Supply Chain Management Think Global, Go Global. Hau L. Lee Stanford University

Transcription

1 Supply Chain Management Think Global, Go Global Hau L. Lee Stanford University

2 Global Supply Chain Management Diverse needs of customers Greater complexities & uncertainties Large geographical spread of supply chains Differential dynamics of technology and product life cycles Country to country barriers Organizational & cultural challenges

3 Key Responses Align supply chains with needs Design for Postponement Information integration for visibility and coordination D y n a m i c

4 Key Responses Align supply chains with needs Design for Postponement Information integration for visibility and coordination D y n a m i c

5 Lucent Technologies 5ESS: Pre-1995 Primary market in N. America. Product kitting technology required complex technology. Supply base in Asia not well developed. Cost efficiency & responsiveness not most critical. Oklahoma City as central procurement, stocking, kitting and assembly site for North America and Asia.

6 Changes in the 90 s Cost efficiency an internal pressure. Response time an external competitive pressure. Fast growing market in Asia. Remote product kitting feasible. Bulk of supply base in Asia.

7 Asia Supply Chain, 1996 Customer 6. Product shipped 1. Order placed with JV 2. Order placed Asian with Hubs Asian Hubs Joint Venture 4. Parts shipped Asian Hubs 5. Kits exported 4. Parts shipped Asia Parts Supplier 3. Parts order U.S. Factory OKC 4. Parts shipped 4. Parts shipped US Parts Supplier

8 Value Creation 10% margin improvement. > 35% reduction in supply chain order intervals. > 30% inventory reduction. > 35% reduction in delivery lead times. High growth market share and profitability in China. Captured 100% of bids in Taiwan s telecommunications switch market in 1998 and Doubled unit shipments in Indonesia in Significant growth in India.

9 Lucent s Evolving Asia Supply Chain Time Pre Post-2001 Focus US-centric Regional Globalized Strategy Radiation Hub & Spoke?

10 Key Responses Align supply chains with needs Design for Postponement Information integration for visibility and coordination D y n a m i c

11 A New HP Network Printer 110V Engine Formatter 220V Engine 110V Printer Customization Materials 220V Printer

12 Postponement: Network Printer Engine Europe Dedicated Power Supply and Fuser Universal Power Supply and Fuser N. America Europe N. America

13 Product Life Cycle Analysis Ramp Up Mature End-of-life Inventory risk Shortage cost UPS value High Medium High

14 Value of Universal Power Supply & $ per unit Fuser Ramp-Up Mature End-of-Life Time

15 Final Decision! Use 110V for base N. American demands, and Universal for ramnant N. American + complete European demands in Ramp-Up and Mature phases.! Use Universal for worldwide demand in End of Life phase.! Strategy extended to other product line.

16 Key Responses Align supply chains with needs Design for Postponement Information integration for visibility and coordination D y n a m i c

17 Evolution of Technological Innovations Substitution Effect Scale Effect Structural Effect Motor Engine Vehicles in place of horses/boats More frequent & extensive travels Highways, suburbs, malls Trades Traders in place of barter markets Frequent & extensive trades Financial markets, insurance industries

18 Similar Evolutions Substitution Effect Scale Effect Structural Effect LSP More effective logistics provider Economies of scale & risk pooling 4PL and logistics restructuring EMS More effective manufacturing Economies of scale & risk pooling Coordination & collaboration, new services

19 Structural Effects with Logistics Outsourcing Measure Category With Restructuring Without Restructuring Cost Transportation -18% +4% Warehousing -16% -17% Inventory -17% -15% Others -22% -7% Service Order cycle time -62% -9% On time delivery 3-19% -- Availability 1-12% -- Based on survey of 30 computer manufacturers that outsourced logistics functions (Kopczak, 1995)

20 Evolution of Technology Innovations Substitution Scale Structural Time

21 IT Opportunities Substitution Effect Scale Effect Structural Effect Opportunity Internet-based transactions Auctions and secondary markets Visibility and intelligent supply chain coordination Values Overhead and time efficiency Lower costs, supply & demand matching Super-efficiency across the chain, higher revenues

22 The Visibility Problem Time Space Delayed reactions to problems Inability to plan Process delays due to inspections & checks Security threats Information distortion

23 Why the Supply Chain Broke Down Business Week, March 19, 2001 Forecasts by electronics and telecom companies are often inflated. The problems include flawed flows of information, software tools that are too difficult and costly to use, and confused lines of responsibilities. Now, Solectron has $4.7 billion in inventory.

24 Time to Adjust the Supply Chain Slowdown detected, massive production plan adjustment Level by level order/production plan adjustments could take weeks to reach upstream suppliers Channel OEM EMS Distributors Suppliers Suppliers suppliers Result: huge inventory could still build up.

25 Cisco s New ehub Global B2B portal. Extended visibility for supply partners Exception identification and alerting. Resolution path identification. Shared performance measurement & reporting. Robust supply planning. Total end-to-end visibility. Single demand signal. Better capacity planning and allocation of constrained materials. Shorter lead times, higher availabilities, less expediting. Improved partnership relationships. Proactive SCM as opposed to reactive SCM.

26 Supply Chain Visibility is the Key to Intelligent Supply Chain Management Supply chain visibility of assets, especially dealing with the security of regulated assets, should be the topics of revitalized interest. AMR Research

27 Real Time Supply Chain Visibility TRANSPORTATION CONTAINERS ITEMS Pre-emptive crisis management. Adaptive supply chain planning. Monitoring for improvement. Provides supply chain confidence. Supplier Factory Distribution Center Customer

28 Supply Chain Security with Smart-Seal Real time alert and notification provides security. Enables fast inspection or eliminates inspection. Higher assurance of supply leads to supply chain confidence.

29 Summary Global supply chain management has inherently great complexities and challenges. Design for postponement, dynamic supply chains, and information integration are innovative responses. Information integration for visibility, coordination and supply chain security and confidence can create great values, giving rise to structural effects of the evolution of informationage supply chain management.