENT AS. . . COMPLEXITY MANAGEMENT production complexities INTRODUCTION CONFIGURATION COORDINATION P/S-STRATEGIES EXAMPLES logistics complexities market complexities Tariff and nontariff barriers Exchange rates OUTLOOK Differences in product requirements Consumer tastes and the nature of market segmentation Quality and quantity of labor force 6
CONFIGURATION AND COORDINATION OF GLOBAL SUPPLY NETWORKS GLOBAL SUPPLY CHAIN MANAGEMENT AS. . . COMPLEXITY MANAGEMENT logistics complexities INTRODUCTION CONFIGURATION COORDINATION P/S-STRATEGIES EXAMPLES OUTLOOK market complexities production complexities Lead times Product variety Length of production runs Length of supply networks 7
CONFIGURATION AND COORDINATION OF GLOBAL SUPPLY NETWORKS WHAT IS A GSC-MANAGEMENT? INTRODUCTION CONFIGURATION COORDINATION P/S-STRATEGIES EXAMPLES OUTLOOK COORDINATION Managing strategies Making structure work and achieve goals GLOBAL SUPPLY CHAIN MANAGEMENT CONFIGURATION Member identification Geographic structure 8
CONFIGURATION AND COORDINATION OF GLOBAL SUPPLY NETWORKS GSC-CONFIGURATION - MEMBERS IDENTIFICATION UPSTREAM INTRODUCTION DOWNSTREAM ASSIGNING A LEADER DEFINING MANAGED LINKAGES CONFIGURATION COORDINATION P/S-STRATEGIES EXAMPLES OUTLOOK DEFINING MONITORED LINKS CHOOSING NONMANAGED LINKS 9
CONFIGURATION AND COORDINATION OF GLOBAL SUPPLY NETWORKS SCM – CONFIGURATION – ANALYSING FACTORS INTRODUCTION CONFIGURATION COORDINATION P/S-STRATEGIES GEOGRAPHICAL FACTORS EXAMPLES OUTLOOK ANALYSING FACTORS ECONOMIC FACTORS POLITICAL FACTORS 10
CONFIGURATION AND COORDINATION OF GLOBAL SUPPLY NETWORKS GEOGRAPHIC LOCATION STRATEGIES (A) Globally Concentrated Production (B) Host-market Production INTRODUCTION CONFIGURATION COORDINATION P/S-STRATEGIES EXAMPLES OUTLOOK (C) Product Specialization for a Global or (D) Transnational Vertical Integration Regional Market 11
CONFIGURATION AND COORDINATION OF GLOBAL SUPPLY NETWORKS POLITICAL FACTORS STRATEGIES Tariff Barriers Adequacy of Infrastructures INTRODUCTION CONFIGURATION COORDINATION Limits on Natural Resource Extractions P/S-STRATEGIES EXAMPLES Labor Costs OUTLOOK Currency Fluctuations $ → €→£→¥ Host Government Pressures 12
CONFIGURATION AND COORDINATION OF GLOBAL SUPPLY NETWORKS ECONOMIC FACTORS INTRODUCTION ECONOMIES OF SCALE – Maximization at all points on the SC – Entrance into new markets CONFIGURATION COORDINATION P/S-STRATEGIES EXAMPLES OUTLOOK ECONOMIES OF SCOPE – Differentiation of products at one facility ECONOMIES OF SPECIALISATION – Focus on the production of one product – Customer oriented 13
CONFIGURATION AND COORDINATION OF GLOBAL SUPPLY NETWORKS LSP´S ROLE IN CONFIGURATION LSP’s INTRODUCTION Increase Flexibilities Increase Quality CONFIGURATION COORDINATION P/S-STRATEGIES EXAMPLES OUTLOOK Core Competencies Reduce Assets Reuse Technology Reduce Cost Free Management 14
CONFIGURATION AND COORDINATION OF GLOBAL SUPPLY NETWORKS PREREQUISITES FOR EFFECTIVE COORDINATION • Mutual trust and commitment of all participants • Common vision • Leadership COORDINATION • Mutual sharing of information P/S-STRATEGIES • Firm base INTRODUCTION CONFIGURATION EXAMPLES OUTLOOK COMPETITIVE ADVANTAGE 15
CONFIGURATION AND COORDINATION OF GLOBAL SUPPLY NETWORKS CONCEPT OF SPECULATION AND POSTPONEMENT AND SPECULATION strategies INTRODUCTION CONFIGURATION They offer opportunities to achieve delivery of products in a COORDINATION timely and cost effective P/S-STRATEGIES manner EXAMPLES OUTLOOK They reflect the specific configuration and coordination of a supply network. 16
CONFIGURATION AND COORDINATION OF GLOBAL SUPPLY NETWORKS SPECULATION AND POSTPONEMENT IN THE SUPPLY CHAIN ORDER PENETRATION POINTS INTRODUCTION CONFIGURATION COORDINATION P/S-STRATEGIES EXAMPLES OUTLOOK Light Heavy Engineering/ manufacturing/ purchasing manufacturing assembly Reactive Postponement Logistics/ distribution CUSTOMER Anticipative Speculation 17
CONFIGURATION AND COORDINATION OF GLOBAL SUPPLY NETWORKS GENERIC SUPPLY CHAIN P/S-STRATEGIES Logistics INTRODUCTION SPECULATION POSTPONEMENT CONFIGURATION Decentralized inventories Centralized inventories The full speculation strategy The logistics postponement strategy The manufacturing postponement Make to order strategy The full postponement strategy COORDINATION P/S-STRATEGIES SPECULATION EXAMPLES Make to inventory OUTLOOK Manufacturing POSTPONEMENT 18
CONFIGURATION AND COORDINATION OF GLOBAL SUPPLY NETWORKS P/S-STRATEGIES – ADVANTAGES AND DISADVANTAGES Logistics INTRODUCTION SPECULATION POSTPONEMENT SPECULATION • Low production costs • High inventory costs • Low distribution costs • High customer service • Low production costs • Low/mid. Inventory costs • High distribution costs • Low/mid. Customer service POSTPONEMENT • Mid. /high production costs • Mid. /high inventory costs • Low distribution costs • Mid. /high customer service • Mid. /high production costs • Low inventory costs • High distribution costs • Low customer service CONFIGURATION COORDINATION P/S-STRATEGIES EXAMPLES OUTLOOK Manufacturing 19
CONFIGURATION AND COORDINATION OF GLOBAL SUPPLY NETWORKS DETERMINANTS OF A P/S-STRATEGY Product Determinants INTRODUCTION CONFIGURATION COORDINATION life cycle, value density, design characteristics Market and Demand P/S-STRATEGIES EXAMPLES relative time delivery, uncertainty of demand OUTLOOK Manufacturing and Logistics System constraints 20
CONFIGURATION AND COORDINATION OF GLOBAL SUPPLY NETWORKS REAL EXAMPLES Real examples of application of various P/S strategies Xerox Bang&Olufsen Deskjet-Plus Copiers High-end televisions and stereo systems Production Postponement Full Speculation Full Postponement Hewlett-Packard INTRODUCTION CONFIGURATION COORDINATION P/S-STRATEGIES EXAMPLES OUTLOOK 21
CONFIGURATION AND COORDINATION OF GLOBAL SUPPLY NETWORKS REAL EXAMPLES INTRODUCTION Solectron & Flextronics CONFIGURATION COORDINATION EMS / CM Dell Toyota Computers Cars P/S-STRATEGIES EXAMPLES OUTLOOK Economies of Scale Full Postponement keiretsu (系列) and kaizen (改善) 22
CONFIGURATION AND COORDINATION OF GLOBAL SUPPLY NETWORKS REAL EXAMPLES (SOLECTRON & FLEXTRONICS) INTRODUCTION CONFIGURATION OEMs Component Suppliers COORDINATION P/S-STRATEGIES Customer Electronics Manufacturing Service EXAMPLES OUTLOOK Design Labs without manufacturing • OEMs outsource missing capacity or inadequate SCNs • EMS/CM has established supply chain for components • EMS/CM manufactures near target markets • EMS/CM attract design labs without manufacturing 23
CONFIGURATION AND COORDINATION OF GLOBAL SUPPLY NETWORKS REAL EXAMPLES (DELL) • full postponement strategy • web-based order triggers assembly • customer demand known Dell INTRODUCTION • customer demand can be influenced CONFIGURATION COORDINATION P/S-STRATEGIES EXAMPLES OUTLOOK Supplier Customer • limited number of basic components • hundreds of possible configurations • e-commerce in downstream and upstream • only material for next 2 h of assembly • only 5 d of inventory • credit card payment = no bad debts 24
CONFIGURATION AND COORDINATION OF GLOBAL SUPPLY NETWORKS REAL EXAMPLES (TOYOTA) INTRODUCTION CONFIGURATION COORDINATION Toyota P/S-STRATEGIES 系列 EXAMPLES OUTLOOK Tier 2 Suppliers Tier 1 Suppliers 系列 • keiretsu involves coherent price setting, cost control and profit sharing • kaizen means ”to strive for improvement”, common efforts to yield higher quality and improve production processes 25
CONFIGURATION AND COORDINATION OF GLOBAL SUPPLY NETWORKS DISCUSSION OUTLOOK Globalization is a trend into the future→→It’s unavoidable INTRODUCTION CONFIGURATION SCM must become more sophisticated due to the expanding complexities & competitiveness COORDINATION P/S-STRATEGIES EXAMPLES Companies must be willing to share risk and visions with the partners of the SC OUTLOOK Strategic alliances within the GSC can play a major role in gaining competitive advantages GSCM is a dynamic process with continuous monitoring and adjustments geared toward changing environments 26
CONFIGURATION AND COORDINATION OF GLOBAL SUPPLY NETWORKS DISCUSSION Is it possible to standardize applications of SC strategies within various industries? Is it possible the future will hold only one supply chain for each specific sector? Which problems arise from more disperse geographically spaced supply chains? 27
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